Boosting Production & Emergency Bunker Surcharges | Weekly News Update

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OPEC and Allies Likely to Boost Oil Production

Saudi Energy Minister Khalid Al-Falih publicly stated OPEC and its allies are likely to gradually boost oil production during the second half of 2018. This marks the first time since the November 2016 production-cutting agreement began between OPEC and its allies, that production levels for cooperating countries may be pushed higher. The amount of the production increase will be made clearer as OPEC’s June meeting approaches. Global crude oil inventories moved significantly below their five-year average volumes in April, which had been a paramount focus of the OPEC production-cutting agreement and was used as justification for talks of production increases among OPEC and its allies.

The news from Saudi Arabia and Russia, pulled WTI crude oil back under $70.00 per barrel, closing over $3.00 per barrel lower at $67.88 on Friday. Wholesale diesel subsequently responded over the Memorial Day weekend, closing 5.4¢/gallon lower than Friday, at a national average price of 291.74¢/gallon.

More Emergency Bunker Surcharges

Container carriers Maersk, MSC and CMA CGM announced emergency bunker surcharges will go into effect to help these carriers cover rising fuel costs. The three carriers have set June 1st and July 1st dates for emergency bunker surcharges to take effect on their respective trade lanes. According to an article published by American Shipper, an announcement from Maersk Line on Friday said its emergency bunker surcharge (EBS) of $60 on 20-foot containers and $120 on 40-foot and 45-foot dry containers will go into effect June 1 on many trades, but July 1 on “regulated corridors” including lanes to and from the United States. Maersk said the EBS is “a necessary action to ensure a continued sustainable service to our customers.”

Bunker fuel prices have steadily increased since July 2017, putting pressure on carriers. Prices thus far into 2018 have been higher than anticipated for most carriers and are the highest fuel prices seen by the maritime shipping industry since 2014.

In Other News

5/21

Transport Topics: Gov. John Kasich Opens Ohio Roads to Autonomous Testing

Ohio’s public roads and highways are open to autonomous vehicle testing as mandated in an executive order recently signed by Gov. John Kasich.

Commercial Carrier Journal: Shippers Using Contracts to Shift Burdens of Food Hauling Regs to Carriers

Despite much of the burden of new FSMA-related compliance falling on shippers of perishable foods, there’s some evidence of overbroad interpretation of the rules and willingness of shippers to use contracts to “cram down” that responsibility on carriers, says Henry Seaton, a transportation attorney.

5/22

EIA: Electrified vehicles continue to see slow growth and less use than conventional vehicles

From 2012 through 2017, electrified vehicles consistently accounted for between 2.5% and 4.0% of total light-duty vehicle sales, even as the number of available models increased from 58 to 95.

5/23

Reuters: Exxon to cut methane emissions in bid to tackle climate change

Exxon stated it is targeting a 15 percent cut of its methane emissions by 2020, representing the latest effort by an oil major to reduce its carbon footprint and address climate change concerns. BP recently committed to keeping its carbon emissions flat to 2025 to reduce its impact on the climate.

5/24

American Shipper: Going Bananas for Reefers

Global trade in refrigerated goods moving in ships is expected to reach 134 million tons by 2021, up from 117 million tons in 2016, according to the consultants Drewry Shipping. The biggest single refrigerated commodity moving by ship is meat, which increased by an annual rate of four percent between 2006 and 2016. Exotic fruit shipments have also grown and added volume. Growth in perishable goods has stemmed from population growth and growing incomes across developing economies.

5/25

Bloomberg: Oil Falls Most in Two Weeks as Phase Out of Supply Cuts Looms

Oil prices slid the most in more than two weeks after Russia signaled that phasing out historic supply curbs that eliminated a worldwide glut may be on the table.

American Shipper: Liners Announce Emergency Bunker Surcharges

Several container carriers, including the three largest – Maersk, MSC, CMA CGM – have announced new bunker surcharges. In an announcement by MSC earlier this week, the carrier went so far as to state, “the situation is no longer sustainable without emergency action.”

An announcement from Maersk Line on Friday said its emergency bunker surcharge (EBS) of $60 on 20-foot containers and $120 on 40-foot and 45-foot dry containers will go into effect June 1 on many trades, but July 1 on “regulated corridors” including lanes to and from the United States.

Toronto Star: CP Rail Talks Set to Resume in Calgary After Unions Reject Railway’s Offer

Canadian Pacific Railway Ltd. is set to resume talks with its train operators and signaling workers after they overwhelmingly rejected the company’s contract offer, leaving its already disgruntled customers fearing a labor disruption that could further affect their businesses.

This weekly publication is designed to highlight relevant industry news to provide professionals in the transportation, supply chain, and energy sectors with up-to-date information in a rapidly changing marketplace. This update is purely a compilation of industry news and as such, does not necessarily reflect the opinion of Breakthrough®Fuel. We do not warrant or guarantee accuracy or completeness of information. For additional information, please contact us at info@breakthroughfuel.com.

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