The trucking and logistics sector faces significant challenges as shares in companies within the industry have plummeted. Investor concerns regarding the potential impact of new artificial intelligence (AI) tools on demand have intensified, marking this sector as the latest casualty in the ongoing wave of market volatility.
A recent launch by Algorhythm, an AI company that initially specialized in in-car karaoke systems and currently boasts a market capitalization of only $6 million (£4.4 million), triggered a sharp sell-off on Thursday. This incident reflects broader fears surrounding AI’s disruptive capabilities, which have already shaken companies in the software and real estate sectors.
The introduction of Algorhythm’s SemiCab platform, which claims to boost freight volumes by 300% to 400% without increasing staff, led to an almost 30% increase in Algorhythm’s share price on Thursday alone.
However, this news had a counterproductive effect on the broader market, resulting in a 6.6% decline in the Russell 3000 Trucking Index, which tracks shares in the U.S. trucking industry. Notably, CH Robinson Worldwide’s stock fell by 15% by the end of the trading day, having experienced a decline of nearly 24% at one point.
The downturn was widespread, with Landstar System dropping 16%, RXO plunging 20.5%, and both J.B. Hunt Transportation Services and XPO experiencing declines of about 5%. This represented the most significant drop in the sector since the trade tensions linked to Donald Trump’s tariff policy last year.
“The level of paranoia is Category 5,” commented Joseph Shaposhnik, a portfolio manager at Rainwater Equity. “This level of reaction is unprecedented in recent history.”
In response to the market’s intense reaction, Algorhythm’s CEO expressed disbelief that a firm of their size could provoke such a widespread “AI scare trade.” Gary Atkinson stated, “Never in my wildest dreams would I have imagined a day like today. It almost feels like David versus Goliath.”
The fallout from Algorhythm’s announcement also affected publicly traded drug distribution companies, with McKesson Corp and Cardinal Health each registering declines of about 4%.
Across the Atlantic in Europe, the logistics firm DHL Group saw a dip of 4.9%, while DSV A/S and Kuehne + Nagel International AG experienced declines of 11% and 13%, respectively.
“An ongoing discussion is emerging around open-source automation agents, like Molt Bot, which have the potential to automate routine back-office tasks, leveling the technological playing field for smaller operators,” noted Daniel Moore, an analyst at Baird.
Algorhythm’s roots lie in the development of in-car karaoke systems. The company sold its Singing Machine division to Stingray for $4.5 million in 2025, preparing for its pivot towards the AI-driven freight platform.
