200,000 drivers didn’t disappear overnight. Plus: Dalilah’s Law targets foreign dispatch, a broker ran a $1M USPS scam, the dashcam war escalates, and more.
B1 visa drivers and illegal operators are not the same thing. Here's the difference and why conflating them is hurting the industry.
Milton's net worth reached at least $3.1 billion in September 2020, largely due to his 25% stake in Nikola, which was valued around $12.4 billion after going public in June 2020 through a special purpose acquisition company.
Good Wednesday Morning. Today's feature focuses on disgraced Nikola Founder Trevor Milton, from visionary to fraudster facing a four-year prison sentence. Also in the headlines: a $10 million drug bust from a spicy shipment, the rerouting of $35 billion worth of cargo from the Red Sea, and why FedEx stock took a 10% hit.
In today's email:
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🐔 WHAT’S COOKIN’ IN FREIGHT
🌶️ $10M Drug Bust in Jalapeno Paste. At the Otay Mesa Cargo Facility, U.S. Customs and Border Protection officers discovered narcotics worth over $10 million hidden in a shipment of jalapeno paste. A K-9 unit alerted to the shipment, leading to the finding of 349 packages of methamphetamine and cocaine weighing a total of 3,684 pounds. The driver of the shipment was detained for further investigation. This seizure is part of ongoing efforts by the CBP to combat drug trafficking and follows a 14,000-pound narcotics seizure back in November.
🚢 $35 Billion Cargo Shifted Amid Red Sea Tensions. In response to security threats from Houthi militants in Yemen, shippers have rerouted approximately $35 billion worth of cargo away from the Red Sea. This major diversion, affecting 57 container vessels, comes as a direct consequence of heightened tensions following the Israel-Hamas war. The rerouted vessels, carrying about 700,000 TEUs, are now navigating longer paths around Africa. The U.S. has responded by forming an international task force to address these maritime security concerns.
📉 FedEx Stock Dips 10% on Earnings Miss. FedEx experienced a 10% drop in its share price following a shortfall in its second quarter, which spans from September 1st to November 30th. The company reported earnings of $3.99 per share, missing the expected $4.19, and revenues of $22.2 billion, slightly below the forecasted $22.37 billion. FedEx attributes this downturn to a weak holiday season. In response to this performance and facing stiff competition, especially from UPS, FedEx is implementing cost-cutting measures and consolidating operations to maintain its market position.
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Trevor Milton, once a visionary in the electric and hydrogen-powered vehicle industry, recently faced a downfall, culminating in a four-year prison sentence for fraud. Here's a look at how the Nikola Corporation founder arrived at this point.
In 2014, Milton founded Nikola Corporation to revolutionize the automotive industry with battery-electric and hydrogen fuel cell powertrains. His entrepreneurial journey began in 2009, when he launched dHybrid, later acquired by Worthington for $15.9 million. Nikola initially soared, with Milton making bold claims about its technological advancements and partnerships, including with companies like Powercell AB and Bosch
Nikola Corporation filed a $2 billion patent lawsuit against Tesla, alleging that Tesla's semi-truck design infringed on several of Nikola's patents. Nikola claimed this infringement could cost it $2 billion in market share. Tesla denied these allegations. The legal battle lingered until October 2023, when the case was closed after neither party responded to court orders issued in July.
Milton's fall began with a report by Hindenburg Research in 2020, accusing Nikola of deceptive practices. It claimed the company's first vehicle, the Nikola One semi-truck, was not self-propelled as initially portrayed. Nikola admitted the truck had been placed on a hill to create the illusion of functionality.
Federal prosecutors charged Milton with making numerous false statements to investors. He falsely claimed Nikola had created a “fully functioning” semi-truck prototype and an electric and hydrogen-powered pickup truck, known as the Badger, from scratch. In reality, Nikola's prototypes were incomplete, non-operational, and relied heavily on parts from third parties. Additionally, Milton misrepresented Nikola's hydrogen production capabilities and the nature of customer reservations for its trucks.
Milton's actions severely impacted retail investors, many of whom were inexperienced and invested during the COVID-19 pandemic. His fraudulent scheme led to significant financial losses for these investors, with some losing their life savings. Nikola's stock value plummeted following the revelations, and the company faced substantial reputational damage.
2023: Milton sentenced to four years in prison.
On December 18, Milton was sentenced to four years in prison for securities fraud and wire fraud. Despite his claims of innocence and request for probation, the judge emphasized the importance of honesty in corporate communications and did not accept Milton's explanation of speaking with enthusiasm without intent to harm investors.
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AROUND THE FREIGHT WEB
🚛 Freight Thread of the Year? An amusing debate ensued on X (formerly Twitter), between Ken Adamo (Chief of Analytics at DAT) and others about broker rate transparency.
👔 CHRW Leadership Change. Six months into his tenure, CHRW's new CEO discusses plans to revitalize the freight brokerage, focusing on large language models and lean management.
✈️ Air Freight Boost from Shein, Temu. November saw a 5% increase in global air cargo demand, driven by e-commerce giants Shein and Temu.
🚚 Greenscreens.ai Multi-Stop Lane Pricing: Greenscreens.ai introduces a unique multi-stop truckload prediction feature, using AI for more accurate and efficient freight pricing.
🚛 Trucker's Political Forum. A Truckers Townhall at the Iowa 80 Truckstop on Thursday, December 21, will feature Republican presidential candidate Vivek Ramaswamy, offering truckers a chance to voice their concerns and questions.
🌽 Corn Trade Shift. Brazil surpasses the US as China's largest corn supplier, reflecting Beijing's strategy to diversify import sources amid growing demand.
📦 DB Schenker Sale: Deutsche Bahn initiates the sales process for its logistics arm, DB Schenker, potentially valued at up to 20 billion euros.
🚢 Red Sea Risk Rises. Insurance rates for ships transiting the Red Sea soar due to persistent attacks, ranging from 0.05% to 0.1% of the ship's value, up from 0.03%.
FREIGHT CONFERENCES WE'RE ATTENDING
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FREIGHT MEME OF THE DAY
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