OPEC Decision and Battery-Electric Tractors | Weekly News Update

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OPEC Rules Out Crude Production Increase

Last week, the Organization of Petroleum Exporting Countries (OPEC) announced they will keep crude oil production steady and they are comfortable with Brent crude prices reaching $80 per barrel (bbl).  This resulted in fear that sanctions on Iran and outages in Venezuela will cause supply shortages.  The cartel decided they will wait to increase production when it is clear the oil supply is needed.  This is to avoid anticipating the needed amount of production and potentially creating a supply surplus.  The energy markets saw the effects of this decision as prices spiked to start last week.  Brent prices surpassed $82/bbl on Friday for the first time since 2014.  Diesel prices also surged 9.02 cents per gallon in five days to reach 301.91, the highest its been since December 2014.

Battery Electric Tractor-Trailers Gaining Traction

Several stories promoting battery electric tractor-trailers surfaced last week.  First, Doorne’s Aanhangwagon Fabriek or DAF Trucks released two battery-electric tractors and one hybrid model at the IAA Commercial Vehicles show in Hanover, Germany.  The LF Electric is a medium-duty tractor with a range of 137 miles ideally used for regional distribution.  The CF Electric is a heavy-duty truck with a range of 62 miles.  This tractor is designed for urban applications with higher payloads and volumes like supermarket delivery.  The CF Hybrid uses a combination of electric power and diesel.  The truck can drive in zero emissions zones for 19 to 31 miles but can also operate of diesel on long length of hauls.  The diesel engine can also charge the electric batteries during on-highway operations.

Volvo also announced they will deploy eight all-electric heavy-duty trucks in California next year and full commercialization of the trucks in 2020.  The California Air Resource Board (CARB) is awarding $44.8 million for the Volvo Low Impact Green Heavy Transport Solutions project (Volvo LIGHTS) to help fund the development and deployment of the eight prototype trucks.  The project consists of 16 partners between Volvo Group, SCAQMD, and industry leaders in transportation and electrical charging infrastructure.

In Other News

9/24

Platts: US may be Prepping Venezuela Oil Sector Sanctions

The US is preparing actions to pressure the Maduro regime in Venezuela, which analysts said Sunday could include some oil sector sanctions. The actions will not include restrictions on US imports of Venezuelan crude oil but could include new prohibitions on US light oil exports and refined product exports to Venezuela.

Transport Topics: DAF Trucks Showcases Hybrid, Full-Electric Models at IAA

DAF Trucks exhibited two full battery-electric tractors and one hybrid model at the IAA Commercial Vehicles show, illustrating how electric-vehicle technology could be adapted to different trucking applications.

Journal of Commerce: US Shippers Advised to Extend Hours to Add Truck Capacity

Imagine how much US truck capacity could be unlocked with weekend hours. Distribution centers might be closed, but truckers are always on the road. Making space available on the weekends may mean additional costs, but it also creates much needed capacity and flexibility for truck driver hours.

WSJ: Brent Crude Tops $80, Closes at Highest Level Since 2014

Global oil prices surged to their highest close in nearly four years on Monday after OPEC left production steady over the weekend, fueling fresh bets that U.S. sanctions against Iran and outages in Venezuela will lead to supply shortages.  Also see, Why the Lid Is Off of Oil Prices For Now

Reuters: U.S. – China Trade War Poses Oil Demand Shock in 2019

U.S. sanctions on Iran will tighten global oil supplies sharply until the end of the year, but a threat to world demand looms in 2019 from the U.S.-China trade war, the head of BP’s oil trading in Asia said.

The Hill: Trump officials roll back Obama oil train safety rule

The Trump administration rescinded a rule requiring trains carrying crude oil to use special brakes with new technology. 

9/25

WSJ: Europe Plans ‘Special Vehicle’ to Maintain Companies’ Ties to Iran, Avoid U.S. Sanctions

The European Union said late Monday that it would establish a special payment channel to allow European and other companies to legally continue financial transactions with Iran while avoiding exposure to U.S. sanctions.

Bloomberg: Goldman Sachs Pours Cold Water on Talk of $100 a Barrel Oil

Oil at $100? Not so fast, says Goldman. The bank said Tuesday that “another supply catalyst beyond Iran would likely be needed for prices to meaningfully break to the upside.” According to Goldman, supply from other OPEC producers and Russia will offset losses out of Iran.  Also see,  Goldman Sachs: Trucking Rates to Peak in Q4, Gradually Decline in 2019

Transport Topics: Shipping Lobby Proposes Phased Start to Historic Fuel Change

Three trade groups and four countries where thousands of ships are registered made a joint proposal to the International Maritime Organization on Aug. 31 for what they called an “experience building phase,” according to a copy of the document obtained by Bloomberg. The suggestion, if adopted, would avoid individual ships being “unduly penalized” if they can’t get the right fuel.

Journal of Commerce: Carriers Move Beyond Ocean Shipping Beset With Challenges

Container lines’ effort to move upstream and downstream into services that go beyond port-to-port ocean freight is beset by challenges from e-commerce giants, and new startups also looking to better provide shippers the higher service e-retailing demands.

Bloomberg: India Is Cutting Imports of Iranian Oil to Zero in November

India isn’t planning to buy any Iranian oil in November, raising the prospect that Tehran will lose another major customer as U.S. sanctions hit and spurring speculation over whether China will follow suit.

9/26

Transport Topics: Nation’s Two Largest Ports Toughen Clean-Truck Standard

As of Oct. 1, any Class 8 trucks entering service for the first time at either the Port of Los Angeles or the Port of Long Beach must be model year 2014 or newer under a change implemented at the nation’s two largest ports. It is the first in a series of steps the ports are taking to advance clean truck progress under the 2017 Clean Air Action Plan Update, approved last November.

WSJ: Shipping’s New Arctic Routes Won’t Thaw Cold Economic Reality

Arctic routes are drawing greater attention as the global climate warms up and polar ice recedes, potentially opening new paths between Asia, Europe and North America.  Before the ice began melting some 20 years ago, the Arctic was inhabited by local tribes, and visited by scientists and explorers. But it is now a major energy production site with easy access to the sea to move crude and liquefied natural gas.

Transport Topics: Technology Can Help Unlock Capacity in Tight Freight Environment

The transportation industry is facing an evolving set of challenges.  Historic freight demand is further stretching truck capacity, which already had been constrained by the industry’s chronic shortage of professional drivers. At the same time, motor carriers must carefully comply with driver hours-of-service limits while still meeting shippers’ increasing expectations regarding service and freight visibility.

Journal of Commerce: US Intermodal Peak Delayed, Tariffs Could be to Blame

In most years, rail shippers are frantically moving freight by late September, but that isn’t true this year, surprising those who thought the peak season would start earlier than normal.

Transport Topics: Thermo King Introduces Clean-Energy Refrigerant Options

Thermo King, a provider of transport temperature-control solutions, showcased its latest clean energy cooling systems at the IAA Commercial Vehicles Show in Hanover, Germany, including several refrigeration units, a discharge evaporator and new solar panels.

9/27

WSJ: Oil’s Rise Puts Asia on a Slippery Slope

Pricey oil is making emerging markets’ tough year even tougher, and the pain could spread wider this time round.  Brent crude notched its highest close since 2014 Monday, moving decisively above $80 a barrel for the first time since the 2015 commodities meltdown. That’s bad news for Asia’s big importers of oil and capital, such as India and Indonesia—but also for two countries usually well-equipped to deal with expensive energy.

Reuters: White House Mulls Limits on Biofuel Trading as Part of E15 Deal

The White House is considering imposing restrictions on trading of biofuel credits, hoping to discourage speculation and reduce costs for oil refiners to comply with U.S. biofuels policy, according to three sources familiar with the discussions.

CCJ: Volvo Set to Deploy 8 All-Electric Heavy Trucks in California Next Year

Volvo Trucks announced Thursday it expects to begin all-electric truck demonstrations in California next year with commercialization to follow in 2020. The California Air Resources Board (CARB) has preliminarily awarded $44.8 million to California’s South Coast Air Quality Management District for the Volvo LIGHTS (Low Impact Green Heavy Transport Solutions) project – a partnership between the Volvo Group, SCAQMD, and industry leaders in transportation and electrical charging infrastructure.

Reuters: White House Mulls Limits on Biofuel Trading as Part of E15 Deal

The White House is considering imposing restrictions on trading of biofuel credits, hoping to discourage speculation and reduce costs for oil refiners to comply with U.S. biofuels policy, according to three sources familiar with the discussions. 

USA Today: Former Pilot Flying J president sentenced to more than 12​​​​​​​ years in prison, fined $750K

A federal judge on Wednesday ordered the former president of Pilot Flying J to serve more than 12 years in federal prison as the mastermind of a five-year fraud plot to grow the firm’s market share.  In addition to spending 150 months behind bars, Senior U.S. District Judge Curtis Collier also ordered Mark Hazelwood to pay a $750,000 fine.

9/28

Journal of Commerce: Low-Sulfur Fuel Prices Won’t be Clear to BCO’s Until Next Year

The container shipping industry won’t have a handle on the cost of low-sulfur bunker fuel needed to help ocean carriers meet a global mandate until early to mid-2019, even though the rule takes effect in less than 14 months. But so-called pricing discovery for the new fuel, of which various types are still being created, won’t be finished until between the first and second quarters of 2019.

Transport Topics: Tariffs Start to Drag on US Economy as Trade Deficit Widens

Fresh data on the U.S. economy show President Donald Trump’s escalating trade war is shaping up as a clear drag on growth this quarter. The merchandise-trade deficit unexpectedly grew in August to $75.8 billion, the widest in six months, as exports of food, industrial supplies and autos declined, Commerce Department data showed Sept. 27. A separate report from the department showed corporate investment took a breather, with business equipment orders at U.S. factories falling in August after a run of strong gains, while shipments of those items slowed.

FreightWaves: BNSF Looks to Turn Around Intermodal Speeds as Ecommerce Powers Freight Growth

BNSF wants to speed up intermodal service with new capital projects as the company aims to get a larger piece of ecommerce freight, says the company’s head of intermodal marketing.  BNSF, a unit of Berskshire Hathway, has seen its intermodal service grow 4.2% this year-to-date to 3.8 million loads, according to Susquehanna Financial Group. Intermodal accounts for just over half the loads on its network.

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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