No truck with failure

Launching a successful firm on the back of 105 lorry trailers idle in a field is all a matter of Logistix, managing director Azim Hussain tells Brian Nicholls.

It’s in the alchemy of enterprise to be landed sometimes with an opportunity which is quite unexpected - perhaps never even imagined. Like 105 lorry trailers? Who but holders of an HGV licence would want to consider that? Well, three young entrepreneurs have had no cause to regret such a windfall.

In fact, they acquired the trailers and have built on their backs, within three years, a £6m turnover business, an international operation grown in the North East, and are now aspiring to double their revenues within two years. Their accounts already show profits beyond half a million. It’s quite an achievement, indeed, given that none of the three now employing 40 drivers and 30 office staff had trucked before. Their backgrounds lie in accounting, finance, IT, property dealing and business banking.

No CB Radio hint of Bears or Fender Benders. Yet here they are with a 400-strong client list of local traders and blue chip companies that include a royal flush of pharmaceutical giants – Pfizer, Shire and Novartis among them – as well as the diverse requirements of the Fred Olsen cruise firm and Fowler Welch and DHL, fellow deliverers in logistics.

The three with suddenly fast acceleratingwheels of fortune are cousins Azim Hussain and Azeem Sharif, plus Mansoor Hussain – none of them over 30, yet all driving their business, The Logistix Group, to become a miles-eating mammoth of the roads.

“I suppose it must look to have been a bit of a risk, us with our backgrounds buying 105 trailers like that,” says Azim Hussain, the managing director and eldest of the three at 29.

“But do you know,” he says, “we did have the opportunity to pick up 1,000!” All three live in Middlesbrough and are Teesside born except Azim, who was born in Edinburgh and moved to Teesside at 16.

He lived with his uncle, the late Dr Masood Anwar, then a lecturer in chemical engineering at Teesside University, while his father set up a textile operation in Belgium.

He studied mathematics, economics and computing at the sixth form Prior Pursglove College in Guisborough, then graduated in finance and accounting at Sunderland University.

A member of the Chartered Institute of Management Accountants, he went into banking and property, and also set up a personal property portfolio.

Azeem Sharif, the executive director and son of a retired senior chemist, studied computing at Leeds Metropolitan University, entered IT with Aker Kvaerner engineers at Stockton, where his father worked, and gained Microsoft Certified Professional status. He too set up in property, and later joined Azim in a joint property venture, Thornberry Properties. Trucking was far from their thoughts then.

Even at university, Azim and Azeem had been investing in real estate – all three property activities are still ongoing - and at one point Azim even bought into a restaurant at Rotherham. “It was an opportunity as I was coming out of university,” he explains.

“I went ahead and did it. I’ve always been entrepreneurial. We all have been.” In Leeds, where their agency was, they chanced up on the trailers offer. Azim recalls: “A massive company called Transrent had 6,000 trailers that it rented out to other hauliers. But it had gone into liquidation. We heard about it and acted. We bought 105, wanting to sell them on. We had got them so cheap that they were easily saleable in the open market.

“We thought, ‘yeah, there’s a little bob to be made there’. Then, from the centre of Leeds we looked into the haulage market and started trying to win business. We soon realised that we had some sort of sustainable business.

“So we thought, ‘yes, ok, we can take those and sell them on’, as people do. People buy and sell all the time. You don’t need to be an expert in logistics to buy something cheap and sell it on for a profit, do you? Nor do you need to be an expert to rent something out.

“So we started to rent the trailers out. We rang around and researched the market on the internet. But, to be honest, the level of research was such that we were acting first. The fact was, there were trailers sitting in a field somewhere when they could be earning money.

“So, the priority was to get them out. Various people wanted to buy them, but we decided to rent them out. From there, we went into transport. Still in Leeds, we started buying jobs – winning contracts - and selling them on.” The cousins were 26 then, and their enthusiasm soon drew in Mansoor who, today, is operations director.

At 20, he had been running his own business supplying IT products and software to businesses on Teesside and he was still only 21 when Azeem met him. He brought in the technical expertise needed for a complex amounting now to shifting 1m pallets a year.

The three of them fitted neatly as a management. Now, partly by acquisitions, Logistix has about 300 trucks and trailers, including those of the refrigerated and articulated type.

The group - which also provides groupage and consolidation, trans-shipping, warehousing and packaging operations – began with distributing and warehousing at Stockton, then additionally at premises double in size on Brunswick Industrial Estate in North Newcastle, it established a depot with vehicle maintenance and repair facilities.

Today it also has depots at Skelmersdale near Liverpool, where it parks up transiting trailers, and a 20,000sq ft warehouse storing up to 3,000 pallets in Manchester. The search is now on for a 70,000sq ft warehouse there.

The Logistix Group, a member of the Geodis-owned Fortec Pallet Network for the UK and Ireland, provides a specialised, time critical, express pallet delivery service in mainland England and Scotland.

Building a freight fleet is one thing; building an enviable client list in pharmaceuticals, foodstuffs and myriad other lines is quite another. This group seems to have achieved both. How are big-name customers won? Azim says: “When you do an acquisition you get the business connected with it. We got a distressed acquisition in Liverpool for example. The company was about to collapse. We realised we had to pump a relevant amount of money into the business to keep it afloat.

“But we were also able to move the contracts over. It was a decent purchase given those contracts. In Newcastle we also bought a company, merged it and won good contracts.” A subsequent prompt and safe delivery service is a follow-up requirement if contracts are to be retained, and Logistix seems to have fulfilled this side of obligations. Liverpool is the group’s main centre of activity in the pharmaceutical supply chain. From there it ships to many parts of the world, including Greece, Spain, Italy, France and Belgium.

In the North East, where lots of its grouping and consolidation of freight goes on, Port of Blyth is its contact point for local trucks gathering pallets throughout the region.

About 20,000 pallets a week are moved; 8,000 for international distribution. With the swingeing fuel tax, tightening legislation and the downturn in business generally, surely logistics is a tough business now? Azim is philosophical – or perhaps just realistic.

“Yes,” he replies, “it’s a difficult industry. But what industry isn’t just now? Property is difficult, wholesaling is difficult. Even running a shop is difficult. What you have to do is earn your money. I’ve had a dabble at a few things. With logistics and the haulage industry, getting customers and winning business is not all that relatively easy. But it can come.” The best way it can come, experience tells them, is by acquisition. “We’re on the trail at the moment,” he says.

“I’m actually buying a business now at Ilkeston, near Nottingham. It’s only a mile from the M1 and it gets a lot of work from big French companies. “What attracted me is its big workshop facility. So as trucks move up and down the M1, they can trans-ship and go in for a service. Swap trucks, swap trailers - it’s good integration from the workshop point of view.

It also gives a chance to consolidate traffic in the middle of the country.” It also moves the group network towards other points south besides Norfolk, where it has use of a site for refuelling and transshipping, and on towards mainland Europe, which accounts for 40% of the business.

“I’ve just come back from Amsterdam,” hediscloses. “We looked at a company there and that could help consolidate our international work. We’re also talking to business agents in Paris. Belgium too is a key target.

A presence in these places could help our fuelling and servicing costs.” Vehicle fuel is cheaper across the Channel because governments there make lower tax demands on road transport.

“We already fuel up there when we can. But with a site there you can also have bunkering. There are so many opportunities,” Azim reflects. The three partners are the sole investors, yet no bank loans hover like a guillotine.

“We do have an excellent relationship with HSBC and Close Asset Finance, and we have a factoring facility with BB Finance, but no loans,” Azim affirms.

“Bear in mind, if you get 105 trailers for 40% of market value you have immediately acquired equity. Our mergers have also created equity. Turnover level goes up and equity is created too. Our Ilkeston deal will eliminate a garage down there, slowing the costs of other sites, and equity is again created.

“If we found another business in Newcastle now we could create equity by eliminating the depot there and moving things to the one we already have in the city. It’s not a matter of purchasing power, but power within the group,” he explains.

“Hiring trucks and trailers minimises labour costs. It’s not turnover intensive, but it brings in a decent income. A decent part of our income comes also from storage, and then there’s container stuffing and packaging, too. We’ve been active in business for quite a while, and when you want to do something, you can.” Also, he chuckles, of the three of them only Mansoor is married with two children.

He and Azeem, as bachelors, have fewer domestic commitments. Even so, Logistix streamlines as it grows; the risks surrounding the industry - particularly at this difficult time – are not being underestimated.

Cost analysis is made monthly. Nominal ledgers are scanned. Where have costs risen, where can improvements be made? “A lot of the big boys are on an acquisition spree. Or they are trying to take small rivals out by pricing.

The whole industry is consolidating,” Azim says.

“Numbers are declining because small firms are being bought out or are going to the wall. Probably about 80% are going to the wall. We have grown in recession. But a lot of other firms have had a lot of fixed costs and cannot be flexible. And yes, for everyone in this climate, turnover has dipped.”