Dedication to Dedicated
About 10 years ago, Mark Warsofsky decided to focus his M&M Transport on dedicated routes and steer away from truckload common carrier business. Based in Worchester, Mass., he found enhanced profitability in New England by signing customers for long-term contracts.
The strategy has paid off as the company has steadily grown to about $60 million in revenue with 310 tractors and 950 trailers. Contrary to what happened to many other fleets, M&M grew about 9 percent in 2009 and remained steady in 2010, Warsofsky says.
Over the years, M&M has added several major chain retailers as clients, as well as manufacturers such as a corrugated box maker, paper mill recycler and potato chip producer. The routes cover New England and the Midwest, plus Arizona from a terminal in Phoenix. About 85 percent of the business is dedicated.
The strategy, however, is being challenged as bigger carriers are jumping into the market to compete for the contracts, Warsofsky says. The result is lower rates as carriers undercut them, he says.
Warsofsky’s reply is to concentrate on reducing costs on everything from office supplies to insurance and stressing customer service. He overhauled his dispatch system to reduce empty miles, which he estimates at less than 6 percent of total miles. The carrier aims to get more business from existing customers, as well as seek new shippers. “As part of our long-term relationships with our customers, we provide better customer service,” he says. “We keep overhead down.”
One area that isn’t cut is pay for the 100-percent company driver fleet. M&M pays 40-43 cents a mile with vacation and holiday pay and health insurance. Turnover last year was less than 10 percent, Warsofsky says. “When you pay above-average wages to drivers, it pays dividends to the customer. We try to prove to the customer that a few more cents per mile for us versus a large carrier will pay off.”
“As part of our long-term relationships with our customers, we provide better customer service. we keep overhead down.”
— Mark Warsofsky
A stable driver force pays off in more on-time deliveries, fewer callouts, less equipment damage and lower maintenance costs. In emphasizing safety, he keeps one rule of thumb in mind. “I was a driver,” he says, “and my philosophy has always been I would never ask a driver to do something I haven’t done and wouldn’t do myself.” This winter’s snowstorms not only hurt business but forced the company to pull its trucks off the roads three times.
The company is installing electronic onboard recorders in its trucks and tracks its trailers. The EOBRs are expensive, but Warsofsky sees the expense as an investment in safety and compliance and a signal to his customers. “It tells our customers we’re ahead of the curve, and it proves a carrier of my size can compete with the big boys and give as many benefits.”
M&M also targets improved fuel efficiency in its trucks with a fleet average a little over 6 mpg, an ongoing benefit as New England has become the most expensive region to buy diesel, according to the U.S. Department of Energy. “When fuel gets up into the high threes, it starts to cut into profit,” Warsofsky says. “It’s going to be hard to survive if fuel goes to $4-5 a gallon.”
A U.S. Environmental Protection Agency SmartWay program carrier, the company has added aerodynamic equipment to several of its trucks. It is testing auxiliary power units in some of its 100 sleepers and has installed super-single tires on about 25 trucks. Speed is governed at 65 mph.
Warsofsky also hopes new Mack trucks he’s receiving equipped with 2010 emissions-compliant engines will improve fuel economy and reduce maintenance costs. He says tests indicate the engines will make a difference, “but you just don’t know. I feel we’re venturing into an area that is an unknown zone.”