While some industries are struggling to stay afloat during the COVID-19 pandemic, changing shopping habits and the surge in demand for goods have generated new opportunities in others.
Chicago resident Mohammad Banibaker saw the pandemic as a chance to jump into the trucking and logistics industries — a sector that has always piqued his interest.
“Logistics was always in the back of my mind, I just never had the time or opportunity to get in,” Banibaker told FreightWaves. “COVID-19 was a blessing in disguise. Now I’m addicted to the industry. Honestly, I don’t want to do anything else for a while.”
Banibaker is the founder and owner of Azmi Freight, which he started late last winter, during the early months of the COVID-19 pandemic. Chicago-based Azmi Freight is a carrier with about five trucks primarily hauling flatbed freight.
Banibaker said the flatbed trucking business has been strong since he started, hauling whatever the market throws his way, while the reefer market has been tougher to break into.
“If it goes on a flatbed, and fits our week’s objectives, we’ll move it,” Banibaker said. “I’m dying to move more into reefer, but finding/affording trailers is bleak.”
Banibaker is not alone when it comes to starting a new business during the pandemic, according to the U.S. Census Bureau. More than 4.4 million businesses were created in the U.S. during 2020 — the highest total on record. It is a 24.3% increase compared to 2019, when 3.5 million businesses were created.
The trend was continuing through the first nine months of 2021. People across the U.S. filed a record 4.1 million applications to start new businesses through the end of September this year, according to the Census Bureau.
Washington-based EIG is a bipartisan public policy organization that is focused on building a more entrepreneurial and innovative U.S. economy.
“The transportation and warehousing sector has also experienced rapid increases in potential business formation — up 74% so far [in 2021] compared to the same period in 2019,” Daniel Newman, an EIG research and policy analyst, wrote in a recent blog post.
Other sectors in which business applications are up include accommodation and food services, a 75% increase over the same period in 2019, while the retail trade sector is up 62%, and health care and social assistance is up 36%.
“The jump in intent to form new businesses likely reflects a necessity to adapt in response to job losses during the downturn as well as an opportunity to fill new economic needs amid changing consumer preferences, supply chain issues and novel circumstances brought on by the pandemic,” Newman wrote.
Small trucking companies like Azmi Freight make up a large portion of the industry. According to the American Trucking Associations, 91% of operators have fleets with six or fewer trucks and 97% operate with 20 or fewer.
For Banibaker, the path to owning his own trucking business didn’t necessarily follow a straight line. Last year, Banibaker was in the process of finishing college in Illinois with degrees in both biology and analytic philosophy.
“I was right about to lock in both degrees before COVID hit. The plan was grad school, get a doctorate degree, then a postdoctorate degree and then join a biotech company, then go up the business ladder,” Banibaker said. “Frankly, it was dreadful, but a safe and sound option.”
Once news of the coronavirus affecting supply chains began in February 2020, Banibaker said conversations transitioned from college studies to talking about the virus that was spreading around the globe.
At the time, Banibaker was working in the event rentals business to make ends meet. The pandemic was also coming at a time when Banibaker was engaged to be married and planning a wedding.
“I saw the handwriting on the wall and needed a plan B, in case things hit the fan and I lost my only source of income — event rentals,” Banibaker said. “I had an expensive wedding coming up and I’m 24 at the time. The pandemic came at the worst time.”
He came up with four backup business ideas: trucking; security/smart home system installation; firearms training/sales; or a limousine company. Banibaker filed articles of incorporation for all four business ideas with the state.
“The lockdowns killed my event rentals business. So I decided to learn everything I could about trucking in a month. I don’t remember sleeping more than three hours a day during that month,” Banibaker said.
He started Azmi Freight with one owner-operator who leased with the company.
“With how things played out, we hauled our first load June 1, 2020. The owner-operator was a tremendous help in scaling, one unit at a time. A major part of my success was him believing in me, signing on and sticking around the rough days,” Banibaker said.
The biggest challenge for Azmi Freight in the beginning was cash flow, Banibaker said, explaining he had to put a lot of his own money into the operation.
Banibaker said he tried working with the U.S. Small Business Administration but it denied Azmi Freight for an Economic Injury Disaster Loan. Other lenders Banibaker had used in the past rejected him due to either industry constraints or years in business qualifiers.
“Access to credit was almost impossible in the first year of the pandemic. Every bank said they stopped giving loans out due to their Paycheck Protection Program loans,” Banibaker said. “The lenders that would approve me were charging interest rates that would have bankrupt us in a month.”
The COVID-19 pandemic initially forced many small fleets and owner-operators to file for bankruptcy protection. More than 57% of PPP loans in the transportation industry were issued to trucking companies, according to the SBA.
Making sure Azmi Freight’s insurance, fuel costs and weekly payroll were paid on time was exhausting, Banibaker said.
“For the first year, we relied strictly on factoring and credit cards. That meant stretching every dollar until we built out our operating capital,” Banibaker said.
The trucking industry entered into historically strong freight volumes by the end of 2020 and throughout most of 2021. The outbound tender volume index (OTVI.USA) on FreightWaves’ SONAR platform recently dipped slightly back below the 16,000 mark, but most analysts expect freight volumes to remain strong throughout 2022.
Another challenge for Azmi Freight was that Banibaker didn’t have any prior relationships in the trucking industry. He had to grow his freight network from scratch.
“I was fighting against time. We were running strictly spot loads for the first year,” Banibaker said. “Only recently have we felt comfortable to stick with the circle and network of brokers that we developed a relationship with. My day to day is really fostering and growing our network of customers.”
Like many carriers both large and small, Azmi Freight has also had to deal with driver recruiting and retention.
“There’s no driver shortage. When we post a listing for a local trucking job, we get flooded with candidates,” Banibaker said. “But post a job that requires you to be away for three weeks, then the pool gets infinitely smaller.”
Banibaker said he understands how hard it is being a truck driver.
“It’s a grueling lifestyle being away. The vast majority of the time, driver pay does not justify being weeks away from your family. Missing your kid’s birthday or those small moments growing up is not worth $70,000 a year,” Banibaker said.
Also finding consistent local and regional lanes that pay above the breakeven point have been very difficult, Banibaker said.
For anyone thinking of starting a trucking company right now, Banibaker recommends trusting your instincts and knowing that throwing money at problems won’t always solve it.
“No matter how desperate you are, if you don’t feel right about a candidate, don’t hire him. A parked truck with no claims is better than a rolling truck racking in violations,” Banibaker said. “Throwing money into a problem will not solve it. Every recruiter will promise you the best drivers. Every dispatcher will promise you the best shippers. But no one can substitute your grit.”
More articles by Noi Mahoney