Entrepreneurial spirit

Sept. 1, 2007
Every company in every industry faces challenges. Key among them: finding the competitive edge that attracts and satisfies customers, building and supporting

Every company in every industry faces challenges. Key among them: finding the competitive edge that attracts and satisfies customers, building and supporting a talented and committed employee base, and discovering new ways to operate at peak efficiency in order to continue to grow and prosper. While some would say that larger companies face greater challenges, the management team at one of the country's largest temperature-sensitive truckload carriers — Marten Transport Ltd of Mondovi, Wisconsin, feels quite different. “Even though we have become a very sizeable organization, the challenges that we face are no different than those of a start-up company,” says Don Hinson, the company's vice-president of operations.

As a publicly-held company, Marten Transport does have to deal with additional challenges. One of which is the added pressure to give investors a superior return on their investment. That, Hinson says, is a positive thing. “We believe the discipline that this forces upon us is actually a key element of our success.”

Adds Robert Smith, the company's chief operating officer: “Even though we have grown into a large company, we have an entrepreneurial spirit that starts with our chief executive officer and extends throughout the entire management team.”

Marten Transport's way of doing business works well. Started 61 years ago with one truck, the company now operates nearly 2,600 tractors and 4,000 trailers and contracts for the services of almost 370 owner-operators. Along with its headquarters in the small town of Mondovi, some 25 miles south of Eau Claire, Wisconsin, it maintains four satellite terminals. There is a field sales force of 11 and a total sales and marketing group of 19 people.

The company focuses on customers who need temperature sensitive or expedited transportation services throughout the continental United States and Canada, offering irregular route, regional, and dedicated transportation solutions. More than 80 percent of its business is conducted with 30 national accounts. The customer base includes such recognizable names as General Mills, Kraft, Anheuser Busch, and 3M, to name a few.

Marten Transport has been diligent about expanding the array of services it offers customers. Most recently, the company formed Marten Logistics, which is comprised of both brokerage and intermodal divisions.

“The brokerage operation allows us to continue to meet our commitments to our customers when our proprietary capacity is not available,” says Smith. “The intermodal division offers our customers an efficient, lower cost option on specific lanes.”

“We do not cannibalize our existing business or take opportunities away from our drivers,” Tim Nash, Marten transport's executive vice president of sales and marketing, says. “Our intent is to find intermodal opportunities that would not be available to us for truck transportation. By managing the process and providing full flexibility, Marten Logistics allows us to become a more efficient, full-service, single-carrier solution for our customers.”

Equipment mix

The vast majority of Marten Transport's tractors are sleeper cabs with a combination of Freightliner, Kenworth, Peterbilt, and Volvo models. All equipment is assigned. There are only a few team drivers.

The company did a substantial pre-buy of 2007 trucks with 2006 engines. It didn't want be concerned with the new diesel engines engineered with exhaust-scrubbing technologies to meet the more stringent 2007 federal diesel emissions regulations.

The majority of tractors have Caterpillar ACERT diesel engines, rated at 475 horsepower and governed at 65 mph. They are mated to mostly Eaton manual transmissions. All tractors are equipped with Qualcomm units to communicate with drivers and monitor vehicle location and status.

Tractors are typically traded at approximately four years or 500,000 miles.

Most of the company's trailers are 53-foot single-temperature models with air-ride suspension. The majority are Utility, with some Great Dane and Wabash units. All trailers are capable of travel by rail because of the addition of side rails for greater support and a larger reefer fuel tank.

The refrigeration units on the trailers are predominately Thermo King. Carrier Transicold units are spec'd as well. Trailers usually are traded after seven years.

Driver handling

With the industry average for driver turnover being well over 120 percent annually, Marten Transport goes to great lengths to make certain it hires qualified drivers and then retains them, It offers drivers various fleet opportunities, provides them with good equipment, and treats them with respect and appreciation.

The company also provides opportunities for drivers who want to transition into other areas of trucking. It has an established program to help drivers become owner operators.

Once drivers are onboard, the company focuses heavily on their quality of life. “Quality of life means three things,” says Doug Petit, director of operations. “Make certain drivers earn a decent living by giving them the miles they need, get them home when they want to be home, and give them a decent piece of equipment to perform their job. Add to that respect for them as individuals, and you have what it takes to help drivers succeed.”

Each driver is assigned a fleet manager who is the driver's primary contact in the operations department. Each fleet manager, who functions as both a driver's supervisor and their representative in operations, works with an assigned group of 30 to 70 drivers. It is the job of the fleet managers to make certain the quality of life elements are met.

A particular area of emphasis is getting drivers home when they want to be there. “Many times, drivers need to be home for specific reasons, such as a child's birthday or graduation,” Petit says. “When you miss that, you can't make it up to the driver or his family.”

When Marten Transport misses a driver's requested home date, it pays the driver an additional $50 per day for each missed day. “We really don't want to pay the money,” says vice president of operations Hinson. “We want to get the driver home, but at least this is a small token to show the driver that we do recognize the importance of getting him home on time.”

Beyond the traditional irregular route, over-the-road positions, Marten Transport offers drivers regional and dedicated opportunities. The company recognizes driver aspirations and is proud to note that a number of drivers have progressed into office and management positions in maintenance, safety, and operations. It has a sizeable number of owner operators who have transitioned from company driver to business owner through programs arranged by the company.

In addition to the support of a large team at corporate headquarters, the company's network of terminals in California, Georgia, Indiana, and Oregon offer fueling, driver amenities, safe-haven parking, maintenance, and administrative help for its drivers. Terminal managers and support staff act as additional intermediaries to help resolve any issue a driver faces.

Driver turnover

By answering the challenges drivers face each day, Marten Transport's driver turnover is just over one-half the industry average.

The Marten Hall of Fame is an example of the low turnover and inherent loyalty drivers feel toward the company. The Hall of Fame is a program that recognizes drivers who have achieved at least one million accident-free miles with the company.

This year, 30 drivers accumulated that mileage, and 12 drivers achieved two million accident-free miles. All were inducted at an elaborate ceremony and dinner attended by the management team, non-driving employees, drivers, and their family members.

To date, more than 300 of the company's current drivers are members of the elite Hall of Fame.

Management continuation

The non-driving employees at Marten are headed by an executive management team of six people who have a combined 177 years of industry experience, and about 20 years working together as a team. Succession planning is firmly in place, with experienced and well-trained back-ups at the next level for every management position.

“As a publicly held company, we have an obligation to our shareholders to make certain that this company is positioned to prosper for many years,” says chief operating officer Smith. “The succession planning efforts we have in place will carry us for at least the next two generations.”

Most of the non-driving staff is based in the small town of Mondovi. Marten Transport is the largest employer in the community.

Improvement is an ongoing, never-ending process at the company. Efforts to maintain peak efficiency in every facet of operations are widely varied.

Fuel focus

A particular area of emphasis is reducing fuel costs and emissions. With its large number of power units and single drivers averaging around 120,000 miles annually, fuel is a major expense for the company.

In 2006, Marten Transport became a part of the US EPA's SmartWay Transportation Partnership, an organization of businesses that commit to reduce greenhouse gas emissions and air pollution, and to improve fuel efficiency of ground freight transportation.

The company has received SmartWay's top fuel efficiency/environmental performance score of 1.25. According to the partnership, this means a company “is utilizing most of the commercially available fuel saving strategies and is actively evaluating the latest emerging technologies.”

Energy efficiency

Ed Accola, Marten Transport's maintenance administration manager, is the point person for this objective. Among other things, he works with drivers every day to help them better manage their engine idle time.

“‘We want our drivers to be comfortable while they are in their trucks,” he says, “but we're trying to work with them to make certain that when they are away from the truck, the engine is not idling. Idling a truck with no one in it provides no benefit to the driver, the company, or the environment.”

Along with recurrent driver training, and purchasing more aerodynamic and efficient equipment, the latest step taken by Marten Transport in reducing engine idle time and overall fuel consumption was the recent decision to purchase more than 2,000 Thermo King TriPac Hybrid Auxiliary Idle Reduction and Temperature Management systems (APUs).

With an up-front cost approaching $16 million, it is another example of the company's willingness to take risks to find ever-greater efficiency and profitability for the company's shareholders, says COO Smith. “While the upfront cost is significant, we have no doubt that it is the right thing to do for our drivers, our shareholders, and our environment.”

The APU systems, being retrofitted on all company-owned tractors, provide sleeper cab heating and air conditioning, truck battery charging, and engine block heating. In addition, Marten Transport purchased the inverter option on the TriPacs so drivers will have accessory power for their laptop computers, televisions, DVD players, and other electronic gear.

“Our equipment has always been spec'd for driver comfort and productivity,” says maintenance administration manager Accola. “We're using the new TriPacs as a key selling point in our driver recruiting efforts. These systems with inverters are perceived among drivers as a luxury item.”

The APUs are being installed onsite by technicians from Thermo King Sales and Service of St Paul, Minnesota. The dealership has been handling the Marten Transport account since 1972.

The installation involves mounting the TriPac's engine assembly between the frame rails, explains Bob Grilz, general manager of the Thermo King dealership. The air conditioning evaporator and fuel-fired heater are installed under the sleeper bunk, the condenser is installed on the outside rear cab wall, and the control panel is mounted on an interior wall of the sleeper. Ducting for the heat and air-conditioning is routed directly to the cab or integrated with existing air distribution ducting.

“I've been working with Marten Transport since day one,” he says. “One of the many things that impresses me about the company is that it is always looking for a new way of doing something and seeking the latest in technology to keep a competitive advantage.”

“The TriPacs will reduce idling, saving fuel and reducing the wear and tear on engines,” says Accola. “Reduced wear and tear on engines will decrease the frequency and cost of maintenance and repairs, and all the while maintain driver comfort.” The APUs also will help the company deal with the growing trend of anti-idling laws and restrictions.

Marten Transport expects a big impact on the bottom line from the auxiliary power units. Trucks currently equipped with the Thermo King TriPacs have reduced idle times to around six percent, versus a fleet average approaching 40 percent.

Once the fleet is fully equipped, and assuming the cost of fuel remains high, the company figures it will realize monthly fuel savings of $1 million and anticipates recovering the cost of the systems in 12 to 18 months.

As it does with any new piece of equipment, the company explains to drivers why it purchased the systems, provides full training on system operation, and details the impact the system will have on operating costs and associated profitability. “This helps us get the most benefit from anything new,” Smith says, “plus it helps with driver satisfaction, and that helps keep drivers.”

Accola says driver reaction to the APUs has been extremely positive. “I'm getting calls every day from our drivers asking to be next in line to have these installed on their trucks.”

Company history

Marten Transport was founded in 1946 when Roger Marten, at the age of 17, borrowed $400 from his mother and purchased a dairy route in Modena, Wisconsin. He expanded his business in 1956 when he purchased his first tractor trailer rig.

With his willingness to take risks, enter new business segments, and find and rely on the talents of an expanded management team, Marten grew his company. His son, Randy, joined the company in 1965 when the operation moved to its present day headquarters in Mondovi, Wisconsin. Randy became president in 1986, at the time the company had its initial public offering.

In 1993, the company surpassed $100 million in revenue but also suffered the loss of company founder Roger Marten. Randy assumed the primary leadership role as chairman, president, and CEO.

The lessons his father taught him are evident in the way he has guided the company to continued success. Under Randy's leadership, the company has realized growth of more than $400 million in annual revenues since 1993, and completed a secondary stock offering, as well as three stock splits.

Through all his success, Randy says what motivates him every day is: “I don't want to be the son who lost his father's business.” That is a humble attitude for a man who has accomplished so much in such a competitive environment.

Forward looking

“Looking toward the future, Marten Transport plans to continue to do the right thing for its investors, its employees, and the environment,” says Smith. “At every level of management we have a lot of strength from seasoned professionals. We continually scrutinize our costs and look at ways to become more efficient and productive.”

He says the company will carry on with its growth strategy of expanding its business internally by offering shippers a high level of service and significant truck capacity. Why fool with success?

About the Author

David Kolman

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