If you’re a regular FreightWaves reader and ever wondered why we cover commodities like oil, and especially the shale oil industry, you’d do well to read Donald Broughton’s column from Friday, “Is the cycle about to be over, or is it just getting started?” Broughton makes the case that we’re still early in the economic cycle, which he says is an industrial-led expansion powered by high prices for West Texas Intermediate and the Trump tax cuts, while consumer spending is being driven by millennial household formation and rising wages from low unemployment.
“All of those ‘other things’ aside, the lower corporate tax rate is a boost to the U.S. economy which just began and should stimulate outsized growth for the next 2 to 3 years. Bottom line: we are early in the industrial recovery and the tax cuts should produce a boost to both the rate of growth and nominal size of the industrial economy when it does reach its peak size,” Broughton wrote.
Did you know?
According to SONAR’s otri.atl index, in the past month, tendered loads outbound from Atlanta have seen their rejections soar, from 22.67% on May 16 to 28.68% as of yesterday.
“We’re thinking about minimizing miles, maximizing weights, how many days a week do you need delivery. Our customers are very open to those discussions.”
-Hormel CEO James Snee, on managing transport costs, during a May 24 earnings call
In other news:
As shipping costs soar, supply chains get a makeover
A variety of companies, including food producer Hormel Foods Corp. and retailer Dollar General Corp. , have reconfigured their supply chains, including building out their own truck fleets, reducing the frequency of pickups and deliveries, and shopping around for better rates. (Wall Street Journal)
Google places a $550 million bet on China’s second-largest e-commerce player
As part of a strategic partnership, Google will put $550 million in cash into JD.com, the companies said in a statement. In return, Google will receive more than 27 million newly issued JD.com Class A ordinary shares at an issue price of $20.29 per share. (CNBC)
China’s tariffs on U.S. oil would disrupt $1 billion monthly business
China’s threat to impose duties on U.S. oil imports will hit a business that has soared in the last two years, and which is now worth almost $1 billion per month. (Reuters)
Carrier hopes for price hikes tumble with spot rate declines on major routes
Container spot rates seem to have shrugged off carriers’ attempts to add an emergency bunker surcharge (EBS). And there are doubts emerging as to whether the lines can secure peak season surcharges (PSSs) this year. (The LoadStar)
Brazil’s growth forecast falls off a cliff on strike, uncertainty
Brazil’s growth forecasts fell for a seventh consecutive week as economists assessed the impact of a nationwide trucker strike, growing emerging market turbulence and domestic uncertainty ahead of the October presidential election. (Bloomberg)
There are some big stories coming up this week that FreightWaves readers should stay tuned for: tomorrow afternoon FedEx will do its Q4 FY2018 earnings call, and on Friday OPEC meets in Vienna, Austria. Russia is expected to ask for large production hikes, while Iran appears to think no changes in the caps are necessary, and Saudi Arabia may try to negotiate a compromise.
In other European news, our correspondent Vishnu Rajamanickam reported on the arrest in Germany of Audi CEO Rupert Stadler over suppression of evidence in the automaker’s emissions testing scandal. Last year, Zaccheo Giovanni Pamio, the head of thermodynamics in the diesel engine development department of Audi, was caught lying to the U.S. Environmental Protection Agency with charges of willful law-flouting that ran deep into the higher management of Volkswagen and Audi.
Hammer down everyone!
Stay up-to-date with the latest commentary and insights on FreightTech and the impact to the markets by subscribing.