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Shipping-Fuel Rule Change Cuts Demand for Canadian Oil

As if pipeline bottlenecks weren’t enough, Canadian heavy-oil producers are facing a new barrier to marketing their crude.

New rules limiting the amount of sulfur allowed in shipping fuel is expected to cut demand for high-sulfur fuel oil and the sour crude that yields it. In Canada, that could extend — or worsen — the biggest price slump in nearly five years.

As surging production runs up against limited pipeline space, Western Canada Select’s discount to West Texas Intermediate widened to more than $31 a barrel this month from an average of about $13 a barrel last year, data compiled by Bloomberg show. The bigger discount is needed to incentivize shipping by rail, which costs more, Kevin Birn, a director on the North American crude oil markets team at IHS Markit, said in a phone interview.

NACPC Gets Approval to Run Chassis Pool at Georgia, South Carolina Ports

Chassis pool operations at ports in Georgia and South Carolina will shift later this year to a new entity created by the North American Chassis Pool Cooperative, and equipment at the facilities will be expanded and undergo a series of improvements, the group said.

The Federal Maritime Commission on Aug. 2 gave final approval to the Georgia Ports Authority and the South Carolina Ports Authority to shift pool operations to a new entity created by NACPC called the Southern States Chassis Pool.

“Both South Carolina and Georgia are pleased to be moving forward with the proposed SSCP agreement in an effort to add chassis to the current pool,” the two ports said in a statement provided to Transport Topics. “GPA and SCPA hope to not only increase the number of chassis in the Southeast fleet, but improve the quality and provide an at-cost model to support the growth in containerized trade in the Southeast.”

While NACPC will own and operate the new entity, equipment and personnel from the ports’ previous chassis provider, Consolidated Chassis Management, will remain in place, said Dave Manning, president of Nashville, Tenn.-based transportation company TCW and chairman of NACPC. Manning also is chairman of American Trucking Associations.

Bill takes aim at collecting unpaid wages and settlements.

A California bill that would hold freight forwarders and beneficial cargo owners liable for wage disputes between port drayage carriers and their drivers took a step closer to becoming law.

The California Assembly’s appropriations committee passed Senate Bill 1402. The bill, introduced this February, would require that customers also be liable when port drayage carriers fail to make good on judgements over wage and settlement disputes with drivers.

The passage by the appropriations committee, which has a say on any legislation with fiscal or budgetary impact, sets the stage for a vote by the full assembly, which could occur early next week. The California senate passed in May.

The bill stems from investigations into Southern California drayage industry, which is largely composed of independent contractors that lease trucks from owners. According to the bill’s legislative analysis, some 1,150 drivers have filed claims with the state’s Division of Labor Standards Enforcement (DLSE).

The DLSE has awarded $45 million to 450 drivers. But many drivers have not been able to secure these claims as the carrier companies have sometimes shut up shop, only to reopen under a different name.

Mexican Energy Sector Overhaul Could Reduce US Export Demand

An ambitious plan to boost Mexico’s oil and gas production could slow the country’s energy sector reforms and hinder trade opportunities for U.S. refiners and pipeline companies that have ramped up exports to meet growing demand there, according to research firm Morningstar.

Mexican President-elect Andrés Manuel López Obrador announced in late July a plan to invest billions of dollars in Pemex, the country’s state-owned energy company, in an effort to reverse years of declining production. He also reaffirmed his intent to review more than 100 exploration and production contracts awarded to private oil and gas companies since the 2013 reforms, which opened the country’s energy sector to foreign investment for the first time in decades.

Mexico’s energy reforms are enshrined in its constitution, and López Obrador has said that he will he will honor existing contracts so long as they don’t reveal corruption. But Morningstar noted that any effort to scale back the reforms or increase Mexican energy production could jeopardize some $200 billion in outside investments planned for the country’s oil and gas, power, refining and distribution sectors.

Part of López Obrador’s plan involves investing $2.6 billion to upgrade the nation’s six refineries as well as build an $8.6 billion refinery at the oil port of Dos Bocas in Tabasco. The country’s existing refineries have been operating at less than 70% capacity since 2012, according to Mexico’s energy department, requiring the country to import more gasoline, diesel, jet fuel and other refined products.

Senate OK’s year’s ELD exemption for livestock haulers

The Senate Wednesday passed a bill that exempts livestock haulers from compliance with the electronic logging device mandate for another year, allowing them to run on paper logs until the end of September 2019.

However, the measure still has hurdles to clear before becoming final. Though the House has taken up a similar extension, it has not yet passed the bill to which it is attached. The two chambers, once the House passes its bill, will need to confer to iron out differences between the two pieces of legislation. Both chambers will then need to pass the bills again. President Trump must also sign the legislation, but he has threatened to veto appropriations packages coming out of Congress if they don’t include funding for a wall along the U.S.’ southern border.

Legislators have just two months to finalize 2019 appropriations packages to ward off a government shutdown. Livestockers are currently exempt from ELD compliance through September 2018.

Seaborne Reefer Trade Continues to Expand

Global seaborne reefer trade continues to expand, posting a gain of over 5% in 2017 to 124 million tonnes, a big improvement on trend growth over the past 10 years of 3.6% a year. Underpinning this progress was strong growth in banana, meat and fish trades.

Drewry estimates that containerised reefer traffic expanded by 8% in 2017, outpacing the growth in overall seaborne reefer trade. Driving this acceleration has been the continued shift of cargo from the declining specialised reefer fleet to the container mode.

“This modal shift in favour of container shipping lines is expected to continue as the specialised fleet shrinks further,” said Drewry’s director of research products Martin Dixon. “Indeed the specialised sector’s share of total seaborne reefer trade is forecast to fall from 20% today to just 14% for 2022, with container lines picking up the slack.”

However, container equipment availability remains an issue, particularly in hinterland locations where carriers have been reluctant to reposition empty reefer boxes. Production of new refrigerated container equipment recovered in 2017 and the fleet is forecast to continue growing ahead of cargo demand, but despite this tight supply conditions are expected to remain.

Nikola Raises $100 Million in August

Hydrogen-electric truck maker Nikola Motor Co. announced it has quickly raised $100 million of a planned $200 million in C-round funding as it accelerates the scale of its operations.

Nikola Founder and CEO Trevor Milton said accomplishments were piling up as the company prepares to launch a hydrogen-electric Class 8 truck in 2019 for field tests.

“Nikola’s business model has been vetted, and the investment world is taking notice,” Milton said. “So far this year, we have kicked off plans to build the largest hydrogen network in the world with NEL, secured a massive 800-truck order commitment from Anheuser-Busch, developed the most energy-dense battery system on the market with almost 400 watt hours per liter, engineered a 240 kW fuel cell, kicked off electric vehicle stability controls and electric ABS with Wabco, designed a thermo-management and HVAC system with Mahle, finalized the most advanced Class 8 independent suspension on the market with Meritor, relocated our company to Arizona to build our new 150,000-square-foot headquarters and now closed on $100 million.”

Uber Freight “not going anywhere” amid Uber’s self-driving truck shutdown

According to Uber, “There are no implications for Uber Freight with the shutting down of the self-driving truck program. They were operating separate programs before this even happened, so there really is no effect. Uber Freight will continue on as usual, and it’s one of our fastest growing businesses within Uber, so it’s not going anywhere.”

“At a high level we’ve been rethinking our self-driving efforts, we’ve made the decision to focus on cars because we don’t feel we need to immediately be developing self-driving trucks to remain competitive in the freight logistics space” a spokesperson said.

Instead, they’re currently focused on “building out the network first to ensure we have a viable place to put this technology.”

“Given that Uber Freight has been growing as rapidly as it has, we think it’s the best use of time to focus on that and then explore self-driving technology for trucks down the line. We’re continuing to explore approaches to highway driving using the cars,” exploring new business opportunities, like self-driving trucks, in the future,” Uber stated.

Uber will also be reallocating employees from the self-driving truck division to the self-driving car division: “We’ll be moving folks over from the truck program to the car program, we continue to hire relatively aggressively for the car program. It’s great that we can move folks over who already have experience. We want to make sure we have all of the best people on the project. We want to use their expertise on the car program any way we can.”

Vancouver Port Celebrates Completion of Freight Rail Project

Port of Vancouver administrators, along with political and industry leaders, stood atop a small stage in a largely vacant marine terminal the morning of July 31 to celebrate the completion of the $251 million West Vancouver Freight Access project.

“We are building transportation infrastructure in this part of the state because this part of the state is integral to the economic growth of the entire state,” Gov. Jay Inslee told the crowd. “This project is as important to the economic development of Bellingham and Spokane as it is Vancouver.”

Throughout the celebration, workers rushed newly imported Subarus into an awaiting freight train in the background, and heavy equipment and engines groaned in the distance.

Diesel Creeps Up 0.6¢ to $3.226

The U.S. average retail price of diesel crept up 0.6 cent to $3.226 a gallon while crude oil prices jumped higher as Middle East tensions continued.

Diesel fuel costs 69.5 cents a gallon more than it did a year ago, when the price was $2.531, the Department of Energy said July 30.

Averages rose in all regions except the Rocky Mountains, where the average fell by 0.8 cent to $3.361 a gallon.

The national average price for regular gasoline rose 1.5 cents to $2.846 a gallon, DOE’s Energy Information Administration said. The average is 49.4 cents higher than it was a year ago.

Average gasoline prices fell in the Rocky Mountains and West Coast but rose elsewhere.