Good day,
Minutes after Canadian Pacific management announced a tentative three year agreement with one of its unions, the International Brotherhood of Electrical Workers, CP conductors and locomotive engineers represented by the Teamsters have now gone on strike. 3,000 workers walked off the job, and the railroad shut down its services this morning.
The densest part of Canadian Pacific’s network is west of Winnipeg, but its tracks extend down through the Upper Midwest, reaching Minneapolis, Chicago, and Kansas City, and the railroad also operates in upstate New York. FreightWaves is monitoring the situation as it develops and will report on how the shutdown affects freight markets in the United States.
Did you know?
According to SONAR data, the real-time national average for diesel truck stop actual price per gallon has risen to $3.15.
Quotable:
“We believe deeply in working things out at the bargaining table. We have companies that have gotten used to the fact that in certain industries, the government in the past was very quick to legislate against unions. We are not going to do that.”
-Canadian Prime Minister Justin Trudeau, on the Canadian Pacific Railway Teamsters strike
In other news:
Brazil’s crippling trucker protests enter day 9, despite suggestions of a deal
President Michel Temer appeared to blink after a standoff with truck drivers’ unions, announcing late Sunday that his government would comply with their central demand to reduce diesel prices. But as the sun rose over Brazil’s major highways Tuesday, an observer would be forgiven for thinking no such offer had been tendered. (NPR)
Savannah moved a record 356K TEUs in April
The Georgia Ports Authority said Savannah is the fastest growing port in the United States and is on track to move more than 4M TEUs in FY2018. (Progressive Railroading)
Strike at Canadian Pacific railway brings shipments to a halt
Train conductors and engineers went on strike at Canadian Pacific Railway Ltd. late Tuesday night, stranding large volumes of commodities and manufactured goods that are shipped across North America by the country’s second-largest railroad. (Wall Street Journal)
Goldman: the oil price rally isn’t over yet
“While today’s announcement lifts some of the uncertainty on whether and when OPEC and Russia would increase production, we do not view this as a material change to our bullish oil outlook,” Goldman Sachs wrote in a research note last Friday. (OilPrice.com)
CMA CGM and Zim blame rising fuel costs as they join the list reporting Q1 losses
CMA CGM chairman and chief executive Rudolphe Saade said of the line’s net loss of $77M: “The shipping industry is experiencing sustained growth but was hit in the first quarter by the sharp increase in bunker prices.” (The LoadStar)
Final Thoughts:
The global oil price rally, which has pushed up prices for everything from Brent crude to WTI and OPEC basket oil, has started having a significant impact on transportation and logistics across modes. Brazilian truckers have shut down the country’s commerce in highway-blocking protests over fuel costs, demanding that the national government fix diesel prices at a lower rate.
Major maritime carriers like CMA CGM and Zim are reporting losses and blaming bunker fuel price inflation, which will only get worse as new very low sulphur regulations come into force. Air cargo fleets, too, are feeling the pain: Asia Pacific cited ‘markedly higher fuel prices’ in its annual report on its 2017 performance, and high fuel costs have greatly reduced airlines’ appetite for exposure to the maindeck freighter markets.
Although Saudi Arabia and Russia are now signaling that OPEC and its partners will ease some of the strict production cuts that have been in place since January 2017, they want to increase production to 100% of the agreed-upon cuts. Turmoil in Venezuela and other countries had inadvertently increased the production cuts to 150% of the agreed amount. Therefore, investors like Goldman Sachs believe that the oil rally is not over yet, and fuel prices across modes should continue to rise with the price of crude.
Hammer down everyone!
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