“Fighting Time”: The Challenges of Starting a Trucking Business During COVID

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While some industries struggle to stay afloat during the COVID-19 pandemic, changing purchasing habits and increasing demand for goods have created new opportunities in others.

Chicago resident Mohammad Banibaker saw the pandemic as a chance to enter the trucking and logistics industries – a sector that has always sparked his interest.

“Logistics was always on my mind, I just never had the time or the opportunity to come in,” Banibaker told FreightWaves. “COVID-19 was a blessing in disguise. Now I am 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 launched at the end of last winter, during the early months of the COVID-19 pandemic. Chicago-based Azmi Freight is a carrier with around five trucks carrying mostly flatbed freight.

Banibaker said the flatbed trucking industry has been strong since its inception, carrying everything the market has to offer, while the refrigerator market has been harder to break into.

“If he goes on a plateau and matches our week’s goals, we’ll move him,” Banibaker said. “I’m dying to go more in the reefer, but finding / affording trailers is dark.”

Banibaker is not alone when it comes to starting a new business during the pandemic, according to the US Census Bureau. More than 4.4 million businesses were created in the United States in 2020, the highest total on record. This is an increase of 24.3% compared to 2019, when 3.5 million businesses were created.

The trend continued in the first nine months of 2021. In the United States, a record 4.1 million business start-up applications were filed through the end of September this year, according to the Census Bureau.

New business applications have focused in areas of the economy that have been most affected by the pandemic, according to an analysis of census data by the Economic Innovation Group (EIG).

Washington-based EIG is a bipartisan public policy organization focused on building a more entrepreneurial and innovative US economy.

“The transportation and warehousing sector has also seen a rapid increase in the potential for business start-ups – up 74% so far. [in 2021] compared to the same period in 2019, ”wrote Daniel Newman, GIE research and policy analyst, in a recent blog post.

Other sectors in which business applications are on the rise include accommodation and food services, an increase of 75% over the same period in 2019, while the retail sector is up 62% and health care and social assistance are up 36%.

“The surge in intention to start new businesses likely reflects a need to adapt in response to job losses during the recession as well as an opportunity to meet new economic needs amid changing consumer preferences. consumers, supply chain issues and the new circumstances brought on by the pandemic, “Newman wrote.

Small trucking companies like Azmi Freight make up a big part of the industry. According to the American Trucking Associations, 91% of operators have fleets of six trucks or less and 97% operate with 20 trucks or less.

For Banibaker, the path to owning his own trucking business hasn’t necessarily followed a straight line. Last year, Banibaker was finishing his college education in Illinois with degrees in biology and analytical philosophy.

“I was about to lock in both degrees before COVID hit. The plan was to get a graduate degree, get a doctorate, then a postdoctoral degree, then join a biotech company, then move up the business ladder, ”Banibaker said. “Frankly, it was appalling, but a safe and healthy option.”

Once news of the coronavirus affecting supply chains began in February 2020, Banibaker said conversations had shifted from academic studies to discussion of the virus spreading around the world.

At the time, Banibaker was working in the event rental business to make ends meet. The pandemic also came at a time when Banibaker was engaged to get married and plan a wedding.

“I saw the handwriting on the wall and needed a plan B, in case things hit the fan and I lose my only source of income – event rentals,” Banibaker said. . “I had an expensive marriage coming up and I was 24 at the time. The pandemic came at the worst time. “

He came up with four relief business ideas: trucking; installation of security system / smart home; training / sale of firearms; or a limousine company. Banibaker has filed articles of incorporation for the four business ideas with the state.

“The lockdowns killed my event rental 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 an owner-operator who leased with the company.

“With the way things went, we hauled our first load on June 1, 2020. The owner-operator was a huge help with the scale-up, one unit at a time. A big part of my success was that he believed in me, committed and stayed through tough times, ”Banibaker said.

The biggest challenge for Azmi Freight at the start was cash flow, Banibaker said, explaining that he had to invest a lot of his own money into the operation.

Banibaker said he tried to work with the US Small Business Administration, but denied Azmi Freight an economic disaster loan. Other lenders Banibaker had used in the past rejected it due to industry constraints or years of commercial qualification.

“Access to credit was almost impossible in the first year of the pandemic. Each bank has reported that they have stopped making loans because of their paycheck protection program loans, ”Banibaker said. “Lenders who approved me were charging interest rates that would have bankrupted us in a month.”

The COVID-19 pandemic initially forced many small fleets and owner-operators to file for bankruptcy. More than 57% of PPP loans in the transportation sector have gone 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. It meant stretching every dollar until we had built our working capital, ”Banibaker said.

The trucking industry has entered historically high freight volumes by the end of 2020 and through most of 2021. The Outbound Tender Volume Index (OTVI.USA) on the platform FreightWaves’ SONAR recently came back slightly below the 16,000 mark, but most analysts expect freight volumes to remain strong through 2022.

The US outbound tender volume index continues to show high freight flows in 2021 compared to the previous two years. Graphic: FreightWaves SONAR (To learn more about FreightWaves SONAR, click here.)

Another challenge for Azmi Freight was that Banibaker had no previous relationship in the trucking industry. He had to develop his freight network from scratch.

“I was fighting against time. We did strictly one-off charges the first year, ”Banibaker said. “It is only recently that we have felt comfortable staying with the circle and network of brokers with whom we have developed a relationship. My daily life is really to promote and develop our network of customers.

Like many carriers, large and small, Azmi Freight has also had to deal with recruiting and retaining drivers.

“There is no shortage of drivers. When we post a list for a local trucking job, we are inundated with applicants, ”Banibaker said. “But post a job that requires you to be away for three weeks, and then the pool gets infinitely smaller. “

Banibaker said he understands how difficult it is to be a truck driver.

“It’s an exhausting way of life to be away. The vast majority of the time, the driver’s pay does not justify being weeks away from your family. Missing your child’s birthday or those little growing moments isn’t worth $ 70,000 a year, ”Banibaker said.

It has also been very difficult to find cohesive local and regional lanes that pay above the break-even point, Banibaker said.

For anyone considering starting a trucking business right now, Banibaker recommends trusting your gut feelings and knowing that spending money on problems won’t always solve them.

“No matter how desperate you are, if you don’t feel good with a candidate, don’t hire them. A truck parked without a claim is better than a truck running in violation, ”Banibaker said. “Putting money into a problem won’t solve it. Each recruiter promises you the best drivers. Each shipper will promise you the best shippers. But no one can replace your grain.

Click for more FreightWaves articles by Noi Mahoney.

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