NEW YORK New trucking regulations scheduled to come into effect in 2013 have some ferroalloys market participants concerned about logistics.
"It will take a lot longer for material to arrive at a destination," one trader said.
The Federal Motor Carrier Safety Administrations new regulations, which go into effect July 1, include a requirement that drivers take a mandatory 30-minute break every eight hours, according to the agencys website. This follows on the heels of regulations that prohibit drivers from working more than 14 hours, including time spent loading material.
"They (truck drivers) used to be able to drive 14 hours," the trader said, with drivers previously listed as off-duty when loading material.
The regulations led at least one top logistics executive to conclude that trucking costs are on the rise. "Right now, the industry is in the eye of the storm. There are a lot of fundamental changes going on in motor transport," Jim Ruiz, senior vice president of Pittsburgh-based PLS Logistics Services Inc., said at AMMs Steel Success Strategies XXVII conference in New York (amm.com, June 19).
Fuel surcharges will continue to be part of the logistics story, although some sources are seeing a slight respite from rising prices. "There are rumors that fuel prices by January could be below $3 (per gallon)," a second trader told AMM.
But a third trader expressed skepticism that trucking costs would fall even if fuel prices declined. "Theyre going to put it to us no matter what," he said.
While trucking costs might remain high, shipping rates are steady at low levels due to an oversupply of vessels. "The market is in a total surplus," the second trader said. "Too many vessels came on-stream and theres not enough freight. We can get full vessels from China to the U.S. Gulf for $30 (per tonne) or less."
"Youve seen the Baltic Dry Index (an assessment of the cost of moving goods by sea) plunging," the first trader said.