Logistics stocks

sank Thursday as investors rushed to exit the group amid fears over disruption from

artificial intelligence

, making it the latest casualty of the “AI scare trade.”

The

Russell 3000 Trucking Index

dropped 7.8 per cent, with CH Robinson Worldwide Inc. at one point plunging by a record 24 per cent, and Landstar System Inc. falling 18 per cent. The index is on track for its worst day since President Donald Trump enacted his so-called Liberation Day tariffs last year. Drug distribution stocks were also caught up in the selloff, with McKesson Corp. and Cardinal Health both sliding more than four per cent.

“The worry is that it could dis-intermediate the truck brokers, which is why they’re getting hit so much,” said Christopher Kuhn, a Benchmark analyst

covering trucking stocks

. “The whole sector is getting hit, but it’s mostly on the broker side.”

Concern that new AI-powered tools and applications can upend the business models of many industries has sparked brutal selloffs in several corners of the stock market over the past couple weeks — starting with software makers, then spilling over to private credit companies, insurers, wealth managers, real estate services and now, logistics firms.

Thursday’s rout was sparked by an update from tiny AI logistics firm Algorhythm Holdings Inc., which said its SemiCab platform in

live customer deployments

was helping its customers’ internal operations to scale freight volumes by 300 per cent to 400 per cent without a corresponding increase in operational headcount. Shares of the company soared 12 per cent.

Algorhythm, which had a market capitalization of less than US$5 million before Thursday, previously operated as The Singing Machine Company, Inc. — selling karaoke products — until rebranding in 2024 as an AI logistics firm. The company reported less than US$2 million in sales for the quarter ended September 30, with a net loss totalling nearly US$3 million for the period.

Meanwhile, in Europe, Denmark’s DSV A/S fell as much as 15 per cent, before closing down 11 per cent in Copenhagen. Swiss firm Kuehne + Nagel International AG slid as much as 14 per cent and closed down 13 per cent in Zurich.

Investors had seen transportation as part of the “AI resistant” trade, particularly as

volatility in technology

names caused a push to diversify portfolios. However, Thursday’s selloff has proven that even the “old economy” is not immune to the AI concerns that have been wreaking havoc on the market.

“I guess it was their time,” Kuhn added. “I think it’s overdone but we need more detail. But clearly it’s unlikely that a big corporation is going to put in this software and not use a major truck broker like CH Robinson and RXO.”

Still, analysts and investors have warned that some of this steep selling reflects a knee-jerk reaction and could be overestimating some of the risk.

“Today’s selloff appears largely blind to the idea that the group appears to be at a cyclical inflection point, driven by reduced supply as well as the potential impact of fiscal,” Baird’s Daniel Moore wrote in a note.

Meanwhile, Barclays analyst Brandon Oglenski defended CH Robinson, as well as other asset-light transport names, seeing the selloff as “disproportionate to the risk.” Oglenski added that he would be a buyer of the sector on weakness, particularly in CH Robinson shares.

“While the impact from AI over time is inevitable and powerful, stock reactions to news like this tend to be emotional and exaggerated,” said Mark Hackett, chief market strategist at Nationwide.

—With assistance from Annika Inampudi and Janet Freund.

Bloomberg.com

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