(

) Revenue and Business Segments

We account for our revenue in accordance with 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 ASC

606.

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 ancillary 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.

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 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 ancillary 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 condensed balance sheet as of

September 30, 2018.

We had

impairment losses on contract assets in the

nine

months ended

September 30, 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 because we are the principal service provider controlling the promised service before it is transferred to each customer. We are primarily responsible for fulfilling the promise to provide each specified service to each customer. We bear the primary risk of loss in the event of cargo claims by our customers. We also have complete control and discretion in establishing the price for each specified service. Accordingly, all such revenue billed to customers is classified as operating revenue and all corresponding payments to carriers for transportation services we arrange in connection with brokerage and intermodal activities and to independent contractor providers of revenue equipment are classified as purchased transportation expense within our consolidated condensed statements of operations.

The following table sets forth for the periods 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.

	Three Months				Nine Months
	Ended September 30,				Ended September 30,
(In thousands)	2018		2017		2018		2017
Operating revenue:
Truckload revenue, net of fuel surcharge revenue	$	80,563	$	81,836	$	241,304	$	251,127
Truckload fuel surcharge revenue		13,357		10,172		40,037		31,453
Total Truckload revenue		93,920		92,008		281,341		282,580

Dedicated revenue, net of fuel surcharge revenue		48,500		39,154		138,096		114,654
Dedicated fuel surcharge revenue		10,291		2,995		26,499		9,274
Total Dedicated revenue		58,791		42,149		164,595		123,928

Intermodal revenue, net of fuel surcharge revenue		21,735		17,423		63,834		51,111
Intermodal fuel surcharge revenue		4,204		2,472		12,227		7,085
Total Intermodal revenue		25,939		19,895		76,061		58,196

Brokerage revenue		20,999		16,627		61,636		50,645
Total operating revenue	$	199,649	$	170,679	$	583,633	$	515,349

Operating income:
Truckload	$	10,026	$	5,764	$	25,530	$	19,249
Dedicated		5,249		4,514		13,321		14,075
Intermodals		2,507		1,588		7,997		5,777
Brokerage		1,211		1,156		3,962		3,428
Total operating income	$	18,993	$	13,022	$	50,810	$	42,529

Truckload segment depreciation expense was

$12.8

million and

$14.1

million, Dedicated segment depreciation expense was

$7.8

million and

$5.6

million, Intermodal segment depreciation expense was

$1.4

million and

$1.2

million, and Brokerage segment depreciation expense was

$337,000

and

$328,000

in the

three

-month periods ended

September 30, 2018

and

2017,

respectively.

Truckload segment depreciation expense was

$39.4

million and

$43.1

million, Dedicated segment depreciation expense was

$21.9

million and

$16.4

million, Intermodal segment depreciation expense was

$4.1

million and

$3.4

million, and Brokerage segment depreciation expense was

$960,000

and

$1.0

million in the

nine

-month periods ended

September 30, 2018

and

2017,

respectively.