Prices for the most part have remained steady, but that probably won't last. With demand growth expected to outstrip modest growth in supply, higher retail prices seem likely.
Although diesel fuel markets in the United States experienced some short-term volatility in the last 12 months, for the most part prices have behaved as expected. This is in line with the outlook we offered in our article last year, when we predicted that diesel fuel prices would stay in roughly the same place as they had been throughout 2012. And that is indeed what happened: As we write this, the U.S. average retail price is within 5 cents per gallon of where it was a year ago, which amounts to less than a 2-percent change.
The reason for this steady diesel market over the medium term is the steady crude market. While crude prices are slightly higher than they were a year ago, the year-over-year difference is around 5 percent. In the longer term, crude oil futures still indicate that crude prices are projected to fall by nearly 10 percent from current levels (see Figure 1). This has remained true even as turmoil has begun to spread in the Middle East. Unfortunately, for diesel buyers this longer-term easing in crude prices may not translate into lower diesel prices in the near future.
Article Figures
[Figure 1] Light sweet crude oil prices (historical and futures)Enlarge this image
[Figure 2] U.S. diesel price vs. underlying crude price: 1994-presentEnlarge this image
Behind the volatility
While overall retail diesel prices are largely unchanged (see Figure 2), some parts of the United States have experienced more volatility than usual. For example, diesel prices increased by more than 10 percent during February and March in New England and the Mid-Atlantic states. While it is not uncommon to see a seasonal rise in diesel prices in those regions, the magnitude of that increase was greater than normal.
Two main factors contributed to that increase in price volatility. The first was the weather. The extreme cold brought by the "polar vortex" significantly increased the demand for heating oil in New England, one of the few parts of the country where heating oil and propane are still major fuel sources for residential heating. The composition of heating oil is very similar to diesel, and it is becoming even more similar as more states phase in low-sulfur specifications for home heating oil. So when it is cold outside, demand for heating oil goes up, putting stress on the available supply of diesel.
The second contributor to this price volatility was probably the so-called "unconventional revolution" in oil production and its impact on diesel supplies. U.S. domestic crude production is increasing, and most of that increase is coming from Light Tight Oil (LTO), sometimes referred to as shale oil, in places like the Bakken field in the Dakotas and the Eagle Ford field in Texas. At the same time, heavy Canadian oil-sands crude continues to be an important crude source for U.S. refiners. These crudes have a different assay, or profile, than that of the historical mix of crudes processed in U.S. refineries.
The combination of these factors created a "dumbelling" of U.S crudes. This term alludes to the relatively large amount of light and heavy "ends," or extremes, of the crude spectrum, that ultimately result in lower diesel production. This situation reduces production of diesel because it is a middle distillate most easily produced from the center of the crude spectrum. While refiners can make capital investments to handle a new crude slate, for example cracking the longer-chain molecules in the heavy ends, it takes time to bring new equipment on stream. It is likely, therefore, that any capital investment plans would have to be supported by an expectation of continued strength in diesel prices. This may well be the case, given the lower diesel production due to the "dumbelling" effect described above.
One way diesel purchasers can prepare for this expected increase in price volatility is to implement a hedging program, whether by buying financial instruments such as futures contracts, call options, and collars, or simply by negotiating a hedged supply contract. This may work in the short term, and it may have been sufficient to avoid paying a premium in the U.S. Northeast and Mid-Atlantic this past winter. However, a hedging strategy alone is not likely to be effective in more extreme scenarios or in the face of longer-term, unpredictable price changes.
Global rise in demand
Growth in demand for diesel, both domestically and abroad, is another factor that will put pressure on diesel prices to decouple—or at least stretch—the historical relationship with crude. Globally, diesel is now in greater demand than gasoline, and that is unlikely to change given the preference for diesel in Europe and many emerging markets. Meanwhile diesel's market share in the United States is growing, and that trend is expected to continue. The Diesel Technology Forum predicts diesel's share of the light vehicle fleet could double or triple from its current level of around 3 percent by the end of the decade. In fact, more than 40 new diesel-powered vehicle models will be introduced in the next three years in anticipation of increasing U.S. consumer demand for "clean diesel."
But another large and potentially global demand driver also looms. Segments of the marine transportation market may begin switching from heavy bunker fuel to diesel when changes to marine-fuel sulfur specifications are announced. These changes will likely occur within the next decade. For these reasons, demand growth will ultimately outpace supply growth, leading to higher prices.
Regardless of the future scenario that materializes for diesel prices, the best way to prepare is still a risk management strategy that considers these and other risk scenarios in a wider context. A risk management strategy that combines different elements gives diesel users the best chance to weather price volatility or inflation. Hedging, different types of supply sources, diverse contracting terms, demand management strategies, and appropriate governance should be part of a robust diesel management strategy.
The new funding brings Amazon's total investment in Anthropic to $8 billion, while maintaining the e-commerce giant’s position as a minority investor, according to Anthropic. The partnership was launched in 2023, when Amazon invested its first $4 billion round in the firm.
Anthropic’s “Claude” family of AI assistant models is available on AWS’s Amazon Bedrock, which is a cloud-based managed service that lets companies build specialized generative AI applications by choosing from an array of foundation models (FMs) developed by AI providers like AI21 Labs, Anthropic, Cohere, Meta, Mistral AI, Stability AI, and Amazon itself.
According to Amazon, tens of thousands of customers, from startups to enterprises and government institutions, are currently running their generative AI workloads using Anthropic’s models in the AWS cloud. Those GenAI tools are powering tasks such as customer service chatbots, coding assistants, translation applications, drug discovery, engineering design, and complex business processes.
"The response from AWS customers who are developing generative AI applications powered by Anthropic in Amazon Bedrock has been remarkable," Matt Garman, AWS CEO, said in a release. "By continuing to deploy Anthropic models in Amazon Bedrock and collaborating with Anthropic on the development of our custom Trainium chips, we’ll keep pushing the boundaries of what customers can achieve with generative AI technologies. We’ve been impressed by Anthropic’s pace of innovation and commitment to responsible development of generative AI, and look forward to deepening our collaboration."
Specifically, the new global average robot density has reached a record 162 units per 10,000 employees in 2023, which is more than double the mark of 74 units measured seven years ago.
Broken into geographical regions, the European Union has a robot density of 219 units per 10,000 employees, an increase of 5.2%, with Germany, Sweden, Denmark and Slovenia in the global top ten. Next, North America’s robot density is 197 units per 10,000 employees – up 4.2%. And Asia has a robot density of 182 units per 10,000 persons employed in manufacturing - an increase of 7.6%. The economies of Korea, Singapore, mainland China and Japan are among the top ten most automated countries.
Broken into individual countries, the U.S. ranked in 10th place in 2023, with a robot density of 295 units. Higher up on the list, the top five are:
The Republic of Korea, with 1,012 robot units, showing a 5% increase on average each year since 2018 thanks to its strong electronics and automotive industries.
Singapore had 770 robot units, in part because it is a small country with a very low number of employees in the manufacturing industry, so it can reach a high robot density with a relatively small operational stock.
China took third place in 2023, surpassing Germany and Japan with a mark of 470 robot units as the nation has managed to double its robot density within four years.
Germany ranks fourth with 429 robot units for a 5% CAGR since 2018.
Japan is in fifth place with 419 robot units, showing growth of 7% on average each year from 2018 to 2023.
Progress in generative AI (GenAI) is poised to impact business procurement processes through advancements in three areas—agentic reasoning, multimodality, and AI agents—according to Gartner Inc.
Those functions will redefine how procurement operates and significantly impact the agendas of chief procurement officers (CPOs). And 72% of procurement leaders are already prioritizing the integration of GenAI into their strategies, thus highlighting the recognition of its potential to drive significant improvements in efficiency and effectiveness, Gartner found in a survey conducted in July, 2024, with 258 global respondents.
Gartner defined the new functions as follows:
Agentic reasoning in GenAI allows for advanced decision-making processes that mimic human-like cognition. This capability will enable procurement functions to leverage GenAI to analyze complex scenarios and make informed decisions with greater accuracy and speed.
Multimodality refers to the ability of GenAI to process and integrate multiple forms of data, such as text, images, and audio. This will make GenAI more intuitively consumable to users and enhance procurement's ability to gather and analyze diverse information sources, leading to more comprehensive insights and better-informed strategies.
AI agents are autonomous systems that can perform tasks and make decisions on behalf of human operators. In procurement, these agents will automate procurement tasks and activities, freeing up human resources to focus on strategic initiatives, complex problem-solving and edge cases.
As CPOs look to maximize the value of GenAI in procurement, the study recommended three starting points: double down on data governance, develop and incorporate privacy standards into contracts, and increase procurement thresholds.
“These advancements will usher procurement into an era where the distance between ideas, insights, and actions will shorten rapidly,” Ryan Polk, senior director analyst in Gartner’s Supply Chain practice, said in a release. "Procurement leaders who build their foundation now through a focus on data quality, privacy and risk management have the potential to reap new levels of productivity and strategic value from the technology."
Businesses are cautiously optimistic as peak holiday shipping season draws near, with many anticipating year-over-year sales increases as they continue to battle challenging supply chain conditions.
That’s according to the DHL 2024 Peak Season Shipping Survey, released today by express shipping service provider DHL Express U.S. The company surveyed small and medium-sized enterprises (SMEs) to gauge their holiday business outlook compared to last year and found that a mix of optimism and “strategic caution” prevail ahead of this year’s peak.
Nearly half (48%) of the SMEs surveyed said they expect higher holiday sales compared to 2023, while 44% said they expect sales to remain on par with last year, and just 8% said they foresee a decline. Respondents said the main challenges to hitting those goals are supply chain problems (35%), inflation and fluctuating consumer demand (34%), staffing (16%), and inventory challenges (14%).
But respondents said they have strategies in place to tackle those issues. Many said they began preparing for holiday season earlier this year—with 45% saying they started planning in Q2 or earlier, up from 39% last year. Other strategies include expanding into international markets (35%) and leveraging holiday discounts (32%).
Sixty percent of respondents said they will prioritize personalized customer service as a way to enhance customer interactions and loyalty this year. Still others said they will invest in enhanced web and mobile experiences (23%) and eco-friendly practices (13%) to draw customers this holiday season.
The practice consists of 5,000 professionals from Accenture and from Avanade—the consulting firm’s joint venture with Microsoft. They will be supported by Microsoft product specialists who will work closely with the Accenture Center for Advanced AI. Together, that group will collaborate on AI and Copilot agent templates, extensions, plugins, and connectors to help organizations leverage their data and gen AI to reduce costs, improve efficiencies and drive growth, they said on Thursday.
Accenture and Avanade say they have already developed some AI tools for these applications. For example, a supplier discovery and risk agent can deliver real-time market insights, agile supply chain responses, and better vendor selection, which could result in up to 15% cost savings. And a procure-to-pay agent could improve efficiency by up to 40% and enhance vendor relations and satisfaction by addressing urgent payment requirements and avoiding disruptions of key services
Likewise, they have also built solutions for clients using Microsoft 365 Copilot technology. For example, they have created Copilots for a variety of industries and functions including finance, manufacturing, supply chain, retail, and consumer goods and healthcare.
Another part of the new practice will be educating clients how to use the technology, using an “Azure Generative AI Engineer Nanodegree program” to teach users how to design, build, and operationalize AI-driven applications on Azure, Microsoft’s cloud computing platform. The online classes will teach learners how to use AI models to solve real-world problems through automation, data insights, and generative AI solutions, the firms said.
“We are pleased to deepen our collaboration with Accenture to help our mutual customers develop AI-first business processes responsibly and securely, while helping them drive market differentiation,” Judson Althoff, executive vice president and chief commercial officer at Microsoft, said in a release. “By bringing together Copilots and human ambition, paired with the autonomous capabilities of an agent, we can accelerate AI transformation for organizations across industries and help them realize successful business outcomes through pragmatic innovation.”