So…This morning Boston received its first snowfall of the season. The overzealous news reporters are already in action “traffic delays, polar vortex, stay tuned for (15 minute interval) updates!” The picture on the left is the snow on my property this morning. I had to rush outside to capture that little dusting of snow before it completely melted. In contrast, the picture on the right captures the snowfall in Wisconsin earlier this week. It looks like they’re going to give Rochester, NY a run for its money this season. My point, I’m admitting we are such wimps in Boston.
On to this week’s news… lots of shale oil supply chain stuff:
- Cass Freight Index for October Reflects Congestion
- BNSF puts moratorium on adding more oil tank cars
- Rising US chemical production spurs logistics, trucking, intermodal growth
- Halliburton ‘War Room’ Tracks Sand Shipments for Fracking Industry
- Wal-Mart Reports Rare Rise in U.S. Sales
- Google Takes Over Operations Of Moffett Airfield From NASA, Will Invest $200M Into The Site
The Cass Freight Index for October was static month-to-month. Shipments were down about 1 percent, while expenditures were flat. The report attributes the reduction in shipments to port congestion, especially on the west coast, and a drop in new orders for manufactured goods in September. However, both shipments and expenditures shows healthy year-over-year growth, at 3.3 percent and 6.4 percent, respectively.
The Dakota shale boom has relied heavily on rail transport of its crude oil production. This has displaced capacity that has traditionally been available for commodities such as grains and other agricultural products. An article on Bakken.com reports that BNSF Railroad has told some of its oil transportation customers that they cannot add new oil tank cars to its system until next year. Here are a coupl brief excepts from the article:
The moratorium on new cars, which customers were informed of in recent weeks, is BNSF’s latest effort to avoid worsening congestion on its rail network amid record freight traffic….The efforts by BNSF come just as nation’s rail system faces what could be its biggest ever test as farmers start shipping a record harvest of corn and soybeans just as winter weather threatens to slow down operations.
I am interested in seeing what impact this decision will have on shale oil production from the region. Will the oil production increase as it would have with excess rail capacity, with trucks taking over the excess volumes? Or will trucking capacity constraints or the increased cost of truck transport, in conjunction with lower crude oil prices constrain production volumes until rail capacity is increased? I’m guessing the latter. Does anyone disagree?
An article on the Journal of Commerce reports that Sasol recently decided to build an $8.1 billion plant in Louisiana that will triple its chemical production capacity in the U.S. The article quotes Sasol president David Constable as stating, “The U.S. Gulf Coast’s robust infrastructure for transporting and storing abundant, low-cost ethane was a key driver in our decision to invest in America,” Chemical production is up nationally, and this is creating logistics demand and opportunities. Here is an excerpt from the article:
Those steady gains mean more chemical shipments on highway, rail and by water. That in turns means more interest and investment by third-party logistics companies and transport operators in the lucrative chemicals business.
The article goes on to mention recent chemical industry logistics activities including Transplace’s acquisitions of Logistics Management Solutions and SCO Logistics and Quality Distribution’s recent 10.9 percent increase in chemical logistics revenue.
Wall Street Journal (subscription may be required) published an article on Halliburton’s “war room” that tracks the sand shipments used for fracking operations. There are certain requirements for fracking sand and it is a critical ingredient in the fracking process. Here is a quote from the article:
More than a dozen employees hunker down daily on the first floor of Halliburton’s north Houston office in front of massive screens with real-time maps of railcars transporting sand, live camera feeds of sand mine loading and unloading operations, constantly updated weather conditions and data about sand levels in the company’s storage silos.
Who would’ve thought ten years ago that sand would’ve become such a critical commodity in US oil production..
Finally, Walmart recently reported an increased in same store sales. In previous posts I had mentioned that same store sales had been declining at Walmart, while e-commerce sales had been increasing at the retail giant. So it is only fair that I report Walmart’s same store sales rose 0.5% in the U.S over the most recent period. Meanwhile, e-commerce sales grew 21 percent worldwide on a constant currency basis.
Have a great weekend everybody. This weeks video is a short home video from Quebec City showing the results from 12 feet of snow.