HLAG Hapag-Lloyd AG

By Paul Page 

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Concerns over price-fixing in shipping are spreading just as global container lines are preparing to line up in powerful new alliances. The U.S. Justice Department effectively disclosed an investigation into the liner companies, the WSJ's Costas Paris reports, by crashing a meeting of top industry executives and issued subpoenas to companies including Maersk Line, a unit of Danish conglomerate A.P. Moller Maersk A/S and Germany's Hapag-Lloyd AG. The probe comes as carriers are undertaking big changes following a crushing downturn, consolidating businesses while exerting new discipline on operations and pricing. They're also resetting operations this spring under three big alliances that will divide an enormous share of containerized goods on major trade lanes. The shipping lines are seeing freight rates rise at a substantial pace off last year's historic lows, increases carriers say are the result of tight capacity. Recent probes in the automobile-shipping and airfreight business suggest investigators won't easily let go of questions over collusion, however.

When the owners of a shoe factory at the heart of China's industrial base starts looking for lower-cost operations in the U.S., it's clear that big shifts are underway in global manufacturing. The scouting by Dongguan Winwin Industrial, which makes high-quality sneakers and casual shoes for big American companies, is part of a trend that began long before Donald Trump's angry election rhetoric highlighted China's manufacturing power, the WSJ's Andrew Browne reports. The exit of U.S. factory jobs from the country is roughly matched by posts coming in, according to the nonprofit Reshoring Initiative, a response to changes in supply-chain economics, including rising wages and taxes in China and the costly, slow shipping path to market. Lower real-estate and energy costs in the U.S. add to the new calculations, but the biggest change is on the factory floor. Manufacturing executives say new automation helps defray labor costs, changing the formula for measuring factories in China against those in the U.S.

FedEx Corp. insists its investment in ground operations will pay off in coming years , but the business is weighing on earnings growth this year. The express giant reported a $562 million net profit in the third quarter as revenue jumped 18% to $15 billion, the WSJ's Maria Armental reports. But FedEx also cut its projected earnings for the current fiscal year as it copes with the costs of integrating its TNT Express acquisition and of adjusting to more expensive e-commerce deliveries. Those distribution costs helped pull down profit margins at the express and ground divisions in a quarter that included peak-season holiday shipping. FedEx even lost some residential delivery business to what it calls its own "yield management actions." That means the company insisted on higher prices, a strategy FedEx is likely to maintain until its investments make online deliveries cheaper and easier to deliver.

SUPPLY CHAIN STRATEGIES

The logistics real-estate market may be due for a big upheaval. Blackstone Group LP is gearing up to unload its European warehouse property arm, the WSJ's Art Patnaude reports, in a sale that comes as Global Logistic Properties Ltd. prepares to sell its own set of logistics sites around the world. Blackstone, the U.S. private-equity giant, has been working simultaneously toward a sale or initial public offering for Logicor, which it created in 2012 to operate industrial properties across Europe. The sales signal a global shift in ownership of logistics properties as the strong expansion of e-commerce is boosting the value of logistics sites and upending entrenched patterns of distribution. Experts believe a Blackstone sale could surpass $10 billion. One question hanging over any sale is how the Blackstone sites will fit into a distribution landscape that may change as online shopping grows and the U.K. exits the European Union.

QUOTABLE

IN OTHER NEWS

A bankruptcy judge approved a reorganization plan to bring Ultrapetrol (Bahamas) Ltd., owner of one of the largest cargo fleets in South America, out of chapter 11. (WSJ)

The U.S. and Britain banned passengers from carrying most large electronics in the cabin on flights from a handful of countries in the Middle East and North Africa. (WSJ)

The dollar fell to its lowest level in more than four months. (WSJ)

Copper prices are falling on hopes that supply disruptions in Chile and Indonesia could be ending. (WSJ)

European Union leaders will meet April 29 to agree on guidelines for Brexit negotiations with Britain. (WSJ)

U. K. consumer prices rose at their fastest pace in nearly 3 1/2 years in February. (WSJ)

European Union and Japan's leaders vow to fast-track talks on a trade deal aimed at boosting exports and countering U.S. protectionism. (WSJ)

General Mills Inc.'s fiscal third-quarter sales in North America fell 7% from a year ago. (WSJ)

Wal-Mart Stores Inc. is starting an internal venture called Store No. 8 meant to incubate new online retail businesses. ( New York Times)

Amazon.com Inc is expanding a program to remove counterfeit goods from its website. (Reuters)

Taiwan Semiconductor Manufacturing Co. is considering placing a multibillion-dollar microchip fabrication plant in the U.S. (Bloomberg)

App-based grocery delivery service Shipt is rolling out Costco Wholesale Corp. home delivery in Tampa, Fla. (Business Journals)

The Saint Lawrence Seaway navigation season opened at the St. Lambert Lock in Montreal. (MarineLink)

The New York Shipping Exchange, which aims to provide a platform to set contracts for future ocean shipping, gained $8.5 million in funding. (American Shipper)

The American Trucking Associations truck tonnage index fell 2.6% from January to February. (Logistics Management)

Whole Foods Market Inc. adopted new sourcing guidelines for tuna in the grocer's prepared foods department. (MarketWatch)

Chinese imports of U.S. lobsters are soaring. (WBZ)

ABOUT US

Paul Page is deputy editor of WSJ Logistics Report. Follow him at @PaulPage, and follow the entire WSJ Logistics Report team: @brianjbaskin, @jensmithWSJ 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

March 22, 2017 06:51 ET (10:51 GMT)

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