Revenue and Business Segments

We account for our revenue in accordance with FASB ASC

606,

Revenue from Contracts with Customers

, which we adopted on

January 1, 2018

using the modified retrospective method. We combine our

five

current operating segments into

four

reporting segments (Truckload, Dedicated, Intermodal and Brokerage) for financial reporting purposes. These

four

reporting segments are also the appropriate categories for the disaggregation of our revenue under FASB ASC

606.

We have strategically transitioned from a long-haul carrier to a multifaceted business offering a network of truck-based transportation capabilities across our

five

distinct business platforms – Truckload, Dedicated, Intermodal, Brokerage and MRTN de Mexico.

The primary source of our operating revenue is provided by our Truckload segment through a combination of regional short-haul and medium-to-long-haul full-load transportation services. We transport food and other consumer packaged goods that require a temperature-controlled or insulated environment, along with dry freight, across the United States and into and out of Mexico and Canada.

Our Dedicated segment provides customized transportation solutions tailored to meet individual customers’ requirements, utilizing temperature-controlled trailers, dry vans and other specialized equipment within the United States. Our agreements with customers range from

three

five

years and are subject to annual rate reviews.

Generally, we are paid by the mile for our Truckload and Dedicated services. We also derive Truckload and Dedicated revenue from fuel surcharges, loading and unloading activities, equipment detention and other accessorial services. The main factors that affect our Truckload and Dedicated revenue are the rate per mile we receive from our customers, the percentage of miles for which we are compensated, the number of miles we generate with our equipment and changes in fuel prices. We monitor our revenue production primarily through average Truckload and Dedicated revenue, net of fuel surcharges, per tractor per week. We also analyze our average Truckload and Dedicated revenue, net of fuel surcharges, per total mile, non-revenue miles percentage, the miles per tractor we generate, our fuel surcharge revenue, our accessorial revenue and our other sources of operating revenue.

Our Intermodal segment transports our customers’ freight within the United States utilizing our temperature-controlled trailers on railroad flatcars for portions of trips, with the balance of the trips using our tractors or, to a lesser extent, contracted carriers. The main factors that affect our Intermodal revenue are the rate per mile and other charges we receive from our customers.

Our Brokerage segment develops contractual relationships with and arranges for

third

-party carriers to transport freight for our customers in temperature-controlled trailers and dry vans within the United States and into and out of Mexico through Marten Transport Logistics, LLC, which was established in

2007

and operates pursuant to brokerage authority granted by the United States Department of Transportation, or DOT. We retain the billing, collection and customer management responsibilities. The main factors that affect our Brokerage revenue are the rate per mile and other charges that we receive from our customers.

Operating results of our MRTN de Mexico business which offers our customers door-to-door service between the United States and Mexico with our Mexican partner carriers is reported within our Truckload and Brokerage segments.

Our customer agreements are typically for

one

-year terms except for our Dedicated agreements which range from

three

five

years with annual rate reviews. Under FASB ASC

606,

the contract date for each individual load within each of our

four

reporting segments is generally the date that each load is tendered to and accepted by us. For each load transported within each of our

four

reporting segments, the entire amount of revenue to be recognized is a single performance obligation and our agreements with our customers detail the per-mile charges for line haul and fuel surcharges, along with the rates for loading and unloading, stop offs and drops, equipment detention and other accessorial services, which is the transaction price. There are

discounts that would be a material right or consideration payable to a customer. We are required to recognize revenue and related expenses over time, from load pickup to delivery, for each load within each of our

four

reporting segments. We base our calculation of the amount of revenue to record in each period for individual loads picking up in

one

period and delivering in the following period using the number of hours estimated to be incurred within each period applied to each estimated transaction price. Contract assets for this estimated revenue are classified within prepaid expenses and other within our consolidated balance sheet as of

December 31, 2018.

We had

impairment losses on contract assets in

2018.

We bill our customers for loads after delivery is complete with standard payment terms of

days.

We account for revenue of our Intermodal and Brokerage segments and revenue on freight transported by independent contractors within our Truckload and Dedicated segments on a gross basis, as discussed in our revenue policy note.

The following table sets forth for the years indicated our operating revenue and operating income by segment. We do

not

prepare separate balance sheets by segment and, as a result, assets are

not

separately identifiable by segment.

(Dollars in thousands)	201 8		2017		2016
Operating revenue:
Truckload revenue, net of fuel surcharge revenue	$	322,324	$	336,596	$	339,967
Truckload fuel surcharge revenue		53,016		43,614		35,884
Total Truckload revenue		375,340		380,210		375,851

Dedicated revenue, net of fuel surcharge revenue		187,137		153,691		147,007
Dedicated fuel surcharge revenue		36,715		13,190		10,363
Total Dedicated revenue		223,852		166,881		157,370

Intermodal revenue, net of fuel surcharge revenue		85,572		70,282		64,508
Intermodal fuel surcharge revenue		16,453		10,339		6,982
Total Intermodal revenue		102,025		80,621		71,490

Brokerage revenue		86,377		70,408		66,433

Total operating revenue	$	787,594	$	698,120	$	671,144

Operating income:
Truckload	$	35,067	$	26,326	$	27,438
Dedicated		18,589		17,074		19,550
Intermodal		11,150		8,303		7,131
Brokerage		5,542		5,159		4,184
Total operating income	$	70,348	$	56,862	$	58,303

Truckload segment depreciation expense was

$52.2

million,

$57.2

million and

$56.2

million, Dedicated segment depreciation expense was

$29.6

million,

$22.0

million and

$20.6

million, Intermodal segment depreciation expense was

$5.5

million,

$4.6

million and

$3.9

million, and Brokerage segment depreciation expense was

$1.3

million,

$1.3

million and

$1.7

million, in

2018,

2017

and

2016,

respectively.