Trade Trends is brought to you by ANDY Transport. It highlights notable news and trends in trade, transportation and supply chain logistics.
Disruption to Over-the-Road Transport May Translate to Higher Retail Prices
The front end of 2022 saw Canadian trucker convoys, a war in Ukraine driving oil prices up, and a follow up disruption around Washington D.C.'s capital beltway by U.S. trucks and drivers.
Why it matters: Summarily they add up to higher prices in many ways - at the pump and at the check-out line when buying goods delivered by truck (which includes about everything we buy, it seems).
In the same stride: According to the Wall Street Journal, firms with a tie to Canada-U.S. trade are expected to absorb shipping delays brought on by convoy protests necessitating the rerouting of trucks and dealing with disruptions.
According to the article, citing Truckstop.com: "Prices to ship goods from Canada to the U.S. on the spot market for standard heavy-duty trucks jumped 44% to $4.07 a mile from Jan. 2 to Feb. 5.” More specifically they said that the rate for refrigerated trucks rose by a third over that period to $4.87, the company said.
At the same time: freight rate increases from the U.S. to Canada were a tad better but still rose about 20% during that period.
Bottom line: The unsung work of over-the-road (OTR) transport is not so unsung as the world sees and feels the importance of trucking and the professional truck drivers. One blip in the equation of OTR transport and the supply chain it supports, and an economy can be put in check quickly.
Rising Spot Oil Prices Magnifies Interest in Alternative Power and Fuel
The takeaway: Watch for a heightened interest (greater than ever before) in sustainable and alternative power sources.
Why it's important: According to the National Association of Truck Stop Operators (NATSO), we can expect innovative technologies in the trucking industry. Part of such technology will incorporate alternative fuels as well as autonomous technology. They state that this "will play a critical role in fleets of the future. But challenges remain as the industry transitions to more efficient and technologically advanced vehicles."
At the same time: “Although I am all for electric trucks, there is still a long way to go mainly on the long-haul market. While the range and weight capacity are major concerns, we cannot forget the lack of charging infrastructure’s when on the road, added to already limited parking spaces available as of today. Other factors to be taken in consideration are the charging time versus hours of service, cost and service to name a few. As for a local and regional fleet that comes back to a terminal daily, the issues mentioned are less of an issue however still requires a lot of planning,” says Andy Transport’s Vice President, Transport Operations, Richard Séguin.
Bottom line: As fleets face higher fuel prices, alternative power such as electric, hydrogen fuel cells, and alternative fuels will be more prominent in conversations as it comes time to procure new vehicles and outfit future fleets.
More Stringent Emissions Standards for U.S. and Canadian Trucks?
The takeaway: To reduce dangerous emissions of CO2 and nitrogen oxide gases from the exhaust of vehicles, new and more stringent requirements may be on the way for vehicle operators - heavy trucks in particular - for both the United States and Canada.
What you need to know: Recently, the U.S. Environmental Protection Agency (EPA) announced new rules that limit emissions of nitrogen dioxide (NO2) and carbon dioxide (CO2) from heavy-duty trucks.
Specifically, the new regulations revolve around stronger nitrogen oxide (NOx) standards for heavy duty trucks. The new rules would apply to 2027 model trucks. They would also apply to “Phase 2” greenhouse gas (GHG) for 2027 trucks and forward.
At the same time: Canada normally adopts vehicle-emissions standards set by the U.S. as vehicle manufacturing is commonly integrated throughout North American. In Canada, CO2 emissions from the transportation sector account for about a third (29 per cent) of greenhouse-gas (GHG) emissions in the U.S. and about one fourth of such emissions in Canada. In Canada, greenhouse gas emissions from transportation are second the oil and gas sector, and the largest source of emissions south of Canada.
The new rules by the U.S. EPA target the curtailment of NO2 emissions from heavy trucks by 90 per cent by 2031, and CO2 emissions by about one-quarter.
Bottom line: Emissions regulation and oversight, throughout North America is peaking. Fleet operators must be aware and vigilant with preemptive measures to keep their assets in compliance.
Are Fuel Surcharges Enough to Offset a Rise in Diesel Prices for Owner-Operators and Smaller Fleets?
Fuel surcharges rise and fall with certain indexes such as those for oil prices. But are such surcharges directly tied to the fluctuation in the refined petroleum product - diesel fuel? Some believe not as diesel prices could be on the precipice of soaring. Without a proportional fuel surcharge, it could adversely affect some operators.
In an article reported in FreightWaves implied fuel surcharges are not always imposed by independent owner-operators and could cause financial loss. According to the article, independent owner-operators don't always use fuel surcharges. In some cases, surcharges may be built into an agreed upon contractual relationship, but such drivers often rely on a round number price per gallon that would have been sufficient for any reasonable rise in fuel prices.
Such agreements are faulty, according to the article, if retail prices soar in short order and rise above the set de facto agreed upon rate. The article quoted David Roush, president of KSM Transport Advisors, cautioned smaller owner-operators who don’t have clear and specific language to accommodate rising fuel prices via a fuel surcharge. Roush told FreightWaves: “Many of these small firms have no customers and are 100% exposed to the spot market. They accept loads based on a flat charge; there is no fuel surcharge for them.”