IEA Cuts Oil Demand Forecasts
The International Energy Agency (IEA) predicts that global crude oil demand will grow at a slower pace than expected for the remainder of 2018 and into 2019. The IEA downgraded demand growth by 0.11 million barrels per day (mmbd) to 1.3 mmbd for the rest of 2018 and to 1.4 mmbd in 2019. The lower demand forecast is connected to trade tensions, higher oil prices, and geopolitical risk in the Middle East. The trade dispute between China and the US threatens global economic growth, which effects oil demand. Furthermore, the sanctions on Iran that go into effect early November, is resulting in less oil supply and rising prices. The IEA reported Iranian supply fell to a two and a half year low in September. In early October, Brent – the global crude benchmark – temporality reached $85/barrel (bbl), for the first time in four years. Despite the losses in Iranian oil supply and rising prices, Russia and Saudi Arabia are increasing production to fill the gap.
Concededly, the Organization of Petroleum Exporting Countries (OPEC) also lowered demand growth and is wary of a surplus of oil in 2019. With the increases of oil output in Russia and Saudi Arabia, the cartel believes the market is well supplied. In the OPEC Monthly Oil Market Report, global demand is projected a 0.1 percent decrease for the remainder of 2018. Crude oil and diesel prices dropped significantly after this news broke. The West Texas Intermediate (WTI) and Brent benchmarks dropped to roughly $71/bbl and $80/bbl respectively to close the week and diesel prices dropped to $3.04/gallon.
Self-Driving Cars May Hit U.S. Roads in Pilot Program
Self-driving vehicles may be on the roads under a pilot program the Trump administration is considering. The pilot would allow real-world road testing for a limited number of vehicles. The National Highway Traffic Safety Administration (NHTSA) will require the vehicles to have technology to disable the vehicle if a sensor fails and any accident, including near misses, and will have to be reported within 24 hours. Real world data would help create methods of validating safety performance and push the adoption of self-driving vehicles forward. The Trump administration is working to revise safety rules that bar self-driving vehicles without equipment such as steering wheels, pedals, and mirrors.
In Other News
CSX Transportation will eliminate more than 230 domestic intermodal and 65 international intermodal origin-and-destination pairs on January 3, 2019, forcing rail shippers to rethink how to move containers next year
Saudi Arabia’s crown prince, facing U.S. pressure to tame surging oil prices, insisted that the kingdom is fulfilling promises to make up for Iranian crude supplies lost to American sanctions.
Hapag-Lloyd laid out its fuel surcharge formula for low-sulfur marine fuel, joining other ocean carriers in readying for the global switch in 2020. Hapag-Lloyd said the requirement from the International Maritime Organization that global shipping lines will have to limit fuel sulfur emissions to 0.5% from the current 3.5% limit sulfur will cost the industry $60 billion in added expenses.
Voice-activated digital assistants such as Apple’s Siri and Amazon’s Alexa are all the rage in consumer electronics right now, and some developers are beginning to apply this technology to the trucking industry to enhance safety and efficiency.
After a year of double-digit price hikes across the US trucking landscape, shippers are wondering when the days of predictable, low-single-digit rate increases will return. Trucking operators have pricing leverage they haven’t seen since deregulation in 1980.
President Trump is moving to allow year-round sale of gasoline containing a higher percentage of ethanol, satisfying campaign promises he made to the Farm Belt, while likely provoking a battle with the oil industry.
CTS data reveals volume growth halted in August to buck the positive trend of healthy box numbers in 2018 so far. Strong growth on the transpacific and transatlantic trades was unable to offset poor performances elsewhere, while news that the CTS global freight index lost ground will do little to lift the mood of carriers
Irving Oil Corp shut its Saint John refinery in the Canadian province of New Brunswick on Monday morning after an explosion and a major fire that followed, with photos showing flames and smoke billowing from the complex.
Transplace, a provider of transportation management services and logistics technology, said Monday that it has acquired Yusen Logistics (Americas) Inc.’s intermodal marketing company and over-the-road freight brokerage group.
Exxon Mobil Corp. is committing $1 million over two years to promote a tax on carbon emissions by corporations, one of the few times an oil company has given money to make fighting climate change a political priority in Washington. Also see, Exxon Puts $1 Million Into Quest for Carbon Tax and Rebate
The IEA made a direct appeal to OPEC and other major oil producers to boost output, warning that prices are inflicting damage on the global economy. “We should all see the risky situation, the oil markets are entering the red zone,” IEA Executive Director Fatih Birol said today.
Natso, the national association representing the travel plaza and truck stop industry, and its newly launched Alternative Fuels Council initiated a renewable identification numbers management service Oct. 1. The program is designed to help fuel retailers that blend and sell renewable fuels to more efficiently participate in the Renewable Fuel Standard program and manage their RINs.
Fully self-driving cars may be on the fast lane to U.S. roads under a pilot program the Trump administration said on Tuesday it was considering, which would allow real-world road testing for a limited number of the vehicles.
With January 1, 2020 just 15 months away, compliance with the IMO’s sulfur cap has the complexity of a game theory framework. Key compliance stakeholders, such as container carriers, and refiners, have found their decision-making and likely outcomes are interdependent and made more complex by a volatile energy market that just experience the highest price of crude oil in four years.
Saudi Arabia, the world’s biggest oil exporter, will supply Indian buyers with an additional 4 million barrels of crude oil in November, several sources familiar with the matter said on Wednesday.
Cummins Inc. and Isuzu Motors announced they have signed a letter of intent to jointly evaluate opportunities to deliver globally competitive powertrain products. The two companies, each nearly 100 years old, maintain that significant investment will be required to deliver the best next generation diesel and natural gas engines as well as alternative powertrains, connectivity and autonomy that their respective customers demand.
Shippers already grappling with a lack of ocean reliability should expect even longer transits come 2020 when carriers work to mitigate the higher fuel costs of the low-sulfur mandate via slow steaming, forcing beneficial cargo owners (BCOs) to increase lead time and carry more inventory.
What appears to be a routine price increase announced Wednesday by the United States Postal Service does have one change that could have some impact on trucking. If there is an impact, it is likely to be small. But a change in the pricing system for a service called First-Class Package Service—going to zone pricing from a flat price—is what could push some parcel movement to utilize a truck for part of the trip.
Class 8 U.S. retail sales in September rose 33.9% year-over-year to 23,648, WardsAuto.com reported. For the first nine months of 2018, sales hit 178,199. That was an increase of 32.5% from 134,481 in the 2017 period. Freightliner, a unit of Daimler Trucks North America, remained the market leader with 8,415 sales, good for a 35.6% market share.
OPEC sees the oil market as well supplied and is wary of creating a glut next year, the group’s secretary-general said on Thursday, suggesting producers are in no rush to expand a June agreement that raises output.
Most understand that higher diesel pricing drives both incremental demand and incremental pricing opportunities for domestic intermodal. With the diesel national average price at $3.385 a gallon in the most recent week, which is 22% higher on a YOY basis, it is a positive contributing factor for both demand and pricing.
A robust economy is placing new demands on third-party logistics service providers, based on survey results from two long-running university-sponsored studies released at the Council of Supply Chain Management Professionals annual conference in Nashville, Tenn.
In spite pf all attempts to improve US tricking utilization, about 15 percent of capacity is still wasted. That’s often attributable to factors shippers can control or change, such as how they pack and palletize freight. Shippers also waste capacity by keeping drivers waiting to deliver or pick up freight; handling more deliveries and pickups from facilities without a freight dock or wit ha very tight maneuvering yard; and keeping drivers waiting to obtain confirmation of delivery.
The International Energy Agency on Friday was the latest organization to downgrade the world’s future appetite for oil as trade disputes, higher crude prices and tensions in the Middle East undermine demand. Also see, IEA Cuts Oil Demand Forecasts But Sees Prices Staying High.