With the always heightening safety concerns in the transportation sector, The Federal Motor Carrier Safety Administration (FMCSA) has decided to double the minimum rate for random drug tests of truck drivers. This announcement came just prior to the launch of the heavily anticipated drug and alcohol clearinghouse. The minimum rate for random drug testing will rise from 25% to 50% annually starting January 1, 2020. The rate requirement for alcohol testing will remain untouched at 10%. The drug and alcohol clearinghouse is a central database to house all positive test results and test refusals.
In an effort to reduce greenhouse gas emissions from transportation, 12 Northeastern states and Washington D.C., including Pennsylvania, are weighing a regional program that would raise the price of gasoline. The Transportation and Climate Initiative (TCI) defines their program as a “bipartisan group or Northeast and Mid-Atlantic Jurisdictions” looking to “achieve additional benefits through reduced emissions, cleaner transportation, healthier communities, and more resilient infrastructure.” According to CBS Pittsburgh, their recent plan would require wholesalers of gasoline and diesel in participating states to buy carbon credits to sell their fuel. Critics of the program are quick to point out that the costs of these credits will be passed on directly to the consumer.
During the holiday season millions of gifts are purchased and exchanged among family and friends however, the amount of merchandise that gets returned has increased exponentially over the last several years. According to CBRE and Optoro, Americans are projected to return $41.6 billion in online holiday merchandise this year, up from $37 billion returned last year. With the uptick in online shopping, consumers have more purchasing power than ever before. They can purchase any number of items from the comfort of their home while knowing they can return anything at no cost. This leaves retailers wondering how they can make up for lost profits on returned goods, as well as putting immense pressure on the distribution centers in charge of handling.
Today, stocks stalled out near record highs which remain on track to be their best year in a decade. Optimism about the global economy is still at the fore as the U.S. and China continue to improve on trade relations.
Leaders of Cyprus, Greece and Israel are planning to sign an agreement early in the new year for the construction of a new natural gas pipeline. In Athens on January 2nd, the Greek Prime Minister Kyriakos Mitsotakis, Cypriot President Nikos Anastasiades and Israeli Prime Minister Benjamin Netanyahu, will meet to sign the agreement. The deal will be finalized at a later date dependent on Italy’s signature, they have already expressed displeasure with the project earlier this year. The pipeline will transverse the Mediterranean from the Levantine Basin offshore gas reserve of Israel, to the Greek Island of Crete and the Greek Mainland, then to Italy. The EastMed Pipeline project has an estimated completion date of 2025.
As the end of this week winds down and people prepare for the holidays next week, light liquidity will most likely be the name of the game in our energy markets. Light liquidity means trading volume is lower than normal which is to be expected during this time of year. Therefore, the bid/ask spreads are wider. Meaning that if the computer-driven trading houses decide to either buy or sell a lot of volume, the market can move violently in one direction rather quickly. What does this mean for our industry? This means that our customers can be very opportunistic especially if we see a retracement in prices after this rally we’ve seen since the beginning of December.
The volatility of the China-United States trade war may finally be slowing down. Only a few days after agreeing to phase one of a new trade deal, China has announced a one-year tariff exemption on six chemical and oil derivatives, a positive sign that tensions are easing, and progress is being made. These exemptions become effective on December 26, 2019 and are set to expire on December 25, 2020.
It is no secret that 2019 has not been kind to the trucking industry. In 2018, 310 freight companies were forced to close down. During the first half of 2019 alone, that number was approximately doubled, showing 640 closures. Looking at data like this, you can understand why the trucking industry is looking for ways to diversify and adapt, to stimulate the LTL industry. With Celadon, one of the industry titans in North America closing their doors, there have been more than a few eyebrows being raised around the industry. In times like this these, communication is key for maintaining peak efficiency across all operations.
Last year the provincial government of Ontario, Canada canceled their generous zero-emission vehicle rebates causing sales of electric vehicles (EV) to plummet. The cancellation of this incentive program lead to Ontario being the only Canadian province to see a decrease in sales.