Consumers just assume energy will be there. We head to the big-box store, and there’s a fresh propane tank for the weekend cookout. We turn up the thermostat, and the house gets warmer. But energy transportation doesn’t just “happen.” There’s a ton happening behind the scenes to meet the nation’s perpetual energy needs.
At the same time the sustainability imperative is forcing companies to green up their supply chains and logistics. Efficiency and safety are also major priorities, as energy products are often highly volatile materials.
We’ll review the major challenges in energy transportation, including oil and gas, and look at ways that companies can apply innovative solutions and technologies to overcome them.
Snapshot of Energy Transportation Trends
Oil production and demand were at a four-month high in April, and prices rose in early July as a result. Plans by OPEC+ to cut production in Q3 and summer demand are pointing toward a deficit fueling the price increase.
Natural gas demand is going in the other direction, partly from typical seasonality, and also from cooler U.S. temperatures early in July, according to Nasdaq. This of course could change quickly if temperatures climb later in the summer.
Another factor to watch is the monstrous (and growing) electricity requirement for fueling the legions of servers powering artificial intelligence (AI). While there are optimistic predictions that this demand can be met by renewable sources, it doesn’t seem realistic at this point.
In the solar industry, a major overcapacity of panels coming out of China, helped by years of massive government subsidies, has led to falling prices and market consolidation. It has also caused the U.S. to impose stiff tariffs on Chinese imports to prevent dumping of cheap products and protect domestic manufacturers. The U.S. is now considering new tariffs on solar imports from Malaysia, Thailand, Cambodia and Vietnam, as China operates plants in those countries. Supply chain advisory firm Clean Energy Associates estimates the move could raise the price of solar panels by up to 66%.
Still, overall solar demand remains strong. According to trade group Solar Power Europe, global solar PV installations could reach 655 GWdc this year, up nearly 50% from 444 GWdc in 2023.
Major Challenges Facing Energy Transportation
As energy transportation is in a category by itself due to the volatile nature of the products, it presents more logistical and regulatory challenges than any other sector. We’ll briefly outline a few:
Regulatory Compliance
The U.S. DOT oversees energy product transport through the Federal Motor Carrier Safety Administration (FMCSA) and the Pipeline and Hazardous Materials Safety Administration (PHMSA). The Hazardous Materials Regulations (HMR) cover proper labeling, packaging, and handling of hazmat. Lastly, the EPA works to prevent spills and contamination. Truck drivers need a CDL with a hazmat endorsement, and vehicles must meet safety and maintenance standards.
In September 2023, the Biden administration, under the auspices of the PMHSA, reversed a Trump-era rule that allowed liquified natural gas (LNG) to be transported by rail car.
Infrastructure Limitations
Aging pipelines, inadequate rail and road capacity, and insufficient storage facilities can lead to supply chain bottlenecks and higher costs. They also raise the risk of accidents and spills, affecting the overall efficiency and safety of energy transportation.
Environmental Risks
Related to regulatory compliance, the environmental risks in energy transportation are substantial, particularly related to their potential for spills, contamination, and explosives. A recent train derailment outside Chicago, with cars that contained traces of liquified petroleum gas (LPG), points out the hazards inherent in energy logistics.
Visibility and Monitoring
Challenges in the visibility and tracking of energy transportation include outdated technology, a lack of real-time data, and fragmented systems across different modes of transport. This can hamper effective monitoring, timely incident response, and coordination of stakeholders. All of this impacts the safety, security, and efficiency of energy logistics. Better systems are needed to track and manage energy shipments to ensure safety and improve efficiency.
Storage Challenges
Difficulties related to storing energy products during transport, especially volatile materials, include maintaining stable temperatures, preventing leaks, and managing variations in pressure. There are risks of explosion or, at best, quality degradation, while renewables such as hydrogen require specialized containers. Advanced technology and stringent protocols are needed to ensure proper, safe containment in transit.
Harnessing Innovation for More Efficient Energy Transportation
Innovations are transforming how energy products are tracked, transported, and stored, improving both safety and sustainability. Here are some examples of how technology and processes are combining to tackle these issues.
Advanced Tracking Technology
IoT and AI are rapidly improving both visibility and real-time monitoring of energy shipments. IoT sensors relay a continuous data feed on container location, temperature, and pressure, which AI algorithms then analyze to predict potential issues, optimize routing, and improve on-time delivery performance.
Green Logistics
Biofuels, EVs, and other sustainable practices in energy transportation are helping reduce carbon emissions. Integrating renewable energy promotes sustainability and meets corporate objectives and regulatory requirements.
Improved Infrastructure
Safer rail transport systems and advanced pipeline technologies are being designed specifically for energy products. Modern rail cars, for instance, come with enhanced safety features and automated monitoring systems, reducing the risk of accidents and spills. Advanced pipelines are being designed with real-time leak detection systems.
Regulatory Compliance Software
These tools can automate compliance checks, manage documentation, and trigger alerts on new regulations, mitigating the risk of non-compliance, fees, penalties, and delays.
Telematics
Telematics facilitates the collection and analysis of data on vehicle performance, driver behavior, and fuel consumption. This information helps companies make informed decisions that can improve efficiency, lower costs, and enhance safety.
Energy Transportation: Evolving and Improving
Energy transportation is part of the nation’s critical infrastructure but faces challenges, including increasing regulatory requirements, aging and limited infrastructure, environmental risks, and the need for safe, secure storage. Innovative technologies being leveraged to address them include advanced track-and-trace solutions, green logistics, improved infrastructure, regulatory compliance software, and telematics.
Wicker Park Logistics, a woman-owned logistics company and WBENC Certified Business, provides a range of specialized services within the energy sector. Our dedicated team of logistics experts has decades of experience delivering transportation services and a strong track record of compliance, safety, and efficiency.
Using predictive analytics, integrated communications, and real-time visibility, Wicker Park is a recognized expert in energy transportation, enabling seamless, end-to-end operations. We work with a large network of specialist carriers in North America, providing the best trucking options for your specific needs. Contact us today for a quick quote.
