OPEC+ Production Cuts
The Organization of Petroleum Exporting Countries and supporting nations (OPEC+) agreed to cut 1.2 million barrels per day (mmbd) starting in January. However, in the OPEC monthly report, the cartel decreased production significantly in December ahead of the cuts with Saudi Arabia leading the charge. Saudi Arabia saw production declines of roughly 0.47 mmbd and they also announced they will cut exports by 0.8 mmbd in January. Other big movers consisted of Libya who declared a force majeure on its biggest oilfield and Iran who is facing sanctions from the US. The cartel as a whole decreased a net production decrease of 0.75 mmbd.
Startup Aims to Make Self-Driving Long Haul Look Easy
Self-driving vehicles or autonomous vehicles (AVs) are making waves in the trucking industry. TuSimple, an autonomous truck technology company, believes 2019 will be the year that heavy-duty AVs will be mainstream. TuSimple currently has a pilot fleet of 11 trucks but plans to increase to 40 trucks by June and is partnering with Cummins to integrate the technology in Cummins’ truck powertrains. TuSimple’s technology achieves level 4 automation, which refers to the truck having the ability to operate the vehicle without the driver input in most situations. The steering wheel and pedals work as a backup plan, when road conditions are poor. A few of the many other companies working to achieve level 2-4 automation in 2019 consist of Waymo, Autobon AI, Daimler and Embark.
In Other News
President Trump’s National Security Council asked the Pentagon to provide the White House with military options to strike Iran last year, generating concern at the Pentagon and State Department, current and former U.S. officials said.
In case you didn’t know it, Saudi Arabia is sitting on top of a lot of oil. The first independent assessment of reserves in about 40 years has just proved it. The question is how the kingdom ensures that most of it won’t still be there when the world no longer wants or needs it. Producers in the rest of the world had better pray it doesn’t decide to solve the problem.
Carriers have been busy revising bunker surcharges ahead of the International Maritime Organization’s (IMO) low-sulfur mandate that will take effect on January 1, 2020. According to the JOC, and the shared infographic, “carriers have no option but to directly pass on the costs to shippers and have already begun to phase in the new surcharge formulas to prepare the market for 2020.”
The implications for North American intermodal are varied and run the gamut from beneficial to troubling. In the former category is the potential for a halt or even a reversal of the west coast-to-east coast import routing migration that has been underway for a number of years. Potentially rising diesel prices might also provide an intermodal tailwind. But intermodal may find the volatility that will possibly occur during the transition to be hard to handle.
Co-founded by Cal Tech-trained cognitive scientist Xiaodi Hou (who’s also the chief technology officer and U.S. unit president), the three-year-old TuSimple is generating buzz for what it claims is a breakthrough vision system and a significant uptick in the number of autonomous trucks it will put on the road.
The U.S. petroleum industry is meeting record world demand while decreasing the amount of carbon emissions released into the skies, but challenges lie ahead if it hopes to maintain that momentum, according to the American Petroleum Institute’s annual report, “State of American Energy 2019.”
US intermodal volume is set to grow for the third straight year but at a slower rate than 2018, thanks to international and domestic pressures. Tariffs on Chinese goods threaten the consumer confidence that drives the railing of containerized imports and US manufacturing.
American Fuel & Petrochemical Manufacturers and American Trucking Associations have asked the U.S. Supreme Court to reject an appeals court ruling that upheld the state of Oregon’s program to reduce the carbon intensity of fuel by 10% by 2025.
More freight is moving, and e-commerce is booming, but there is a finite amount of urban space for road use and parking delivery vehicles. It’s a problem known as the final mile, and it’s especially profound in cities.
After enduring extreme rate volatility in 2018, carriers and importers in the eastbound Pacific will enter service contract negotiations cautiously this spring, seeking to achieve mutually agreeable rate levels that truly reflect supply and demand in the largest US trade lane.
Data on producer prices shows that overall inflation pressure calmed further in December, weighed down again by declines in energy prices. Industry detail showed that trucking rates continued to surge, however, driven by another large gain in long-distance trucking rates.
For more than 20 years, fleets have been using telematics, the granddaddy of IoT, to stay connected with vehicles and drivers. The electronic logging device (ELD) mandate accelerated the use of IoT in the industry, at least for trucks. Now attention has turned to the trailer.
A Massachusetts state senator will once again pursue legislation to implement an economy-wide carbon pricing scheme and a low-carbon fuel standard (LCFS) amid increasing support from the executive branch and regional partners to install market-based systems to reduce emissions.
Saudi Arabia expects domestic energy consumption to fall by 1.5 million to 2 million barrels of oil equivalent per day by 2030 as a result of moves a year ago to hike gasoline and electricity prices, the energy minister said on Tuesday.
Nikola Motor Co. founder and CEO Trevor Milton said two key customers — private fleet Anheuser-Busch Cos. and truckload carrier U.S. Xpress Enterprises — will begin fleet tests of Nikola’s zero-emissions hydrogen-electric Class 8 trucks by the end of the year, as the first shoots of the necessary fueling infrastructure are emerging in Phoenix.
The intermodal industry probably is in the final chapters of the conflict between trailers and containers. The history of these two equipment types parallels the history of transportation in the United States. Domestic intermodal arose after World War II with trailers as the preferred asset. As the highway trailer grew in length and width, the railroads strove to keep up. Containers were for ocean borne cargo, and railroads handled this business almost as an afterthought.
While the announcement of a Level 2 truck is exciting for many, it will take time for these vehicles to populate roadways. Even if every fleet in America turned over 20 percent of its equipment each year, it would take five full years for the entire vehicle population to include these features. And we know that not every fleet turns over that many trucks each year. The startup company believes an aftermarket Level 2 solution will speed deployment and efficiencies in freight movement.
There’s little debate that we’re heading down a road toward some level of trucking electrification. What’s up in the air is how we’ll get there and just how far that road will take us.
Shippers’ prospects in US truckload contract talks look better this month than they did even a few months ago, thanks to flat spot market prices and a changed economic landscape. Truckload carriers are losing some of the bargaining leverage they hoped to retain in 2019. However, economic uncertainty may limit shipper advantages in upcoming contract talks.
Technology is changing the transportation landscape as freight carriers move toward self-driving vehicles and public officials look for new ways to develop infrastructure and prepare for what could be a major shift in traffic patterns and driving behavior.
OPEC significantly dialed back its crude-oil production in December ahead of an official plan by the cartel to hold back output as part of an effort to rein in global oversupply and bolster crude prices.
Oil prices rallied about 3 percent on Friday, boosted after OPEC detailed specifics on its production-cut activity to reduce world supply, and on signals of progress in resolving the U.S.-China trade war.
Volvo Group Venture Capital AB, a subsidiary of Volvo Group, announced it has invested an undisclosed amount in Momentum Dynamics Inc., which provides high-power wireless charging systems for the automotive and transportation industries.
Truckload spot rates may be slipping, but Knight-Swift Transportation Holdings, the largest US truckload operator, appears to be more than holding its own at the bottom line. The holding company raised its earnings guidance Thursday, giving battered trucking stocks a shot in the arm and signaling confidence in a freight market that has softened in recent weeks.
The creation of the country’s first uniform equipment interchange agreement will make it easier for Mexican truckers and equipment providers to lease intermodal equipment, positioning the larger industry to better handle rising volume amid truck capacity pinches.