Good day,
Morgan Stanley has come out with a prediction that the oil prices would continue climbing for the next two years, and would reach $90 a barrel by 2020, buoyed by the new international shipping regulations by the IMO, dictating container lines to put a cap on their maximum sulfur content in their fuel to 0.5%.
This is a huge development, since the levels have been seven-fold higher in most regions to the tune of 3.5%, and thus the changes are expected to create an oversupply of high-sulfur fuel, as the refining industry faces the heat to produce IMO-compliant fuel before 2020.
Middle distillate markets are already tightening up, while diesel and oil stockpiles across primary storage centers across the U.S., Europe, and Asia are below their five-year seasonal averages.
Did you know?
U.S. retail sales of Class 8 trucks in April climbed 37% to nearly 19,000 units as all truck makers posted double-digit gains, as per WardsAuto. One key supplier said parts are flowing in from around the globe to meet the demand — which is expected to build this year. Sales in the month were 18,950 compared with 13,836 a year earlier. The latest volume was the highest for that month since April 2015, when sales reached 20,509, according to Ward’s. Sales year-to-date climbed 36.8% to 69,479 compared with the 2017 period.
Quotable:
“Scalability is a problem for the entire industry. There’s nothing done at large scale today. That’s just not reality. There’s still more questions there than answers.”
– Chris Kirchner, CEO and co-founder of blockchain provider Slync
In other news:
California ports see rise in exports last month
Shipments from the United States’ West Coast ports to Asia are picking up, showing signs that companies are stepping up orders ahead of the anticipated trade restrictions. (Food Logistics)
Lawmakers ask FMCSA’s Martinez to grant OOIDA’s ELD exemption request
A trio of Republican congressmen sent a letter to the leader of the FMCSA calling for his support for ELD exemption for small-business trucking firms. (Landline Mag)
Manufacturers see blockchain tracking 3D-printed parts through supply chains
Companies are showing growing confidence that blockchain technology will claim a place in supply chains, even while uses for blockchain are still being studied. (WSJ)
How trucking fleets are dealing with a hot flatbed sector
With a steadily improving economy and sectors such as manufacturing and construction going strong, many trucking companies are finding they have more freight than they have trucks to haul – but nowhere is that truer than in the flatbed sector. (Trucking Info)
LME takes aim at booming electric car market with new metals contracts
The exchange to offer contracts in lithium, graphite, and manganese among others, its head says (South China Morning Post)
Final Thoughts:
Q1 earnings reports from major container lines have shown that all is not well with the maritime trade. The industry has been heavily hit by the rising oil prices, which has risen by over 25% in the last three months. The U.S. pulling out of the Iran Nuclear deal has also triggered panic as it might potentially lead to a fresh rise in oil prices due to sanctions placed on the OPEC member. Nonetheless, going forward the rising spot rates across the China-U.S. routes would be some solace, as the figure is touching the year-on-year rates now.
Hammer down everyone!
Stay up-to-date with the latest commentary and insights on FreightTech and the impact to the markets by subscribing.
