Keeping your connected vehicle safe from software hackers – FreightWaves

Autonomous driving took center stage at the Auto.AI Europe conference in Berlin, as experts within the automation landscape spoke on the technology’s potential as a game-changer in the future of mobility. Stephen Janouch, senior manager of business development at Green Hills Software, delineated the importance of security in automotive systems as vehicles become increasingly self-reliant. 

“Automotive security is like the dirty laundry you have in your basement. You hope someone else is taking care of it, but at the end of the day, you may need to take a look at it yourself,” said Janouch. “And it is important to know the difference between safety and security. Safety on one side is making sure that the system is behaving according to what you want it to do. Security is about making sure that no human can harm the machine and make it do something you didn’t tell the machine to do.”

Janouch pointed out that if an autonomous vehicle is not secure, it cannot be 100% safe. Security is a complicated issue, as the processes to make a vehicle secure are never-ending, and require companies to stay ahead of hackers by constantly updating their security policies and testing their vehicle software for chinks in their armor that may not be apparent. 

Prevention, Janouch contended, is about companies approaching security from an “inside-out” perspective. “We propose that you start from the lowest level of a system – the hardware and operating system – and then work your way upwards and apply security measures on each level,” Janouch. 

The complexities around connected vehicles that are in service today make it an uphill task for companies to make them hack-proof, with Janouch pointing out the futility in trying to build firewalls around them. “Where could you actually build your firewall around the system? What does a system mean, is it just the vehicle?” he asked. 

To reduce security threats and vulnerabilities around a vehicle, it is critical to cut down the complexities behind software systems running the vehicle. The problem mushrooms out from the way the code is written. Janouch spoke of a situation he had encountered, in which a client building a vehicle camera system approached his company with issues revolving around a staggeringly long software code. 

“He gave us a video driver with 250,000 lines of code. The supplier probably brought it down to 50,000 lines of code, hoping that could be sufficient. In the end, we rewrote the driver to nearly 100% of the functionality with everything vital for the operation of the system, and brought the length down to 900 lines of code,” said Janouch. 

Reducing the absolute length of code is essential, as the longer it gets, the higher the probability of security concerns creeping in. “Typically, every 1,000 lines of code could end up with two defects. Though that doesn’t sound like a whole lot, a high-end car will have about 100 million lines of code, and that would mean around 200,000 defects in the software. Hopefully, none of it is really affecting safety, but it still is a lot,” said Janouch. 

To make systems more hacker-proof, it will be prudent to identify critical parts of system code, separate them from untrusted code and auxiliary system code, and apply strict access control to the critical systems. This is akin to getting access to an office building. Though nearly all would have access to the building’s main entry door, only certain people would have access to separate floors within the building.

“Communication needs to be separated as well. You want to make sure that information transferred from a signal that directly affects the system’s vital behavior is not affected when someone does a download,” said Janouch. “The key thing here is the operating system, which is the lowest level of software and practically the last line of defense against anyone trying to hack the software.”

Ultimately, security is a never-ending process and automobile software developers will have to comprehensively plan for security firewalls right from the vehicle’s inception and not wait until the vehicle functionalities are fully developed – as it is somewhere between “very difficult and impossible” to add security at the later stages of the development process. 

XPO inching way back into the M&A game, Jacobs tells analysts – FreightWaves

Brad Jacobs, chairman and CEO of transport and logistics provider XPO Logistics, Inc., (NYSE:XPO) appears to have reopened the door to mergers and acquisitions (M&A) activity, if only just a crack.

Jacobs told analysts at Morgan Stanley & Co. (NYSE:MS) in a recent meeting that he is now devoting about 10 percent to 15 percent of his time to exploring possible acquisitions, according to a September 26 note from the investment firm. Though this may not seem like a lot given XPO’s acquisitive history, it marks a turnaround from February, when XPO tabled M&A activity for the foreseeable future because a mid-December plunge in its stock price had made share buybacks a more cost-effective use of its capital. The company has spent about $1.9 billion of the $2.5 billion it was authorized to buy back shares. 

According to the Morgan Stanley note, XPO management will focus on smaller, tuck-in acquisitions instead of larger deals. It will likely steer clear of freight forwarding due to secular disruptions in the segment, and it is neutral on freight brokerage deals because of declining gross margins, although it believes that the growing applications of information technology will help defend operating margins, according to the note.

The company will not meaningfully increase its debt leverage or issue equity to finance a potential purchase, Jacobs and his investor relations head, Tavio Headley, told the analysts, based on the note. The company is in the “early stages” of feeling out interested companies and conducting “fact-finding” and “relationship-building” activities, according to the note. Neither Jacobs or other company executives responded to requests for comment.

At FreightWaves’ Transparency19 conference in May, Jacobs disclosed that XPO had been close near the end of 2018 to consummating a massive acquisition that would have effectively doubled the company’s size. Jacobs has never taken M&A completely off the table, and has said XPO would have pursued deals had its share price not dropped so appreciably when it did.

XPO’s share prices have fluctuated wildly over the past 52 weeks, peaking at $116 per share last September and falling to $41 per share earlier this year in the wake of several quarters of disappointing financial results and the lingering effects of a scathing short-seller’s report last December questioning the company’s accounting methods and managerial competence. Shares today closed at $70.76.

Jacobs used an aggressive roll-up strategy to transform XPO from a $100 million company in 2011 to a $17 billion behemoth today. XPO acquired and integrated 17 companies in four years, an unprecedented development in the transport and logistics sector. It has been on the M&A sidelines since September 2015 after acquiring transport and logistics firm Con-Way Inc. for $3 billion.

XPO continues to experience difficult macro conditions in the U.S., the U.K. and France, and that demand will remain weak until the U.S.-China trade dispute is resolved and it becomes clear how, or if, Britain exits the European Union, the Morgan Stanley analysts said. The company is focused on cutting its $6.5 billion a year labor spend through technology investments, and sees the potential for hundreds of millions of dollars in cost improvement through route optimization and warehouse automation, according to the note.

German logistics startup sennder acquires Spanish rival Innroute – FreightWaves

German logistics startup sennder had acquired Spanish competitor Innroute, expanding its 

European digital freight-forwarding platform after raising more than $100 million in 2019. 

The Berlin-based firm announced the acquisition on Linkedin on September 25. Terms were not disclosed.

“We are very happy to grow this quickly – and we warmly welcome the Innroute team to the sennder family,” sennder said in its Linkedin message.

Like sennder, Innroute offers a digital platform matching over-the-road freight. Ahead of the purchase, Innroute had said it had more than 3,000 carriers and 10,000 trucks on its platform.

Assuming sennder retains Innroute’s customers, its connected vehicle base grows from 7,500 to 17,500.  

sennder had an existing office in Barcelona. Its Spanish team will join Innroute’s in Madrid.   

Sennder has raised more than $100 million this year, most recently with $70 million in series C funding in July.  

Further container rate weakness forecast for Q4 – FreightWaves

Spot container shipping rates will continue to subside in the coming weeks following a tepid peak shipping season, according to analysis by Alphaliner.

“With Chinese factories due to close for the Oct. 1 Golden Week holidays, marking the traditional start of the container shipping slack season, carriers have slashed rates ahead of the holidays to build their cargo booking pipeline,” said Alphaliner’s latest weekly report.

“Further rate weakness is expected for the rest of the year, with carriers’ capacity management efforts ineffective so far in stemming the rate decline.”

As reported in FreightWaves, World Container Index spot freight rates on the Shanghai-to-Genoa lane plummeted 13% last week, dragging the global composite index down 6% as a result, according to London-based shipping consultancy Drewry.

Alphaliner noted that spot freight rate indices on the SCFI (Shanghai Containerized Freight Index) have slumped to a four-month low and are down 18% year-on-year — evidence, believes the analyst, that while the slew of container line voided sailings may have helped manage seasonal short-term drops in cargo volumes, they have been ineffective in dealing with a “structural deficit” in demand.

“Carriers have limited room to keep capacity out of the market for extended periods, as the cost of keeping ships inactive will be substantial, while a steady stream of new ships is still expected to be delivered in the coming months and the scrapping of older ships remain very low,” said the report.

“The 2M carriers’ decision to withdraw their FE-North Europe AE-2/Swan service in late September will be short-lived, with MSC already suggesting that the service could return by mid-November.

“Although some of the withdrawn 2M ships will be replacing ships that are undergoing scrubber retrofits, a number of ships that have completed their retrofits are already back in service.”

HMM’s decision to withdraw its FE-North Europe AEX service in September also will be more than compensated for in the second quarter of 2020, when 12 of the line’s new 23,000-TEU newbuilds are phased into the trade, dwarfing the 5,000-TEU ships that were deployed on the old AEX, according to Alphaliner.

However, the rush to fit container vessels with scrubbers ahead of the introduction of IMO 2020 low-sulfur fuels at the start of next year is taking some capacity out of the market.

Blanked sailings and scrubber retrofits pushed up the inactive fleet to 148 units totalling 641,259 TEU of capacity as of Sept. 16, or 2.8% of the total fleet.

“Of these, 25 units for 277,611 TEU are recorded to be undergoing scrubber retrofits,” said the analyst.

“The unemployed ships, excluding those ships undergoing retrofits, have increased to 123 units for 363,648 TEU, compared to 111 units for 223,791 TEU two weeks ago.

“The inactive fleet is expected to rise further in the coming month with more blank sailings already announced, while the number of ships undergoing retrofit is also on the rise.”

More FreightWaves articles by Mike

DHL Express hikes U.S. rates 5.9% for 2020 – FreightWaves

Air and ground express firm DHL Express announced September 27 a 5.9% general rate increase on shipments moving to and from the U.S., effective January 1, 2020.

The increases are for tariff, or published, rates. Contract rates will differ depending on the specific customer. However, contract pricing in the express delivery business is influenced by the level of tariff rates in effect at the time. In addition, the actual tariff rate charged for transporting a shipment will vary depending on the shipment’s “profile,” such as weight, dimensions, length of haul and any special handling. DHL Express’ 2020 service guide, which will contain more detailed pricing information, has yet to be made public.

DHL serves the U.S. from international markets only. It ceased domestic U.S. pick-ups and deliveries in January 2009. DHL serves more than 220 countries and territories.

Rival FedEx Corp. (NYSE:FDX) has already announced its 2020 rate structure, with the average tariff rate increasing by 4.9%. UPS Inc. (NYSE:UPS), another DHL rival, has yet to disclose its 2020 rates.

Separately, global trade activity is likely to decline from already-muted levels through November, according to the latest version of DHL’s global trade outlook, which was published September 26. The overall index fell by one point from the last version, settling at 47. This indicates that global trade will continue to lose momentum over the next three months.

A reading of 50 is the baseline for growth. Of the seven countries that were canvassed, only Japan and the U.K. showed readings above 50. The United States, China, India, Germany and South Korea all posted negative readings, according to the report. The seven countries, and the 10 industries profiled, account for about three-quarters of all global trade.

Airfreight accounted for most of the overall decline, falling 4 points from the last reading in June to 45. Ocean freight remained steady at 48, the report found. Chinese airfreight activity showed the most glaring weakness, down 8 points to 43. Japanese ocean freight, by contrast, gained 6 points to 55 due to a strong outlook for raw materials exports.

The overall weakness was attributed to the usual suspects: The U.S.-China tariff battle, uncertainties over Brexit, and weakness in European economies, especially those like Germany that rely on exports to China.

The one bright spot is that the pace of decline slowed considerably from June, when the broad index toppled eight points to 48.

Port Report: truckers beware – IMO 2020 will cause fuel prices to “go through the roof” – FreightWaves

It’s going to be a very tough transition to the low sulfur world, ocean shipping experts believe. And that’s because the availability of low sulfur fuel is “uncertain”, the use of scrubbers is unsustainable and ocean going ships will quickly burn through low sulfur stockpiles.

High demand, restricted supply and a run-down of stockpiles equals one sure consequence: a price spike.

“Prices will go through the roof,” one ocean shipping expert told FreightWaves at the side of the Marine Money Week Asia 2019 conference, which was held this week in Singapore.

Oil, sulfur and air pollution

Ocean going ships today normally burn residual fuel oil, which is basically a near-waste material that’s left over after crude oil is refined into substances such as gasoline, kerosene and other petrochemicals.

Burning residual fuel oil releases lots of sulfur dioxide. And it’s very nasty stuff.

Breathing sulfur dioxide irritates the body’s internal air passageways, causing coughing, wheezing, shortness of breath. Inhaling sulfur dioxide makes breathing more difficult and it’s particularly hard on people with asthma.

Sulfur dioxide in the air also leads to the formation of sulfur oxides (SOx) and these react with other chemicals to form super-tiny specs of dust called “particulate matter”. These tiny particles penetrate deeply into the lungs and into the bloodstream. They cause irregular heart beats, inflammation of internal organs, decreased ability to breathe and heart attacks.

Worse, every year we, the human population of Earth, suffer a massive, preventable and tragic disaster because repeatedly breathing particulate matter is deadly.

Scientists reckon that, every year, breathing ship-source emissions causes over 400,000 early, and preventable, deaths.

Sulfur dioxide also gets absorbed into water in the air and falls to the ground as acid rain. That kills forests, kill fish in lakes and streams, and damages crops.

And that’s why the IMO has acted to ban the burning of high sulfur fuel oil. As of January 1, 2020, ships will be forbidden from burning fuel oil with more than 0.5 percent sulfur content. Certain other specially protected and pre-existing Sulfur Emissions Control Areas, such as the English Channel, the North Sea and the entire coast of continental USA (excluding Alaska) will have an extra-low level of 0.1 percent. The Sulfur Emissions Control Areas were set up in July 2010.

Low sulfur fuels

There are a few ways to comply. Ships can use fuel that basically does not have any sulfur in it. One compliant fuel is liquefied natural gas. But, at minus 260 Fahrenheit, LNG is very difficult to handle and it requires a lot of technical skill to do so. There are only about 600 or so such ships in the world fleet, according to David Jordan, regional director Asia at commercial shipping consultancy MSI. And most of those ships are LNG carriers. Although LNG looks like it may be a major fuel type for ocean going ships in the future, it is not today.

Another way to comply is to use low sulfur fuel. Unfortunately for the U.S. trucking industry, refiners that have been producing low sulfur diesel will likely use the same feedstock to create low sulfur marine fuel. There is limited capacity to produce both types of fuel.

“IMO sulphur regulations… have the potential to be highly disruptive to the pricing and availability of compliant fuels,” says analyst company Wood Mackenzie. It adds that a growing demand for distilled fuels could “result in an upward price pressure on fuels such as diesel and jet fuel. Knock-on effects from the upcoming cap on sulphur emissions in marine bunker fuel could even wind up giving you a more expensive plane ticket in 2020”.

Thirsty? Drink up! Drink up… 3.5 million barrels of oil

The potential for disruption is so great because ocean going cargo ships are so very, very thirsty.

In 2018, the global maritime sector had a demand for high sulfur residual fuel of about 3.5 million barrels a day out of a total demand of about seven million barrels a day i.e. the maritime sector accounts for about half of total fuel oil demand.

“And the global refining system is not yet equipped to make this volume of residual fuel oil at 0.5 percent sulfur once the regulation goes into effect,” says independent corporate consultant McKinsey.

There have been a fair few media reports of traders and some shipping companies buying up stocks of low sulfur fuel oil. While traders will probably make a killing on a likely upsurge in low sulfur fuel prices, the source scoffed at the idea that any reserve of low sulfur fuel could bolster supply to, and ameliorate prices for, the maritime industry.

“Any stockpile will evaporate within a month – it’s a tiny, tiny drop vis-a-vis the size of the world fleet,” he said.

High demand plus low supply equals price spike

FreightWaves’ Craig Fuller also notes that the current U.S. consumption of ultra low sulfur diesel is about 4.1 million barrels a day. And, he adds, although only some demand will be met from the U.S., “the demand for refined and low sulfur fuel will be roughly equivalent to 80 percent of the consumption of the U.S. market”.

IMO 2020 will likely lead to a fuel price increase.

“Because of IMO 2020, estimates of an increase in wholesale ULSD prices range from $0.22 to $0.50 per gallon. The current average ULSD wholesale price is $1.89 per gallon; the estimated increases translate to a 12 percent to 26 percent increase in the cost of ULSD diesel from the refineries. Once the ULSD makes its way into the hands of the retail market, which currently sits at $3.05 per gallon, it could drive diesel prices north of the highest prices seen in the U.S. market in the past year – over $3.55 per gallon, and in parts of Northern California $4.60 per gallon,” Fuller writes.

Scrub-up

The third way to comply is to use exhaust gas cleaning systems, which are commonly known as “scrubbers”. Roughly speaking, sulfur in exhaust gases is attracted to seawater, which is alkaline (which is the same as  “basic” as in “acid” and “basic”). The scrubber sprays seawater as a mist into the exhaust gases. The sulfur binds to the seawater and the waste stream is discharged into the sea.

However, ocean going shipping experts do not see scrubbers as a viable solution.

“Scrubbers won’t work,” one executive told FreightWaves at the Marine Money Week Asia 2019 conference in Singapore. He did not mean that they do not physically or economically work, he meant that they are not a long-term solution to the problem of sulfur in fuel.

As at April 1, 2019, there were just over six hundred ships fitted with scrubbers according to data company IHS Markit. And there were a further 1,674 ships due to be fitted with scrubbers. That’s about 2,300 or so scrubber-equipped ships.

In any event, not all of those ships will have scrubbers fitted in time for the IMO 2020 deadline.

Singapore-based Quantum Pacific Shipping is a large ship owner that put a lot of money down on installing scrubbers across its fleet. Kenneth Cambie is Quantum’s chief financial officer. He explained the company’s thinking at the Marine Money Week Asia 2019 conference. Owing to the large number of ships it owns, Cambie explained, Quantum Pacific Shipping had to look ahead.

“We saw scrubbers as a good bridge to LNG. Scrubbers get us through the price and uncertainty of supply… scrubbers work but they’re not a long term solution,” he told the conference.

Cost and the scrubber order book

Scrubbers cost up to about US$5 million, although that will vary depending upon the exact type of scrubber and the type of vessel that it is installed upon. The scrubber price tag is significantly less for smaller vessels. Sebastian Blum, director maritime industries, with KfW IPEX-Bank, told the Marine Money Week Asia conference that about US$500 million has been spent on buying scrubbers between 2015 to 2019.

The number of scrubber equipped ships is tiny as a percentage of the world fleet. While estimates of the size of the world fleet will vary, the number of individual ocean-going ships in the world fleet is in the range of 90,715 (Equasis; 2017) to 94,169 (UNCTAD; 2018) ships.

That puts a rough estimate on the size of the scrubber-equipped fleet as a percentage of the world fleet at about 2.4 percent.

And the latest intelligence suggests that there won’t be an upsurge in scrubber orders. It’s very much the opposite. The number of scrubber orders may have dried up. KfW IPEX-Bank’s Blum provided some insight. He told FreightWaves that “nothing happened” between 2015-2018 and that most of the early-bought scrubbers were installed on ships deployed on routes through the Sulfur Emissions Control Areas.

Eirik Dahlberg is the general manager of Clean Marine, a supplier of scrubber systems. He was on a panel at Marine Money Week Asia 2019.

“It was in 2018 where everything took off. We were at 150 contracts. Then it stopped. Ship owners saw that they could not receive vessels or retrofit ships in 2019. Ship owners then climbed up onto the fence…”.

A good example of that was given by Graham Porter, one of the founders of Seaspan Corporation (NYSE: SSW). He told the Marine Money Week Asia conference: “we’re not a believer in scrubbers so we’ve taken our chips off the table and [we will] wait”.

Why would they, just for you? They wouldn’t!

An insight into how ship owners are thinking was provided by the FreightWaves source. He pointed out the nature of the marine fuel supply chain makes it unlikely that there will even be a continued supply of high sulfur fuel oil to be fed into scrubbers.

“Longer term, low sulfur fuel oil will become the norm, just like unleaded, right? Look at the bunker [marine fuel] supply chain. I’m not talking about the big boys like Shell, I’m talking about the small operators. They’ve got, what, four or five tanks on the land side? And they have a max of a bunker barge, or two, maybe three?

“If you want high sulfur fuel oil delivery for your scrubber system ship, then they [the bunker supplier] have to keep a quarter to a fifth of their capacity separate because you don’t want to mix fuels.

“Why would they block up to one quarter to one fifth of their capacity just for you? Low sulfur fuel will become normal, so why would they keep off-spec fuel just for you? Especially when you, as a market share, represent less than five percent of the market. Why would they? They wouldn’t.

“And don’t tell me that bunker pooling will work. It never will. The bunker people hate each other.

“Ship operators tell me they don’t really care about scrubbers. They just want to get their money back on the scrubber system in five or six years. After that, once it’s settled down, they’ll just switch to low sulfur.

“They’re just trying to avoid the likely price spike for low sulfur fuel… pricing is just going to go through the roof.”

Marine Money granted a complimentary invitation to Jim Wilson to attend its Marine Money Week Asia 2019 conference in Singapore; FreightWaves paid for all travel and accommodation expenses.

Elsewhere around the maritime world

KOGAS eyes LNG terminal in Vietnam
Dredging and Port Construction

Stena Impero released by Iran
Seatrade

Cosco sanctions send ‘shockwave’ through tanker markets
Lloyds List

EU mulls tariffs on US exports to hit back at Trump threat
The Loadstar

Blackstone turns to Europe for last-mile logistics real estate domination – FreightWaves

Global asset management titan Blackstone Group (NYSE:BX), fresh from a major leap into the U.S. logistics real estate market, has extended its last-mile infrastructure reach into Europe by forming a company called “Mileway” to support pan-European last-mile delivery operations.

The new company will utilize 1,000 logistics ”assets” that Blackstone, which entered real estate in 1991 and today is a major player in virtually all forms of property, has acquired over the years. Mileway will become the largest last-mile logistics real estate firm in Europe, with more than 29 million square feet of space, Blackstone said. More than 80 percent of the capacity is in the U.K., Germany, the Netherlands and France, Blackstone said. 

Published reports have pegged the value of the new company’s portfolio alone at around $8 billion in assets, a staggering sum if accurate, said Marek Różycki, managing partner of Last Mile experts, a Warsaw-based consultancy. Blackstone did not include the portfolio’s value in its announcement, and company officials did not respond to requests for comment on September 25.

In June, Blackstone spent $18.7 billion to acquire 179 million square feet of “urban logistics” assets from GLP, a Singapore investment manager, in the largest-ever real estate investment between privately held multinational firms. The acquisition nearly doubled Blackstone’s U.S. industrial logistics footprint.

In its September 24 announcement, Blackstone said logistics, especially last-mile, remains one of its top investment themes.

The European last-mile logistics real estate sector is fragmented. In the U.K., there is a dearth of suitable last-mile assets to meet what is expected to be growing e-commerce demand, Rozycki said. However, given the breadth of the market – the European Union alone is comprised of 28 countries – it is hard to imagine any one company, even one as large as Blackstone, dominating everywhere, he added.

Emmanuel Van der Stichele, previously fund director of the Goodman European Logistics Fund, was named Mileway’s CEO. The new firm is headquartered in Amsterdam.

XPO inching way back into the M&A game, Jacobs tells analysts – FreightWaves

Brad Jacobs, chairman and CEO of transport and logistics provider XPO Logistics, Inc., (NYSE:XPO) appears to have reopened the door to mergers and acquisitions (M&A) activity, if only just a crack.

Jacobs told analysts at Morgan Stanley & Co. (NYSE:MS) in a recent meeting that he is now devoting about 10 percent to 15 percent of his time to exploring possible acquisitions, according to a September 26 note from the investment firm. Though this may not seem like a lot given XPO’s acquisitive history, it marks a turnaround from February, when XPO tabled M&A activity for the foreseeable future because a mid-December plunge in its stock price had made share buybacks a more cost-effective use of its capital. The company has spent about $1.9 billion of the $2.5 billion it was authorized to buy back shares. 

According to the Morgan Stanley note, XPO management will focus on smaller, tuck-in acquisitions instead of larger deals. It will likely steer clear of freight forwarding due to secular disruptions in the segment, and it is neutral on freight brokerage deals because of declining gross margins, although it believes that the growing applications of information technology will help defend operating margins, according to the note.

The company will not meaningfully increase its debt leverage or issue equity to finance a potential purchase, Jacobs and his investor relations head, Tavio Headley, told the analysts, based on the note. The company is in the “early stages” of feeling out interested companies and conducting “fact-finding” and “relationship-building” activities, according to the note. Neither Jacobs or other company executives responded to requests for comment.

At FreightWaves’ Transparency19 conference in May, Jacobs disclosed that XPO had been close near the end of 2018 to consummating a massive acquisition that would have effectively doubled the company’s size. Jacobs has never taken M&A completely off the table, and has said XPO would have pursued deals had its share price not dropped so appreciably when it did.

XPO’s share prices have fluctuated wildly over the past 52 weeks, peaking at $116 per share last September and falling to $41 per share earlier this year in the wake of several quarters of disappointing financial results and the lingering effects of a scathing short-seller’s report last December questioning the company’s accounting methods and managerial competence. Shares today closed at $70.76.

Jacobs used an aggressive roll-up strategy to transform XPO from a $100 million company in 2011 to a $17 billion behemoth today. XPO acquired and integrated 17 companies in four years, an unprecedented development in the transport and logistics sector. It has been on the M&A sidelines since September 2015 after acquiring transport and logistics firm Con-Way Inc. for $3 billion.

XPO continues to experience difficult macro conditions in the U.S., the U.K. and France, and that demand will remain weak until the U.S.-China trade dispute is resolved and it becomes clear how, or if, Britain exits the European Union, the Morgan Stanley analysts said. The company is focused on cutting its $6.5 billion a year labor spend through technology investments, and sees the potential for hundreds of millions of dollars in cost improvement through route optimization and warehouse automation, according to the note.

German logistics startup sennder acquires Spanish rival Innroute – FreightWaves

German logistics startup sennder had acquired Spanish competitor Innroute, expanding its 

European digital freight-forwarding platform after raising more than $100 million in 2019. 

The Berlin-based firm announced the acquisition on Linkedin on September 25. Terms were not disclosed.

“We are very happy to grow this quickly – and we warmly welcome the Innroute team to the sennder family,” sennder said in its Linkedin message.

Like sennder, Innroute offers a digital platform matching over-the-road freight. Ahead of the purchase, Innroute had said it had more than 3,000 carriers and 10,000 trucks on its platform.

Assuming sennder retains Innroute’s customers, its connected vehicle base grows from 7,500 to 17,500.  

sennder had an existing office in Barcelona. Its Spanish team will join Innroute’s in Madrid.   

Sennder has raised more than $100 million this year, most recently with $70 million in series C funding in July.  

Further container rate weakness forecast for Q4 – FreightWaves

Spot container shipping rates will continue to subside in the coming weeks following a tepid peak shipping season, according to analysis by Alphaliner.

“With Chinese factories due to close for the Oct. 1 Golden Week holidays, marking the traditional start of the container shipping slack season, carriers have slashed rates ahead of the holidays to build their cargo booking pipeline,” said Alphaliner’s latest weekly report.

“Further rate weakness is expected for the rest of the year, with carriers’ capacity management efforts ineffective so far in stemming the rate decline.”

As reported in FreightWaves, World Container Index spot freight rates on the Shanghai-to-Genoa lane plummeted 13% last week, dragging the global composite index down 6% as a result, according to London-based shipping consultancy Drewry.

Alphaliner noted that spot freight rate indices on the SCFI (Shanghai Containerized Freight Index) have slumped to a four-month low and are down 18% year-on-year — evidence, believes the analyst, that while the slew of container line voided sailings may have helped manage seasonal short-term drops in cargo volumes, they have been ineffective in dealing with a “structural deficit” in demand.

“Carriers have limited room to keep capacity out of the market for extended periods, as the cost of keeping ships inactive will be substantial, while a steady stream of new ships is still expected to be delivered in the coming months and the scrapping of older ships remain very low,” said the report.

“The 2M carriers’ decision to withdraw their FE-North Europe AE-2/Swan service in late September will be short-lived, with MSC already suggesting that the service could return by mid-November.

“Although some of the withdrawn 2M ships will be replacing ships that are undergoing scrubber retrofits, a number of ships that have completed their retrofits are already back in service.”

HMM’s decision to withdraw its FE-North Europe AEX service in September also will be more than compensated for in the second quarter of 2020, when 12 of the line’s new 23,000-TEU newbuilds are phased into the trade, dwarfing the 5,000-TEU ships that were deployed on the old AEX, according to Alphaliner.

However, the rush to fit container vessels with scrubbers ahead of the introduction of IMO 2020 low-sulfur fuels at the start of next year is taking some capacity out of the market.

Blanked sailings and scrubber retrofits pushed up the inactive fleet to 148 units totalling 641,259 TEU of capacity as of Sept. 16, or 2.8% of the total fleet.

“Of these, 25 units for 277,611 TEU are recorded to be undergoing scrubber retrofits,” said the analyst.

“The unemployed ships, excluding those ships undergoing retrofits, have increased to 123 units for 363,648 TEU, compared to 111 units for 223,791 TEU two weeks ago.

“The inactive fleet is expected to rise further in the coming month with more blank sailings already announced, while the number of ships undergoing retrofit is also on the rise.”

More FreightWaves articles by Mike