👎 Five Losers of 2023

Good Wednesday Morning. Today, we take a look at some of the worst-performing freight stocks this year and the reasons behind their crashes. What's Cooking in Freight? Aldi's impressive growth trajectory, a noticeable shift in transportation toward rail, and a monumental drug seizure at Port Everglades. Also, truckers urge FMCSA to force brokers to pay for detention time, and Mack wants you to subscribe to its electric trucks program.

In today's email:

• Three Freight Headlines: Aldi's strategic growth analyzed, domestic rail volumes challenge trucking, and a $448M drug bust at Port Everglades.
• The Five Worst-Performing Freight Stocks
• Around the Freight Web: Diesel prices dip, truckers demand broker payment for delays, and US debates ending tomato trade with Mexico.
• Carrier of the Week

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🐔 WHAT’S COOKIN’ IN FREIGHT

🛒 Aldi's Growth Analyzed. Over the past decade, Aldi has consistently opened around 100 stores annually. Key to its strategy are smaller stores averaging 12,000 sq ft, stocking around 1,600 products—significantly fewer than other supermarkets. This lean approach, including limited in-store services and a high percentage (90%) of private-label items, contributes to Aldi's cost-saving model. However, this efficiency-driven setup has led to mixed customer feedback on store cleanliness and item availability. Despite the criticisms, Aldi's emphasis on value has seen it thrive during economic downturns.

🚓 Massive Drug Seizure at Port Everglades. The U.S. Coast Guard made waves, offloading a colossal 33,200 lbs of cocaine and 12,400 lbs of marijuana at Port Everglades. Worth a mind-blowing $448 million, this operation is a testament to the combined strength of numerous U.S. agencies and their fight against transnational organized crime. "This offload is about national security,” emphasizes Vice Adm. Kevin Lunday.

🚂 Rail Experiencing Peak Season at Price of OTR. Amidst logistics industry shake-ups, domestic intermodal container volumes hit their highest peak since 2021, overshadowing long-haul truckload demand. This shift, spurred by shippers leaning into rail's better services and rates, especially on routes exceeding 800 miles like Los Angeles to Chicago, hints at challenges for the truckload market. Though railroads faced pandemic-induced congestion, significant efficiency leaps in CPKC's Mexican operations—showcasing up to 31% improvements in network speeds—are promising. The railroad's edge at major international gateway Laredo further cements its rising dominance.

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The 5 Worst Performing Freight Stocks of 2023

On Monday, we shed light on the best performers in the freight industry, today we turn our gaze to the other side of the coin. Here’s a look into the five freight stocks that didn't quite hit the mark this year and the reasons behind their setbacks.

P.A.M. Transportation Services, Inc (PTSI) -33%

Factors behind P.A.M's disappointing performance this year:

• Earnings Decline: Profits fell over 60% in Q2, with Q3 also seeing double-digit losses due to an unfavorable truckload market.
• Market Challenges: A tepid truckload market negatively impacted the company's overall performance.
• Stake Reduction: Victory Capital Management's sale of 47.1% of its shares may have influenced the stock price dip.
• Profit Margin Shrinkage: Year-over-year profit margins fell from 11.4% to 6.2%.

Forward Air Corp (FWRD) -38%

While Forward Air Corp stock grew over the summer, the stock took a significant dive recently. The main factors contributing to this dip include:

• Planned Acquisition: Forward's planned $3.2 billion Omni purchase faced Wall Street criticism and strategic complications. The merger has faced lawsuits and leadership change efforts by Ancora Alternatives.
• Acquisition Abandoned?: Forward considered dropping the Omni deal due to mounting opposition. However, Omni asks court to force Forward to seal the deal.
• Earnings Disappointment: Forward missed Q2 earnings, with Q3 outlook worse due to decreased demand for brokerage capacity. Consolidated revenue of $402 million was 22% lower YoY.
• Shipping Volume Decline: Q4 2022 saw a decline in pieces per shipment, impacting share value.

Yellow Corp. (YRCW) -43%

With the Yellow's closure, it's no surprise why the stock plummet followed:

• Bankruptcy Plans: Yellow ceased operations due to a failure to refinance its $1.5 billion debt, exacerbated by a $700 million pandemic-era loan and a nearly $7 million Defense Department lawsuit settlement.
• NASDAQ Delisting: A probable NASDAQ removal is expected.
• Employee Disputes: Failure to support employee benefits like pensions and health plans intensified internal conflicts. With a strike averted, the company shut down soon after.

ZIM Integrated Shipping Ltd -54%

Critical challenges faced by ZIM this year:

• Plummeting Shipping Rates: A 75% drop in container shipping rates from June 2022 to 2023 severely reduced earnings.
• Earnings Below Expectations: ZIM's performance did not meet analysts' projections, causing investor disappointment. The company's Q1 revenue saw a 63% decrease YoY.
• Vessel Redelivery Costs: A non-cash after-tax cost of $51 million was incurred due to the redelivery of specific vessels.

Freightos (CRGO) -78%

The company with the most significant drop on our list is Freightos, the "Expedia of Freight," which went public earlier this year in a SPAC deal.

• Diminished Revenue Projections: Freightos slashed its 2023 revenue growth projection to 15%-21% from 87%.
• Financial Losses: Despite a 71% revenue increase to $19.1 million, the company recorded an operating loss of $24.3 million.
• Dramatic Stock Dip: The company's stock has plunged, with shares down to $4.41 from an initial $10.49, resulting in a 73% loss for shareholders.

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AROUND THE FREIGHT WEB

📉 Diesel Drops Again. Diesel prices dropped 9.1¢, almost offsetting last week's increase, with every region in EIA's survey seeing a decrease.

⏰ Truckers' Stand on Detention Time. Truckers urge FMCSA to require brokers to compensate for detention time, emphasizing its impact on road safety.

🍅 US-Mexico Tomato Trade at Crossroads. The U.S. contemplates ending the 2019 Tomato Suspension Agreement with Mexico, raising concerns about potential impacts on pricing and trade.

📊 For-Hire Trucking Index Insights. Volume Index falls in September, while Pricing Index shows an upswing. Capacity Index indicates gradual contraction in for-hire fleets. Catch the full report from ACT Research.

🚚 Mack's Electric Truck Subscription. Mack Trucks introduces an all-in monthly subscription for its new medium-duty electric trucks, aiming to overcome the high initial costs.

FREIGHT CONFERENCES WE'RE ATTENDING

• Feb. 5th-7th, 2024: Manifest Vegas, February 5 - 7, 2024, is the world's largest global supply chain & logistics tech event, bringing together Fortune 500 global supply chain executives, logistics service providers, cutting-edge startups, venture investors, and technology leaders.  Join 4,500+ supply chain innovators to foster new strategies and relationships. Receive $200 off your ticket with our exclusive link.
• November 7th-9th, 2023: F3, taking place in Chattanooga, TN November 7th-9th. The heart of Freight Alley and home to FreightWaves—will come alive once again with the largest festival in freight November 7-9, 2023. Bringing together experts, entrepreneurs, industry leaders, educators and more to discuss the key factors impacting freight markets and the latest trends pushing our industry forward. Receive $500 off your ticket with our exclusive link.

CARRIER OF THE WEEK PRESENTED BY LOSTFR8.COM

Founded in 2006, MMM Express XPD, based in Winder, GA, boasts a versatile fleet serving all 48 states. Specializing in expedited shipping, including final mile and lift-gate services, they offer 24/7 expert management, a commendable safety record, and 100% satisfaction guarantee. For reliable, professional carrier solutions, reach out to MMM Express XPD. Click here to view their Lost Fr8 Profile.

Freight Meme of the Day

Also, check out:

• 🎧 The FreightCaviar Podcast. Listen to this week's podcast on Spotify & Apple Podcasts.
• ☕️ FreightCaviar Fall Essentials: purchase a FreightCaviar sticker, hoodie, long-sleeve, or mug by clicking here. Use code FC10 to receive a 10% discount.
• 🤝 Master the essentials of freight brokering with Freight360's comprehensive online course, tailored for both aspiring brokers and current agents looking to enhance sales and operations. Receive $150 off your course with our code FREIGHTCAVIAR. Click here to learn more.