DNJ Intermodal chief learns the hard way how to tighten up oversight
From Crain’s Chicago Business –
DNJ Transportation started in 1979 as a family-owned business with one truck and a handful of domestic routes. At its peak, in 2006, the Cicero company, by then renamed DNJ Intermodal Services, posted $20 million in revenue and had a fleet of 120 trucks.
Over the next two years, with the economy hurting, “freight in general stopped moving, and our taxes were increasing,” says Joseph Tovo, president of the company his father founded.
Mr. Tovo, 38, was caught unprepared. Prior to the downturn, he had spent $90,000 in cash on new equipment and, by his own estimate, was paying employees 44% over the industry average.
“For the first time, cash flow became an issue,” he says. “Facing payroll on Friday, I was driving around to customers to pick up checks so I could pay our people. It became clear we weren’t really running the business well.”
He says the company also lacked a financial management process that would have indicated a problem. “We couldn’t stop the bleeding because we didn’t know where it was coming from,” he says. “It was a scary time.”
At the same time, rivals were forming partnerships with larger carriers to offer consistent pricing and a single point of contact for more shipping regions. Mr. Tovo says he missed the industry shift until he began losing customers because he couldn’t offer the same services.
DNJ’s survival depended on making drastic changes.
Over the following year, Mr. Tovo led an in-depth review of every aspect of the business. He made cutbacks where he could. He hired outside accounting, human resources and legal support and implemented a series of checks and balances, including weekly benchmarking and financial reporting. “ ‘What gets measured gets managed’ is my new thing,” he says.
Last year, DNJ merged with IMC Cos., a Memphis-based intermodal company, and revenue appears to be back on track. Mr. Tovo estimates the company will generate $12 million in revenue by yearend, up slightly from 2010, and expects to return to the $20-million mark by 2013.
He also has made it a priority to educate himself and stay involved in the industry.
“When my business was running well, the rest of the world didn’t matter to me,” he says. “But I need to pay attention to what’s happening around me.”
Posted: November 17, 2011