Energy Update: With the cost of diesel now reaching the $6 a gallon threshold, hydrogen power for commercial vehicles is at the forefront in zero-emission commercial vehicles. The pursuit of hydrogen is typically following two paths: the power to hydrogen and hydrogen to power technologies. Recently, the power of hydrogen in the form of internal combustion engines has been receiving a great deal of attention due to its reliance on current technology.
The current challenges in moving toward hydrogen-powered internal combustion engines for commercial truck applications are onboard storage and fueling infrastructure. Research and testing are underway to build out onboard storage that is safe and easily adapted to refueling. Fueling infrastructure is the next challenge and one that can easily be met for the commercial truck market. Long haul and regional fuel points can be installed to provide available fueling stations giving fleets the required infrastructure to run the trucks on the road. The transition to hydrogen internal combustion engines can give us a bridge to begin the journey into hydrogen. The good news is advancements in onboard storage and hydrogen fueling infrastructure is developing toward more advanced technologies such as Hydrogen fuel cells. The hydrogen combustion engine is here with the announcement by Sinotruck releasing the first heavy truck with a 13-liter hydrogen internal combustion engine.
The Rockfarm truckload rate per mile continues to show a decline with some leveling as we head into the July holiday. At $3.22 cost per mile, the index is nearing the threshold we crossed in June of 2021. There is still considerable strength in the market, but there is no
doubt truck capacity is now reacting to the high costs of fuel and parts required to keep the truck running.
The Rockfarm index for line haul cost per mile is still dropping from its high of $3.61 per mile, illustrating $2.98 for an average line haul cost per mile. The Rockfarm index lanes that measure strength in specific trade lanes show all lanes decreasing in cost per mile costs.
Diesel fuel, on the other hand, continues to increase, reaching a $5.71 average cost per gallon. We now have three out of seven regions reported by the EIA at over $6 per gallon for diesel.
Next Challenge: The last 2 + years have brought a host of challenges, so one more on the horizon just falls into our pattern of taking what comes our way. This challenge may or may not materialize, but it is one we have historical knowledge of that drives a great deal of concern. Just as we are getting our legs under us, the ongoing labor negotiations between the ILWU and PMA and the start of the seasonal surge of imports is pulling our efforts into drawing up contingency plans should a work stoppage occur within the West Coast ports. At this time it does appear both the ILWU and Pacific Maritime Association are committed to working through the current labor contract termination date of July 1. The concerns then turn to the jostling that occurs during labor negotiations which may include work slowdowns during the upcoming peak season.
The largest port represented by the PMA, LAX, saw a record number of containers handled in May at 967,900 total TEUs. A sharp increase in export containers propelled the port to establish a new benchmark in container throughput. The question is how much more capacity is available to manage the upcoming peak season? Are we going to see a repeat of 2021 with port congestion?
All questions will be answered within the next few months. The larger initiative is gaining visibility upstream to make the necessary adjustments in our contingency plans. Reporting on milestones and the throughput timeline for each milestone will give us leading indicators that drive our decisions to make alternate routings either at the port of origin, port of entry or domestically in order to meet our internal company schedules. The U.S. Census Bureau’s March ’22 inventory number grew 2.4%, and April’s inventory level grew another 1.2% leaving April’s business-to-sales ratio at 1.29. With May and June yet to be counted, we are in much better shape than we have been over the last two years.
Critical milestones upstream that can be reviewed to identify choke points may include bookings to available sailings, ships in waiting at the origin and destination port, daily port TEU throughput, drayage capacity at origin and destination ports, and empty container and chassis availability. Pieced together as a timeline, the milestones provide an overall snapshot of your import supply chain that may illustrate breakouts from the norm, allowing for contingency plans to come into effect mitigating the similar issues we have seen over the past 24 months.
For more information please reach out to our Supply Chain Coach team.
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Brad’s journey into logistics began as a Marine Officer and transitioned from the LTL docks to the non-asset side within the logistics service provider arena. As a co-founder of Rockfarm, Brad drives our business development efforts and delivery of our promise. An Arizona native, Brad enjoys spending time outdoors in his home state with his wife and family.
“Our approach to the market allowed us an opportunity to push forward in 2008 and enable our mission, “lower the cost to serve” to stand as a cornerstone to our company today.”
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Vineyard, Jared. (2022 June). ILWU & PMA Speak About Contract Negotiations
Berman, Jeff. (2022 June). ILWU and PMA expect labor negotiations to go past July 1 deadline
https://www.logisticsmgmt.com/article/ilwu_and_pma_expect_labor_negotiations_to_go_past_july_1_deadline
LM Staff. (2022 June). U.S. rail carload and intermodal volumes see annual declines, for week ofJune 11, reports AAR
https://www.logisticsmgmt.com/article/ u.s._rail_carload_and_intermodal_volumes_see_annual_declines_for_week_of_ju
Overdrive Staff. (2022 June). Large Canadian cross-border fleet acquired
https://www.overdriveonline.com/business/article/15293326/large-canadian-crossborder-fleet- acquired-i5-closures-next-week
Overdrive Staff. (2022 June). Broker reform: FMCSA wants clarity on “broker”, “bona-fide agent” definitions
https://www.overdriveonline.com/regulations/article/15293010/broker-reform-fmcsa-wants-clarityon-broker-bona-fide-agent-definitions-autocar-yard-spotters-served-by-new-dealer
In Freight News. (2022 June). Russian oil exports up 12% in 2022 as demand persists: Novak
https://www.hellenicshippingnews.com/russian-oil-exports-up-12-in-2022-as-demand-persists- novak/
Ballard & Mahle. (2022 February). A Sneak Peek at the Next-Generation Hyrdrogen Engine for Commercial Trucks
https://hydrogen-central.com/ballard-mahle-next-generation-hydrogen-engine-commercial- trucks/
Cummins. (2022 June). HYDROGEN ECONOMY TO BE KICKSTARTED BY HYDROGEN ENGINES
https://www.cummins.com/engines/hydrogen-engines
Seetao. (2022 June). The first commercial hydrogen internal combustion engine heavy truck released https://www.seetao.com/details/163764.html
