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US Oil Boom and Trucking: The Case for Leasing

Crude oil sold at the wellhead in Bakken shale region across North Dakota dipped to $49.7 per barrel on November 28, revealing how geographic and logistical issues can cause disparate prices in areas where new shale plays have pushed U.S. oil product to a 31-year high, reports Dan Murtaugh for Bloomberg.

“You have gathering fees, trucking, terminalling, pipeline and rail fees,” Andy Lipow, president of Lipow Oil Associates LLC, said in the article. “If you’re selling at the wellhead, you’re getting a very low number relative to WTI.”

In comparison, West Texas Intermediate crude oil futures were hovering around $67.3 per barrel Wednesday.

Consequently, in order to turn a profit, more drillers are turning to railways to ship oil to large hubs for distribution. Tank carloads of crude are up 50% so far this year, compared to 2014, according to Pacific Standard Magazine.

However, if crude oil prices continue to weaken, railways may no longer be an option. For instance, in places with limited pipeline capacity, producers have to fill rail cars with crude and pay $10 to $15 per barrel to bring oil thousands of miles or more to the coasts for processing.

“To a producer in Wyoming, if Brent’s $70 then I’m at $50, then I have to start asking does it economically make sense to keep drilling,” John Auers, executive vice president at energy consulting firm Turner Mason & Co, said in the Bloomberg article. “They might start reallocating capital, you might see projects slowed or shut down.”

Transcourt a Tanker leasing company can help reduce capital outlays to support transportation costs through a lease program. Transcourt has locations now in Alberta, Ontario, Quebec and the US. The company provides leases for various tankers including; pneumatic tankers, oil and petroleum tankers and stainless tankers.

Recent trends indicate an uptick in oil and pump prices according to Trucking News. Prices this week in major trucking centers range from 95.5 cents per liter in Edmonton, 97.8 cents in Winnipeg, $1.102 in Kamloops, $1.124 in Toronto to $1.142 in Moncton.

The national average price of regular grade gasoline also followed the same pattern, but increasing even more by 1.7 cents to $1.114 per liter. It is 28.4 cents less than during this week last year.

Meantime, south of the border, the average U.S. cost of on-highway diesel moved higher this week for the second straight week. The U.S. Energy Department reports it increased 3.1 U.S. cents to U.S.$2.811 per gallon. This follows diesel falling for five consecutive weeks, when it lost a total of 19 U.S cents.

This week’s price is still U.S.$1.164 lower than the same time a year earlier.

Diesel now ranges from a low of U.S.$2.683 in the Gulf Coast region to as high of U.S.$3.11 in the Central Atlantic states.

Meantime, the average cost of regular grade gasoline posted an even larger increase than diesel over the past week, 8.5 U.S. cents, registering U.S.$2.57 per gallon, its highest level since early December.

Compared to this time a year ago gasoline is still U.S.$1.143 less per gallon.

The expectation is fuel prices are going to head even higher following reports on Wednesday that both Brent and U.S. crude are at their highest levels in more than four months.

ETF Trends 2014, December 4th, 2014 Tom Loydon

Trucking News April 29th, 2015

Transcourt is reinforcing its presence in Québec

Toronto, April 24th, 1025 – Transcourt Tank Leasing, the Canadian leader in leasing and long-term rental of liquid and dry bulk tank trailers, is presently expanding its activities in the North-American market. This expansion includes efforts to reinforce its presence in Québec as was the case when Transcourt took part in the recent ExpoCam 2015 that was held in Montreal on April 16, 17 and 18, 2015. Last year, as it pushed its market expansion westward, Transcourt opened an office in Calgary. The development of the Québec market is supported by the establishment of a new office in Montreal’s Anjou borough.

“This new office will enable us to cater and better serve our French-speaking clientele and answer the needs of the Québec market whether on a short or long term basis”, explained Bruce Daccord, President and co-founder of Transcourt Tank Leasing. “With our vast fleet that includes a large variety of tank trailers we are certainly well equipped to deliver flexible and customized service anywhere in Canada.”

Within the past three years alone, Transcourt has doubled its business as the tank trailer fleet has grown by more than 30% per year for the past two years to meet the constantly increasing demand. Transcourt certainly isn’t a conventional trailer rental company as it strives to offer business solutions encompassing operational and financial aspects to suit the specific needs of each client, no matter how big or how small the project is.

“Our main goal is to provide a wide variety of equipment from coast to coast and become the supplier of choice when carriers and bulk shippers are looking for a tanker to add to their operations, continued Bruce Daccord.

About Transcourt

Transcourt Tank Leasing was founded in 1997, specifically to meet the leasing and long-term rental needs of the liquid and dry bulk transport industry. Transcourt’s large fleet of tankers is available to customers across Canada. A wide selection of tank trailer configurations is available to a variety of unique industry segments and includes stainless and aluminum tankers, propane btrains and tridems, crude oil and condensate tankers as well as dry bulk trailers.

Expocam 2015
Expocam 2015

Bruce Daccord and John Campbell co-founders of Transcourt Tank Leasing
Bruce Daccord and John Campbell co-founders of Transcourt Tank Leasing

Source:Vianna Murday
Transcourt Tank Leasing
905-338-5744
vmurday@transcourt.com

Tips for filling liquid tankers

The following are key tips required in the filling of Liquid Tankers. To prevent creating a hazardous atmosphere, filling must occur only outdoors in well-ventilated and well- illuminated areas. A properly designed overhead cover is permissible.

While filling, the tanker shall be stationary and should be level. If a trailer is loaded on scales, the levelness and materials of the loading area are usually covered by local or regional requirements for measuring systems.

The system shall be designed to rapidly and safely interrupt the flow of cryogenic liquids for either safety or normal process reasons.

During periods of inactivity, the storage system design (equipment and piping) should not build and store pressure significantly above its normal operating pressure. The system should be designed to prevent contamination of the plant piping or product transfer system from occurring and to ensure storage product integrity when the equipment is idle between tanker fills.

Fill personnel should visually monitor fittings and hose connections to verify that they do not leak during filling operations. Leaking fittings for LIN (Nitrogen in a cryogenic liquid state) and LAR (Liquid Argon in a cryogenic liquid state) can be tightened during filling operations. If LOX (Oxygen in a cryogenic liquid state) fittings and hose connections are observed to be leaking, the filling operation should be shut down and the leaking fitting should be tightened using non sparking tools as appropriate.

This article has been brought to you by Transcourt, for more information on Liquid Tanker Leasing, please do not hesitate to call.

Six simple safety tips for liquid tanker loading.

A liquid tanker or sometime called a tanker truck is a motor vehicle designed to carry liquefied loads, dry bulk cargo or gases on roads. Many variants exist due to the wide variety of liquids that can be transported. Tank trucks tend to be large; they may be insulated or non-insulated; pressurized or non-pressurized; and designed for single or multiple loads (often by means of internal divisions in their tank).

Liquid tankers need special vehicle checks before loading

On arriving at the loading station, the driver should:

  1. Chock the wheels of the vehicle.
  2. Put on the personal protection equipment.
  3. Identify the working area (where unauthorized persons are not allowed).
  4. Ensure that the product to be loaded is correct as marked on both storage and tanker.
  5. Ensure that the tanker is adequately equipped with over-pressurization protection.
  6. Ensure that the fill connections are suitable for the product to be filled.

The driver or operator can then proceed with the following operations:

  1. Connect the vehicle to the loading point with the loading hose.
  2. Purge the hose, allowing the purge of the residual content from the vehicle to the loadingstation. Note that the purge flow rate does not need to be high. A laminar flow speed, at a low rate of flow in the hose, is sufficient. The effectiveness of a purge is not necessarily proportional to the noise it makes.
  3. Ensure the quality of the residual product in the tanker is at an acceptable level.
  4. A residual positive pressure, would show that the tanker has not been completely emptiedand exposed to the air since the last loading. Generally a threshold of 0.2 to 0.3 bars gauge is sufficient.

If analysis on loading is not possible:

  1. Purge the hose in the same way, at a low flow rate and from the vehicle to the loading station, for at least 5 minutes. This procedure will help to prevent any contamination on loading, but in the absence of definite information about the quality of the residual product in the vehicle’s tanker before loading, the quality of the product loaded cannot be assured.

Asia Industrial Gases Association 2013 and Wikipedia 2015

Liquid surges in tankers can be deadly

Liquid-Tanker

Liquid Tanker Safety:

Liquid surge results from movement of the liquid in partially filled tanks. This movement can have negative effects on handling. For example, when coming to a stop, the liquid will surge back and forth. When the wave hits the end of the tank, it tends to push the truck in the direction the wave is moving. If the truck is on a slippery surface such as ice, the wave can shove a stopped truck out into an intersection.

How much so you load?
Never load a cargo tank totally full. Liquids expand as they warm and you must leave room for the expanding liquid. This is called “outage.” Since different liquids expand by different amounts, they require different amounts of outage. You must know the outage requirement when hauling liquids in bulk.

A full tank of dense liquid (such as some acids) may exceed legal weight limits. For that reason, you often may only partially fill tanks with heavy liquids. The amount of liquid to load into a tank depends on:

  • The amount the liquid will expand in transit.
  • The weight of the liquid.
  • Legal weight limits.
TruckingTruth.com Author Brett Aquila

Liquid Tank Segment Outperforming

Truck 5 1541219 back

Almost everyone is operating right now at a pretty good pace. However, the liquid tank truck segment is currently outperforming all other trucking segments largely due to the boom in oil and gas exploration. This is slowed somewhat in 2015 but still strong. “Trucking is a major economic indicator of the overall economy, and the bottom line is that fuel and chemicals tend to hedge the cyclicality of the economy at large,” National Tank Truck Carriers President Dan Furth says.

Tanks make up approximately 5% to 10% of the trucking industry. Trucking is a very low margin business, and it is a very expensives – for the tank trailer industry, even more so.“Getting into the liquid tank industry requires a serious investment. Transcourt – a tank leasing company with offices across Canada helps with capitalization by offering fleet leasing or individual leases. The industry is highly specialized no matter which commodity market you’re serving,” Furth says. The equipment is highly specialized and is much more expensive than your average dry van.

“A strong operator would have a loaded mile ratio at about 60%, which is much lower than the average truckload carrier and that’s due to the specialized nature of each individual trailer. Since you can’t put certain products into certain trailers, it’s common for tank trucks to generate revenue even when they are empty.”

Due to the highly specialized nature of the segment and the shortage of qualified drivers, Furth says there is a movement toward more dedicated contract carriers.

TFW changes reinforce truck driving as low skill? – That’s wrong!

Regardless of whether yours is a carrier that participates in the Temporary Foreign Worker Program (TFWP), or whether you agree with the program or not, recently introduced changes should be of concern to the entire Canadian trucking industry. In the grand scheme of things, a relatively small number of carriers participate in the TFWP. But, for those that do, they will say that it is the last remaining way for them to get idled trucks moving for a period of time when all efforts to recruit Canadians have been exhausted.

Truck driving is not a low skill level job.

Truck driving is not a low skill level job.

The TFWP was already expensive and cumbersome before the recent changes. Now it is even it even more costly and restrictive to the point where some carriers will be forced to abandon the program altogether. This could have significant implications for those carriers and their customers.

But, the more universal problem underscored by the recent changes to the TFWP – and why everyone in the industry should be concerned — is that they reinforce the notion that truck driving, as an occupation, has about the same standing as a burger flipper in the government’s eyes. For years, CTA has — given the level of skill, training, planning, administration and legal compliance required to do the job — objected to the classification of truck drivers as unskilled under the National Occupational Classification (NOC), which is the underpinning for government policy on which occupations are eligible for training funds, immigration, and programs like the TFWP.

In 2009, a research report conducted by Hiscott Consulting for the last review of the NOC by the federal department now called Employment and Social Development Canada (ESDC), recommended occupation 7411(Truck Drivers) be re-classified from Skill Level C (low skilled) to Skill Level B. For reasons that were never fully explained, that recommendation was not adopted.

The implications of this misclassification of truck drivers are significant. The trucking industry, hauls 90% of all consumer products and foodstuffs and almost 60% by value of Canada’s trade with the United States. It is facing a chronic shortage of drivers which the Conference Board of Canada forecasts will reach as high as 33,000 (mostly of long-haul tractor-trailer drivers) by 2020.

The industry has been put in an untenable situation. Labelling the occupation is low skill creates huge barriers and disincentives to people who might otherwise consider driving in Canada for a living. On the one hand the federal government is telling employers in the trucking sector they should be hiring Canadians first to fill driver vacancies (which everyone agrees with). But, on the other hand, by classifying the occupation as low skill, Canadians who might consider becoming truck drivers are excluded (through key programs like the Canada Jobs Grant) from funding for the training they will need to become employable. Low skilled occupations are also at the bottom of the priority list when it comes to immigration. Other than in a few provinces with receptive Provincial Nominee Programs (where the TFWP can be a stepping stone to permanent residence status and a path to citizenship), qualified, experienced truck drivers who would love to work in Canada and become Canadians have no chance of doing so.

The recent changes to the TFWP serve to exacerbate the situation. In one sense ESDC seems to acknowledge the problems that are inherent in the current classification system for certain occupations by introducing the concept of high/low wage occupations as opposed to low/high skilled workers. The determination of whether an occupation is low or high wage is conducted by comparing the median hourly wage for all occupations in a province to the median hourly wage for that occupation in the province. The result of this is that in all but two provinces (British Columbia and Alberta) the occupation of truck driver is deemed to be low wage. (Quebec is exempt from all the changes to the TFWP).

This is not about whether truck drivers should be paid more. The CTA Blue Ribbon Task Force has already acknowledged that industry compensation packages need to be as competitive — or better — than that available in other occupations and sectors in order to attract and retain drivers. Part of the problem is that most tractor-trailer drivers at least are paid by the mile. In addition, all types of truck drivers are lumped together in the NOC. As usual trucking does not fit into the typical 9-to-5 office/factory world that most government analysis and data is based on. Trucking complicates things. CTA has proposed that tractor-trailer drivers should have their own classification distinct from drivers of other vehicles.

While the tractor-trailer/straight truck comparison may not apply in all cases for the most part tractor-trailer drivers tend to earn higher wages, are far less likely to be paid by the hour, work longer hours, drive longer distances, require a different class of license, etc., than most straight truck drivers. There are certainly straight truck drivers in specialized sectors who would earn wages as high as or even higher than some tractor-trailer drivers. Nonetheless, separating the two is a superior methodology to the one currently in use.

Last year, CTA asked the Minister of ESDC, Jason Kenney, if he would consider moving up the timetable and accelerating a review of the NOC for truck drivers. (CTA and the provincial associations are also seeking mandatory entry level training to a national occupational standard currently being developed by Trucking HR Canada with assistance from ESDC). With the recently announced changes to the TFWP, a review of the NOC to ensure the occupation of truck driver, or the various types of truck drivers are properly classified, is even more critical today than it has ever been.

Source: David Bradley, Ontario Trucking Association, November 28, 2014

Researcher discusses self driving truck

Trucks engineered with various levels of self-driving capabilities are expected to pull onto North American roads over the next decade; and autonomous could be seen in the real world not to long after 2025, according to Frost & Sullivan.

Mercedez-Benz Future Truck 2025

Mercedez-Benz Future Truck 2025

As reported by Fleet Owner, F&S’s global director Sandeep Kar offered a “forward-looking perspective on how this brave new world of trucking may play out down the road.”

He contends such technologies will work in concert to cut fuel consumption, reduce emissions and ensure better highway safety. “Trucks that will host these technologies in 2020 and beyond will be more fuel-efficient compared to trucks today and will feature even higher levels of distributed electronics,” he told Fleet Owner.

“Automated vehicle technologies can enhance fuel efficiency by communicating with disparate vehicle systems and sub-systems in trucks featuring electronic interfaces. Moreover, OEMs will design and use these technologies to catalyze highest fuel efficiency so as to influence the purchase decision of truck buyers.”

Kar noted that wireless platooning is “a form of autonomous driving that has shown meaningful fuel cost savings with very little incremental increase to a truck’s price. That can be leveraged by long-haul fleets to derive significant cost savings. This is one of the autonomous driving technologies/concepts that if applied properly can deliver interesting fuel economy gains.”

According to Kar, self-driving trucks will improve the performance of individual truck drivers “particularly if drivers can extract the promised benefits of this technology effectively and efficiently– which includes higher fuel efficiency, higher safety, less driver fatigue, etc.

“Nowadays,” he pointed out, “more and more fleets are incentivizing drivers for safe driving, and this technology can help drivers with safe driving, regulation compliance and fatigue reduction.”

While Kar conceded that “the jury is still out” on the technology’s potential to improve highway safety, he said that “our initial research indicates that highway safety may actually increase overall since most accidents can be attributed to human error.

“However, this will be a long-term phenomenon,” he continued, “since it will take at least a decade or more from 2025 onwards to have a sizeable population of such vehicles on the road to make a meaningful impact on highway safety.”

Kar also advised that self-driving technology “would also enable drivers and vehicles to communicate more effectively with shippers, receivers, fleet hub, and service and maintenance infrastructure. That would improve overall mobile-resource productivity.

Alberta big oil to feel the price squeeze

Source: Tim Webb, The Guardian, Friday 29 October 2010

Alberta Tar Sands: Source: Tim Webb, The Guardian, Friday 29 October 2010

Canada’s biggest energy producers now face the same prospects of shrinking budgets and declining profit as their smaller rivals as prices drop for what’s already the world’s cheapest oil.

If crude prices continue sinking following OPEC’s decision not to cut global oil supplies, Canada’s producers big and small will have to tighten their belts to prepare for declining profits.
“This is a pretty big shock,” said Justin Bouchard, an analyst at Desjardins Securities Inc. in Calgary.

Western Canada Select, the Canadian benchmark, has lost more than a third of its value since June, in step with declines for West Texas Intermediate and the international gauge Brent.

Lower Spending
Large Canadian energy producers will probably trim capital spending with WTI below US$70 a barrel, which reduces cash flow about 30%, Matthew Kolodzie, a Toronto-based credit analyst at RBC Dominion Securities Inc., said in a note Thursday.

There are factors working in the Canadian producers’ favour.
To offset low prices, as well as the high cost of mining and steaming bitumen from northern Alberta, Suncor, Cenovus Energy Inc. and some competitors own refineries and use trains to move their products to coastal markets, where they get better prices.

‘Not a Holiday’
Stocks tied to oil-sands growth are falling less than Canadian producers focused on delivering output growth from shale, as well as those carrying high levels of debt, said Jennifer Stevenson, who helps oversee CUS$5.5 billion at Dynamic Funds in Calgary. That’s because investors consider oil-sands developers based on long-term prices for decades-long projects, she said.

Source: Jeremy van Loon and Rebecca Penty, Bloomberg News | November 28, 2014 12:36 PM ET