Saudis Plan New Export Cuts
Saudi Arabia – the third largest oil producer in the world and the de facto leader of the Organization of Petroleum Exporting Countries (OPEC) – plans to cut crude oil exports to around 7.1 million barrels per day (mmbd) by the end of January. In November, Saudi Arabia exported 7.9 mmbd, which would result in Saudi exports declining by 800,000 barrels per day. Saudi Arabia is hoping this will elevate prices to $80 per barrel (bbl). The strategy is a partially due to OPEC and supporting countries (OPEC+) deciding to cut 1.2 mmbd starting January 1. The announcement for Saudi Arabia to go above and beyond their alluded cuts, is attributed to the country preparing for a large surge in government spending to diversify its economy away from oil.
Amid the news, crude oil prices saw gains for eight straight trading days, before dropping last Friday. Both West Texas Intermediate (WTI) and Brent crude benchmarks entered a bull market, due to prices rising over twenty percent since its recent lows on December 24th. WTI and Brent prices ended the week at $51.59 and $60.48, respectively.
Innovative Trucks Offer Glimpse of Industry’s Future
This year at the Consumer Electronics Show (CES), transportation and supply chain made a big appearance with autonomous technology and electric vehicles (EVs). Peterbilt Motors showed off two battery-electric commercial trucks, along with Kenworth and Toyota exhibiting a hydrogen-electric commercial truck. The two companies also announced a partnership to develop ten hydrogen-electric heavy-duty trucks. As for autonomous technology, Daimler trucks not only announced they are curbing their platooning program to focus on automation, but they also announced that the Cascadia class 8 truck will have the ability for level 2 automation. Level 2 automation is when the vehicle can control steering, acceleration, and deceleration, but requires a driver in the cab. When level 2 automation is active, the truck will experience a better fuel efficiency by reducing fast acceleration and hard braking.
In Other News
In 2018, surging crude production in the Canadian province ran into limited space on export pipelines, creating bottlenecks and sending the price of local oil to record lows relative to world benchmarks. Now Premier Rachel Notley’s government wants to see if keeping more of the oil at home with a new refinery will make a difference.
There’s so much focus on the IMO2020 rule in the transport sector, as companies start to realize that diverting that much distillate into the marine market could tighten supplies for their own needs. A more pressing switch began occurring this week, when Mexico started requiring ultra-low sulfur diesel—with 15 parts per million sulfur—for all diesel use in that country.
Daimler Trucks North America will add hands- and foot-free driving capability to the latest version of its Freightliner Cascadia truck later this year, the company announced Monday at the start of the 2019 Consumer Electronics Show in Las Vegas. Also see, DTNA Will Go Into Production With Electric Trucks Starting in 2021 and Electric, Automated Trucks Offer Glimpse of Industry’s Future at CES.
This past year was the year of the intermodal shipment as the looming trade war put pressure on international shippers to move as much inventory from overseas into the U.S. as possible in order to give them enough time to adjust their supply chain.
Pricing for compliant fuels is one of the biggest unknowns of IMO 2020, with many believing it will be the same as the current HSFO/MGO spread – currently around $200-$250/mt in the major ports.
For years, shippers were warned about the looming driver shortage. Trucking executives sometimes were accused of “crying wolf” when it came to driver shortages to secure rate increases — until 2018. Suddenly, the wolf was real and had teeth, in the form of higher spot and contract rates and rejected freight tenders that drove double-digit cost increases.
Uncertainty over the fate of talks between the United States and European Union could mar the usually stable trans-Atlantic route in 2019, after a year in which shippers faced erratic shipping schedules and prices because of growing shipper demand and static ship capacity.
Saudi Arabia will reduce its exports by 800,000 barrels a day from November levels to lift oil prices and cover a 7 percent boost in its government spending in 2019. The US market will see the largest reduction in Saudi exports, as Saudi Arabia aims to draw US stocks and influence inventory data. Saudi Arabia acknowledged $80-a-barrel oil would be unlikely in the short term; however, the Brent crude benchmark could reach this price in the second half of 2019 when analysts anticipate an increase in oil demand. Also see, Oil Rises for Sixth Straight Session as Saudis Cut More.
Mexico’s new government has sought to assure worried consumers that its fuel theft plan is working while cars waited hours to fuel up over the weekend and gasoline tankers swarmed congested ports.
Daimler Trucks plans to focus its attention on automated driving and as a result plans to pause testing of truck platooning the company announced Monday in Las Vegas during the 2019 Consumer Electronics Show (CES). Also see, Daimler Nixes Platooning, Focuses on Automation.
It’s that time of year; time to look forward and plan for the year. In order to have a better idea of where the economy and industry are headed, we always like to look back and review from where we came and what happened. Then, assess where we are now. Only then are we equipped to make our predictions about 2019.
America’s carbon dioxide emissions rose by 3.4 percent in 2018, the biggest increase in eight years, according to a preliminary estimate published Tuesday. Strikingly, the sharp uptick in emissions occurred even as a near-record number of coal plants around the United States retired last year, illustrating how difficult it could be for the country to make further progress on climate change in the years to come.
Pennsylvania Governor Tom Wolf (D) signed an executive order Tuesday announcing the state’s first ever GHG targets, coming ahead of an updated climate plan that may reveal further information on a possible cap-and-trade strategy.
Peterbilt Motors Co. has unveiled an all-electric medium-duty truck, adding a third model to its emerging electric-vehicle lineup. The truck maker introduced the zero-emissions Model 220EV on Jan. 8 here at CES, the world’s largest technology trade show. Also see, Peterbilt Joins Growing Electric Medium-Duty Truck Crowd.
The U.S. and China made progress on narrowing their differences on trade issues, especially on purchases of U.S. goods and services and widening access to China’s markets, though the two sides are far from striking a deal. Also see, U.S. Pushes China to Follow Through on Trade Promises.
Growing trucking and aircraft use helped make the transportation sector the No. 1 source of carbon emissions in the U.S. last year.
This could be the year Congress tries to enact the mother of all taxes, a carbon tax—a levy on the use of oil, natural gas and coal. Everything that is fabricated, grown, operated or moved is made possible by hydrocarbons.
At the 2019 Consumer Electronics Show, Kenworth Truck Company showcased a T680 converted to fuel cell electric power by Toyota Motor North America. Moving forward, the two companies will work together to design and build 10 new zero-emission fuel cell electric T680s as part of a $41 million Zero and Near-Zero Emissions Freight Facilities (ZANZEFF) grant from the California Air Resources Board. Also see, Kenworth, Toyota team on hydrogen fuel cell project.
The best economic news of the first few weeks of 2019 came from the December US employment report: 312,000 new jobs were added in the last month of 2018 and the numbers for the previous two months were revised upward; US unemployment is at 3.9 percent. There’s trouble behind those numbers, however, for those trying to hire truck drivers, especially long-haul drivers
Booming U.S. oil exports have set off a scramble to build Gulf Coast ports to handle more than 3 million barrels per day in new supplies expected over the next five years.
Funding infrastructure projects transportation officials and freight executives around the country agree are badly needed for reducing congestion and to boost regional economies was high on the list of priorities for the new Speaker of the U.S. House of Representatives. Also see, Infrastructure, Trade Loom Large for Trucking in the New Year
Bottlenecks for offloading imported fuel are forming at some Mexican oil ports following government orders to shut pipelines to limit losses from widespread fuel theft.
Wouldn’t it be nice if international logistics were on a perpetual upward trajectory? Key elements of service would improve continuously. As 2019 progresses, that’s a fantasy, unfortunately.
Crude oil production in Iraq averaged 4.5 million barrels per day (b/d) through August 2018, up from 4.4 million b/d in 2017. Iraq’s crude oil production has been steadily increasing since declines in the late 1990s and early 2000s, and it has nearly doubled over the past decade.
Amid a sea of gadgets, drones, robots and virtual reality demos, commercial trucking carved out a significant niche for itself here at the Consumer Electronics Show, the world’s largest technology event. The project is part of a $41 million grant preliminarily awarded by the California Air Resources Board.
At its best, freight technology grants shippers access to things they wouldn’t get ordinarily. Those things might be lower rates, more efficiency use of resources, or visibility into the movement of goods.