Saudi Arabia Seeks Investment | Weekly News Update

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Last week Saudi Arabia was front and center in the media as speculation over the intentions behind corruption crackdowns elevates. Investors are cautious, and the impending IPO has the potential to be persuasive. Fossil fuels are on their way out in select countries—Germany is the first of which is taking regulatory steps to usher in electric and zero emissions vehicles. Further news about self-driving trucks, electric vehicles, pipelines, and the intermodal industry rounded out the week.

Saudi Arabia Seeks Investment Following Crackdown

The late-2017 corruption crackdown in Saudi Arabia involved the detainment of dozens of royals, businessmen, and government officials.  The abrupt actions, under the direction of Crown Prince Mohammed bin Salman, have faced wide speculation over motive – is it true removal of corruption, or consolidation of power under bin Salman.  The 32-year-old Crown Prince experienced a meteoric rise in the past few years to become first in line for the throne, while favoring a more progressive path for a Saudi kingdom that is deeply rooted in conservatism and tradition.

Foreign investors have long complained about corruption within the oil-dependent kingdom, so many might believe that the recent crackdown would provide positive signs for investment.  Instead, the swift actions and secrecy behind them have left both local and outside investors tentative.  Top Saudi officials, including bin Salman, look to the future in 2018 as they are actively reassuring investors that the crackdown is near its end and Saudi Arabia remains open for business.  Officials have stated that many of the detainees have been released and financial settlements made with these individuals have raised more than $100 billion (though actual settlements remain confidential).  The ability of bin Salman and the Saudi government to maintain outside investment will be crucial to realizing Saudi Vision 2030 – a plan to move Saudi Arabia away from the oil dependant economy that has defined the kingdom.  A key barometer for faith in the reformation will be the IPO of state-owned Saudi Aramco, which is the largest oil company in the world. A date for the IPO is unclear, as Saudi Aramco will proceed “when the time is right.”  The timing of the IPO may now have as much to do with investor sentiment in the kingdom as the economic condition of the global oil market.

Banning Fossil Fuel Vehicles in Germany

2017 was highlighted by several countries setting targets for the ban of internal combustion engines (ICE), as the excitement over all-electric and zero emission vehicles grew.  Germany is providing the first glimpse of the long road to enact such legislation.  A German court is contemplating the legality of major cities instituting a ban on ICE vehicles, specifically reviewing bans put in place in the cities of Stuttgart and Duesseldorf.  It is estimated that such a ban could ultimately impact over 15 million vehicles in Europe’s biggest economy and largest car market.  The final ruling is set for February 27th, though the battle will likely be continued by advocacy groups on both sides of the debate.

In Other News

2/19

FreightWaves: Why self-driving trucks are good for truckers, and why that’s good for everyone

Uber Freight recently released a report that compiles months of research. In their baseline projections without self-driving trucks, the number of trucking jobs nationwide increased 766,000 over the next ten years. When you add self-driving trucks into the scenario above, truck-driving jobs increase even more, with many long haul jobs shifting to local haul to support growing freight volume moving in and out of transfer hubs.

2/20

Reuters: Refiner goes belly-up after big payouts to Carlyle Group

Throughout 2016 and 2017, a rail terminal built to accept crude oil for the largest East Coast refinery often sat idle, with few trains showing up to unload.  Under a deal Philadelphia Energy Solutions (PES) signed in 2015, the refiner paid minimum quarterly payments of $30 million to terminal owner North Yard Logistics LP – even if little crude arrived.

Reuters: Relax and invest, Saudi prince tells investors after corruption crackdown

Foreign and local investors have long complained about corruption, and confronting it is an important part of reforms unveiled by Crown Prince Mohammed bin Salman to transform the country and reduce the economy’s reliance on oil exports.

2/21

Bloomberg: CN Rail’s Traffic Jam Dulls Shine of ‘Gold Standard’ Efficiency

Canadian National Railway Co., the longtime paragon of efficiency for North American railroads, is losing some of its luster as it struggles to catch up with a surprise surge in demand.

Bloomberg: Daimler Throws Shade at Tesla as Truck Rivalry Heats Up

Daimler AG cast doubt on Tesla Inc.’s plan to deliver electric heavy trucks next year, saying its more modest goal to start selling battery-powered big rigs by 2021 is more realistic.

2/22

Reuters: German court to decide on fate of 15 million diesel cars

A German court will rule on Thursday whether major cities can ban heavily polluting diesel cars, potentially hitting the resale value of 15 million vehicles in Europe’s largest car market and forcing automakers to pay for costly modifications.

Journal of Commerce: Chicago Intermodal Delays Unprecedented Since January

The congestion along the top US freight hub is so bad some drayage providers are refusing to take on new customers. Winter weather, intermodal rail yard delays, chassis shortages and tighter truck capacity are contributing factors to the length of delays. Multiple trucking executives told JOC.com that they are charging accessorial fees on some hauls

and imposing $75 to $150 detention penalties after one hour sitting at an intermodal rail yard.

2/23

WSJ: Judge Suspends Construction of Louisiana Oil Pipeline

A federal judge agreed Friday to suspend construction of a crude-oil pipeline through a Louisiana swamp, a victory for environmental groups opposed to the project.

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®Fuel. 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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