IKEA asks courts to intervene as Convoy’s unpaid truckers send flurry of invoices

When the freight broker Convoy went into bankruptcy, apparently they walked away from paying many truckers for loads already carried. The individual claims weren’t too large, and as creditors they would be far down the line in a bankruptcy proceeding.

Quite a few of the truckers were carrying for IKEA, the giant home goods retailers. The estimate is somewhere around $500K owed to truckers for loads brokered by Convoy.

But IKEA doesn’t know whom to pay. Its contract says to pay Convoy, but only after Convoy has paid the truckers. The carriers were forbidden by the contract they signed from invoicing IKEA.

Apparently Hercules Capital has secured an interest in Convly’s assets including the accounts receivable as part of a financing deal. Hercules Capital has tried to invoice IKEA for $519,254 in transportation costs. But they haven’t agreed to pay the carriers, let alone done so.

To its credit IKEA placed the funds in care of the court. It has asked to be exonerated, and will allow the court to decide which truckers should be paid. But the wheels of bankruptcy grind slowly, and in the meantime, the truckers don’t have their money.

It’s an unpleasant situation for the truckers. I hope the court can address their concerns promptly.

By Alex Lennane 27/02/2024

IKEA asks courts to intervene as Convoy’s unpaid truckers send flurry of invoices

Boardroom battle at Norfolk Southern heats up

Ancora Advisors (some info here), an activist hedge fund with over 300 high-wealth customers, is suggesting 7 new board members for the Class I rail Norfolk Southern (NS). You may remember NS as the victim of the giant train wreck in New Palestine, OH, which released a lot of fumes; it has been criticized for having too few workers to perform required preventative inspections. Ancora also has suggestions for a new COO who is a disciple of Hunter Harrison, who implemented precision scheduled railroading.

Regulators also are suspicious of the idea. They fear that Ancora is more interested in short-term profit and will drive railroad operations back into a philosophy of cost savings rather than a culture of safety.

I looked a bit at the Ancora staff and CEO. I don’t see folks who seem like rabid cost-cutters. I do see people who might feel that NS’s current management has not done enough to address the operational problems that have recently come up, both in the safety line and in operational effectiveness in meeting customer requirements.

That too is a concern of regulators, though it’s a bit muted. Reciprocal switching is also being discussed now, and the rails are not enthusiastic about a change towards this practice, even though it would be consistent with a common carrier’s role, and would increase competition for customers.

We will watch closely to see how the boardroom battle continues.

By Ian Putzger in Toronto  28/02/2024

Boardroom battle at Norfolk Southern heats up as rail regulators weigh in

Surcharges, artificial demands and market opportunists

Xeneta, a data analytics firm specializing in shipping markets, has presented some data for their webinar January 25, 2024.

One of the most striking figures is the percentage of loads being shifted from negotiated contract rates to freight-all-kinds (FAK) rates. The latter are substantially higher in most cases and allow for additional accessory charges to be added.

One of those extra surcharges is for the risk associated with Red Sea transits. The Houthi attacks from Yemen have made sailing the Red Sea more dangerous, even though a consortium naval fleet is patrolling and has even hit Houthi positions in Yemen. There’s no question that insurance rates have increased for Red Sea transits.

These changes not only increase shipper cost, but also add to the volatility of load charges. Shippers have more trouble doing business when they can’t estimate their shipping costs precisely enough.

There’s also a fear that carriers are creating ‘artificial demand’, by blanking sailings. Discussions of a shortage of containers also lead shippers to book sooner than might be required. There’s not exactly a shortage. But changes to the routes are playing havoc with the ability to reposition containers. That means there could be a temporary shortage, and if a particular shipper is affected it creates a negative perception of the ocean carriers.

Freight forwarders are worried that this demand creation will pull forward shipments that could have been delivered later. There could be a large dropoff in business later in the year.

All this turmoil means shippers need to begin thinking about renegotiating contracts now before the season starts. There are many more moving parts to be discussed with the carriers.

Xeneta clearly hopes their data service will be chosen to aid in the negotiations. But the careful analysis provided should alert shippers, forwarders, and carriers to the instability and uncertainty in the pricing of ocean shipping services today.

ELOISA TOVEE FEBRUARY 01, 2024

Surcharges, artificial demands and market opportunists