Welcome to the WHAT THE TRUCK?!? newsletter sponsored by ‘zembles. In this issue, could a logistics stock be the next GameStop, spot market slumps, UPS Freight sold to TFI, pirates attack, bees on the loose and more — Dooner
Will logistics have its own GameStop moment?
GameStop, won’t stop — A little over a month ago a group of traders organized on Reddit’s WallStreetBets coordinated a short squeeze assault on GameStop ($GME). The run on the stock has finally gotten mainstream attention as shares skyrocket and hedge funds like Melvin lost billions of dollars.
Redditors, retail investors and firms capitalizing on the run are forcing those in short positions (traders betting against the stock) to hedge their own losses by buying up shares at higher valuations. As the price of the stock continues to skyrocket, those shorts are forced into the buyers market along with the traders running up the stock — sending the shares of stocks to even greater heights. In the case of $GME: the stock has gone viral.
Meme stocks — Understanding WallStreetBets is understanding meme stocks. A meme stock is usually one with potential for high volatility that also holds some sentimental value to its traders. GameStop is a meme stock because it’s amusing to that group to target the same place they used to prank call with Battletoads inquiries (and its business model is dying). Other targets are formerly beloved cellphone companies Nokia and BlackBerry.
BlackBerry? —Could a logistics stock be next? Sort of. Although the last time BlackBerry was a leader in smartphone sales was when “Harry Potter and the Deathly Hallows” was in theaters, the company has recently pivoted toward both data and logistics. Although only 7% of $BB stock is held by shorts, Reddit’s WallStreetBets is trying to squeeze that stock as well. BlackBerry went as far as to release a statement saying that there is no material reason for the surge.
Spot drops another 14 cents
Further down the spiral — The spot market sank again this week as the national dry van average according to TruckStop.com fell to $2.71. That’s a 14 cent drop from last week as it continues its week-over-week decline. Although roughly 1-in-5 contracted loads are still being rejected, a number of truckers have reached out to me to say that they’re on the wrong side of the average. What it may mean? More freight is moving to contract from the spot market.
Highest/lowest paying dry van lanes — $4.37 Elkridge, Maryland, to Hartford, Connecticut / $1.32 DFW to LAX.
UPS farewell to LTL
The sale — On Monday morning TFI International agreed to buy UPS Freight for about $800 million. The deal positions TFI in the U.S. with massive dedicated and LTL divisions. Prior to the purchase, TFI was already doing chunky numbers, bringing in $3 billion in revenue in 2019.
“We’re excited by this very attractive opportunity to extend our long-standing record of successful growth through acquisition, which will vault TFI International to one of the largest North American LTL carriers,” TFI CEO Alain Bedard said.
But why? — UPS Freight had posted $414 million in losses over the past three years. Satish Jindel, founder and president of consultancy ShipMatrix, doesn’t see that as a reflection of the health of the LTL industry. Instead, he looks at it like a minnow swallowed up by a whale that does not get the resources and attention it needs to compete with pure-play providers like Old Dominion Freight Line Inc. (NASDAQ:ODFL), Saia Inc. (NASDAQ:SAIA), Estes Freight Lines and XPO Logistics Inc. (NYSE:XPO).
Better not bigger — E-commerce is booming and UPS DNA is in parcel delivery. At a virtual meeting sponsored by LTL trade group SMC3, XPO Chairman and CEO Brad Jacobs said he understood UPS’ decision to focus on its core parcel business and to narrow its portfolio as a result, FreightWaves’ Mark Solomon reported. XPO sold its truckload business to TFI for $558 million in 2016.
What’s UPS Freight now? — Brown becomes red and blue as the company is rebranded as TForce Freight. TForce Freight will absorb UPS Freight’s 14,500 employees and will continue to serve UPS LTL needs as part of a five-year agreement.
Piracy sails again
Weekend tragedy — Pirates boarded the Turkish-managed container ship Mozart on Saturday in the Gulf of Guinea, FreightWaves’ Greg Miller reported. Though the crew went into lockdown in the ship’s citadel, pirates were able to breach their safe room with explosives. Nigerian pirates killed one crew member and took 15 for ransom.
“Borealis Maritime are offering their full support to the vessel’s technical managers, Boden Denizcilik, who together with authorities and professional advisers are currently working to establish contact with the missing crew and the kidnappers in order to secure their earliest and safe release,” Borealis said in a statement.
Escalation — This epidemic may seem like an issue from a decade ago when Somalian pirate attacks peaked, but from 2019 to 2020 the number of incidents was up 13%, with 195 in 2020. Of the 153 crew members kidnapped last year, 148 were in Africa’s Gulf of Guinea. Unlike Somalian pirates, who would hold ships for ransom, Nigerian pirates have taken to ransoming crews. Check out ICC’s 2021 IMB Piracy & Armed Robbery live map.
Life on the edge of the plank — Pirates target merchant vessels because security and monitoring is weak, especially outside of hotbeds. While the waters around Somali saw a measurable increase in security after 2011, other seas are not in the same boat. In the case of the latest abduction, “the pirates were aboard and working on the abduction for six hours, with no reported law enforcement or military interference,” according to The Maritime Executive.
COVID by land and by sea — COVID restrictions and congestion at ports are making life in global maritime trade perilous even without pirates. “The spread of new variants of COVID-19 in Brazil, South Africa and the U.K. is contributing to stricter crew-change restrictions globally,” warned the International Chamber of Shipping (ICS) last week. This means that some crews have been out at sea for over a year. In addition, dockworkers are also falling victim on land. The ILWU reported that as of last Sunday, a total of 694 union members working at the ports of LA and Long Beach had tested positive for COVID.
Buzzworthy
If you see a swarm of bees in the shape of an arrow, run — A tractor-trailer hauling a load of honeybees overturned Sunday on a Texas highway, releasing a swarm in downtown San Antonio, FreightWaves’ Noi Mahoney reported. Roughly $90,000 worth of damage was reported. That’s gotta sting.
WTT?!? Wednesdays
Matthew Mottola, co-founder and CEO of Venture L, author of ‘The Human Cloud’ — Matthew is getting us ready for our sales and marketing event and will talk about:
- How to position yourself as a freelancer to not get trapped in the dying gig economy.
- How companies can manage remote teams to avoid becoming obsolete.
- How to grow your freelance business by doing the one thing that seems counterproductive.
- How building sh*t in sweatpants is more valuable than wearing a tie.
Wasim Munayyer, president of The Munayyer Group — Wasim talks about finding a new role in a remote world and taking advantage of those opportunities.
Mario Pawlowski, CEO at iTucker — Mario just attended CES and is going to report back to us on all the awesome tech he saw at the event and how that will apply to freight.
Catch new shows live at noon ET Mondays, Fridays and Wednesdays on FreightWavesTV, FreightWaves LinkedIn and Facebook or on demand by looking up WHAT THE TRUCK?!? on your favorite podcast player.
Reunited for one day only
Getting the band back together — This Thursday, Kevin Hill and I reunite as Put That Coffee Down hosts the FreightWaves Sales & Marketing Summit virtual event. We’ll welcome Morning Brew’s Toby Howell, ‘zembles’ Greg Johnson, Ambition’s Mark McWatters and Lean Solutions Group’s Ryan Mann. Register for free and check out the full agenda here.
Now on demand
Getting paid and giving back with St. Christopher Truckers Fund, ‘zembles, more
What goes around comes around with EALGreen, DHL Supply Chain, Business Insider
Who runs the FreightTech world? Girls with Fetch Robotics and Fast
A little cowbell for the listeners
We did it — On Monday’s show we loved hearing from Shannon Currier of St. Christopher Truckers Fund, which reached its million dollar goal last year — and that was due in part to some of our amazing listeners who gave back. Let’s crush $1.1 million this year! Hear from Shannon here.
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One love,
Dooner