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Marten Transport (MRTN) |
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WIKI ANALYSIS
Marten Transport, Ltd. is a temperature-sensitive truckload carrier in the United States. The company specializes in transporting and distributing food and other consumer packaged goods that require a temperature-controlled or insulated environment. The company operates in two segments: Truckload and Logistics.[1] Due to increase in fuel prices, the truckload segment has experienced both an increase in expenses due to gas prices and an increase in revenues due to fuel surcharges.[2]
Business Growth
MRTN's operating revenue increased $11.0 million, or 2.2%, in 2010.[2] This increase was primarily due to fuel surcharge revenue increasing by $20.2 million, or 36.2%, caused by significantly higher fuel prices in 2010. [2]
Key Trends and Forces
Costs Are Affected by Oil Prices
Since Marten Transport s a shipping company, gas prices are one of the greatest contributors to cost, especially when fuel prices are not as stable. Even the smallest increase in the price of diesel fuel has a large impact on the trucking industry; the American Trucking Association estimates that expenses on fuel increase by $391 million annually if fuel increases by just one cent.[2] It's clear that unpredictable fluctuations in fuel prices can cause costs - and therefore earnings - to be volatile
Market Consolidation
Due to the financial crisis, the truckload sector is moving towards consolidation, meaning a few larger companies will dominate the sector, squeezing out smaller firms. It's likely that this will continue because some smaller firms are forced out by competition by larger firms or combine with others. If this continues to happen, this trend will be advantageous to Marten Transport, as it is a large provider and has the opportunity to capture more market share and customers as smaller competitors continue exit.
Competition
- J.B. Hunt Transport Services (JBHT)
- Landstar System (LSTR)
- Arkansas Best (ABFS)
- Old Dominion Freight Line (ODFL)
- Universal Truckload Services (UACL)
- Hub Group (HUBG)
- Covenant Transport (CVTI)
In the shipping industry, prices charged for shipping services are influenced and determined by fuel rates, equipment availability - how many trucks are on hand for services, the overall economic climate, as well as competitors' prices. There are about a quarter of a million trucks that have excess capacity to deliver freight, which means increased competition and smaller profit margins.
References
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