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By Paul Page 

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Apple Inc.'s supply chains are slimming down. The trend-setting electronics giant says sales of its signature iPhone and iPad products fell in its fiscal third quarter, declines that will reverberate across Asia-based distribution channels built around the manufacturing of smartphones and tablets. Apple's profit fell 27% in the quarter, the WSJ's Daisuke Wakabayashi reports, and overall revenue declined 14.6% as the company grappled with the first prolonged slump in iPhone sales since the product was introduced in 2007. With sales of the iPhones down nearly 15% year-over-year and iPad sales off 9%, Apple is making adjustments: Chief Executive Tim Cook said in an interview the company reduced inventory of the iPhone by more than four million units in its retail channels. Apple is forecasting better sales and margins in the fall quarter, but some of that may come from improving services revenue that won't feed into manufacturing and shipping.

Shipping companies may not get the help they're looking for from retailers after all. The National Retail Federation's new assessment of 2016 is more upbeat than it had been, but the retailer group says the big growth in the consumer market has likely already come and gone. The direction of the retail market remains a critical question for shipping lines, trucking companies and railroads as they look for stores to restock inventories and push more goods through their supply chains ahead of the holiday season. The NRF says it now forecasts U.S. retail sales rising 3.4% this year, up from an initial forecast of 3.1%, the WSJ's Paul Ziobro reports, thanks to a stronger start to the year and a continuing shift to online sales. NRF projects a slower growth rate over the coming months and into the critical holiday season, saying lackluster wage growth, deflation and uncertainty around the presidential election are weighing on business.

Private-equity firm Wind Point Partners has its eyes on consolidating parts of the logistics business tied to container shipping. The Chicago-based investment group is structuring its newly-acquired St. George Logistics business as a holding company, WSJ Logistics Report's Loretta Chao writes, and says its first logistics acquisition should be a platform for more purchases. The target, says Wind Point principal Konrad Salaber, will be warehouse operations in the Northeast and upper Midwest to complement St. George's existing network of 15 container freight stations and partnerships across other logistics facilities. Wind Point is buying into the business at a period of deeply depressed container shipping rates, but the firm is expecting prices to increase and returns for companies in the field to improve.

ECONOMY & TRADE

Caterpillar Inc., a bellwether for the world-wide construction industry, isn't looking for a turnaround before next year. The construction and mining giant reported another sharp decline in sales in its second quarter and scaled back its outlook for this year, saying it sees no end to the four-year-long slide in sales from falling oil and commodities prices and lower foreign demand. The WSJ's Bob Tita reports that Caterpillar is being hurt by more than anemic economic growth. The company says geopolitical events that undermine customer confidence such as the Brexit referendum in Britain, the hostile rhetoric from the U.S. presidential campaign and the attempted coup in Turkey are holding down global machinery demand. The company's machinery and engine sales dropped 17% from a year ago, a troubling sign that will echo beyond Caterpillar's own business since it suggests that the appetite for bigger projects around the world remains weak.

QUOTABLE

IN OTHER NEWS

U.S. sales of new single-family homes rose 10.1% in the first six months of the year in the U.S. (WSJ)

Oil prices sank to a fresh three-month low as a supply glut keeps weighing on the market. (WSJ)

Air France-KLM SA said geopolitical and economic uncertainties that are depressing revenue would more than wipe out savings from lower fuel costs. (WSJ)

U.K. economic growth accelerated in the second quarter, growing at a 2.4% annual rate ahead of the Brexit referendum. (WSJ)

3M Co. trimmed its sales outlook after reporting falling sales in its struggling electronics and energy business. (WSJ)

China's Huawei Technologies Co. is confident it will reach its target to ship 140 million smartphones in 2016, up 30% from last year. (WSJ)

Sporting goods retailer Under Armour Inc. will start selling a new casual-wear line and expand its sales to midtier department stores. (WSJ)

The U.K. government gave Amazon.com Inc. greater freedom to test drone deliveries in the country. (The Telegraph)

The U.S. and Mexico will implement a new air services agreement on Aug. 21 that will allow for greater freedom for cargo flights. (Air Cargo World)

Korean shipbuilder Hyundai Heavy Industries Co. Ltd. swung to its biggest net profit in three years amid reduced costs and gains in non-shipbuilding business. (Korea Herald)

China's online retail sales will grow at a 24.6% annual rate over the next three years, according to a Jefferies Group analysis. (South China Morning Post)

A survey shows a large majority of retailers have been frustrated at aligning mobile e-commerce strategy with supply chain operations. (Sourcing Journal)

Smaller online merchants got fewer visitors and sales during this year's Amazon Prime Day than during the promotion last year. (Charleston Post and Courier)

Indian e-commerce firm Flipkart is buying domestic online fashion retailer Jabong for $70 million in cash. (Reuters)

Mediterranean Shipping Co. joined CMA CGM SA as an investor and board member of French start-up container monitoring company Traxens. (The Loadstar)

Logistics technology provider Freightos launched an online marketplace for international freight rates. (American Shipper)

Freight broker Scott Logistics Corp. bought Louisiana-based Apex Freight Services. (Transport Topics)

The first ship carrying liquefied natural gas passed through the newly expanded Panama Canal. (Port Technology)

ABOUT US

Paul Page is deputy editor of WSJ Logistics Report. Follow him at @PaulPage, and follow the entire WSJ Logistics Report team: @brianjbaskin, @lorettachao, @RWhelanWSJ and @EEPhillips_WSJ, and follow the WSJ Logistics Report on Twitter at @WSJLogistics.

Subscribe to this email newsletter by clicking here: http://on.wsj.com/Logisticsnewsletter .

Write to Paul Page at paul.page@wsj.com

(END) Dow Jones Newswires

July 27, 2016 06:37 ET (10:37 GMT)

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