Tariffs Dropped on Chinese Imports | Weekly News Update

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U.S. Slaps Higher Tariffs on Chinese Imports as Trade Talks Resume

The US rose tariffs on $200 billion of Chinese goods from 10 percent to 25 percent on Friday.  The sudden move to increase tariffs is attributed to put pressure on China after they went back on previous commitments that was expected to produce a preliminary trade deal.  President Trump also stated that he will be applying tariffs on 25 percent of $325 billion of Chinese goods that are currently not taxed.  China threatened to retaliate, but the extent of the tariffs and when they will go into effect are uncertain.  It is expected that the tariffs on Chinese goods will remain until a trade deal is reached and China’s compliance of the trade deal is determined successful.  The announcement has put downward pressure on energy prices and is expected to effect freight demand in the coming months.

Crude oil prices dropped 1 percent this week, while diesel prices dropped nearly 5 cents or 2 percent since the beginning of the month.  As the uncertainty from the trade talks continue and the second round of tariffs go into effect, energy prices could see additional downward pressure.

The short timeframe between the announcement and the increase in tariffs that went into effect Friday did not allow companies to pull freight forward to avoid tariffs, like the market saw at the end of last year.  However, with the assumption that President Trump will apply another round of tariffs in the near future, we may see another cycle of companies try to get ahead of the tariffs by pulling freight forward.  This would inflate inventories on top of the already heightened inventories and disrupt freight demand.

J.B. Hunt Launches New Drop Trailer Program 360box

JB Hunt unveiled their newest product offering apart of JB Hunt 360, called 360box.  The program allows small carriers to drop and hook freight using the 360 app.  This summer, JB Hunt will make 500 trailers available for shippers to reserve and carriers will bid to move the freight.  The program “adds capacity to a customer’s supply chain while moving more freight in a way that’s efficient for both the customer and the carrier,” John Roberts, president and CEO of J.B. Hunt, said.

In Other News

5/6

FreightWaves: J.B. Hunt launches new drop trailer program 360box

J.B. Hunt announced the launch of a drop trailer program called J.B. Hunt 360box that will give small carriers using the app access to drop and hook freight. This summer, 500 trailers will be made available for shippers to reserve, and carriers can bid on moving those trailers through J.B. Hunt’s carrier app.

Supply Chain Dive: HOS changes to be published, open for comment next month

Changes to hours-of-service (HOS) regulations in the trucking industry are expected to be up for a round of a public comment beginning next month, according to an April regulatory update from the Department of Transportation (DOT).

WSJ: Mexico Stanches Flow of Stolen Fuel

Mexico’s government is notching some successes in its battle against the country’s fuel thieves, dealing a blow to organized crime and restoring lost revenues to financially troubled state-run oil company Petróleos Mexicanos.

JOC: Container Lines Reject Mandatory Speed Limit Proposal

Container carriers are rejecting proposed mandatory vessel speed limits, saying the move set to be discussed at the International Maritime Organization (IMO) meeting later this month would undermine climate change goals for shipping.

WSJ: Rivals Vie for Mastery Over America’s Hottest Oil Field

Chevron and Occidental, in vying for Anadarko, are fighting to control more of the Permian Basin, the chief engine of the U.S. shale boom. Production from the region, which spans more than 75,000 square miles of West Texas and New Mexico, has more than doubled in recent years and makes up about one-third of total U.S. crude output, according to the Energy Information Administration.

Oil Price: Trump’s Dangerous Oil Price Game

Trump’s trade war may have depressed oil prices at the start of the week, but the U.S.’ decision to send warships to the Middle East is an ominous sign of a potential escalation in conflict with Iran. The oil market seesawed on Monday as traders tried to balance these two sources of instability.

5/7

Transport Topics: Lawmakers Introduce Bill to Repeal Federal Excise Tax on New Trucks

Two members of the U.S. House of Representatives recently introduced bipartisan legislation aimed at repealing the 12% federal excise tax on certain heavy-duty trucks, tractors and trailers. The lawmakers emphasized in an announcement accompanying the legislation that, on average, the World War I-era federal excise tax could potentially add $12,000 to $22,000 to the sale of a new truck.

S&P Global Platts: South Korea to Grant Freight Incentives for Non-Middle East Crude Purchases

The South Korean government granted freight incentives for refiners buying crude oil from regions other than the Middle East until 2021 to support companies looking for alternatives to Iranian crude and condensate, an energy ministry official said Tuesday.

Argus Media: Petroineos’ Lavera to start 0.5pc VLSFO sales in 4Q

UK-Chinese joint venture Petroineos will start sales of 0.5pc sulfur marine fuel from its 210,000 b/d Lavera refinery in the fourth quarter this year. Petroineos’ IMO compliant marine fuel will meet the existing International Organization for Standardization (ISO) 8217 specifications.

JOC: Panama Canal Draft Restrictions Limiting Container Ship Loadings

The Panama Canal Authority (ACP) announced the sixth reduction in draft this year to a maximum of 43 feet, effective May 28, for the Neopanamax locks on Gatun Lake as water levels continue to fall. The canal informs customers of draft adjustments through the Advisories to Shipping website at least four weeks in advance to allow time for proper planning.

WSJ: Consumers Could Be Hit as New Front Opens in U.S.-China Trade Fight

But the higher tariffs set to go into force Friday would apply 25% levies on more than $40 billion worth of items purchased directly by consumers—furniture, handbags, clothing, Christmas decorations, fire alarms and other things shoppers find on the shelves at Target, Walmart, Macy’s and other stores.

5/8

S&P Global Platts: Global Debate on Open-Loop Scrubbers Adds to Uncertainty Ahead of IMO 2020

countries remain divided over open-loop scrubbers due to environmental concerns over the discharge of polluted washwater into the sea. As a result, countries have started banning the use of open-loop scrubbers in their port waters, necessitating either the use of closed-loop scrubbers or lower sulfur marine fuels.

Transport Topics: Aging Driver Workforce Increases Workers’ Compensation Risks for Fleets

An aging workforce of drivers is elevating the risk of workers’ compensation claims for fleets even as trucking companies are seeing stable or even lower premiums for workers’ compensation insurance, industry experts said.

NGT News: Nearly Every State Took EV Policy Action in Q1

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JOC: Softening US Truck Market Resets Battle for Domestic Freight

Historically, intermodal rail has offered a slower, lower-cost option for shippers, but with truckload prices falling, intermodal rail is now more expensive than trucking in some secondary markets.

5/9

Argus Media: Mexico Scraps Refinery Tender, Pemex To Go It Alone

The Mexican government has scrapped plans for outside firms to build the 340,000 b/d Dos Bocas refinery, charging the energy ministry and state-owned Pemex with building and managing the project.

Transport Topics: CN Rail Open to Moving Alberta’s Oil-Shipping Deals to Drillers

Canadian National Railway Co. is open to transferring the crude-by-rail contracts that it signed with Alberta to private companies or to striking other arrangements that put its spare shipping capacity to use, CEO Jean-Jacques Ruest said.

WSJ: China Hardens Trade Stance as Talks Enter New Phase

The new hard line taken by China in trade talks—surprising the White House and threatening to derail negotiations—came after Beijing interpreted recent statements and actions by President Trump as a sign the U.S. was ready to make concessions, said people familiar with the thinking of the Chinese side.

NYT: U.S. Seizes North Korean Ship for Violating Sanctions

The United States has seized a North Korean shipping vessel that was violating American law and international sanctions, the Justice Department announced Thursday, a move certain to escalate tensions already on the rise because of recent North Korean weapons tests.

Reuters: U.S. EPA Proposes Hike in Biofuel Mandate to 20.04 Billion Gallons in 2020

he U.S. Environmental Protection Agency has proposed increasing the volume of biofuels refiners must blend into their fuel annually to 20.04 billion gallons in 2020, from 19.92 billion gallons in 2019, according to two sources familiar with the matter.

JOC.com Emergency Bunker Fuel Surcharges Returning

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5/10

WSJ: U.S. Slaps Higher Tariffs on Chinese Imports as Trade Talks Resume

The U.S. increased tariffs on $200 billion of Chinese goods to 25% Friday as President Trump ratcheted up pressure on Beijing and threatened to impose additional levies on virtually everything China exports to the U.S.

WSJ: Shipowners Seek to Slow Services to Meet Emissions Limits

Looming new environmental regulations are triggering sharp divisions in the shipping industry between vessel operators investing billions of dollars to reduce emissions and others who want to stave off the financial impact by simply slowing down ships.

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. 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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