Today's Top Supply Chain and Logistics News From WSJ
September 28 2016 - 7:08AM
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By Paul Page Sign up:With one click, get this newsletter delivered to your inbox.
Amazon.com Inc. has designs on the distribution of more than
just its own packages . The e-commerce giant has publicly outlined
efforts to build out a logistics network aimed at handling more of
its own deliveries, but the WSJ's Laura Stevens and Greg Bensinger
report the company has grander ambitions that could upend the
traditional relationship between seller and shipper. Interviews
with current and former Amazon managers and business partners
indicate the retailer aims to one day haul packages for both itself
and other retailers and consumers. Some executives call the
initiative "Consume the City," a nod to the company's plans to
build a massive delivery network that could eventually compete with
partners including United Parcel Service Inc. and FedEx Corp.
Amazon's ambitions have been the subject of fierce speculation in
the shipping business, with companies wondering whether the
retailer's logistics plans present an opportunity or a threat.
Executives at UPS and FedEx are skeptical Amazon can scale up to
compete with their services. But as Amazon moves more of its own
goods, the company will find that adding packages and freight from
other customers will only make the economics behind its own
logistics operation more attractive.
Beyond the upheaval in the global shipping industry this year,
container ship operators are facing one clear and disturbing
reality: the business is on track for its worst performance since
the 2009 economic crisis. Overall shipping volume will likely be
flat and freight rates have been sinking, the WSJ's Costas Paris
reports, providing a catalyst for further bankruptcies and possible
acquisitions in a beleaguered industry. Despite an earlier upward
spike in prices in the wake of Hanjin Shipping Co.'s bankruptcy
filing, rates fell 20% in the Asia-to-Europe trade route this week,
and have stayed well below $1,000 all year. With the slow shipping
season approaching, many industry experts say the business is on a
path toward a broad restructuring that will wipe several familiar
names from the water. Shipping analysts say any operator with less
than 5% global share of the market may be taken over or confined to
regional business. Right now, only four of the world's top 20
companies surpass that threshold.
An unusual disconnect in the craft beer supply chain is
undermining growth in the business. The problem is that craft
brewers are proliferating so rapidly, the WSJ's Tripp Mickle
reports, they are outpacing the growth in production of hops, the
key ingredient in many microbrews. Hops farmers are doing their
part: Farmland devoted to the crop has increased 65% in the last
five years, and growers have spread out into aromatic varieties
that give ales a wider range of bitter and fruity flavors. But the
brewer population has doubled to more than 4,000 in that time,
leaving supplies short and distribution channels tougher to serve.
With so many small customers, farmers are hard-pressed to fulfill
so many small orders, and production across the industry has
slowed, casting a cloud over the business. After several years of
rapid growth, hops farmers now fear they could end up bearing the
bitter results of a supply glut.
ECONOMY & TRADE
World trade isn't going to bail out the shipping industry this
year, and probably not next year. The World Trade Organization's
latest assessment of international trade offers a grim view of
global business, with growth projections scaled back sharply from
just five months ago. The WTO now foresees an increase of just 1.7%
in 2016 and as little as 1.8% in 2017, the WSJ's Paul Hannon and
William Mauldin report, thanks to weak trade growth in China, North
America and Brazil. The growth would be the slowest since the
financial crisis, and comes with an extra warning for shipping
businesses. World trade over the long term has grown at 1.5 times
the rate of total economic output. But 2016 will mark the first
time in 15 years that trade will grow more slowly than total
output, suggesting the role of moving goods across borders has
diminished in national economies since the financial crisis.
QUOTABLE
IN OTHER NEWS
A South Korean bankruptcy court said a sale of Hanjin Shipping
is possible. (WSJ)
A key measure of U.S. consumer confidence rose to its highest
level since August 2007. (WSJ)
Mexico's trade deficit narrowed in August as exports rose 4.5%,
including 4.8% growth in exports of manufactured goods. (WSJ)
Nike Inc.'s futures orders for products for delivery the rest of
the year rose 5% in the third quarter, below the increase of 9% a
year earlier and the 8% growth in the previous quarter. (WSJ)
Car parts retailer Autozone Inc. is seeing strong sales gains by
expanding inventory availability at its stores. (WSJ)
A move by a pair of mall owners to rescue retailer AĆ©ropostale
Inc. shows how some landlords are getting more aggressive to stem
store closings. (WSJ)
Amazon is looking for its first warehouse space in Australia,
with a focus on an area west of Sydney. (Sydney Morning Herald)
Suppliers of low-margin goods to Wal-Mart Stores Inc. face tough
logistics and cost questions in meeting the retailer's stricter
delivery demands. (Supply Chain Brain)
UPS signed a long-term lease for a 525,400-square-foot
distribution center in Compton, Calif., east of Los Angeles. (The
Real Deal)
Uber Technologies Inc. is making an aggressive drive into meal
delivery, backed by new staff recruitment and a goal to enter at
least 22 new countries. (Reuters)
Concern is growing among seaport and terminal operators over the
impact of climate change on their facilities. (IHS Fairplay)
International air cargo carriers are seeing high-value goods
such as electronics and machinery shift to ocean freight. (Air
Cargo News)
Sales of used Class 8 trucks in the U.S. slipped 2%
year-over-year in August but expanded 19% from July. (Heavy Duty
Trucking)
Baltic Shipping Exchange shareholders approved a $113 million
takeover offer from the Singapore Exchange. (MarineLink)
British grocer Sainsbury PLC opened a 185,000-square-foot
distribution center in East London dedicated to online grocery
fulfillment. (Logistics Manager)
Greenpeace activists blocked operations of a Malaysian ship
hauling palm oil into the Port of Rotterdam. (Maritime
Executive)
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:
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Write to Paul Page at paul.page@wsj.com
(END) Dow Jones Newswires
September 28, 2016 06:53 ET (10:53 GMT)
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