Oil Prices Rise on U.S.-China Trade Hopes | Weekly News Update

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Oil hits 2019 Highs on U.S.-China Trade Hopes

Oil and diesel prices have rose the past two weeks on hopes of a trade resolution between US and China.  US President Trump announced the March 1 deadline to apply additional tariffs will be extended as substantial progress towards a successful trade deal was achieved.  President Trump did not mention how long the extension would be, however he mentioned if the two sides make more progress, President Trump and Chinese President Xi will meet at Trump’s Mar-a-Lago resort in Florida to conclude an agreement.  The news pressured crude and diesel prices to its highest point since November 2018.  In the past two weeks, West Texas Intermediate (WTI) and Brent crude benchmarks both rose roughly 9 percent or $4.85 and $5.61 per barrel, respectively.  Diesel prices rose almost 15 cents per gallon in that same timeframe.

Autonomous Technology Adoption

Multiple stories were released this week about the growing presence of autonomous technology and vehicles.  The next generation Freightliner Cascadia set to start production this fall will achieve SAE Level 2 automation, which allows the truck to accelerate, decelerate, and steer independently with a human in the truck.  In other words, the truck will have fully functioning Adaptive Cruise Control to control acceleration and deceleration and Active Lane Assist to handle automated steering input.  Both technologies contribute to the evolving autonomous vehicle landscape.

Another company working towards a gradual adoption is Pronto.  Pronto is taking baby steps to get to fully autonomous technology as they believe it is still years away.  Pronto is currently focusing on SAE Level 2 or driver-assist technology as well.  Just as the Cascadia performs, Pronto’s technology will provide lane assist and adaptive cruise control but will also have a driver monitoring system that uses in-cab technology to track the drivers body position and head movements.

In Other News

2/18

WSJ: Import Wave Jams California Warehouses

A steady wave of imports into Southern California’s ports, driven by a robust U.S. economy and companies trying to get goods moving ahead of potential tariffs, has the region’s warehouses and shipping terminals overstuffed and distribution networks jammed.

FreightWaves: Railroads Look to PTC to Shae Out More Capacity

For the last 10 years, freight railroads and their regulators have emphasized the safety benefits of Positive Train Control (PTC). But with the technology getting closer to being up and running on every freight track mile required by federal mandate, the nation’s big railroads are starting to consider how PTC may help them make better use of their assets.

Transport Topics: Amazon Leads $700 Million Investment in Electric Car Maker Rivian

Amazon.com led a $700 million equity investment in Rivian Automotive, the electric pickup and SUV maker preparing to deliver its first vehicles next year. The backing from Amazon will bolster Michigan-based Rivian’s plans to bring an electric truck to market in late 2020.

Supply Chain Dive: Are Trailers the Next Big Warehousing Trend?

Companies and warehouse providers are scrambling for creative solutions to overcome a lack of warehouse space as they revamp supply chain networks to embrace e-commerce expectations.

FreightWaves: US Raises Safety Bar for Crude Oil Transported by Rail

Competition between rail and truck for crude oil shipments may soon be heating up with the issuance of costlier new railroad reporting requirements. A final rule issued on February 14 by the Pipeline and Hazardous Materials Safety Administration (PHMSA) requires that railroads develop oil spill response plans for routes travelled by trains carrying crude oil in a block of 20 or more loaded tank cars, or those with a total of 35 loaded tank cars spread throughout the train.

Dayone: Delivering Shipment Zero, a vision for net zero carbon shipments

Amazon announced that it plans to eventually have all its shipments to customers become net zero carbon, with 50% of all shipments net zero by 2030, though it currently lacks many public details.  They’re calling it “Shipment Zero,” and it won’t be just about electrification. Amazon mentions EVs, but also aviation biofuels, reusable packaging, and renewable energy. We’ll see how much of Amazon’s own fleet will electrify because of this project.  Also see, Amazon Pledges 50% Net-Zero Carbon Shipments by 2030

CCJ: Test drive: Freightliner’s autonomous-capable 2020 Cascadia

Next generation Cascadia tractors, set for production this Fall, will enable SAE Level 2 automated driving and will become the first production model to hold such distinction in North America. Level 2 automation means the truck can accelerate, decelerate and steer independently.

WSJ: OPEC Officials Say U.S. Sanctions Against Its Chief Won’t Derail Plans

OPEC will continue to operate normally despite U.S. sanctions placed on Venezuela’s oil minister, said officials for the oil cartel, according to WSJ’s Benoit Faucon and Summer Said.

2/19

Smart Cities Drive: California AVs drove more than 2M miles last year

Autonomous vehicles (AVs) notched more than 2 million miles on California roads in 2018. The reports are required of the companies permitted to test AVs in the state and tally the number of miles driven and disengagements, meaning when human safety drivers had to take control.

FreightWaves: Hapag-Lloyd’s Fleet Efficiency Seen as Tailwind Going Into 2020

Hapag-Lloyd is on track to meet one of the major goals set out in its 2016 merger with United Arab Shipping Company, according to credit rating agency Moody’s, with the result being a strong outlook for the company’s debt securities. While high fuel prices still challenge the company’s results, Moody’s sees advantages for Hapag-Lloyd going into what is expected to be a turbulent period for the ocean shipping market in 2020.

Platts: EU Agrees on Deal to Cut 15% of Carbon Dioxide from New HGVs by 2025, 20% by 2030

New EU heavy goods vehicles will have to emit an average of 15% less CO2 by 2025 and 30% less by 2030, compared with 2019, under an informal deal agreed upon by EU lawmakers.

Platts: First 0.5%/3.5% FOB Rotterdam Barge Marine Fuel Futures Trades on ICE

Futures contracts settling against Platts FOB Rotterdam Marine Fuel 0.5% barge assessments traded for the first time Tuesday morning on the Intercontinental Exchange, following Tuesday’s launch of ICE’s futures contracts.

JOC: Container Carriers Rewrite Game Plans

When 10 out of the top 20 major container carriers over the past four years ceased to exist as independent entities, or entirely in the case of Hanjin, there was little question the conservative container shipping industry would change. Less clear was exactly how. Now that’s coming into focus, and it’s not playing out as some thought.

Reuters: Despite Sanctions, Iran’s Oil Exports Rise in Early 2019

Iran’s exports of crude oil were higher than expected in January and are at least holding steady this month, according to tanker data and industry sources, as some customers have increased purchases due to waivers from U.S. sanctions.

Transport Topics: Self-Driving Truck Startup Pronto Pursues Gradual Path to Automation

Pronto, the new self-driving truck startup launched by Anthony Levandowski, is pursuing a more incremental path toward autonomous driving than many of its competitors in the increasingly crowded race to bring automation to trucking.

2/20

JOC: US Truckers’ Pricing Power Receding

The pricing power held by trucking companies in 2018 will likely diminish in 2019, but not disappear, according to various economic indices and comments by shippers. The IHS Markit Producer Price Index for the US long-haul truckload sector shows year-over-year pricing gains slowing from 8.2 percent in the 2018 fourth quarter to 2.15 percent by this year’s last quarter, according the company’s Pricing and Purchasing Service.

Supply Chain Dive: Maersk Strikes Deal with Refiner to Secure Low-Sulfur Fuel Source

A.P. Moller – Maersk struck a deal with PBF logistics to process crude oil for the carrier at a New Jersey facility so Maersk Oil Trading can sell IMO 2020 compliant fuels to its customers. The ocean carrier has also announced a leasing agreement to store approximately 20 percent of Maersk’s annual fuel demand at the Vopak Europoort Terminal in Rotterdam.

JOC: Small Shippers Face Higher Low-Sulfur Fuel Burden

Smaller beneficial cargo owners (BCOs) are poised to pay a higher fuel price per TEU than their larger counterparts to meet the International Maritime Organization’s low-sulfur rule. Among a half-dozen of the varying formulas, the cost of burning low-sulfur fuel needed to meet the rule starting Jan. 1 is the only constant factor.

Transport Topics: Volvo’s First Electric Trucks Put to Work

Volvo Trucks delivered its first all-electric vehicles to two companies operating in Sweden. A refuse truck went to waste and recycling company Renova, and a distribution truck to logistics company DB Schenker and partner hauler TGM.  Also see, Volvo delivers first electric trucks

JOC: Enough Low-Sulfur Fuel at US Ports Come 2020?

With implementation of the International Maritime Organization’s low-sulfur fuel requirement for vessel operators just 10 and one-half months away, the level of confidence that fueling infrastructure and adequate fuel supplies will be in place ranges from moderate to doubtful.

2/21

JOC: Carrier Earnings Show Scale of Low-Sulfur Risk

Although Maersk marked rising tariffs as a key risk to the profitability of the container shipping industry, the impending low-sulfur fuel mandate poses the greatest threat as carriers struggle to achieve rate levels needed to compensate for the higher bunker prices.

CCJ: Stakeholders Form Group to Develop. Test Hydrogen Fueling Hardware for HD Trucks

A group of hydrogen stakeholders – including Hyundai, Nikola Motor, and Toyota – have signed a Memorandum of Understanding (MOU) to test state-of-the art heavy duty (HD) hydrogen fueling hardware to assist in standardization and speed to market for fuel cell electric trucks.

Argus Media: Trump Administration Halts Car Talks with California

US president Donald Trump’s administration has put the brakes on talks with California over the future of fuel economy and CO2 standards for new cars, likely setting the stage for a legal fight over the state’s ability to enforce its own regulations.  Also see, Trump Administration, Getting Set for a Major Rollback, Ends Clean Air Talks with California

Transport Topics: Nation’s Ports Off to a Strong Start to 2019 as Trade Talks Continue

The nation’s major ports finished 2018 setting monthly and yearly container volume records, and industry experts said 2019 is off to a strong start as shippers continue to import and export goods as critical trade negotiations between the United States and China continue.

2/22

Supply Chain Dive: Maersk Expects Trade Uncertainty, Fuel Prices to Wreak Havoc in 2019

A.P. Moller-Maersk said the ocean side of its business had a good fourth quarter as shippers rushed to move product before the U.S.-China trade war escalated further, but a laundry list of complications in 2019 makes for soft growth projections. Revenue was up 9.3% year-over-year for the carrier at the end of 2018, heavily influenced by the acquisition of Hamburg Süd, which closed at the end of 2017.

Reuters: Oil hits 2019 highs on U.S.-China trade hopes, but U.S. output weighs

Oil prices touched their highest since mid-November on Friday and posted weekly gains for the second week in a row, boosted by hopes that U.S.-China trade talks would soon produce a deal, although new record U.S. oil supply limited gains.

Bloomberg: Trump Extends China Tariff Deadline After ‘Substantial’ Progress

President Donald Trump said he’ll extend a deadline to raise tariffs on Chinese goods beyond this week, citing “substantial progress” in the latest round of talks that wrapped up Sunday in Washington.

JOC: Detention-Demurrage Mitigation Demand Rises with Fees

As US detention and demurrage fees rise, shippers have a greater incentive to be more diligent about contracts and better use technology to avoid thousands of dollars in fines. Ten years ago, these fines were rare, today they are common. Beneficial cargo owners want their goods, but port congestion, bad weather, or chassis shortages tend to get in the way. It’s easy to pay $10,000 in fines per year but can also balloon to $100,000. Detention and demurrage weren’t major issues until 2014 when labor strife paralyzed the West Coast.

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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