Today's Top Supply Chain and Logistics News From WSJ
May 25 2016 - 7:03AM
Dow Jones News
By Paul Page
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Sony Corp. is making a costly change in manufacturing to protect
itself from bigger losses in its supply chain. The Japanese
electronics giant says it will book a $366 million operating loss
in the current fiscal year on its business making parts for
smartphones, the WSJ's Yuka Koshino and Takashi Mochizuki report.
The company is scaling back development and production of parts
that it has hoped to make for Apple Inc., but now faces a hazy
future in the market, with Apple's sales sluggish, smartphone sales
growth world-wide tepid and the prospects for unwanted inventory
buildup looming larger. Sony had already been coping with the hit
to production when earthquakes hit its parts factory in southern
Japan as it addressed questions about a parts business that has
been a pillar of its ambitious growth plans. Now, company officials
say the component-production process is too complex to adjust
output when the smartphone industry changes quickly.
Shipping crude oil is becoming more unpredictable for railroads
as refiners slash costs in their supply chains. Patrick J.
Ottensmeyer, the incoming CEO at Kansas City Southern Railway Inc.,
says refiners are using uncommon flexibility in sourcing oil as
they cope with energy sector upheaval, the WSJ's Laura Stevens
reports. The push for oil from the cheapest source, whether
international or domestic, is making rail tank car operations
tougher to plan for as freight railroads scramble to get the right
equipment in the right place. The only certainty has been the
general downturn in demand: crude-by-rail shipments fell 44% in the
first quarter from a year ago. With less oil moving on tracks, tank
car owners may question how much they'll invest in retrofitting or
buying new tank cars to meet new regulatory requirements, which
could make the right equipment harder to find.
Sports Authority Holdings Inc. is a big step closer to
liquidation. A federal bankruptcy judge gave the go-ahead to a
group of liquidators to start unloading inventory at steep price
discounts as soon as this weekend, one of the last big steps toward
shuttering the bankrupt big-box retailer entirely, the WSJ's
Lillian Rizzo reports. That will make Sports Authority the most
prominent casualty this year in the upheaval underway in the retail
world, Liquidators will pay a guaranteed 101% of the value of the
inventory. The judge's ruling put the liquidation on a fast track,
as she overruled lease holders and vendors to move things forward.
The impact is already rolling across the retailer's national
network of stores and warehouses. Workers at the company's
distribution center in northern New Jersey were given notices that
they would be laid off as early as June 10, the Newark Star-Ledger
reports.
SUPPLY CHAIN STRATEGIES
Australian mining companies are finding an unlikely source of
relief from the commodities slump -- beef. Mining companies
including BHP Billiton Ltd. and Rio Tinto PLC are rearing cattle on
land that has been set aside for minerals exploration, steering
away from commodities business marked by a glut toward meat markets
coping with a beef shortage, the WSJ's Rhiannon Doyle reports. The
miners are finding conditions in cattle ranching so sharply
different from the minerals trade, where prices for iron ore, zinc
and coal are plunging, that they're investing in genetics and other
strategies to expand herds. The beef shortage arose because drought
in North America cut into production just as world-wide demand for
protein is growing. The new line hardly produces revenue to rival
the minerals production, but for even the big miners it provides
cash to spend.
QUOTABLE
IN OTHER NEWS
South Korea's STX Offshore & Shipbuilding Co. will be put
under court receivership despite years of financial aid. (WSJ)
Sales of newly-built homes rose at the fastest pace in more than
eight years in April while prices jumped. (WSJ)
Germany's economic growth accelerated to 0.7% in the first
quarter. (WSJ)
Best Buy Co. sales slipped 0.1% in its first quarter, although
sales of wearable electronics and appliances expanded sharply.
(WSJ)
Coca-Cola Enterprises Inc. shareholders approved the company's
proposed bottling merger to create the largest independent Coke
bottler world-wide. (WSJ)
Autonomous-vehicle startup nuTonomy raised $16 million in new
funding to add to its earlier backing by Ford Motor Co. Chairman
Bill Ford. (WSJ)
Hyundai Motor Co. plans to build an electric car by 2018 that
has at least 200 miles of range. (WSJ)
Strikes in France over labor reform triggered a transportation
meltdown as workers blocked oil refineries and fuel pumps ran dry.
(The Telegraph)
Creditors of struggling South Korean shipping line Hyundai
Merchant Marine Co Ltd. agreed to a $570.27 million debt-for-equity
swap. (Reuters)
South Korea's Hanjin Shipping Co. Ltd. is past due on $11.6
million in payments owed to Seaspan Corp., the ship owner says.
(The Loadstar)
The American Trucking Associations truck tonnage index fell 2.1%
month-to-month in April after a 4.4% decline in March. (Transport
Topics)
Adidas AG, which moved its manufacturing to Asia 20 years ago,
will start producing shoes using robots at a plant in southern
Germany. (Agence France-Presse)
Ohio granted Amazon.com Inc. a $270,000 tax break over six years
to operate a distribution center between Cleveland and Akron.
(Akron Beacon-Journal)
Cocoa, Fla., is offering Wal-Mart Stores Inc. $2.92 million in
incentives, including $2 million in cash, to choose the city for a
regional distribution center. (Florida Today)
Malaysia plans to add air cargo and other facilities around
Kuala Lumpur International Airport to draw logistics business.
(Straits Times)
Crowley Maritime will spend $21 million to expand its Isla
Grande freight terminal in Puerto Rico. (Handy Shipping Guide)
Swiss watch exports declined 11.1% in April. (The Standard)
Zappos.com Inc. will start shipping shoes in boxes that
consumers can convert to other uses. (Adweek)
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.
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(END) Dow Jones Newswires
May 25, 2016 06:48 ET (10:48 GMT)
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