Snarled supply chains represent one of the core roadblocks of the new normal. However, transportation optimization firm Freight Technologies (NASDAQ:FRGT) has been hard at work improving the process and is enjoying the fruits of its labor today. Early this morning, Freight announced a deal with Samsung subsidiary Samsung Mexico SDS to improve its logistics operations between Mexico and the U.S. So far this afternoon, FRGT stock is up 60%.
Freight is billed as a technology company developing solutions to optimize the supply chain process for shippers and carriers. It has a wholly owned subsidiary Freight App (stylized as Fr8App), a business-to-business (B2B) artificial intelligence and machine-learning-powered shipping marketplace in the North American Free Trade Agreement (NAFTA) region.
Primarily, Freight leveraged the Fr8App technology to “connect carriers and shippers and significantly improve matching and operation efficiency via innovative technologies such as live pricing and real-time tracking, digital freight marketplace, broker, transportation management, fleet management, and committed capacity solutions,” according to its press release.
Esteban Park of Samsung Mexico SDS noted in the release:
“Fr8App has delivered cross border capacity during a difficult market when others have not been able to do so. We have well over 100 trucks per week going from Mexico to the United States, and the Fr8App offerings will help us with the ongoing administration of our logistics across the US-Mexico border.”
FRGT Stock and the Challenges of New Normal Logistics
Naturally, Freight Technologies was also enthused about securing a high-profile deal with Samsung Mexico SDS. Javier Selgas, CEO of Fr8Tech, stated the following:
“Samsung, one of the world’s largest producers of electronic devices, selected Fr8App to ship from Mexico cross border to the United States, which we believe validates the Fr8App platform. We believe this is just the beginning of many great things to come.”
What makes the contract sweeter is that FRGT stock is swinging higher amid broader market weakness. At time of writing, the benchmark S&P 500 index is down 1.2% while the Nasdaq Composite has shed nearly 2% of value. Therefore, the underlying company is providing a glimmer of hope amid a busy earnings season and ahead of key economic and monetary disclosures.
Still, it’s difficult for many investors to justify FRGT stock as a reliable opportunity. Even with the massive spike up, shares are down roughly 60% on a year-to-date basis. In the trailing five-year period, the security has hemorrhaged 98% of its market value.
Unfortunately, the volatility of FRGT stock is emblematic of pandemic-driven realities. In early February of this year – and before Russia’s devastating invasion of Ukraine – the New York Times declared normalization of supply chains would be unlikely to occur this year. Indeed, recent evidence indicates this forecast is proving prescient.
Why It Matters
Another factor for prospective investors in FRGT stock to consider is the underlying economic conditions. For example, just recently, e-commerce platform Shopify (NYSE:SHOP) announced it is laying off approximately 1,000 workers. That’s around 10% of its global workforce.
In other words, supply chains can be optimized to maximum theoretical efficiency. However, if demand is waning, then the broader impact of said optimization will necessarily diminish. This will present fundamental problems not just for FRGT stock, but the entire shipment and transportation ecosystem.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
