UPS United Parcel Service

By Paul Page 

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Amazon.com Inc. is getting a strong message from regulators that the company needs to tighten its shipping controls as it builds out its own distribution network. The Federal Aviation Administration proposed a $350,000 fine on the e-commerce giant for allegedly shipping prohibited hazardous goods by air, WSJ Logistics Report's Robbie Whelan writes. The agency pointed to a single 2014 incident in which nine United Parcel Service Inc. workers were exposed to a leak from a drain cleaner called "Liquid Fire." But the FAA also says it was one of two dozen incidents in recent years involving Amazon, suggesting "a history of violating" hazardous materials regulations. With Amazon investing in air operations and its delivery networks likely to get more complicated, the company will be under greater pressure to get its fulfillment workers trained in handling dangerous goods.

Online shoppers aren't making it any easier for retailers. A new survey of over 1,000 U.S. consumers by AlixPartners LLP shows that shipping choices are looming larger in e-commerce sales, WSJ Logistics Report's Loretta Chao writes, with buyers increasingly looking for goods to be delivered faster and cheaper. That's tough news for brick-and-mortar retailers that are finding so far that delivering online purchases while maintaining profit margins makes for tough math. For consumers, however, it looks like delivery options are becoming just as important as the goods themselves: more than half of those surveyed said they browse products online based on the available shipping choices. The profit question is only likely to get tougher since more consumer say they are looking online for bigger, bulkier items like home furnishings. Those are the goods that are the most difficult and expensive to get to home.

The Massachusetts Bay Transportation Authority is facing a classic problem with its logistics provider except for one twist -- it manages its own logistics. The Boston-area transit authority is wrestling with poor service to riders and lengthy maintenance schedules largely because the MBTA simply can't get deliver parts from its nearby warehouses with even modest speed and anything close to accuracy. A consultant's analysis, described in a report by the Boston Globe, found chronic dysfunction in an operation that holds some $62 million in spare-parts inventory, including excess goods, but can accurately count what's on the shelves barely half the time. The agency is pressing to privatize its sprawling warehouse department, something the MBTA's chief procurement officer would be a "game-changer."

ECONOMY & TRADE

Slower investment in China is casting a cloud over the country's economic growth. New figures show China's industrial and consumer sectors were relatively strong in May, but the WSJ's Mark Magnier reports that private investment grew just 3.9% in the first five months of the year, a sharp slowdown from the previous report. A slowdown in private investment is particularly worrisome because it suggests companies are holding off spending, signaling limited confidence in the future and that the flow of imports into the country will slow down. Even as auto sales hit a five-month high in May, auto makers scaled back their production of cars because inventory levels remain precariously high after rapid production in previous months. One northeastern China-based manufacturer, Oriental Furniture Co. says it doesn't expect to invest much without new government stimulus to boost demand.

QUOTABLE

IN OTHER NEWS

A drop in the U.S. savings rate is giving retailers hope that consumer sales will pick up. (WSJ)

Small businesses in the U.K. show more support for the British exit from the European Union than larger businesses. (WSJ)

A CSX Corp. freight train carrying flammable chemicals derailed in a Baltimore tunnel. (Baltimore Sun)

IHS Automotive says sales of self-driving heavy-duty trucks could reach 60,000 vehicles by 2035. (Trucks.com)

The Nicola Motor Co. says it has received more than 7,000 reservations for electric Class 8 trucks it plans to produce. (Commercial Carrier Journal)

Indiana is testing cameras allowing state police to weigh trucks as they move on highways. (Chicago Tribune)

Amazon may launch grocery delivery in Australia as soon as next year. (Sydney Morning Herald)

A.P. Moeller-Maersk NV named Henriette H. Thygesen, the Americas chief at its Damco forwarding subsidiary, as CEO of the Svitzer offshore ship business. (Splash 24/7)

Nike Inc. says an analysis found no evidence of banned chemicals in its supply chain. (Chem Insider)

Developers are planning a 791,000-square-foot distribution center near a General Motors Corp. plant in Indiana. (Fort Wayne News-Sentinel)

Alibaba Group Holding Ltd. is talking with Indian e-commerce firms Delhivery and Xpressbees Logistics about potential investment stakes. (Economic Times)

Lawmakers in India released legislation that would privatize the country's ports. (Journal of Commerce)

Indian e-commerce marketplace Snapdeal says it is now shipping most goods purchased on its site from its own distribution centers. (Times of India)

Norway will bar the use of products that contribute to deforestation. (Christian Science Monitor)

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 .

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June 14, 2016 06:53 ET (10:53 GMT)

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