Moving cargo or shipments is more risky than ever as the trucking industry grapples with insecurity.
It's another edition of The People First newsletter, where we discuss major issues across global logistics and supply chains. In this edition, we review cargo theft, cybersecurity, and the rising mergers and acquisitions in the trucking industry. The freight and trucking industry has been quite the rollercoaster, but there may be some hope on the horizon as government, businesses, and supply chains start taking measures to mitigate some of these issues.
So, what exactly is the problem? Continue reading to find out more.
Cargo theft remains a rising concern for businesses, supply chains, and the trucking industry.
The last quarter of 2023 saw a dramatic spike of 68% year over year compared with 2022. According to Scott Cornell, Travellers's transportation lead and crime and theft specialist, “the trends project that cargo theft is at a 10-year high.” In 2023, loss from cargo theft was almost $700 million. And the current reports for 2024 suggest that there may be a higher number for the year. That will make it three consecutive years of increasing cargo theft. It may worsen by year's end if nothing is done about it.
Beyond mere theft is the issue with strategic cargo theft.
California, Texas, Florida, Georgia, and Kentucky are currently hotbeds for strategic theft. Recently, a cargo theft ring in Southern California left many shippers on edge. Considering there is a sting that comes with cargo theft that could impact carrier trust, many are unwilling to talk about it openly. The problem with the wave of freight and cargo theft is that many of these theft rings have figured out how the trucking industry operates. And they know of all the loopholes they can exploit.
It will take a serious review of the entire process and some concerted effort to lock up many of these loopholes.
Another challenge is that cargo theft is not just happening within the United States. It is also rampant in Mexico. In April 2024, an average of five trucks were stolen daily in Mexico, which is a 7.7% year-on-year increase. More than 70% of these cargo thefts involve violence, making it especially distressing for drivers and truckers in the area.
In late March, an unprecedented attack on the open-source ecosystem caused the U.S. government to panic over what it means for the entire open-source supply chain.
After a foiled attempt to subvert one of the commonly used software utility applications, D.C. is in a panic about the vulnerability of the open-source supply chain. There is a critical question about the extent to which foreign nations are actively using cloak-and-dagger human spycraft to exploit it. This frenzy began on March 29 when Andres Freund, a software engineer, found fragments of malicious code cleverly concealed within two versions of a highly popular open-source data compression tool.
After escalating the issue, it kicked off a mad scramble among security pros and government agencies to prevent the compromised code from being used to launch spying campaigns or cyberattacks against the U.S.
Following the attack, a new report found that Tech professionals are worried about cybersecurity threats to their organizations' supply chains. The report was conducted by Hexnode, who spoke to 1,000 IT professionals across various industries. 77% say they are apprehensive about supply chain cybersecurity. And 42% say a lack of a clearly defined technology solution and response plan has left the supply chain unable to counter a cyberattack. Considering the recent wave of cybersecurity attacks, it is wise to be wary.
The thing about cybersecurity within the supply chain is that there are many stakeholders at any given point within the value chain.
This means the suppliers may not be as equipped even when the primary organization is well-equipped and protected against cybersecurity. To protect themselves against such blindspots, more organizations are beginning to vet the security strength of their suppliers. Previously, many of them were satisfied with getting a checklist. However, the wave of cyberattacks has prompted a more in-depth vetting process.
This will ensure that suppliers and partners take more responsibility and that supply chains are better prepared against cyber attacks.
The freight economy looks great, stakeholders are excited, and trucking company mergers and acquisitions are making a comeback.
Before the freight and trucking economy went downhill, there was a wave of mergers and acquisitions. However, as the industry struggled, the wave took a break because more companies were trying to survive the crisis. With survival a priority, most M&As were put on the back burner. Since the trucking industry shows signs of recovery and business seems good, pursuing M&As has also resumed in full force.
However, because of the market downturn, there is a gap between sellers' expectations and what buyers are willing to offer.
A major reason for this is that the current buyers are strategic players with a more in-depth knowledge of the industry and know what is expected and how and why the buys may or may not be worth it for now. Financial buyers are waiting for a stronger performance before they can re-enter the market. So, for now, it is either sell or hold out for that time.
While it is good news that some of the sellers are becoming more realistic, the M&A is still projected to struggle till late in the year.
One of the reasons why M&A’s became so popular is because it is typically seen as an effective strategy to reduce operational cost, diversify portfolios, and reduce exposure to volatile spot markets. Much of the M&A activity is focused on smaller, "tuck-in" acquisitions, as brokerage and dedicated companies are attractive targets due to their stability. For now, many sellers and buyers are still working off projections. When the market turns the corner, the recovery of M&A will get into gear. Traders can expect a busier second half of 2024 and a stronger 2025.
In an industry plagued with security challenges, it is only fitting to surround the logistics and supply chain operation with applications that ensure a secure and frictionless transportation process.
The good news is that the EKA platform is this and more. EKA is an affordable, end-to-end TMS designed for carriers, freight brokers, and shippers alike. EKA’s high performance is your ticket to enjoying a robust, scalable, and secure technology solution for logistics operations. There is no reason to wait any longer. Contact us today and enjoy a better logistics experience.
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