Category Archives: Investing

BNSF plans $1.5B Southern California facility for intermodal, transloading

This has been a winning strategy in the past for BNSF and other Class I rails. I am reminded of the Centerpoint facility near Chicago, which provides BNSF a transfer point in the Midwest. But Centerpoint was developed with money from investors, CalPERS being the largest. BNSF hopes to be the prime developer in Barstow, CA.

In case you don’t know where that is, Barstow is in the middle of the Mojave desert, 132 miles from the Port of LA (about 2 hr 27min as I look at Google Maps). It is right on I-15, the main route the movie stars take to go to Las Vegas from LA. Parts of it around San Bernardino are already traffic jams at many hours. However, the BNSF vision is that containers from the port will move by train, reducing traffic on I-15 and other LA freeways.

The Alameda Corridor already moves containers inland a good 20 miles. It’s a double-stack double-track route. BNSF will ensure good rail service from the Barstow yards to the ports.

Transloading and distribution warehouses will be built near Barstow on the BNSF complex. I believe BNSF sees this as a good real estate play as well as a plan to improve container rail service.

I am wondering if the plans for Barstow include customs processing. If so, that would be good for both imports and exports, because they would not have to wait for customs on the ports. That would aid in reducing port congestion.

Joanna Marsh Monday, October 3, 2022

BNSF plans $1.5B Southern California facility for intermodal, transloading – FreightWaves
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New UCL report claims $850bn of LNG-capable tonnage risks being stranded by 2030

UCL Energy Institute is a very influential research group. The UCL part is University College London. Their investigation of LNG-fueled vessels indicates that these ships are not on the best path to reduce carbon emissions. Thus, many of them being built now will need to be scrapped early.

A news piece written by the institute indicates as much as $850 billion of shipping may have to be scrapped.

The study could be quite influential. Shipowners have recently been investing in LNG-powered ships to produce reduced emissions now, especially since methane emissions are not being measured as they should. LNG ships emit methane, a worse greenhouse gas than CO2, through slip from the engine and the fuel handling operations. Most ships have not put in place advanced methane recovery systems.

The ships involved are dual-fuel ships that burn both oil and LNG, as well as single-fuel LNG powered ships.

The scientific evidence seems to indicate that LNG power may actually be worse than Low Sulphur Heavy Fuel Oil (LSHFO) when all the lifecycle emissions are analyzed. So the ultimate economic effect of the now LNG builds may turn out to be quite a waste of money.

The full report from the UCL Institute can be read here.

Sam ChambersSeptember 21, 2022

New UCL report claims $850bn of LNG-capable tonnage risks being stranded by 2030 – Splash247

FreightTech investment: With the cheap money gone, what happens now?

How do innovations get to logistics and supply chain firms? Here is the current state of the situation.

We went through a period of high venture capitalist (VC) interest in Supply Chain and Logistics startups. but now with some contraction and with high interest rates, the money is drying up. How will firms get money to develop innovations?

As so often in tech, the big question is, hardware or software? Years ago in Silicon Valley that was the intro line used at parties!

Hardware products require more involvement with the actual situation where they will be made or used– a use test bed. They need to be developed near users’ sites. Software products, like scheduling software or logistics management software, can be built anywhere and tested via the internet. They require much less physical user involvement.

And hardware products require immediate feedback from the users as they are being developed. They need to fit, to match the required form factors, and to be able to handle the situations encountered in the location of use. So customers are consulted as you go along, and serviceability is built in as the design progresses. In fact, often the design is the service that is actually being sold. Serviceability is built into the first viable product.

With software, on the other hand, customer service capability is pushed off down the road. It doesn’t become a burden on the firm creating and offering it till there’s a large customer base. And that’s the moment of truth for software-based firms– when they have a large customer base, and the engineers can no longer handle the problems themselves. Normally this occurs more than five years after the first viable product is produced.

This distinction between hardware and software in serviceability makes a substantial difference to VC investors. They normally want to see their investment returns within 5 years, via a public offering or a SPAC or acquisition. With software, they are more likely to be able to cash out before the difficulty occurs. With hardware, the whole development and service framework must be devised before the innovation firm can cash out.

So VCs strongly prefer software investments.

Hardware investments, on the other hand, are often developed as partnerships with user firms, and they have continued oversight as they go along, along with investments. The concerns are going to include how the product is maintained and what service needs it has. And the investments are more likely to come from logistics or material handling firms that have the ability to provide testing sites and engineering oversight for the project. So the investments are more likely to not come from VCs, but from potential clients or users of the hardware.

It’s just the way of the world. The graph here shows all the red software investment dominates in most years since 2017. The data is the market valuation of unicorns, firms with over a billion-dollar market valuation, identified by Crunchbase, a firm that tracks startups and innovators and the investors that choose them. Market valuation will give a good idea of the money that can be returned to investors.

Source: Graph by author from Crunchbase Unicorns data.

Notice also the industries favored (the red bars). Supply Chain investments, and Auto and Transportation, are way down the list. The large valuations are in soft industries like Fintech, Internet software, Cybersecurity, and Artificial Intelligence.

VCs know where they can get the returns. Don’t expect them to jump up and support your new electric forklift or container mover.

Grace Sharkey Friday, June 17, 2022

FreightTech investment: With the cheap money gone, what happens now? – FreightWaves