The sharp drop in oil prices, combined with the expected upward adjustment, has a two-way impact on the transportation and logistics of large equipment

On Monday local time, international crude oil and natural gas prices collectively plunged, with New York crude oil futures and Brent crude oil futures falling as much as 13% during trading, and European natural gas prices falling by over 8%, bringing cost dividends to the energy intensive large-scale equipment transportation and logistics industry in the short term. At the same time, Goldman Sachs has significantly raised its expectations for the average oil prices in March and April, indicating that oil prices may rebound after a short-term decline. This "short-term positive+long-term uncertainty" pattern is directly transmitted to the transportation and logistics field of large engineering equipment such as rotary drilling rigs and pile drivers, which not only alleviates the current cost pressure but also forces the industry to respond to risks and adjust its layout.

Short term oil price plunge, significant drop in heavy-duty transportation costs

The collective plunge in oil prices has directly eased the core cost pressure of transporting large equipment such as rotary drilling rigs and pile drivers, especially for heavy-duty transportation that relies on fuel power, the positive effect is particularly evident. In the transportation of large equipment, fuel costs account for 30% -40% of the total cost of road transportation, and the proportion of some long-distance heavy-duty transportation is even higher. The sharp drop in crude oil prices by 13% has directly driven down the prices of diesel and gasoline, resulting in a significant reduction in fuel expenses for logistics companies. Taking the long-distance transportation of a rotary drilling rig from a domestic port to a European construction site as an example, one-way fuel expenses can be reduced by 15% -20%, and single equipment transportation can save thousands of yuan on fuel costs alone. This is in sharp contrast to the situation where logistics companies were under severe pressure when oil prices were high in the past, effectively alleviating the profit squeeze dilemma of enterprises, especially allowing small and medium-sized logistics enterprises to reduce their financial burden.

The release of transportation capacity supply and the steady improvement of equipment transportation efficiency

The cost relief brought about by the decline in oil prices has prompted logistics companies to gradually release their capacity and improve the timeliness bottleneck of large-scale equipment transportation. Previously, when oil prices were running at high levels, many logistics companies, in order to control costs, reduced heavy load capacity, decreased scheduling frequency, and even postponed transportation plans for non emergency equipment, resulting in longer transportation schedules for equipment such as rotary drilling rigs and pile drivers. With the sharp drop in oil prices and the easing of operational pressure on logistics companies, normal capacity scheduling has begun to resume. Some companies have even taken the initiative to increase heavy-duty transportation schedules and optimize transportation arrangements. Previously, due to cost pressures, the situation of being forced to "wait until the goods are full before dispatching" has been greatly reduced, and the flexibility of equipment transportation has been improved. The cross regional transportation cycle of rotary drilling rigs and pile drivers has been shortened by 2-3 days compared to before, effectively ensuring the timely entry of engineering equipment and alleviating the risk of construction delays on site.

There are hidden concerns about the expected increase, and we need to be alert to the risk of cost rebound

It should be noted that Goldman Sachs has significantly raised its expectations for the average oil prices in March and April, which means that this sharp drop in oil prices may only be a short-term fluctuation, and there is still a possibility of a long-term rebound, laying a hidden cost rebound risk for the transportation and logistics of large equipment. The current downward trend in oil prices is mainly influenced by short-term market sentiment and supply-demand adjustments, while global geopolitical uncertainties still exist. The risk of navigation in the Strait of Hormuz has not been fully resolved, and oil prices are likely to gradually rise or even return to high levels in the future. If oil prices rebound rapidly, the fuel costs of logistics companies will rise again, and the expenses saved due to the sharp drop in oil prices may be quickly offset. Especially for logistics companies that have adjusted their transportation quotations and signed long-term transportation agreements, the cost rebound will further squeeze their profit margins. It is necessary to prepare contingency plans in advance to avoid falling into a passive situation.

Equipment export logistics benefits, transportation demand slightly rebounds

The short-term drop in oil prices combined with the release of transportation capacity has indirectly driven a slight rebound in export logistics demand for large equipment such as rotary drilling rigs and pile drivers. The export volume of domestically produced equipment such as rotary drilling rigs and pile drivers is relatively large, and their cross-border transportation relies on sea and land transportation. The decline in oil prices not only reduces the fuel costs of sea and land transportation, but also drives logistics companies to lower transportation quotations, indirectly reducing the comprehensive logistics costs of equipment exports and enhancing the international competitiveness of domestically produced equipment. At the same time, cost relief has increased the willingness of overseas construction companies to purchase equipment, driving an increase in equipment export orders and corresponding cross-border transportation demand. Especially for modular split pile driver components, rotary drilling rig drill rods and other goods, the transportation frequency has significantly increased, bringing stable market growth to logistics enterprises and helping "Made in China" equipment further expand its global market.

Industry rational response, balancing short-term dividends and long-term risks

Faced with the two-way pattern of "short-term plunge in oil prices+long-term expectation increase", the large-scale equipment transportation and logistics industry is adjusting its strategy rationally to achieve a balance between short-term benefits and long-term prevention and control. On the one hand, logistics companies seize the short-term dividend of the decline in oil prices, optimize capacity allocation, improve vehicle occupancy rates, and negotiate with equipment manufacturers and terminal construction companies to adjust transportation quotations reasonably and lock in some cost advantages; On the other hand, it is necessary to anticipate the risk of oil price rebound in advance, strengthen cost control, optimize transportation routes, reduce ineffective mileage, and pilot new energy heavy-duty vehicle models and oil electric hybrid rotary drilling rig supporting transportation schemes to reduce dependence on traditional fuels and alleviate the long-term impact of oil price fluctuations. In addition, some top enterprises have taken advantage of cost advantages to update transportati