OPEC Ruling and Hydrogen Trains | Weekly News Update

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OPEC Rules Out Crude Production Increase

The Organization of Petroleum Exporting Countries (OPEC) has decided not to increase crude oil production after the cartel met in Algeria this past weekend.  The cartel announced they are comfortable with oil prices reaching $80 per barrel (bbl).  This decision comes after President Trump tweeted for OPEC to increase production and raise prices.  The tweet read, “…The OPEC monopoly must get prices down now!”  The oil markets dropped in result from the tweet.

The decision to not increase production is backed by OPEC’s projections of surging non-OPEC crude production, including the US.  According to the mid-term report released by OPEC, non-OPEC supply countries will raise oil production by 2.4 million barrels per day (mmbd) in 2019, while global demand is projected to grow by 1.5 mmbd.  OPEC believes if they would increase production, supply would exceed global demand growth.  Saudi Arabia has the ability to raise output by 1.5 mmbd, if needed. 

Two Hydrogen-Powered Trains Roll Out

Two hydrogen-powered trains are beginning service in northern Germany and will replace diesel-powered trains.  These are the first of 14 additional hydrogen-powered trains set to launch by 2021.  The train will travel 62 miles between Cuxhaven and Buxtehude.  The trains will produce zero emissions of carbon dioxide and other pollutants as they will only emit steam and water.  The hydrogen fuel cells generate electricity through a chemical reaction.  This climate friendly breakthrough sets the stage for others to move into this space and implement more environmental-friendly alternative energies.

In Other News

9/16

New York Times: Hydrogen-Powered Trains Roll Out

In a breakthrough for a green fuel, two hydrogen-powered trains are expected to go into commercial service Monday on a rail line in northern Germany near Hamburg. The trains, which will serve cities including Bremerhaven and Cuxhaven, will be powered by hydrogen fuel cells that generate electricity through a chemical reaction.  Also see, World’s 1st hydrogen-powered trains hit the tracks

FreightWaves: Kenworth Part of $82 Million Project at Port of Los Angeles for Zero-Emissions Trucking

Kenworth’s zero-emissions trucks may get a step closer to commercial deployment thanks to a grant from the state of California. The California Air Resources Board (CARB) says it has made a preliminary grant of $41 million to the Port of Los Angeles a project aimed at reducing emissions from drayage trucking.

9/17

Bloomberg: OPEC Sees Need to Keep Oil Supply Deal as Demand Faces Headwinds

OPEC needs to keep working with other oil producers to manage global supplies as demand for crude faces “headwinds,” the head of the organization said. The historic supply deal between Saudi Arabia, Russia and other producers reached in late 2016 needs to become permanent, Mohammad Barkindo, secretary-general of OPEC, said Sunday in an interview in Dubai. Oil demand is “robust,” though crude use “is beginning to face some headwinds,” he said, without elaborating.

WSJ: In Rare Step, Saudi’s Sovereign Wealth-Fund Raises $11 Billion Loan

Saudi Arabia’s sovereign-wealth fund inked an $11 billion loan with global banks, as part of the government’s plan to invest in new industries and diversify the kingdom’s the oil-dependent economy.

Journal of Commerce: Maersk’s New Fuel Surcharge Underscores Test to Recoup Low-Sulfur Costs

Maersk will replace its current standard bunker surcharge with a new bunker adjustment factor (BAF). Estimates on the cost of the container shipping industry meeting the mandate range from $5 billion to tens of billions of dollars, but container lines are uniform in saying that the higher operating expenses must be passed to shippers.  Also see, Plan for Low-Sulfur Surcharge Draws Predictable Rebuke From Shippers

Journal of Commerce: Goods Distributors Face Upward Climb to Fully Leverage Freight Visibility

Goods distributors, positioned between manufacturers and customers, wrestle with several cultural and technological hurdles to investing in and fully leveraging freight visibility solutions. The tension from such roadblocks arises because customer expectations are rising quickly, even in business-to-business environments.

9/18

EIA: OPEC net oil export revenues increased in 2017, will likely continue to increase in 2018

Members of the Organization of the Petroleum Exporting Countries (OPEC) received about $567 billion in net oil export revenues in 2017, up 29% from revenues in 2016. Increases in both crude oil prices and in net OPEC oil exports drove revenues higher in 2017, and EIA expects that revenues will continue to increase in 2018.

FreightWaves: California Ports to Restrict Age of New Drayage Trucks to Fight Pollution

The two largest ports on the West Coast will increase age restrictions on new trucks entering drayage service as part of a regional plan to improve air quality. The Port of Long Beach and Port of Los Angeles will require that any new trucks registering for the Port Drayage Truck Registry (PDTR) to be model year 2014 or later, starting October 1.

Transport Topics: Automation, Electrification Could Advance Faster in Intermodal

Autonomous technologies and electrified equipment will have specific roles in the transportation and intermodal sectors and already are increasing safety and improving efficiency. As the technology continues to advance, it may gain adoption faster in the controlled situations within intermodal yards and drayage environments.

Journal of Commerce: UP’s Precision Railroading Effort Raises Shipper Concern

Union Pacific Railroad will begin a two-year process to implement precision railroading to address poor service to shippers this year, but it’s also an operating model that customers tend to believe is more about operation ratios than service, and one in which shippers have seen a service-detrimental rollout when CSX Transportation undertook a similar strategy.

Journal of Commerce: US Ports Embrace ‘Smart Equipment’ to Cut Cost, Boost Efficiency

The use of smart equipment, including autonomous vehicles, electric yard tractors, and other cargo handling units, is spreading rapidly in the confined environments of ports and rail ramps, as operators seek to lower costs and increase efficiency.

CCJ: Meet Mercedes-Benz Tech-Laden New Actros

On the eve of IAA 2018, the world’s largest commercial vehicle show in Hannover, Germany, Daimler Trucks introduced the new Mercedes-Benz Actros. More than just a vehicle refresh, Daimler says the production-series cabover is the realization of its Future Truck 2025 initiative rolled out four years earlier.

9/19

FreightWaves: Brokers Face a More Complex Decision-Making Process When Putting Customers on the Rails

Brokerage companies and 3PLs that play in the intermodal segment face a variety of challenges, with the biggest one obvious: do they put their customer’s freight on the rails, or do they put it in the truckload space?

Transport Topics: Retail Growth, Consumer Expectations Add to Supply Chain Demands

The retail industry is in the middle of an enormous transformation, growing at a pace that exceeds the gross domestic product and adding about 70,000 jobs this year. Brick-and-mortar retailers as well as e-commerce providers are working to expand their offerings, which will place new demands on the supply chain.

WSJ: Union Pacific’s Cure for Congestion: Imitate a Rival

Union Pacific Corp. never hired Hunter Harrison to run its sprawling network. But with congestion clogging its system, the company is now adopting the late railroad maverick’s strategy to speed its freight trains.

9/20

FreightWaves: Scrubber Use to Comply with Tighter Shipping Emissions Rules Will be Bigger Than Expected

With Maersk having announced last week that it would be installing scrubbers on its ships to comply with the IMO2020 rules on cleaning up the marine fuels pool, a report by a Norwegian bank can be viewed as another sign that just using lower-sulfur products may not be the only solution.

Transport Topics: Electrification, Technology Take Center Stage at IAA 2018

The global truck manufacturers and suppliers exhibiting here at the massive IAA Commercial Vehicles show expressed a broadly shared vision that connectivity, automated driving and electric power are the dominant trends that will mold the future of commercial vehicles.

Reuters: In U-Turn, Exxon, Chevron to Join Industry Climate Initiative

Exxon Mobil, Chevron and Occidental Petroleum are joining a group of major international oil and gas companies in an initiative aimed at curbing carbon emissions in the sector. The move marks a U-turn for Exxon Mobil and Chevron. The top two U.S. oil and gas producers had resisted joining the Oil and Gas Climate Initiative (OGCI) after its launch in 2014.

Reuters: OPEC Unlikely to Agree Official Output Increase in Algeria, but Pressure Mounts

OPEC and its allies are unlikely to agree an official increase in crude output when they meet in Algeria this weekend, although pressure is mounting on top producers to prevent a spike in oil prices ahead of new U.S. sanctions on Iran.  Also see, OPEC, Russia rebuff Trump’s call for immediate boost to oil output

9/21

Convoy Blog: Convoy Raises $185 Million Led by Alphabet’s CapitalG

The growth equity fund of Google parent company Alphabet has helped Convoy raise $185 million, bringing its total capital raised to $265 million. Convoy has had nationwide success in freight matching and is expanding its offerings to solve other freight optimization problems.

Transport Topics: Intermodal, 3PL Outlook Remains Strong

The intermodal and third-party logistics industries are experiencing growth that is running parallel to the strength of the economy. Joni Casey, executive director of the Intermodal Association of North America, said intermodal volumes were at 12.6 million loads through August, up about 7% year-to-date over last year.

Transport Topics: NAFTA’s Latest Deadline Day Comes and Goes Without Canada Deal

U.S. Trade Representative Robert Lighthizer and Canadian Foreign Minister Chrystia Freeland met Sept. 20 in Washington for negotiations. September 20 was considered by some to be the deadline to get a deal to satisfy a target the United States has been shooting for. No agreement was reached.

Transport Topics: Bosch Pursues Electric, Fuel-Cell Powertrains

Bosch presented a range of products and innovations to support the trucking industry’s movement toward vehicle electrification and automated driving here at the IAA Commercial Vehi

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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