Good day,
Your correspondent (a term news organizations used to use to stay away from the first-person voice) attended an all-day conference on battery metals earlier this week. It’s easy to talk about batteries, but they come in different formulations, and not all formulations do the same thing. A few quick takeaways from the event, relevant to the transportation sector: one, there needs to be massive investment in things like lithium production to meet the demands of the EV sector. In just a few years, EV consumption alone will consume more than 100% of the lithium now consumed for all uses. Two, everybody wants to reduce the amount of cobalt in batteries, because it mostly comes from the DRC Congo which is unstable, and the price volatility reflects that instability. Three, there may be competition to be lithium’s partners in the next generation of batteries, but lithium has so many great characteristics—lots of reserves from stable countries, and it’s lightweight so it doesn’t add a lot of pounds to the vehicle itself—that the only thing that might displace it would be solid state batteries, which are more of a dream than a reality at this point. A tremendous amount of investment is going to be needed to ensure the supply of the metals the world will be demanding, and lots of investment will be needed to produce the best battery mix for cost and efficiency.
Did you know?
There are signs in the used truck market that a market top may be getting near or is here already. According to J.D. Power figures, the number of trucks sold at auction was up last month, but prices were down. Model year 2015 trucks were way down, with the average auction price of 2015 at $38,000. That’s down 31.8% from August.
Quotable:
“There was simply a much higher volume of trucks with high average mileage sold in September compared to August. Newer trucks are indeed seeing more notable depreciation now that more volume is entering the market, but the 31.8 percent result is not representative of what to expect in the real world.”
–J.D. Power on its latest numbers regarding the sales of used trucks.
In other news:
Steel price increases not taking hold in the U.S.
A rise in the list price by major producers is not showing up yet in spot market activity (Platts)
British post-Brexit system going slowly
A system to replace the pre-Brexit Customs activity with a new one is seeing a too-slow rollout (Loadstar)
A truck driver in Idaho was severely beaten
Sleeping in his truck at a truck stop, he was brutally attacked (Idaho State Journal)
An Indian tech company seeks to disrupt the trucking industry in that country
BlackBuck has raised $130 million (TechCircle)
Colorado voters are down on a new fuel tax proposal
Polls show it losing on Election Day (The Gazette of Colorado Springs)
Final Thoughts
Many trucking companies have been saying for awhile that they don’t want to mindlessly chase volume, that they want to focus in on profitable lanes even at the cost of revenue. Heartland Express’ third quarter earnings, released Wednesday, show the results of that strategy in an almost perfect example. In the middle of a bull market for freight, it took in a significantly reduced amount of revenue. It also made more money and its OR was significantly improved. One analyst wondered whether Heartland’s strategy was leading it to pass on a good amount of volume in a great market, and why the company was shrinking rather than growing. But in terms of the bottom line, the strategy for now clearly seems to be working.
Hammer down, everyone!
