Fleet owner convicted of lying to FMCSA

Trucking News and Briefs for Friday, 26th June 2024:

DOT believes that marijuana will continue to be a no-no among truckers

During a House Committee on Transportation & Infrastructure Hearing on Thursday, Transportation Secretary Pete Buttigieg stated that the Department of Justice proposal to change marijuana from a Schedule III to Schedule I drug does not impact his agency’s rules for drug screening.

Buttigieg stated that “any impaired driving, be it alcohol or marijuana, or any other source — is, ofcourse, a major concern for safety.” “Our understanding is that the rescheduling marijuana from Schedule I into a Schedule III would not change DOT’s marijuana test requirements for the regulated community.”

In May , the Drug Enforcement Administration (DEA) and DOJ published an notice of proposed rulemaking for reclassifying marijuana as a Schedule III substance. Schedule I drugs are substances or chemicals that have no accepted medical use but a high abuse potential. Schedule III drugs have a low to moderate potential for physical or psychological dependence.

As a Schedule I drug today, marijuana is classified with heroin, lysergic Acid Diethylamide (LSD), and ecstasy. Schedule III would include medications such as low doses testosterone and codeine.

[ Related to Biden officially commits marijuana regs overhaul: what CDL drivers need know]

Last week, the American Trucking Associations sent Buttigieg an email expressing their concern about the DOJ proposal and asking Buttigieg whether U.S. The DOT will continue to have the authority and resources necessary to test for marijuana use among commercial motor vehicle drivers, and other safety-sensitive workers in transportation.

Buttigieg pointed out that marijuana is not classified or scheduled for private individuals who perform safety-sensitive functions and are subject to drug tests. Instead, marijuana is identified using its name. “We do not believe it would have any direct impact on this authority if the classification of marijuana changed,” he said.

Buttigieg said that his department is evaluating any indirect effects marijuana rescheduling could have on drug tests. However, anyone currently subject to DOT marijuana testing would, in his opinion, remain subject to drug screenings if the drug were rescheduled.

Marijuana and Alcohol remain the most commonly detected drugs in impaired-driving crashes that result in serious or fatal injuries. Between 2000 and 2018 the number of fatal crashes involving marijuana has more than doubled.

Marijuana has been legalized for recreational use in nearly half of the United States (24 states), but it is still illegal for commercial drivers, no matter where they live, what state they drive through, or even if they are driving in. –Jason Cannon

[ Related: What reclassifying marijuana could mean for truckers and small fleet employers]

Former trucking owner convicted of lying to FMCSA

A federal jury recently convicted a trucking company owner from Rochester, New York for making a false statement to Federal Motor Carrier Safety Administration as well as conspiring to do so in relation to an chameleon carrier scheme. The maximum penalty for the charges is five years in prison, plus a fine of $250,000.

The charges for false statements on the OP-1 authority application form are not the same as perjury charges. Perjury is a punishment for deliberate misstatements.

According to Alex Lockie of Overdrive, FMCSA’s legal team indicated that they don’t believe that perjury would apply specifically to false information on the form. FMCSA told Lockie that the cases FMCSA has referred to DOT OIG are usually considered under a federal law that prohibits false statements’, which is broader, and would catch things such as false information on a document.

According to a release from the IRS Tony Kirik a.k.a. Anatoliy KIrik operated a trucking company worth millions of dollars called Dallas Logistics. Kirik submitted false documents to FMCSA when he applied for interstate operating authority. Kirik also provided false information and statements during the FMSCA’s compliance reviews and audits of his trucking business.

Kirik created new companies under the names of various family members and an employee to fool FMSCA about the safety of the trucking business. In reality, the new companies were just an extension of the previous company.

[ Relatedahref=”https://www.overdriveonline.com/regulations/article/15677613/are double-brokers-committing perjury-with” target =””>Are entities that double-broker committing perjury?” FMCSA weighs-in]

In the original complaint filed by the U.S. Government against Kirik in the U.S. District Court of Western New York, it was noted that Dallas Logistics purportedly operated out of Dallas Texas and was controlled by a person identified as “J.Z.”, and was unaffiliated with motor carriers. During a review of compliance, it was discovered that Dallas Logistics was not located in Dallas, Texas but rather was located and operated out of a location in Rochester New York.

Further investigation revealed that Dallas Logistics is an affiliate of Orange Transportation Services. Another carrier owned by Kirik, Orange Transportation Services had a poor safety rating.

The complaint stated that “had the affiliation between Orange Transportation Services, and Dallas Logistics, been disclosed, Dallas Logistics would have had a negative impact on its rating.” “Specifically, Dallas Logistics would receive a safety rating of Conditional at best.”

IRS press release: At trial, it was proven that Kirik’s action jeopardized safety on the nation’s highways by allowing unsafe tractor-trailers to travel.

The verdict is a result of an investigation conducted by IRS Criminal Investigations (IRS CI), directed by Thomas Fattorusso Special Agent in Charge, New York Field Office, and Special Agents of Department of Transportation Office of Inspector General under the supervision of Special Agent in Charge Christopher Scharf Northeast Region.

The sentencing will take place on October 28, 2024 before U.S. district judge Charles J. Siragusa who presided over trial.

[ Related to: New York trucking company owner charged with chameleon carrier scheme]

I-17 closes Monday night

Interstate 17 will be closed in both direction at J.W. Powell Boulevard (Exit 3337) south of Flagstaff in Arizona will be closed from 7 p.m. on Monday, July 1 to 5 a.m. on Tuesday, July 2 for bridge construction.

During the closure, a 10-foot vehicle width restriction is also in place.

The Arizona DOT has announced that traffic will be detoured along the off-ramps and on-ramps of the J.W. Powell interchange will be closed overnight. Crews are constructing a new bridge for J.W. Powell Boulevard crosses the interstate.

ADOT said that drivers should allow extra time for travel and be prepared to merge safely as they approach the project’s construction zones near Pulliam airport and Fort Tuthill Park.

ADOT’s $8.2million project to add the J.W. The Powell Boulevard bridge will be completed in the fall of 2024. The existing bridge will be demolished after the traffic shift to the new structure is completed later this year.

Iowa 80 celebrates 60th anniversary with custom-made cake at Jamboree

The Iowa 80 Truckstop will host a 60th Anniversary Celebration on Friday, July 12 as part of the Walcott Truckers Jamboree.

Charm City Cakes in Baltimore, Maryland, will create a cake replica of the Super Truck Showroom at the truck stop to mark the occasion. It will be a truly unique cake. “We’re excited to share our 60th anniversary with everyone,” said Iowa80 VP of Marketing Heather DeBaillie. She said that the cake would feature the yellow bobtail “Compatch Cadillac” which is displayed in the Super Truck Showroom along with an Iowa landscape, and the iconic Iowa 80 logo.

The cake will be served in the Super Truck Showroom at 2:30 pm on Friday, July 12. The public is invited to come and see the cake, as well as have a piece.

The Iowa 80 Truckstop opened its doors for the first time to the public on Friday, June 4, 1964. The facility included a small store, a restaurant, and two diesel pump. Iowa 80 is now 85 acres of developed land and offers over 900 truck parking spots, 10 restaurants, and other driver amenities.

The 45th annual Walcott Truckers Jamboree is scheduled to take place July 11-13, at the Iowa 80 Truckstop located in Walcott. Parking and admission are free. Shuttles will run from the parking lot to the event site. You can find the complete schedule of events here.

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How FSI firms can use AI to enhance cybersecurity

With generative AI, UK companies in the financial services sector have the opportunity to unlock new opportunities through innovation. This can help them boost resilience as cybersecurity threats increase. They can eventually better serve their customers, increase growth, and contribute to making the UK an AI global leader.

According to , the Citi of London Corporation, the financial services industry is vital to the UK’s growth. It represents approximately 12% of its economic output, and provides about 2.5 million jobs. It is important that the financial services industry continues to grow. It is also vital that the UK strengthens its cybersecurity capabilities.

AI is also expanding, creating new opportunities. FSI companies are increasingly implementing AI as part of their digital transformation from risk and compliance, to marketing and sales. This transition also implies an increase in data, which is something to be considered and requires enhanced data protection.

Customers and consumers are also becoming more aware and excited about AI’s potential to streamline and modernise core banking and payments. Even cybercriminals use AI to launch sophisticated attacks, such as phishing campaign to exploit the trust and extort cash from individuals and organisations.

It’s no secret FSI organisations operate in a challenging environment. This is mainly because of macro factors. They have to deal with regulatory pressures, an uncertain economy and a geopolitical environment that contributes to the rise in cyberattacks. They are also faced with a shortage in cyber experts that can adequately prepare them for cybersecurity threats.

There is a general concern about the impact of cyberattacks on UK FSI companies and their growth. Cyberattacks cost the UK around PS87 billion per year.

A stronger AI-based cybersecurity programme at UK companies and in particular FSI companies could save billions of pounds for the UK economy, and catapult it to the position of AI leadership on the global stage. It is therefore crucial that FSI companies invest in technology to remain competitive and prepare for a future of uncertainty.

According to research, cybersecurity is a top priority for FSI firms. FSI decision-makers also believe that the benefits of AI in protecting against cyber threats outweigh their risks. More than 60% of FSI executives see AI as a way to improve cybersecurity and reduce cyber risks. FSI companies are ready to use AI tools to gain a strategic advantage and strengthen cybersecurity.

Unlocking AI potential

AI has many benefits for FSI organizations, and it can be used in a variety of ways to strengthen their cybersecurity programmes.

AI can be used as an assistant in order to enhance cybersecurity expertise within teams and fill any skills gaps that are not being addressed due to a labour shortage. AI cannot replace cybersecurity experts but it can augment their capabilities.

AI can also be used to plan and run tabletop exercises in order to minimise the likelihood of an attack or prevent it. AI can help plan and anticipate attacks and create protocols that are well-communicated and clear.

AI can assist in preventing the spread of threats and identifying them early, even if an attack occurs. They can automate certain tasks, such as incident response strategies and recovery strategies. AI can isolate virus-affected assets quickly to prevent the spread of the virus. Tools that use generative AI can simplify the reporting required by security professionals following an event, and share the results with the rest the organisation.

Now is the time to integrate AI into security operations in order to benefit from these AI capabilities. They must adopt best practice that will aid in the proactive planning, implementation and use of AI-based cybersecurity system.

Ethics is a fundamental element in AI-based systems. Responsible AI must be built on a foundation of trust, security, and risk management. It is essential that AI-based security systems respect the privacy and confidentiality of customers, employees, consumers, and third parties. These systems need to be safe and reliable.

FSI firms must also be clear about how AI-related risks and controls map across the three lines of defense within an organization, namely, business management, internal audit, and risk functions.

AI-enabled technology must be carefully adopted throughout the organisation to ensure that this proactive AI implementation is successful. In fact, FSI companies should pay attention to the integration of new AI solutions with existing processes and system. Flexibility and agility is key.

FSI organisations should also prioritize spending on buy-and build configurations and off the shelf solutions that provide a strong return on investment. To stay ahead of a rapidly evolving market, they must focus on open-sourcing research breakthroughs and capitalise on knowledge exchange.

AI-based systems can help FSI organisations enhance their cybersecurity capabilities by following these best practices. They can increase their resilience and ensure the future security of their businesses. They can also increase the country’s overall cyber resilience. This is the basis for economic growth in the future and affirming the UK as a global leader in AI and an economic power.

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Cybersecurity for Australian miners: a must-have for the future

Appian Resources, Energy and Utility Account Director Justin Grose explores why data security is important in Australian mines.

Cyber-attacks of a sophisticated nature are increasing exponentially in number around the world. Mining, for example, is more exposed to cyber-attacks than other industries.

Mining operations are particularly vulnerable due to their critical nature. Cyber-security incidents can pose significant threats to productivity, safety, privacy, and future planning.

A high-profile data-security incident involving a rare earth miner in Western Australia compromised commercially sensitive material, including future potential projects.

Staff details were also compromised, resulting in the possible exposure of employee passports and details of medicals and travel requests. Training and certification details and even police clearance documentation could have been exposed.

Mining organisations that operate in remote and diverse locations are at greater risk because some sites have lower security maturity than corporate networks.

It is important to protect commercially sensitive and private data as the mining industry moves towards automation and digitalisation of key processes in order to improve productivity and site efficiency.

Connecting data securely with data fabric

A data breach in the mining industry can be devastating because of the sensitive nature of information such as geological maps and operational plans.

Data security is essential to protect personnel and operations from financial loss, competitive disadvantages and safety risks.

Data fabric is an innovative approach to managing and integrating disparate data across disparate system without moving it away from its original location.

This method ensures strict access controls and data safety by creating a virtualised data layer over existing data resources, allowing seamless integration and access while minimising the risks of data breaches in transit.

By keeping data at its original location, mining firms can maintain their existing security protocols and access control while still enabling integration and use across the organisation.

This reduces the risks of unauthorised access to sensitive information and ensures only authorised personnel have access.

Leveraging private AI to control data

Organisations must be careful not to expose their data as the mining industry looks to improve site productivity by modernising operations. This includes automating and improving activities with artificial intelligence (AI).

Private AI is a major consideration for all Australian mining companies. It refers to artificial-intelligence systems that are deployed in an organisation’s infrastructure rather than relying upon external, cloud solutions.

This ensures that sensitive information, such as organisational financial data, merger and acquisition targets and site surveys, remains on premises, enhancing security, and compliance with local laws.

Cybersecurity threats are very real to AI systems used by miner. Cyberattacks on AI models for predictive maintenance, exploration analyses, and operational optimization can also lead manipulated data. This can result in flawed predictions, and potentially dangerous decisions.

Private AI mitigates the risks by allowing businesses to leverage AI, while still maintaining control over their own data.

Private AI systems operate within the secure environment of a mining company, ensuring sensitive data is not left outside. This reduces the risk of data leakage and ensures compliance to data privacy regulations.

Miners can customize AI applications to meet specific requirements for security, ensuring AI models and algorithms are used in a controlled and secure manner.

Building security into IT Infrastructure

A robust IT infrastructure is essential to a secure data environment. Data protection can be significantly improved by integrating security measures into the IT framework of a mining organisation.

Adopting zero-trust ensures that all users – whether inside or outside of the network – are authenticated and continually validated before they gain access to applications and information.

This is especially important in the mining industry, where companies often have a mix of permanent and contract staff who need to access their system.

Secure cloud solutions protect data with advanced encryption and access controls. They provide a resilient, secure environment for data processing and storage.

Protect your operations with the right provider

Mining companies that want to improve their operational efficiency and data security must choose the right provider.

Appian specializes in unifying data, optimising critical business process with industry-leading security solution.

Appian’s robust frameworks for security and cutting-edge technologies such as data fabric and private AI can help mining companies protect sensitive information, optimise their operations, and ensure compliance to industry regulations.

Click here to learn more about Appian’s offerings for the mining industry.

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NGO denounces increasing air freight pollution

A pressure group for the environment has denounced the increasing emissions of the air cargo industry. This is due to global supply chain problems and the rise in online commerce.

According to Stand Earth (a US-Canadian organization), pollution in the air freight industry has increased by 25% since 2019.

A report by the group fourth found that market distortions due to Covid-19 pandemic travel restrictions, and disruptions in the supply chain boosted the air cargo sector.

The report stated that “prior to the Covid-19 epidemic, air freight was dominated by perishables, time-sensitive delivery, and luxury goods.”

The pandemic forced the industries to switch to air freight in order to transport a wider variety of goods.

It said that “what many thought was a pandemic abnormality is not only continuing but in some cases even growing.”

The report stated that “While FedEx UPS and Amazon celebrate the new norm in the shipping business, their success comes with a terrible cost.”

The “Big Three” in the air freight sector are responsible for 27 percent (or 4,45 million US homes) of the global greenhouse gas emissions.

Stand Earth criticized Amazon’s rapid delivery strategy — which includes same-day or even overnight delivery with Prime membership — as a factor in the growth of air freight emissions.

According to US Commerce Department data, online commerce has grown exponentially in recent years. It is expected to reach $3.6 trillion by 2023 from $2.1 trillion this year.

The report of the group focuses on the air freight companies that specialize in this type of transport. However, they only make up half the market. Commercial airlines carry the rest via passenger flights.

According to the airline trade association IATA 62 million tonnes of air freight is expected to be transported this year, an increase of 7.6 percent from 2019.

Air freight represents only a small percentage of the global trade volume, but it accounts for 35 percent of the total value.

tq/rl/lth

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CMV’s molten aluminium spill will close I-165 until next week

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The funding of female-led businesses involves more than just hiring female venture capitalists

Editor’s Note: This article was originally published by The Conversation on their website. The Conversation is a nonprofit, independent source of news and analysis from academic experts.

Venture capital is important in helping start-up businesses. The field has a persistent gender gap.

Surveys and research indicate that more than 4/5 of partners in venture capital firms in the United States are men. In a similar vein, VC firms tend to direct their funding to businesses led by men: According to Crunchbase, only 1 in 4 VC dollars were allocated to female-led companies in 2023.

For years, advocates of gender equity have called on firms to hire more women as senior venture capitalists. The idea is to have more women making investment decision will translate into more funding being provided for women-led business.

As a professor in entrepreneurship, I was curious to know if the facts supported that idea. My co-authors analyzed funding decisions made by more than 150 large and mid-sized VC firms in the United States over an eight-year period.

When women don’t support women

What we discovered surprised us: firms with more female senior venture investors in their decision-making groups offered less funding to businesses led by women. Each additional senior female venture investor in a firm’s decision-making group is linked to a 0.46% decrease in the percentage of newly funded women led businesses in its portfolio.

The average funding round for our sample was $5.4m, which means that adding an extra female senior venture investor to a VC group results in women-led companies receiving around $25,000 less funding.

My team does not blame individual female venture capitalists for this situation. Our research was not intended to assign personal responsibility. We found that more women in VC circles were associated with less funding for women-led companies.

This may appear to be a paradox. It’s in line with previous research which shows that male dominance is entrenched on the U.S. entrepreneurial financing market. According to our interviews of female entrepreneurs and senior Venture Capitalists, it fosters a cultural where women tends to defer to male counterparts.

Women in male-dominated environments may also be motivated to distance themselves from women who are less powerful to improve their status. This could explain why female venture capitalists are reluctant to fund women-led businesses.

The importance of trust and neutrality

My team also found that two key factors can reduce this effect.

First, we did not see the same negative effects when senior venture capitalists had previously worked together in a group of decision-makers. This suggests that trust is important.

When a group consists of senior venture capitalists who are politically neutral, as we determine by looking at public records of political donations, the negative effects for funding women-led business are reduced. This is because political impartial decision-makers facilitate group communication and consensus-building.

Our findings suggest VC firms may want to explore innovative ways to combat gender bias. They could, for example, invite female investment professionals with connections to many senior venture capitalists from outside to work as consultants. These professionals could independently assess investment proposals and provide advice to VC firms’ decision-making groups.

In some cases, efforts made to promote women in the workplace can pay off. In one study, the inclusion of female directors in the boardroom was linked to calls for greater gender equality.

Our research shows that efforts to promote diversity may not always be successful, particularly in male-dominated contexts like the U.S. entrepreneurial financial market. They can even backfire if the underlying power dynamics and cultural biases are not addressed.

Our study is not a call for venture capitalists to abandon their pursuit of diversity. It emphasizes the importance of persevering until women reach equal status in society and business.

Lei Xu (Jeremy) is an assistant professor of entrepreneurship and business management at the University of Missouri St. Louis.

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Episode 73: Sabina Wizander, Partner at Creandum

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West Coast rail tunnel collapses affect freight services

A West Coast rail tunnel partially collapsed, affecting freight services.

KiwiRail’s Chief Infrastructure Officer Andre Lovatt said to Chris Lynch Media that around 2.15pm, on Saturday afternoon, a digger driver noticed some crumbling as he was performing planned maintenance on the Tawhai Tunnel south of Reefton.

The operator safely exited the tube before a partial collapse took place.

Lovatt stated that “the 370m tunnel remains close”.

“A safe entry program must be developed and approved in order to fully assess the current situation and determine the scope and timeframe of the work required.

“No passenger services are using this line and we’re talking to affected freight clients.” :

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How one firm is aiming to de-risk AI investment

There is increasing speculation that AI start-ups are being engulfed by a bubble. This week Mistral AI, a French start-up founded just a year earlier by former employees of Meta, Google DeepMind and other companies, raised $640 from Nvidia and Salesforce, valuing it at $6 billion. That’s triple what its value was in December.

Cognition Labs was launched in November last year and is said to be in discussions to raise money from investors, which would value it up to $2 billion. This is almost six times the value of the company after raising $21 millions earlier this year. Cognition is creating a fully autonomous AI software developer called Devin.

Toppy multiples, coupled with the lack of an end to the exit drought, could cause some VCs to put off new AI bets, if not out of fear that they will miss out on something, which has never really gone away. Touring Capital is an AI-focused venture company I spoke to recently. They hope to protect themselves from inflated valuations, by not investing in hardware or infrastructure at the foundational layers in the AI tech stack. Instead, they invest in B2B applications built on top.

Touring, which is based in San Francisco currently raises its first fund, the Oakley Touring Venture Fund. Priya Saiprasad, co-founder, general partner and Venture Capital Journal , told Venture Capital Journal that the fund is aiming for $300 million with a closing expected later this year. Oakley Capital, 30 founders backed by Touring’s partners and other LPs are included.

The fund’s sweetspot is Series B rounds, which are for AI-enabled software companies that earn $3 million to $10 millions in annual recurring revenues and have figured out their basic product-market fit.

The fund’s size is due to Touring’s desire for a large amount of money to be invested, as well as his desire to “de-risk” and “diversify” the portfolio by making 12-15 investments. The fund will invest in a majority of US companies, but also in those in Europe, India, and Australia.

Saiprasad, Nagraj Kashyap, and Samir Kumar, her co-founders at M12 and fellow GPs, met each other. All three had previously worked for SoftBank’s Vision Fund. Together, they have backed sixteen unicorns and helped 26 companies reach successful exits including Zoom, Kahoot, and Livongo.

Touring has announced that it has made four of its six investments. In September last year, Touring led an $85m Series C1 round of funding for Pixis. Pixis has developed codeless AI technologies that allow marketers to plug-and play AI products without having to write code. The new funding will allow Pixis to develop its capabilities and refine and launch an AI-powered creative studio. It will also enable it to build strategic product and partnership with various social media brands.

Daloopa is another portfolio company. Its AI-powered extraction engine, and modeling copilot, helps hedge fund analysts as well as equity analysts at large investment firms update their investment models more accurately and faster. Last month, Touring led Daloopa’s $18 million Series-B round. The company is moving away from a bottom up approach where it sells to specific analysts to a model that allows Daloopa to target an entire team. Morgan Stanley invested in this latest round and Daloopa has been thinking about partnering up with other large banks to be distribution partners.

Saiprasad stated that Touring is less concerned about backing companies whose software has been “purpose-built” for a specific business user, and which delivers an ROI, such as increasing ad spending or decreasing cross-selling, and a direct, tangible ROI up front. She said that every company must have a data moat or data-based advantage that they can “leverage in a very focused, thoughtful way” and that can help them build their own customer foundation models.

Saiprasad, along with her co-founders, chose a conservative investment thesis because they were wary of the hype that has surrounded AI since the launch ChatGPT at the end of 2022.

Saiprasad explained that “by the time we reach [an investment opportunity in the Series B stage], the software multiples are still used, and not AI. “But our hypothesis is that eventually, over time, you will prove out the AI moat and then hopefully, when you exit, you’ll be at AI multiples, if the market remains the same. If the market crashes, you can fall back on software multiples. We’re not betting on AI markets to remain as hot as they currently are because we’re entering the market at software multiples.

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3 Air-Freight & Cargo Stocks To Watch In A Promising Industry By Benzinga

Benzinga – by Zacks, Benzinga Contributor.

The Zacks Transportation-Air Freight and Cargo Industry faces challenges, from inflation-induced high interest rates to concerns regarding supply-chain disruptions and a slowdown in economic growth.

We believe that despite the challenges mentioned above, the space has plenty of fuel left, especially for operators who target growth opportunities and take cost-reduction measures. Although economies are reopening and consumers are increasingly interested in online shopping, this trend is not going away. It is also commendable to cut costs in order to improve the bottom line. We advise investors, in light of the positive developments surrounding this space, to focus on United Parcel Service(NYSE : UPS), FedEx(NYSE : FDX) or GXO Logistics (NYSE : GXO).

About the Industry

The companies in the Zacks Transportation Air Freight and Cargo Industry provide air delivery and cargo services. The majority of players in this space offer specialized transportation and logistic services. Some players offer a variety of supply-chain services, including freight forwarding and customs brokerage. Others provide fulfillment, returns, financial transactions, and repairs. The health of this industrial group is directly proportional with the well-being of its companies. UPS and FedEx are major industry players that transport millions of packages every day around the world. Some of these companies operate a ground fleet with multiple vehicles and also maintain an aircraft fleet. Some players specialize in providing air transportation for passengers and cargo while others provide services to entities who outsource air cargo lifting.

4 Key Trends in the Transportation-Air Freight & Cargo Industry

Strong financial returns for shareholders With economic activity picking up from the pandemic levels, more and companies are allocating cash to buybacks and dividends in order to appease long-suffering investors. This shows their confidence and financial strength. FDX, a player in the Transportation – Air Freight and Cargo sector, announced a 10% rise in its quarterly dividend for June 2024.

Focus on cost-cutting to drive bottom line:Despite the signs of cooling, the measure is well above the Fed’s 2% target. We note that the industry experienced significant levels of inflation including higher prices for fuel, labor and freight. The industry players are focusing their efforts on cost-cutting and improving productivity and efficiency in order to mitigate high expenses, and weaker than expected demand scenarios.

The persistent erosion of demand is a grave concern: Due to the decline in shipping demands, especially in Asia and Europe. Volumes are being hurt. Lackluster volumes hurt the results of major industry players such as FDX. FDX reported lower than expected revenues in the third quarter of fiscal 2024. This was primarily due to demand issues. FDX’s Express unit, the largest segment, was severely hit. Segmental revenues declined 2% over the past year due to volume issues. FedEx Freight revenues declined 3%. FedEx’s fourth-quarter fiscal performance is expected to be affected by a lackluster shipping demand. UPS, another leading industry player reported lower-than expected revenues in the first quarter of 2024 due to a lackluster demand.

Ecommerce is Still a Force: With the reopening economies, it’s not surprising that e-commerce growth has slowed down from the peak levels seen during the pandemic. It is still impressive, driven by convenience of online shopping. The race for digitization also helps to support the momentum of e-commerce growth. The demand for e-commerce should continue to drive growth in the industry.

Zacks industry rank indicates bright prospects

The Zacks Air Freight and Cargo sector, which is part of the Zacks Transportation industry, has a Zacks Industry Ranking #92. This ranking places it in the top 37 percent of more than 245 Zacks Industries.

The Zacks Industry Rank of the group, which is the average Zacks Rank for all member stocks, shows bright near-term prospects. Our research shows that top 50% of Zacks-ranked sectors outperform bottom 50% by more than a 2 to 1 factor.

The industry’s ranking in the top half of Zacks-ranked sectors is due to a positive outlook for earnings across all constituent companies. We will first look at the recent performance of the stock market and the valuation picture for the industry before presenting a few stocks that investors should keep in their portfolios.

Industry Lags S&P500 and Sector

Over the past year, the Zacks Air Freight and Cargo sector has underperformed both the Zacks composite S&P 500 as well as the Transportation sector.

The industry has fallen 12% in the last year, compared to the S&P 500’s gains of 16% and a sector-wide appreciation of 4.6%.

One-Year Price Performance

Industry’s current valuation

The industry trades at 10.1X based on the trailing 12-month enterprise-to-EBITDA ratio (EV/EBITDA), a multiple commonly used to value Transportation-Air Freight and Cargo shares. This compares with the S&P 500, which is trading at 13.98X. This is also lower than the sector’s trailing 12-month enterprise value-to-EBITDA of 11,07X.

In the last five years, the industry traded at as high as 13,58X, as low 6.64X, and at a media of 9,65X.

Enterprise Value-to-EBITDA Ratio

3 Transportation Stocks: Air Freight and Cargo to Watch Each of the stocks mentioned carries a Zacks Ranking #3 (Hold).

UPS We appreciate UPS’ efforts to reward shareholders through dividends, buybacks and other means. UPS’s robust free cash flow is a positive factor that has led to an increase in shareholder-friendly actions.

The figures are impressive, even though online shopping is down from its pandemic peak since the reopening economy. UPS’s earnings have exceeded the Zacks Consensus estimate in each of the four last quarters. The average beat was 3.14%.

Price and Consensus : UPS

FedEx FDX is doing a great job rewarding its shareholders in these uncertain times. FDX has been active in the buyback market, as well as paying dividends. FedEx has a solid liquidity position. The company’s efforts at cutting costs are driving the bottom line.

FDX’s earnings exceeded the Zacks Consensus estimate in three of the four last quarters, and missed it in the fourth. The average beat was 8.06%. The Zacks Consensus estimate for FDX’s fiscal-year earnings shows a growth of 18.72% over the previous reported number.

Price and Consensus for FDX

GXO Logistics We are impressed with GXO’s efforts in strengthening its logistics capabilities. The rapid growth in e-commerce and automation, as well as outsourcing, is a boon to the company.

GXO’s earnings exceeded the Zacks Consensus Expectation in three of the four last quarters, and missed it in the fourth. The average beat was 5.59%. GXO shares have risen 1% in the last three months.

Price and Consensus GXO

Click here to read this article at Zacks.com

Read original article on Benzinga

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