Market Overview

Today's Pickup: Port Operator Secures $1 Per Gallon Natural Gas Deal For New Trucks

Today's Pickup: Port Operator Secures $1 Per Gallon Natural Gas Deal For New Trucks

Good day,

Overseas Freight has tapped into Prop 1B funding to secure five Kenworth T680 trucks with near-zero emissions Cummins Inc. (NYSE: CMI) ISX 12N natural gas engines for use in the ports of Long Beach and Los Angeles. The company is further taking advantage of a special $1 a gallon deal for natural gas through a Clean Energy Fuels Co. (NASDAQ: CLNE) program.

"We're pleased to be part of an effort to help improve air quality in the LA and Long Beach ports and support CAAP in fostering more sustainable freight movement," said Joseph Wang, president and CEO, Overseas Freight. "Clean Energy has been a good partner for years and we are excited to use Redeem at a price far below diesel. South Coast AQMD made this project possible with vital grant funding and we deeply appreciate their support."

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Clean Energy's Redeem program allows a company to secure renewable natural gas (RNG) for just $1 a gallon for one year, providing fixed pricing as fleets build their natural gas operations. Clean Energy says that RNG cuts greenhouse gas emissions by at least 70 percent versus diesel.

"America Lung Association State of the Air Report cited Los Angeles and Long Beach with having the worst air quality in the state. Overseas Freight is taking a positive step forward in reducing air pollution in the region by deploying the cleanest truck technology that can be easily and economically adopted," said Greg Roche, vice president, Clean Energy.

The $1 billion Proposition 1B: Goods Movement Emission Reduction Program is a partnership between the California Air Resources Board (CARB) and local agencies designed to quickly reduce air pollution emissions and health risk from freight movement along California's trade corridors. 

Did you know?

In Oklahoma, bridge projects must be started before mating and nesting season for barn and cliff swallows, both protected birds. Because the federal government shutdown is delaying funding for projects, several have been delayed, and if they can't start soon, the birds' arrival will result in further delays.


"[Logisitcs] is the place to be if things fall apart, as the non-asset-based names see margins and earnings hold up better in downturns. Increasingly complex supply chains and changing logistics strategies should lead to continued reliance on and growth of 3PLs. Disruption of brokers has been overhyped, in our opinion, but competition is increasing. We prefer domestic logistics names over international at current valuations and with tariff risks still looming."

- Stifel research note

In other news:

Shutdown's cost to transportation

In Oklahoma, the federal government shutdown has led to a delay in several improvement projects, costing the state up to $133 million in delayed funding so far. (Woodward News)

Sears to ask bankruptcy judge to approve liquidation

Sears Holdings Corp. has been unable to reach agreement with chairman Edward Lampert on a takeover, and will ask a bankruptcy judge to approve a liquidation sale. (Reuters)

No Brexit deal means big trouble for freight

A top freight leader in Britain says if there is no deal on Brexit, his company will face hardship due to huge increases in customs fees and checks. (LBC)

Global air freight flat in November

Global air freight capacity rose in November 2018, but actual freight was flat for the month, according to the International Air Transport Association (Business Standard)

Shippers own part of driver shortage

Trucking companies having trouble filling driver seats now have a co-conspirator as some believe shippers are playing a role in the lack of new driver entrants. (Journal of Commerce)

Final Thoughts

A research note from Stifel this morning reiterates its expectation of continued economic growth, but also the continuing uncertainty in the stock market. The note points out that the Dow Transports have 13% since a late November outlook call held by Stifel, while the broader S&P was down just 6.9%. The note goes on to mention positives (ISM Index still shows growth and contract pricing should remain strong due to labor constraints) and negatives (tariffs and interest rate hikes) for investors looking for value. The group remains firm in its expectations for this year – "slight growth in the economy in 2019, driven by higher consumer spending, while potential tariffs and interest rate hikes remain threats to both freight volumes and economic growth."

Hammer down everyone!

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