Business magnate Thomas (T.) Boone Pickens Jr. believes that U.S. supply chains should rely on natural-gas powered trucks to keep freight flowing.
Pickens, one of America's best-known financiers, is on a mission to convert the nation's eight million heavy-duty trucks from diesel fuel to cheaper, cleaner-burning natural gas. His "Pickens Plan" would reduce U.S. dependence on foreign oil by developing alternative sources of fuel. One key element of that plan calls for persuading U.S. fleet owners to invest in expensive trucks that run on natural gas. The plan also envisions the development of an extensive infrastructure to provide natural gas and maintenance services to truckers. Pickens sits on the board of Clean Energy Fuels Corp., a California-based company that is involved in such an endeavor.
If Pickens' conversion program succeeds, it would have a tremendous impact on U.S. supply chains, since the majority of domestic shipments move by truck.
Pickens, who will give a keynote presentation at the Council of Supply Chain Management Professionals Annual Global Conference in Atlanta, spoke recently with Editor at Large Mark B. Solomon about the project, its challenges, and its implications.
Q: Do you have a realistic number for the potential impact of converting trucks from diesel to natural gas? A: [There are] eight million trucks out of 250 million vehicles in America. Heavy-duty trucks use 20,000 to 30,000 gallons [of fuel] a year. That totals three million barrels a day. We import 4.4 million barrels a day of [Organization of Petroleum Exporting Countries] crude. So you could knock out 70 percent of OPEC oil by going to domestic natural gas for heavy-duty trucks.
Q: The biggest challenge at this point is building out a robust natural gas fueling and maintenance infrastructure. Can this network be developed without some form of government assistance? A: What you want to get from the government is a tax credit to offset the $24,000 cost differential between diesel and natural gas trucks. That differential will be there for a while because of the size of the engines. Eventually the differential will disappear because you can build natural gas engines as cheaply as you can build them for diesel.
Because natural gas is cheaper than diesel, the fuel savings will be such that you won't need federal money for the infrastructure. The conversion is going to happen without government help. What you want from the government is the help to make it happen faster.
Q: What is your time frame for this conversion? A: Five years with government leadership, 10 years without leadership. In 1972, we went from gasoline to diesel trucks because diesel was cheaper. The conversion was completed by 1977 and 1978.
Q: As we talk, oil prices have come off their highs, while natural gas prices have begun climbing from historic lows. Do you have projections as to where these prices will be a year from now? A: About US $115 a barrel for Brent North Sea crude (world oil prices), and $95 to $100 a barrel for West Texas Intermediate crude (domestic). Natural gas prices will probably be at $3.50 to $4 per million BTUs (British Thermal Units).
Q: Many natural gas producers have scaled back production because prices are not compensatory for their investments. That could explain why prices have been rising lately. What would be a good price point for natural gas that would encourage production but not choke off demand? A: $5 (per million BTUs) would put producers back to work.
Q: What is it going to take to maintain the industry momentum to convert from diesel? A: The fuel is cheaper. That's the bottom line. If I am competing against you, and you can cut your fuel bill by a third, I have to do the same thing to be competitive with you. That's where the industry is. It's happening right now.
Q: Will shippers have to push for conversion, or is this something truckers will do independently of shippers? A: Shippers are asking for this. They want to get away from the diesel surcharge. There is no surcharge on natural gas. Shippers are asking for two prices for shipping, natural gas or diesel.
Q: How much will it cost to modify each station to accommodate natural gas refueling? A: About $1.5 million to $2 million a station for liquefied natural gas. The exact figure would depend on site improvements, which include driveway ingress/egress, retention ponds, landscaping, lighting, and street and curb improvements. If stations add compressed natural gas, special equipment and dispensers would add about $750,000 to the cost.
Q: Several people, including you, have raised concerns about U.S. producers' ability to export natural gas supplies overseas to obtain a better price for their products. Do you think there should be quotas, or even an outright ban, on U.S. natural gas exports so the product stays in domestic hands? A: I'm not big on that. I think what should be done is to increase the demand in the United States and take advantage of it. I understand the economics. Producers are trying to get into a global market, because natural gas prices here are at $2.78, and in Beijing it's $14 to $16, in Japan it's $18, and in Europe it's $14.
The United States has the cheapest fuel in the world. Natural gas is a fraction of what it costs overseas, our domestic oil is $15 a barrel cheaper than world oil, and pump prices are much lower than in Europe and Asia. But when it comes to natural gas, you have to give your producers a chance to get a getter price. Either let them do it, or move to develop demand in the U.S. If your leadership would do it, you could develop demand right here.
Q: The core of the 2008 "Pickens Plan" was to make wind power a primary source of energy and convert natural gas from a primary energy source to a transportation fuel. Yet the plan never really gained traction, largely due to resistance to investment in wind power. What happened? A: Wind power is priced off the margin, and the marginal price is set by natural gas. When the proposal came out, natural gas was fluctuating in the $7 to $13 range. But when you get below $6, which is where we've been, you can't finance a wind deal.
Q: Do you still believe in the concept? A: When natural gas gets above $6, you can use wind.
Q: How much of the overall fuel problem rests with elected officials and the federal bureaucracy? A: In Washington, they need to understand the portfolio of fuels, and opportunities to use the fuels, better than they do.
Q: They don't understand the economics of it? A: You can start there. People think it's a free market for oil. It's not a free market for oil. OPEC sets the prices. Twenty million barrels come through the Straits of Hormuz every day. Only 7 percent of that goes to the United States. But we have our military over there to protect that. According to a study by the Milken Institute, we spent $7 trillion from 1978 to 2010 on Mideast oil. A great part of that was military spending, but it's still connected to the price of oil.
In the last 10 years, we have transferred $1 trillion of wealth to Mideast oil producers. That's the largest transfer of wealth in the history of mankind. If this continues for the next 10 years, assuming a price of $100 a barrel, it will cost $2.5 trillion. This is not sustainable.
What we need to know is what's in the energy portfolio, how we deploy it, what's available in the U.S., and what could be available in a North American energy alliance. That goes a long way toward getting us where we need to be. The resources here are adequate and available, and you don't need the cost of oil from the Mideast.
The U.S., U.K., and Australia will strengthen supply chain resiliency by sharing data and taking joint actions under the terms of a pact signed last week, the three nations said.
The agreement creates a “Supply Chain Resilience Cooperation Group” designed to build resilience in priority supply chains and to enhance the members’ mutual ability to identify and address risks, threats, and disruptions, according to the U.K.’s Department for Business and Trade.
One of the top priorities for the new group is developing an early warning pilot focused on the telecommunications supply chain, which is essential for the three countries’ global, digitized economies, they said. By identifying and monitoring disruption risks to the telecommunications supply chain, this pilot will enhance all three countries’ knowledge of relevant vulnerabilities, criticality, and residual risks. It will also develop procedures for sharing this information and responding cooperatively to disruptions.
According to the U.S. Department of Homeland Security (DHS), the group chose that sector because telecommunications infrastructure is vital to the distribution of public safety information, emergency services, and the day to day lives of many citizens. For example, undersea fiberoptic cables carry over 95% of transoceanic data traffic without which smartphones, financial networks, and communications systems would cease to function reliably.
“The resilience of our critical supply chains is a homeland security and economic security imperative,” Secretary of Homeland Security Alejandro N. Mayorkas said in a release. “Collaboration with international partners allows us to anticipate and mitigate disruptions before they occur. Our new U.S.-U.K.-Australia Supply Chain Resilience Cooperation Group will help ensure that our communities continue to have the essential goods and services they need, when they need them.”
Artificial intelligence (AI) tools can help users build “smart and responsive supply chains” by increasing workforce productivity, expanding visibility, accelerating processes, and prioritizing the next best action to drive results, according to business software vendor Oracle.
To help reach that goal, the Texas company last week released software upgrades including user experience (UX) enhancements to its Oracle Fusion Cloud Supply Chain & Manufacturing (SCM) suite.
“Organizations are under pressure to create efficient and resilient supply chains that can quickly adapt to economic conditions, control costs, and protect margins,” Chris Leone, executive vice president, Applications Development, Oracle, said in a release. “The latest enhancements to Oracle Cloud SCM help customers create a smarter, more responsive supply chain by enabling them to optimize planning and execution and improve the speed and accuracy of processes.”
According to Oracle, specific upgrades feature changes to its:
Production Supervisor Workbench, which helps organizations improve manufacturing performance by providing real-time insight into work orders and generative AI-powered shift reporting.
Maintenance Supervisor Workbench, which helps organizations increase productivity and reduce asset downtime by resolving maintenance issues faster.
Order Management Enhancements, which help organizations increase operational performance by enabling users to quickly create and find orders, take actions, and engage customers.
Product Lifecycle Management (PLM) Enhancements, which help organizations accelerate product development and go-to-market by enabling users to quickly find items and configure critical objects and navigation paths to meet business-critical priorities.
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
Businesses were preparing to deal with the effects of the latest major storm of the 2024 hurricane season as Francine barreled toward the Gulf Coast Wednesday.
Louisiana was experiencing heavy rain and wind gusts at midday as the storm moved northeast through the Gulf and was expected to pick up speed. The state will bear the brunt of Francine’s wind, rain, and storm damage, according to forecasters at weather service provider AccuWeather.
“AccuWeather meteorologists are projecting a storm surge of 6-10 feet along much of the Louisiana coast with a pocket of 10-15 feet on some of the inland bays in south-central Louisiana,” the company reported in an afternoon update Wednesday.
Businesses and supply chains were prepping for delays and disruptions from the storm earlier this week. Supply chain mapping and monitoring firm Resilinc said the storm will have a “significant impact” on a wide range of industries along the Gulf Coast, including aerospace, life sciences, manufacturing, oil and gas, and high-tech, among others. In a statement, Resilinc said energy companies had evacuated personnel and suspended operations on oil platforms as of Tuesday. In addition, the firm said its proprietary data showed the storm could affect nearly 11,000 manufacturing, warehousing, distribution, fabrication, and testing sites across the region, putting at risk more than 57,000 parts used in everyday items and the manufacture of more than 4,000 products.
Francine, which was expected to make landfall as a category 2 hurricane, according to AccuWeather, follows the devastating effects of two storms earlier this summer: Hurricane Beryl, which hit the Texas coast in July, and Hurricane Debby, which caused $28 billion in damage and economic loss after hitting the Southeast on August 5.