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'Nuclear' verdict on CHRW liability brings fresh headaches to freight brokers

3PL stocks have fallen in the wake of a 'nuclear' verdict by a Texas jury on brokerage CH Robinson (CHRW) and trucking firm Lupus Superior. Coming after the US Supreme Court's ruling in May that a freight broker can be held liable in the event of an accident caused by a trucker hired by the brokerage, the verdict is seen as a harbinger of more litigation against brokers, higher insurance costs, and further decimation of the trucker pool. The case concerned an accident in Mississippi in 2021, which killed the driver of a Lupus Superior truck and three other people, and injured two more. The jury split fault for the incident three ways: 45% blame on the driver; 32% on the trucking firm; and 23% on CHRW and issued a $604m advisory verdict º yet to be certified by the presiding judge. Besides the damages, the verdict raises several red flags for freight brokers. CHRW had argued that Lupus Superior had a 'satisfactory' rating from the Federal Motor Carrier Safety Administration (DMCSA) when it was hired for the job, and said brokers had to rely on FMCSA ratings as they are unable to vet every carrier to a similar standard. However, the jury dismissed this argument. This puts brokers on unstable ground in the event of litigation following an accident involving a hired trucker, noted Satish Jindel, founder and president of SJ Consulting. And this predicament narrows the pool of truckers brokers are likely to use, as they will be more inclined to avoid those for which they have little or no records. Smaller trucking outfits will struggle to find new customers, and some will be forced out of the industry, which will further decimate the available capacity, he said. He added, however, that this would not affect the ability to move freight in the US. There would be enough capacity, but it will be more expensive, at a time when shippers face increased costs on multiple fronts. The, will now include elevated insurance premiums for brokers and truckers, several observers have pointed out. Another red flag for brokers was the jury's argument that the driver was "operating the vehicle in the furtherance of a mission for the benefit of CH Robinson" - which could be interpreted that a trucking firm's driver is effectively an employee of the broker that hired the carrier. Both this interpretation and the uncertainty about carrier safety assessment are likely to come into play in looming court cases involving truckers causing accidents, and Mr Jindel is certain that there will be more such trials. "Plaintiffs' lawyers always look for a deeper pocket and go after more parties," he commented. Financial services firm TD Cowen produced a report on the Texas case, and its authors share Mr Jindel's view. "Many pending court cases were waiting for the SCOTUS [Supreme Court of the US] ruling for more clarity, and are now moving forward in the courts," they pointed out, adding that the situation was "a new reality many brokers will now live with" and that "investors need to assess the risks of more nuclear verdicts in the future". Mr Jindel thinks the impact on brokers will vary depending on their size, with mid-sized firms facing the biggest threat. Small brokers would likely shut down and re-open under a new brand, while large ones have deep enough pockets to bear the cost of litigation, he said. The day after the news of the Texas verdict, CHRW shares fell 9.25%, while those of RXO and Landstar lost 7.1% and 3.68%, respectively. CHRW has said that it will appeal the verdict if it stands. In addition, its chief legal officer, Dorothy Capers, also wants action in Washington. She said: "The extreme nature of this verdict means it is even more imperative that Congress and the federal government act with urgency to establish clear and proper accountabilities across the transportation industry that enhance highway safety and support the uninterrupted flow of goods across the United States." Mr Jindel thinks the American Trucking Associations should mount a lobbying campaign in Washington to get rid of punitive damages. He questioned their benefit and argued that they would get baked into prices. Moreover, their elimination would probably make it easier for companies to settle a lawsuit out of court and avoid a trial and associated costs, he added.

EXCLUSIVE: MSC CEO to crew: 'Customer relationships remain a critical differentiator'

Earlier this month, MSC's top brass gathered behind closed doors in Phoenix, Arizona, to discuss the future of the company. The agenda? What works $-wise. Then what works, billion $-wise. And then what works and could work better to make more billion $, going forward. New MSC Just as the New Mediterranean Shipping Company (MSC) takes shape, pushing at full throttle for world dominance in transport and logistics (same narrative of recent years, but a lot more relevant in asset-light forwarding now) - crucially too, the ...

Panama Canal braces for El Niño, announcing first transit restrictions

The Panama Canal Authority (ACP) is to reintroduce transit restrictions as it prepares for the annual El Niño weather phenomenon, which this year is predicted to be one of the most severe on record. Canal administrator Ricaurte Vásquez said yesterday the probability of a severe El Niño had increased significantly, from 25% in April to 81% currently, and as a result, ACP was "ready to implement preventive measures based on lessons learned during the 2023-2024 El Niño event". Dr Vásquez warned of "likely capacity restrictions - not only in terms of draught limitations but also through reductions in the number of daily booking slots". The last period in which an El Niño-induced drought across Panama was from mid-2023 to mid-2024, and saw canal capacity curtailed by up to 50% at times, with daily transits halved, from the design capacity of 36 a day to 18. However, Dr Vasquez emphasised that the "timing and scope of any similar restrictions will ultimately depend on market conditions". Nonetheless, ACP has already begun capacity restrictions, with the cancellation this week of Period 3 auctions at its Panamax locks. ACP has a three-tiered slot booking system: Period 1 slots can be booked up to a year in advance; Period 2 slots open 21 days before transit; while Period 3 slots can be booked just 48-96 hours before transit. Cancelling Period 3 bookings for the old Panamax locks effectively reduces total daily transit capacity from 36 to 34. Container shipping lines, particularly those on the Asia-US east coast trade, where the Panama Canal is a key artery - have already begun to respond. MSC announced on Monday a $100 per teu Panama Canal surcharge on all shipments transiting the waterway from 18 August, citing "operational constraints and increased costs associated with Panama Canal transit, and in order to maintain the reliability and quality of our services". CMA CGM will introduce a similar surcharge for Asia to Caribbean and Latin American destinations on 10 August. Mathew Dibb, director of the Fleet Weather division at Polestar Global, explained to The Loadstar Podcast how El Niño's effect in the Pacific has a direct impact on weather in the Atlantic. "We do tend to notice it's drier than normal in the Caribbean, and that can have some pretty big impacts - it was in 2023/2024 that El Niño meant there was less rainfall over Gatun Lake, which is the main supply of water for ships transiting the Panama Canal. "It feeds the water so the vessels can go through the locks. And with less rain, they had to change the amount of frequency of ships that could pass through, as well as restricting draughts. "Some of the ships couldn't have so deep a draught, so that changed things - something shipping companies may have to plan for," he added. Meanwhile, ACP noted that between October last year and June - the first nine months of its financial year - it had averaged 35 transits a day, with a total of 10,726 transits, a 5.2% increase on the 10,191 recorded during the previous financial period. "Daily transit auctions remain an important tool that provide customers with an additional opportunity to secure transit reservations when standard booking options are unavailable, or when operational flexibility is required," the authority said. "Precautionary measures are under consideration for the first time after nearly two consecutive years in which no draught restrictions were necessary, thanks to an abundant availability of water in the canal's reservoirs. "Heavy rainfall throughout 2025 and an unusually wet 2026 dry season allowed the canal to maintain above-normal water storage levels in its lakes," ACP added.