The following discussion and analysis of our financial condition and results of operations should be read together with the selected consolidated financial data and our consolidated condensed financial statements and the related notes appearing elsewhere in this report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those included in our Form 10-K, Part I, Item 1A for the year ended December 31, 2008. We do not assume, and specifically disclaim, any obligation to update any forward-looking statement contained in this report.

Overview

The primary source of our operating revenue is truckload revenue, which we generate by transporting long-haul and regional freight for our customers and report within our Truckload segment. Generally, we are paid by the mile for our services. We also derive truckload revenue from fuel surcharges, loading and unloading activities, equipment detention and other ancillary services. The main factors that affect our truckload revenue are the rate per mile we receive from our customers, the percentage of miles for which we are compensated and the number of miles we generate with our equipment. We monitor our revenue production primarily through average truckload revenue, net of fuel surcharges, per tractor per week. We also analyze our average truckload revenue, net of fuel surcharges, per total mile, non-revenue miles percentage, the miles per tractor we generate, our accessorial revenue and our other sources of operating revenue.

Our operating revenue also includes revenue reported within our Logistics segment, which consists of revenue from our internal brokerage and intermodal operations, both launched in 2005, and through our 45% interest in MWL, a third-party provider of logistics services to the transportation industry. Brokerage services involve arranging for another company to transport freight for our customers while we retain the billing, collection and customer management responsibilities. Intermodal services involve the transport of our trailers on railroad flatcars for a portion of a trip, with the balance of the trip using our tractors or, to a lesser extent, contracted carriers. The main factors that affect our logistics revenue are the rate per mile and other charges we receive from our customers and the rates charged by third-party providers.

In addition to the factors discussed above, our operating revenue is also affected by, among other things, the United States economy, inventory levels, the level of truck and rail capacity in the transportation market and specific customer demand.

Our operating revenue decreased $21.4 million, or 14.9%, in the first quarter of 2009. This decrease was primarily due to fuel surcharge revenue decreasing by $17.2 million, or 61.5%, caused by significantly lower fuel prices in the first quarter of 2009. Our operating revenue, net of fuel surcharges, decreased $4.2 million, or 3.6%, compared with the first quarter of 2008. Truckload segment revenue, net of fuel surcharges, decreased 6.4% due to a decrease in our average truckload revenue, net of fuel surcharges, per tractor per week of 6.3% in the first quarter of 2009. Our average miles per tractor decreased by 10.1% in the first quarter of 2009 due to the difficult freight environment and our reduced length of haul. This was partially offset by a 3.1% increase in our average truckload revenue, net of fuel surcharges, per total mile as a result of an improved freight mix and the reduced length of haul. The changes in our operating statistics are consistent with the continued growth of our regional temperature-controlled operations. By focusing on shorter lengths of haul in certain defined areas, we are addressing customer trends toward regional distribution to lower their transportation expense, furthering our own objectives of reducing fuel consumption per load, and matching some of our drivers' desires to stay closer to home. The concentration of a portion of our fleet in these markets is evident in a 7.6% reduction from the first quarter of 2008 in average length of haul to 824 miles. Our average fleet size increased by 23 tractors in the first quarter of 2009 from the same period of 2008. Logistics segment revenue, net of intermodal fuel surcharges, increased 9.2% compared with the first quarter of 2008. The increase in logistics revenue primarily resulted from continued volume growth in each of our internal brokerage and intermodal services. Logistics revenue represented 19.3% of our operating revenue in the first quarter of 2009.

Our profitability on the expense side is impacted by variable costs of transporting freight for our customers, fixed costs and expenses containing both fixed and variable components. The variable costs include fuel expense, driver-related expenses, such as wages, benefits, training, and recruitment, and independent contractor costs, which are recorded under purchased transportation. Expenses that have both fixed and variable components include maintenance and tire expense and our total cost of insurance and claims. These expenses generally vary with the miles we travel, but also have a controllable component based on safety, fleet age, efficiency and other factors. Our main fixed costs relate to the acquisition and financing of long-term assets, such as revenue equipment and operating terminals. We expect our annual cost of tractor and trailer ownership will increase in future periods as a result of higher prices of new equipment. Although certain factors affecting our expenses are beyond our control, we monitor them closely and attempt to anticipate changes in these factors in managing our business. For example, fuel prices fluctuated dramatically at various times during the last several years, with the D.O.E. national average cost of fuel decreasing to $2.19 per gallon in the first quarter of 2009 from $3.55 per gallon in the first quarter of 2008. We manage our exposure to changes in fuel prices primarily through fuel surcharge programs with our customers, as well as through volume fuel purchasing arrangements with national fuel centers and bulk purchases of fuel at our terminals. To help further reduce fuel expense, we have installed auxiliary power units in our tractors to provide climate control and electrical power for our drivers without idling the tractor engine. For our Logistics segment, our profitability on the expense side is impacted by the percentage of logistics revenue we pay to providers for the transportation services we arrange.

Our operating expenses as a percentage of operating revenue, or "operating ratio," was 94.1% in the first quarter of 2009 compared with 96.2% in the first quarter of 2008. The increased profitability in the first quarter of 2009 was due to an improvement in our overall cost structure, partially offset by the decrease in revenue per tractor per week in our Truckload segment and decreased margins in the logistics services provided by MWL. Our earnings per diluted share increased to $0.18 in the first quarter of 2009 from $0.12 in the same period of 2008.

Our business requires substantial, ongoing capital investments, particularly for new tractors and trailers. At March 31, 2009, we had approximately $14.8 million of marketable securities, $2.9 million of long-term debt, including current maturities, and $262.0 million in stockholders' equity. In the first quarter of 2009, we spent $12.8 million to purchase new revenue equipment, net of proceeds from dispositions. These expenditures were funded with cash flows from operations. We estimate that capital expenditures, net of proceeds from dispositions, will be approximately $45 million to $60 million for the remainder of 2009, which we will adjust throughout the year as we size our fleet to existing customer demand. We believe our sources of liquidity are adequate to meet our current and anticipated needs for at least the next twelve months. Based upon anticipated cash flows, existing cash and marketable securities balances, current borrowing availability and other sources of financing we expect to be available to us, we do not anticipate any significant liquidity constraints in the foreseeable future.

This Management's Discussion and Analysis of Financial Condition and Results of Operations includes discussions of operating, truckload and logistics revenue, net of fuel surcharges, and net fuel expense (fuel and fuel taxes net of fuel surcharge revenue and surcharges passed through to independent contractors, outside drayage carriers and railroads). We provide these additional disclosures because management believes these measures provide a more consistent basis for comparing results of operations from period to period. These financial measures in this report have not been determined in accordance with U.S. generally accepted accounting principles (GAAP). Pursuant to Item 10(e) of Regulation S-K, we have included the amounts necessary to reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures, operating revenue and fuel and fuel taxes.

Results of Operations



The following table sets forth for the periods indicated certain operating
statistics regarding our revenue and operations:



                                                              Three Months
                                                             Ended March 31,
                                                           2009           2008

Truckload Segment:
Revenue (in thousands)                                 $     98,372   $    121,129
Average truckload revenue, net of fuel surcharges,
per total mile                                         $      1.525   $      1.479
Average miles per tractor(1)                                 24,341         27,082
Average truckload revenue, net of fuel surcharges,
per tractor per week(1)                                $      2,887   $      3,081
Average tractors (1)                                          2,385          2,362
Average miles per trip                                          824            892
Total miles - company-employed drivers (in
thousands)                                                   52,112         54,310
Total miles - independent contractors (in thousands)          5,943          9,671

Logistics Segment:
Brokerage:
Revenue (in thousands)                                 $     14,454   $     15,224
Loads                                                         7,606          7,613
Intermodal:
Revenue (in thousands)                                 $      9,129   $      7,021
Loads                                                         3,653          2,153
Average tractors                                                 55             40

Comparison of Three Months Ended March 31, 2009 to Three Months Ended March 31, 2008

The following table sets forth for the periods indicated our operating revenue, operating income and operating ratio by segment, along with the change for each component:

                                                                  Dollar        Percentage
                                                                  Change          Change
                                        Three Months           Three Months    Three Months
                                            Ended                 Ended            Ended
                                          March 31,             March 31,        March 31,
(Dollars in thousands)               2009          2008       2009 vs. 2008    2009 vs. 2008
Operating revenue:
Truckload revenue, net of fuel
surcharge revenue                 $    88,535   $    94,631   $       (6,096 )          (6.4 )%
Truckload fuel surcharge
revenue                                 9,837        26,498          (16,661 )         (62.9 )
Total Truckload revenue                98,372       121,129          (22,757 )         (18.8 )

Logistics revenue, net of
intermodal fuel surcharge
revenue(1)                             22,650        20,745            1,905             9.2
Intermodal fuel surcharge
revenue                                   933         1,500             (567 )         (37.8 )
Total Logistics revenue                23,583        22,245            1,338             6.0

Total operating revenue           $   121,955   $   143,374   $      (21,419 )         (14.9 )%

Operating income:
Truckload                         $     5,833   $     3,727   $        2,106            56.5 %
Logistics                               1,418         1,755             (337 )         (19.2 )
Total operating income            $     7,251   $     5,482   $        1,769            32.3 %

Operating ratio(2):
Truckload                                94.1 %        96.9 %                            2.9 %
Logistics                                94.0          92.1                             (2.1 )
Consolidated operating ratio             94.1 %        96.2 %                            2.2 %

(2) Operating expenses as a percentage of operating revenue.

Our operating revenue decreased $21.4 million, or 14.9%, to $122.0 million in the 2009 period from $143.4 million in the 2008 period. This decrease was primarily due to fuel surcharge revenue decreasing to $10.8 million in the 2009 period from $28.0 million in the 2008 period, caused by significantly lower fuel prices in the 2009 period. Our operating revenue, net of fuel surcharges, decreased $4.2 million, or 3.6%, to $111.2 million in the 2009 period from $115.4 million in the 2008 period. The decrease in operating revenue, net of fuel surcharges, was due to a decrease in truckload revenue, net of fuel surcharges, partially offset by growth in logistics revenue.

Truckload segment revenue decreased $22.8 million, or 18.8%, to $98.4 million in the 2009 period from $121.1 million in the 2008 period. Truckload segment revenue, net of fuel surcharges, decreased 6.4% due to a decrease in our average truckload revenue, net of fuel surcharges, per tractor per week of 6.3% in the 2009 period. Our average miles per tractor decreased by 10.1% in the 2009 period due to the difficult freight environment and our reduced length of haul. This was partially offset by a 3.1% increase in our average truckload revenue, net of fuel surcharges, per total mile as a result of an improved freight mix and the reduced length of haul. The changes in our operating statistics are consistent with the continued growth of our regional temperature-controlled operations. By focusing on shorter lengths of haul in certain defined areas, we are

addressing customer trends toward regional distribution to lower their transportation expense, furthering our own objectives of reducing fuel consumption per load, and matching some of our drivers' desires to stay closer to home. The concentration of a portion of our fleet in these markets is evident in a 7.6% reduction from the 2008 period in average length of haul to 824 miles. Our average fleet size increased by 23 tractors in the 2009 period from the 2008 period. The improvement in our overall cost structure, partially offset by the decrease in revenue per tractor per week, resulted in increased profitability from the 2008 period.

Logistics segment revenue increased $1.4 million, or 6.0%, to $23.6 million in the 2009 period from $22.2 million in the 2008 period. Logistics segment revenue, net of intermodal fuel surcharges, increased 9.2%. The increase in logistics revenue primarily resulted from continued volume growth in each of our internal brokerage and intermodal services. The increase in the operating ratio for our Logistics segment in the 2009 period was primarily due to decreased margins in the logistics services provided by MWL.

The following table sets forth for the periods indicated the dollar and percentage increase or decrease of the items in our unaudited consolidated condensed statements of operations, and those items as a percentage of operating revenue:

                                   Dollar         Percentage            Percentage of
                                   Change           Change            Operating Revenue
                                Three Months     Three Months           Three Months
                                    Ended            Ended                  Ended
                                  March 31,        March 31,              March 31,
(Dollars in thousands)          2009 vs. 2008    2009 vs. 2008       2009           2008
Operating revenue              $       (21,419 )         (14.9 )%      100.0 %        100.0 %
Operating expenses (income):
Salaries, wages and benefits              (580 )          (1.6 )        29.6           25.6
Purchased transportation                (5,252 )         (18.8 )        18.7           19.5
Fuel and fuel taxes                    (20,063 )         (47.8 )        17.9           29.2
Supplies and maintenance                   486             5.2           8.1            6.5
Depreciation                             1,471            12.3          11.0            8.3
Operating taxes and licenses               (36 )          (2.1 )         1.4            1.2
Insurance and claims                       (44 )          (0.8 )         4.5            3.9
Communications and utilities               104            10.8           0.9            0.7
Gain on disposition of
revenue equipment                          588            55.5          (0.4 )         (0.7 )
Other                                      138             4.9           2.4            2.0
Total operating expenses               (23,188 )         (16.8 )        94.1           96.2
Operating income                         1,769            32.3           5.9            3.8
Other expenses (income):
Interest expense                          (470 )         (88.0 )         0.1            0.4
Interest income and other                   44            57.1             -           (0.1 )
                                          (426 )         (93.2 )           -            0.3
Income before income taxes               2,195            43.7           5.9            3.5
Less: Income before income
taxes attributable to
noncontrolling interest                   (264 )         (69.5 )         0.1            0.3
Income before income taxes
attributable to Marten
Transport, Ltd.                          2,459            52.9           5.8            3.2
Provision for income taxes               1,059            53.2           2.5            1.4
Net income                     $         1,400            52.8 %         3.3 %          1.9 %

Salaries, wages and benefits consist of compensation for our employees, including both driver and non-driver employees, employees' health insurance, 401(k) plan contributions and other fringe benefits. These expenses vary depending upon the ratio of company drivers to independent contractors, our efficiency, our experience with employees' health insurance claims, changes in health care premiums and other factors. The decrease in salaries, wages and benefits resulted primarily from a 4.0% decrease in the total miles driven by company drivers and a $604,000 decrease in our self-insured medical claims, which decreased our employees' health insurance expense, which was partially offset by a $379,000 increase in bonus compensation expensed for our non-driver employees.

Purchased transportation consists of payments to independent contractor providers of revenue equipment and to carriers for transportation services we arrange in connection with brokerage and intermodal activities. This category will vary depending upon the ratio of company drivers versus independent contractors, the amount of fuel surcharges passed through to independent contractors and the amount and rates, including fuel surcharges, we pay to third-party railroad and motor carriers. Purchased transportation expense decreased $5.3 million in total, or 18.8%, in the 2009 period from the 2008 period. Payments to carriers for transportation services we arranged in our brokerage and intermodal operations increased $155,000 to $16.9 million in the 2009 period from $16.7 million in the 2008 period. The portion of purchased transportation expense related to our independent contractors, including fuel surcharges, decreased $5.4 million in the 2009 period, primarily due to a decrease in the number of independent contractor-owned tractors in our fleet and a decrease in the amount of fuel surcharges paid to the independent contractors. We expect that purchased transportation expense will increase as we grow our Logistics segment.

Net fuel expense (fuel and fuel taxes net of fuel surcharge revenue and surcharges passed through to independent contractors, outside drayage carriers and railroads) decreased $5.5 million, or 30.4%, to $12.6 million in the 2009 period from $18.0 million in the 2008 period. Fuel surcharges passed through to independent contractors, outside drayage carriers and railroads were $1.5 million in the 2009 period and $4.1 million in the 2008 period. Over the past year, we have worked diligently to control fuel costs and usage by improving our volume purchasing arrangements and optimizing our drivers' fuel purchases with national fuel centers, focusing on shorter lengths of haul, installing and tightly managing the use of auxiliary power units in our tractors to minimize engine idling and improving fuel usage in our trailers' refrigeration units. Auxiliary power units, which were installed in 96% of our company-owned tractors as of March 31, 2009, provide climate control and electrical power for our drivers without idling the tractor engine. The decrease in net fuel expense was primarily due to a significant decrease in the D.O.E. national average cost of fuel to $2.19 per gallon in the 2009 period from $3.55 per gallon in the 2008 period, a 4.0% decrease in the total miles driven by our company-owned fleet and to the cost control measures stated above. Net fuel expense represented 13.0% of truckload and intermodal revenue, net of fuel surcharges, in the 2009 period, compared with 18.0% in the 2008 period.

Supplies and maintenance consist of repairs, maintenance, tires, parts, oil and engine fluids, along with load-specific expenses including loading/unloading, tolls, pallets and trailer hostling. The increase in supplies and maintenance in the 2009 period primarily resulted from a higher percentage of company-owned tractors in our fleet, for which we bear all maintenance expenses. Our maintenance practices were consistent with the 2008 period.

Depreciation relates to owned tractors, trailers, auxiliary power units, communications units, terminal facilities and other assets. The increase in depreciation was primarily due to an increase in the relative percentage of company-owned tractors to independent contractor-owned tractors in the 2009 period. We expect our annual cost of tractor and trailer ownership will increase in future periods as a result of higher prices of new equipment, which is expected to result in greater depreciation over the useful life.

A decrease in the market value for used revenue equipment, which we believe was driven by capacity reductions in the industry, along with a decrease in the planned number of revenue equipment dispositions, caused our gain on disposition of revenue equipment to decrease to $471,000 in the 2009 period from $1.1 million in the 2008 period. Future gains or losses on disposition of revenue equipment will be impacted by the market for used revenue equipment, which is beyond our control. We do not expect our gain on disposition to improve in the near future as we believe that there are few buyers with adequate financing in comparison with

available inventory, and the expectation of additional trucking company failures is likely to keep used truck inventories high.

As a result of the foregoing factors, our operating expenses as a percentage of operating revenue, or "operating ratio," was 94.1% in the 2009 period compared with 96.2% in the 2008 period.

Interest expense primarily consists of interest on our senior unsecured notes and unsecured committed credit facility. The decrease in interest expense of $470,000, or 88.0%, in the 2009 period from the 2008 period was primarily the result of lower average debt balances outstanding.

Our effective income tax rate was 42.9% for each of the 2009 and 2008 periods.

As a result of the factors described above, net income increased to $4.1 million in the 2009 period from $2.7 million in the 2008 period. Net earnings increased to $0.18 per diluted share in the 2009 period from $0.12 per diluted share in the 2008 period.

Liquidity and Capital Resources

Our business requires substantial, ongoing capital investments, particularly for new tractors and trailers. Our primary sources of liquidity are funds provided by operations, our unsecured senior notes and our revolving credit facility. A portion of our tractor fleet is provided by independent contractors who own and operate their own equipment. We have no capital expenditure requirements relating to those drivers who own their tractors or obtain financing through third parties. However, to the extent we purchase tractors and extend financing to the independent contractors through our tractor purchase program, we have an associated capital expenditure requirement.

The table below reflects our net cash flows provided by operating activities, net cash flows used for investing activities and net cash flows used for financing activities for the periods indicated.

                                                     Three Months
                                                    Ended March 31,
(In thousands)                                      2009       2008

Net cash flows provided by operating activities   $ 27,416   $ 14,739
Net cash flows used for investing activities        26,481        867
Net cash flows used for financing activities         1,154     14,924

In December 2007, our Board of Directors approved a share repurchase program to repurchase up to one million shares of our common stock either through purchases on the open market or through private transactions. The timing and extent to which we will repurchase shares depends on market conditions and other corporate considerations. In the first quarter of 2008 we repurchased and retired 67,500 shares of our common stock for $810,000. We made no purchases in the remainder of 2008 or in the first quarter of 2009. The repurchase program does not have an expiration date.

In the first quarter of 2009, we spent $12.8 million to purchase new revenue equipment, net of proceeds from dispositions. These expenditures were funded with cash flows from operations. We estimate that capital expenditures, net of . . .