UNP Union Pacific Corp

By Paul Page 

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Union Pacific Corp. is seeing improving demand from some its commodities shippers. Now it just wants those customers to start paying more for cargo transport. The largest U.S. freight railroad says its third-quarter earnings fell 13% as overall freight volume declined 5.8% and revenue dropped off 7.2% from a year ago, the WSJ's Tess Stynes reports. UP says it's seeing improvement in some shipping sectors -- agriculture carloads jumped 11% year-over-year -- but that "core pricing, " excluding basics like fuel surcharges, increased 1.5% in the third quarter. That was behind the growth rate earlier in the first and second quarters and below what analysts at Cowen and Co. say is the "rail inflation" rate. UP expects increases in energy-sector pricing to trigger higher transport charges in the coming year, but the company in the meantime is responding by paring its spending, trimming its capital spending and writing off $17 million for projects that were started and dropped.

Genesee & Wyoming Inc. is taking advantage of troubles in Australia's coal industry to boost its foothold in the country. The U.S. railroad operator will pay $874 million for Glencore PLC's coal-haulage business in Australia's New South Wales, the latest move by the mining company to sell off pieces of its business to reduce its big debt load, the WSJ's Rhiannon Hoyle reports. GRail hauls about 40 million metric tons of coal a year to the Port of Newcastle, the world's biggest coal-export hub. Glencore says the business has reduced its costs and improved the efficiency of its coal supply chain, but the company has been scrambling to improve its financial structure amid sagging commodities prices and mounting debt. Connecticut-based Genesee & Wyoming is betting big on a turnaround in the coal sector, meantime, and will add the GRail business to some 3,000 miles of track it already operates in the South Australia state and the Northern Territory.

Another big South Korean shipping business is in U.S. bankruptcy court. STX Offshore & Shipbuilding Co. filed for bankruptcy protection in Texas, the WSJ's Patrick Fitzgerald reports, as it bids to stop creditors from seizing its assets in the U.S. while the shipyard looks to sell its business overseas. The administrator overseeing STX's Korean bankruptcy case says some creditors who hired STX are trying to circumvent the Korean proceeding by taking over the company's assets in the U.S. Among those with claims is New York-listed Teekay Tankers Ltd., which hired STX in 2013 to build four oil tankers and won a $32 million arbitration award last year after the shipbuilder failed to deliver the vessels. Creditors have pumped billions of dollars into STX to keep it afloat, but the company continues to bleed red ink. STX is South Korea's fourth-largest shipbuilder, and its bigger rivals are undergoing corporate overhauls as the struggling under the global trade downturn that has helped push Hanjin Shipping into bankruptcy.

SUPPLY CHAIN STRATEGIES

A major toy maker is taking action over concerns about the financial health of a big customer. Jakks Pacific Inc. has halted shipments of its products to Sears Holding Corp.'s Kmart chain, a troubling sign for the retailer from a supplier heading into the holiday season. Jakks isn't formally disclosing the target of the action, only that it is stopping sales to a "major U.S. customer that is experiencing challenges" to minimize risks. The WSJ's Paul Ziobro and Suzanne Kapner report that Kmart is the business, and that Jakks' decision marks a fresh blow to a company that has been hurt hard by the growing toy sales at Wal-Mart Stores Inc., Toys "R" Us Inc. and Amazon.com Inc. Financial stability of companies in supply chains has been a growing concern since several retailers foundered and failed in the wake of the recession, leaving suppliers in the lurch. Jakks is trying to get ahead of such troubles, but its decision may also make it harder for Kmart to meet its goals during a crucial selling period.

QUOTABLE

IN OTHER NEWS

U.K. retail sales were unchanged in September from a strong August, and were 4.1% ahead of last year. (WSJ)

American Airlines Group Inc.'s net profit f ell by more than half in the third quarter, as cargo revenue declined 5.1% despite a 5.6% gain in cargo traffic. (WSJ)

Nissan Motor Co. completed its purchase of a controlling stake in Mitsubishi Motors Corp. in a deal aimed at boosting scale to take on the world's top auto makers. (WSJ)

Mattel Inc.'s third-quarter revenue nudged barely higher, with Barbie and American Girl business plugging lost sales from two Walt Disney Co. licenses. (WSJ)

Apple Inc. says nearly 90 percent of the Apple chargers and cables it has bought under a test on Amazon.com are counterfeits. (WSJ)

Hanjin Shipping plans to lay off half its white-collar staff as it seeks to cut costs to stave off liquidation. (Korea Joongang Daily)

The American Trucking Associations forecast that trucking volumes will grow 27% over the next 10 years, behind the 35% growth in overall freight tonnage. (Industry Week)

Volvo Trucks is laying off another 143 workers at its Hagerstown, Md., factory, following job cuts at the plant earlier this year. (Commercial Carrier Journal)

China's express delivery sector grew 44% in the first nine months of the year based on revenue. (Xinhua)

Taiwan-based bicycle maker Giant Bicycle Inc. began selling bikes online to U.S. consumers for pickup in brick-and-mortar shops. (Internet Retailer)

Chinese apparel manufacturer Suzhou Tianyuan Garments Co. will set up a $20 million factory in Arkansas that will employ 400 people. (Associated Press)

DHL Express opened a 250,000-square-foot automated parcel sorting facility at Singapore Changi Airport to serve as its South Asia hub. (Straits Times)

Investors in Rickmers Maritime are demanding the troubled container line repay their notes with interest as the carrier's trustee-manager considers liquidation. (Splash 24/)

Watco Transportation Services and Eastern Idaho Railroad are upgrading regional services to cut delivery times for agriculture shipments in half. (KMTV)

Global wine production has fallen 5% this year because of "climatic events" that have hit producers in the southern hemisphere. (The Guardian)

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 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

October 21, 2016 06:24 ET (10:24 GMT)

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