Phase-One Trade Deal Moved Diesel Prices
U.S. President Trump announced they agreed to a phase-one trade deal with China on October 11. The deal would require China to purchase agricultural products from the U.S. and committed to further discussion on China’s protocol on Intellectual property and U.S. gaining more access into Chinese markets. The completed deal, paired with an attack on an Iranian tanker in the Red Sea, caused diesel wholesale prices to drop over 3¢ per gallon on Monday. The positive sentiment was quickly reversed when a Chinese state-owned news outlet reported that a lot more discussion needs to be done before a phase-one deal is complete. This made wholesale diesel prices drop nearly 4.5¢ per gallon. The uncertainty of the trade war and the competing stories between the two nations brings additional volatility into the diesel market.
CSX and UP Achieve Efficiencies Despite Sharp Q3 Intermodal Declines
CSX Transportation and Union Pacific (UP) are key adopters to Precision Scheduled Railroading (PSR) and their third quarter results are showing the efficiency gains. Both companies saw declines in intermodal volume in the third quarter, but also experienced higher margins to prove out the more efficient network. This is typically measured by the company’s operating ratio, which is calculated by taking operating expenses minus the revenue. Both companies had a goal to achieve a 60 percent operating ratio or remain below that mark in the third quarter. CSX announced a record of 56.8 percent, while UP also reported a company record of 59.5 percent. As the companies continue to expand their PSR strategy, shippers and carriers will face challenges of declining capacity and rising costs.
Top Energy Stories
Saudi Aramco has delayed the planned launch of its initial public offering in hopes that pending third-quarter results will bolster investor confidence in the world’s largest oil firm, two sources familiar with the matter said on Thursday.
As the clamor grows for OPEC to slash even more oil production, and the group vows to consider any necessary action, its next meeting could result in an unusual step: a preemptive supply cut.
The U.S. and Saudi Arabia have stepped up efforts to protect the kingdom’s oil production, holding talks on connecting Saudi missile defenses to U.S. systems and investigating new antidrone technologies, after an attack last month knocked out half of the country’s crude production.
Top Freight Transportation Stories
TuSimple said it will soon begin partnering on real-world autonomous freight deliveries without anyone in the vehicle.
CSX Transportation and Union Pacific Railroad struggled with steep declines in intermodal volume in the third quarter, but each company is confident that improving margins show their rail networks are becoming more efficient and poised to capitalize whenever the market flips.
Top Economic Stories
President Donald Trump announced Friday the U.S. will hold off on the tariff hikes originally scheduled for Oct. 15, according to the Associated Press. The tariffs were set to go from 25% to 30% on $250 billion in Chinese imports.
Britain clinched an eleventh-hour Brexit deal with the EU on Thursday, more than three years after Britons voted in a referendum to leave the bloc, but Prime Minister Boris Johnson still faces a knife-edge vote in parliament to get it approved.
China has promised to buy more U.S. farm products, but questions remain over how much, the time frame for purchases, and what the U.S. might have to give in return.