UPS United Parcel Service

By Paul Page 

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The marketplace for logistics companies appears to be open again. New mergers and acquisitions deals are percolating, a sign that stagnant shipping demand in recent month is pushing some companies to seek tie-ups to build scale and new business coverage, WSJ Logistics Report writes. The talks follow a wave of consolidation last year that involved some of the logistics world's biggest operators, including United Parcel Service Inc., FedEx Corp. and XPO Logistics Inc. Middle-market companies appear to be in the market this year, with logistics firm BDP International Inc. and freight forwarder Pilot Freight Services both said to be targeted by prospective buyers. Chicago-based Hub Group Inc. is on the other side, looking to add to its intermodal and truck-focused portfolio. The buyers are hoping the purchases lead to another kind of consolidation -- with shipping customers buying bigger packages of logistics and transport service.

Cuba's famous tobacco industry is nowhere near ready to light up over the prospect of reaching the world's largest cigar market. A close look at the island nation's storied tobacco farms shows a business that's grown fallow after 50 years under communist rule, the WSJ's Tripp Mickle reports. Despite fertile soil that yields slow-burning tobacco that is the envy of the world, Cuba's supply chain in its most famous industry appears broken. Cuba's cigar exports are falling and cultivation plummeted 65% between 2009 and 2014.State-owned Tabacuba wants to boost production, but farmers say big changes are needed. They say they are poorly supplied from government-supported cooperatives and the government, which buys all the tobacco farmers grow, pays too little in relation to other crops. Opening trade with the U.S. would surely boost demand, but it may take a long time for the supply side of the trade to catch up.

Panasonic Corp. wants to buy its way into a bigger role in the automotive supply chain . The Japanese electronics giant is looking at acquisitions over the next two years aimed at making the company a force in new technologies going into automobiles, the WSJ's Yuka Koshino reports. The strategy is part of the upheaval in the auto parts business, with companies rushing to capitalize on the computerization of cars and the interest in autonomous technology. Big auto makers and tech companies have struck deals for collaboration, and there's more talk about consolidation among suppliers. Panasonic already provides batteries to power Tesla Motor Inc.'s electric vehicles and is developing driver-assistance systems, so its interest in buying in new technology could lead competing suppliers to line up their deals in response.

TRANSPORTATION

The merger of Germany container-shipping operator Hapag-Lloyd AG and Dubai-based United Arab Shipping Co. could be done by the end of the summer. UASC's shareholders -- which include the governments of Qatar, Saudi Arabia, Kuwait and the United Arab Emirates -- will meet next week to consider the deal that would create the world's fifth-biggest container line, the WSJ's Costas Paris reports. It's the latest by shipping lines to consolidate their operations amid an industry's arms race over costs, capacity and prices that's being fought with increasingly large vessels. That leaves only the fate of South Korea's two carriers still to be resolved in the shipping world's turbulent restructuring, with both Hanjin Shipping Co. Ltd. and Hyundai Merchant Marine Co. Ltd. still trying to reset their debt-laden finances.

U.S. manufacturers that sell largely to domestic markets are doing increasingly better than those that depend on exports. The split conditions, seen throughout new earnings reports and gauges of U.S. factory activity, reflect the weight of a strong dollar and tensions in the global picture weighed down by troubled commodities markets and faltering national economies. Domestically-oriented U.S. manufacturers are faring better, with steadier business buoyed by the relatively brighter auto, housing and job markets, the WSJ's Lisa Beilfuss reports. Caterpillar Inc. is among the companies seeing business struggle abroad, yet Chief Executive Douglas Oberhelman in the U.S., "just about any market that's away from oil is doing pretty good." Consumers are increasingly confident, and smaller manufacturers with shorter, regional supply chains are reflecting the shift in greater hiring and stronger earnings.

QUOTABLE

IN OTHER NEWS

A new report details the projected winners and losers among U.S. industries from the proposed Pacific trade agreement. (WSJ)

Germany's Bayer AG will make a $62 billion offer to acquire Monsanto Co. in a deal that would create the world's largest agrochemicals company. (WSJ)

Vietnam's VietJet Aviation JSC has signed an $11.3 billion deal to buy 100 passenger jets from Boeing Co. (WSJ)

Sales of existing homes rose 1.7% in April, with faster growth in more affordable regions like the Midwest. (WSJ)

General Motors Co. is ending production of its Cadillac ELR electric vehicle after the luxury coupe failed to connect with consumers. (WSJ)

Mexico's economic growth accelerated to 0.8% in the first quarter, including 1.2% expansion in industrial production. (WSJ)

Retail sales in Canada fell 1% in March. (WSJ)

Hanjin Shipping Co. Ltd. bondholders gave the financially-ailing container ship line a four-month extension on debt obligations. (Yonhap)

Amazon.com Inc. notified retail customers it will raise fulfillment services prices during the fourth-quarter holidays. (Internet Retailer)

Amazon will hold nearly 20% of the U.S. retail apparel market by 2020, according to Morgan Stanley. (Sourcing Journal)

Amazon appears to be preparing to add a distribution center in Twinsburg, Ohio, in between Cleveland and Akron. (Cleveland Plain-Dealer)

Retailer J.C. Penney is testing a plan to sell Ashley Furniture by having the supplier handle all inventory and distribution. (Journal of Commerce)

FedEx Ground will place a new regional distribution hub outside Allentown, Pa. (Lehigh Valley Live)

DB Schenker will open a logistics center in northeastern China in a joint venture with Jinbei Automotive. (Stat Times)

Pasha Automotive Services will manage a San Francisco Port cargo terminal under a port plan to draw more automotive import and export trade. (Automotive Logistics)

The United Auto Workers union wants to organize workers at the Tesla Motors Inc. car factory in California. (USA Today)

Leaders in the U.K.'s trucking industry are divided on whether the country should leave the European Union. (Motor Transport)

Air India agreed to pay $12.5 million to settle an airfreight suit over price fixing, the last target of the decade-old suit to settle. (Air Cargo News)

CMA CGM SA will seek nearly $1 billion in cost savings after reporting a $100 million net loss in the first quarter. (Reuters)

New York City will pay $14 million to settle a suit over parking tickets given to commercial delivery trucks. (New York Daily News)

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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May 23, 2016 06:43 ET (10:43 GMT)

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