OPEC Policy Decision Delay & Decreased Truck Orders | Weekly News Update

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OPEC Likely to Defer Output Policy Decision Until June

The Organization of Petroleum Exporting Countries and supporting nations (OPEC+) are unlikely to decide on new output goals until June.  Originally, the group was to meet in April to decide on production cuts going forward, however, the cartel decided it would be too soon to get a clear picture of the impact of their current supply cuts on the market.  OPEC+ will still meet in April but will have another follow-up meeting at the end of June.  It is expected for the group to extend the cuts, but the status of the sanctions on Iran and Venezuela, may alter the decision.  Iran waivers are set to expire at the end of May, with the intent of bringing Iran’s output to zero.  However, there is a possibility that the US will extend the waivers, bringing more uncertainty in the market.  The outcome of the OPEC meeting in June will consider all factors including the countries currently exempt from the supply cuts – Iran, Venezuela, and Libya – who have dropped production by 700,000 barrels per day since October.

New Truck Orders Fall in February as Freight Demand Cools

North American truck orders fell for the fourth straight month in February and was the lowest two-month period since 2016, according to the preliminary report from Freight Transportation Research Associates (FTR).  Truck orders are expected to be 16,700 units, which is roughly 5 percent down from the previous month and 58 percent down year-over-year.  A key driver of the drop-off of truck orders is the backlog-to-build ratio – an estimate of the time between order and delivery of a vehicle – which has not dropped below 10 months since August 2018.  Rising truck order cancellations are also a big contributor as freight demand is showing signs of slower growth.

In Other News

3/4

WSJ: U.S., China Close in on Trade Deal

China and the U.S. are in the final stage of completing a trade deal, with Beijing offering to lower tariffs and other restrictions on American farm, chemical, auto and other products and Washington considering removing most, if not all, sanctions levied against Chinese products since last year.

FreightWaves: Mexico Grapples with Cross-Border Shipping Demand Amid Economic Boom

Mexico’s current economic boom is providing business for the country’s cross-border shipping industry, but also emphasizing the industry’s growing pains. In a webinar hosted by FreightWaves and sponsored by Redwood Logistics, Jordan Dewart, managing director of Redwood’s Mexico service, highlighted the unique challenges facing the industry.

Argus Media: Shale Oil Growth to Slow for Large US Independents

US shale oil output growth plans point to a possible slowdown compared with 2018, as leading independent producers prioritize boosting investor returns and look to rein in their capital expenditure (capex) budgets to stay within cash flows.

Reuters: OPEC Likely to Defer Output Policy Decision Until June

OPEC and its partners are unlikely to decide on their output policy in April as it would be too early to get a clear picture of the impact of their supply cuts on the market by then, three OPEC sources said on Monday.

WSJ: Libya’s Largest Oil Field Restarts Production

Libya’s National Oil Corp. has restarted limited production at its giant Sharara oil field, a person familiar with the matter said Monday, following the removal of gunmen who had occupied the field for three months.

3/5

WSJ: Chevron, Exxon Mobil Tighten Their Grip on Fracking

Chevron Corp. and Exxon Mobil Corp. plan to significantly ramp up production in the oil field at the heart of the American fracking boom, the latest sign that the next era of shale drilling is likely to be led by the major oil companies.

JOC: US Trucking Market Stuck in the ‘Muddy Middle’

Last year was great for trucking companies and less so for the shippers that rely on those operators to move their freight, but capacity is beginning to loosen as more trucks come online and shippers have come to accept higher rates as part of the cost of doing business, bringing the market closer to what could be considered balanced. Even so, no one knows exactly what this new normal will look like.

Transport Topics: Improving Infrastructure Can Cut Fuel Costs, Aid Environment

The nation can conserve fuel and reduce emissions by improving the nation’s highway infrastructure, according to a report by the American Transportation Research Institute. The study quantifies how infrastructure improvements to the nation’s highways cause congestion.

FreightWaves: Ocean Carriers to Take China-Sized Bite of Global Diesel Market as IMO 2020 Hits

Refineries and supply chain not ready for ocean shipping’s uptake of new fuel; even heating oil prices possibly in play during election year. A widely cited oil market expert offered a pessimistic view on the transition to low-sulfur fuel in the ocean shipping industry, saying the steamship lines and their customers are largely unprepared for the switch.

JOC: Technology Opens New BCO Avenues for Efficiency

The transportation industry is replete with old ways to do things with the only explanation that this is how it’s always been done. Using faxes instead of digital communication, paper instead of computers, and phone checks instead of digital tracking are all examples of twentieth century practices still alive today.

HDT: Class 8 Truck Orders Remain Subdued in February

Class 8 Truck orders for January and February of 2019 were the lowest for a two-month period since October-November 2016, according to a preliminary report from FTR.  Also see, New Truck Orders Fall in February as Freight Demand Moderates

3/6

WSJ: U.S.-China Trade Deal Expected to Give Limited Boost to Growth

The global economy is unlikely to receive a big boost from a trade agreement between the U.S. and China, since it would likely leave much uncertainty over future economic relations between the two, the Organization for Economic Cooperation and Development said Wednesday.  Also see, US and China Near Deal, but it May Not Solve Global Trade Problems

Fleet Owner: 10 fuel-saving technologies to make your fleet more efficient

NACFE is celebrating its 10th anniversary this year. And this seems like a good time to reflect on some of the fuel-saving technologies that have seen widespread adoption since NACFE’s inception. We track 85 technologies in our Annual Fleet Fuel Study and you can see what 20 major North American fleets have found helps them achieve their fuel efficiency goals.

Supply Chain Dive: Ocean Carriers Strive to Keep Capacity in Check

Shipping lines are treading cautiously on capacity as they seek to balance supply and demand in ocean freight and avoid a repeat of industry-wide overcapacity prior to consolidation and the formation of alliances.

FreightWaves: Taking Electric Vehicles from Science Project to Reality

Medium-duty truck applications seem primed to accept a rapid deployment of truck electrification projects, but several factors continue to slow progress, including infrastructure. Weight considerations, range limitations and more are limiting opportunities right now for electrification, but that is changing as manufacturers work to solve these challenges.

World Oil: Colorado Lawmakers Weigh Dramatic Overhaul of Oil Drilling Laws

A proposal to overhaul Colorado’s drilling laws had its first hearing yesterday, pushing the bill one step closer to a vote by the Democrat-controlled state legislature. The legislation, supported by Governor Jared Polis, would significantly change the way drilling is permitted and amend elements of state law that have been instrumental in developing Colorado’s most prolific oil play, the Denver-Julesburg basin.

JOC: BCOs Schedule Reliability More Important Than Ever

Ocean carrier schedule reliability has emerged as a major point of conflict between container shipping lines and retailers frustrated by delays and missed deliveries, especially in the wake of a wave of imports to the Southern California ports late last year. The issue is bound to come up in shipper-carrier contract talks as beneficial cargo owners (BCOs) say they need to mitigate risks and meet their own customer demands.

3/7

Argus Media: IMO 2020 to Lift US Shale Demand

New restrictions next year on the amount of sulfur in global marine fuels should lift export demand for US oil shale production, US independent refiner Valero said today. Less complex European refiners would seek out the much lighter, sweeter US production to avoid higher sulfur residual sold today into the marine bunker fuel market.

JOC: New Model for Maritime Shipping Emerging

The ever-evolving makeup of the container shipping business is fascinating, if not amazing. About 60 years ago, a trucker from North Carolina put some trailers on the deck of a Second World War-era vessel and began the evolution. Next came cellular ships, with containers of varying sizes, refrigerated, tanks, and flat racks. From modest 500-TEU ships to the newest 22,000-plus-TEU behemoths, the hardware has changed dramatically.

Reuters: India Wants to Keep Iran Oil Purchases at 300,000 bpd in Extended Waiver

India wants to keep buying Iranian oil at its current level of about 300,000 barrels per day (bpd), as it negotiates with Washington about extending a waiver of U.S. sanctions past early May, two sources in India with knowledge of the matter said.

JOC: LA-LB Congestion Reveals Deeper Supply Chain Issues

Marine terminals in Los Angeles-Long Beach the past four months adjusted their operations to handle an unexpected surge of imports carried by extra-loader vessels, but excessive container dwell times and port congestion that continued into March exposed deeper flaws in the container supply chain.

Supply Chain Dive: Infrastructure, Congestion Cost Carriers Billions in Fuel

Nationally, congestion is estimated to have increased the trucking industry’s fuel consumption by 6.87 billion gallons in 2016. This results in an additional $15.74 billion in fuel spend, according to a new study by the American Transportation Research Institute (ATRI).

JOC: New and Familiar Risks Confront Cold Chain

A combination of new and familiar risks is confronting the maritime industry in 2019, and the refrigerated sector is particularly sensitive to those associated with uncertainty.

Smart Cities Dive: Waymo is selling its LiDAR sensors to boost autonomous tech

Waymo, Alphabet’s self-driving car spinoff, will sell its custom LiDAR sensors to other companies, in part to help expand the market and bring down the cost of the equipment.

3/8

WSJ: U.S.-China Trade Deal Isn’t Imminent So No Summit Date Set, Envoy Says

The U.S. and China have yet to set a date for a summit to resolve their trade dispute, the U.S. ambassador to China said Friday, as neither side feels an agreement is imminent.  Also see, U.S.-China Trade Talks Hit a Bump

WSJ: Parcel Carriers Slashed 9,700 Jobs in February

Hiring at parcel-delivery firms plummeted in February as job growth slowed sharply across the broader U.S. economy, even as payrolls expanded in other logistics sectors.

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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