Today's Logistics Report: Amazon China Powers Down; Balance in Warehousing; Shipbuilding on Idle
April 18 2019 - 11:10AM
Dow Jones News
By Paul Page
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China's fiercely competitive e-commerce market finally proved
too much for Amazon.com Inc. The company told sellers today it will
stop operating its third-party online marketplace and providing
seller services on its Chinese domestic website in July, ending a
long struggle by American online commerce companies to make it in
China. The WSJ's Julie Wernau and Yoko Kubota report Amazon has
been in talks to merge its cross-border e-commerce business with a
Chinese competitor, NetEase Inc.'s Kaola, in a deal that would
remove the Amazon name from consumer-facing e-commerce in China.
Amazon China commanded just 6% of gross merchandise volume in the
niche cross-border e-commerce market in the fourth quarter of 2018,
far behind the 32% held by Alibaba Group Holding Ltd. Nomura
Securities says an Amazon tie-up could help Kaola win the
confidence of leading global brands and spur an increased supply of
goods offered to Chinese consumers.
Demand and supply in the U.S. logistics sector is looking more
balanced every day. A new report suggests the warehouse market is
coming closer to equilibrium, the WSJ Logistics Report's Jennifer
Smith writes, as a long period in which the push for distribution
centers far outpaced construction appears to be running out. CBRE
Group Inc. says in a report released today that the availability
rate for U.S. industrial real estate barely dipped at all in the
first quarter, essentially holding steady at 7%. That hardly means
warehousing has become a buyer's market: the availability rate
still matches the lowest level in the business since 2000. Still,
CBRE says supply even marginally outpaced demand in the quarter
across some of the country's big distribution markets. That could
bring a break in leasing prices if the trend holds, or at least
keep a lid on rate increases.
The Philly Shipyard can't build a sustainable business. The
remnant of America's former shipbuilding power is again fighting
for its life, the WSJ Logistics Report's Costas Paris writes, as it
faces mounting losses, an empty order book and a work force reduced
by two-thirds. The yard is one of a handful left in the U.S. that
can build large ships called for under the Jones Act, century-old
law that seeks to protect American domestic shipping interests.
Global competition and unforgiving maritime economics have painted
the business into a corner, however, and there's little demand for
the expensive cargo vessels that can be built at the shipyard.
Managers concede there is doubt the facility "will be able to
continue as a going concern." The yard is hoping for new military
orders, but almost certainly would need a bailout if it can't win
new contracts.
SUPPLY CHAIN STRATEGIES
Some retailers believe getting more directly involved in reverse
logistics could help them win new customers. Walgreens Boots
Alliance Inc. and Nordstrom Inc. will let online shoppers at other
brands and retailers pick up or return orders at some stores, the
WSJ's Sarah Nassauer reports, a sign of how retailers are teaming
up in new ways to draw customers as online commerce upends shopping
patterns. Walgreens will offer package pickup and returns at more
than 8,000 U.S. locations to companies including Levi Strauss &
Co. and Urban Outfitters Inc. Nordstrom will test the tactic at Los
Angeles-area stores with a group of brands. The strategy highlights
how e-commerce is pressing retailers to adjust to changing consumer
habits and reset relationships between brands and stores.
Department store Kohl's Corp. has helped drive the trend by
allowing Amazon returns at about 100 of its stores.
QUOTABLE
IN OTHER NEWS
The Federal Reserve said it saw "slight to moderate" growth
across the U.S. in recent weeks. (WSJ)
The U.S. trade deficit narrowed in February on a 1.1% gain in
exports while imports inched up 0.2%. (WSJ)
A measure of eurozone manufacturing and services activity
slipped to its lowest level in three months. (WSJ)
Canada's annual inflation rate accelerated in March. (WSJ)
The U.S. and China tentatively scheduled a fresh round of trade
meetings the week of April 29 in Beijing. (WSJ)
United Continental Holdings Inc. is trimming capacity growth
this year in part because of the grounding of Boeing Co. 737 MAX
jets. (WSJ)
A key measure of quarterly sales at PepsiCo Inc. grew at its
fastest rate in more than three years. (WSJ)
India's Jet Airways suspended all operations as the airline ran
out of cash and lenders refused to provide new funding. (Business
Standard)
Chinese steel production is on track to contract 1% next year.
(Lloyd's List)
U.K.-based FibreMark Solutions says it won a patent for its
textile traceability technology. (Sourcing Journal)
Trucking officials expect lengthy delays at the U.S.-Mexico
border to last for several weeks. (Journal of Commerce)
Airfreight rates tied to Asia have declined at a sharp pace this
month. (Lloyd's Loading List)
Kansas City Southern's first-quarter net profit fell 29% to $103
million despite a 6% gain in revenue. (Railway Age)
Israel's ZIM Integrated Shipping Services joined the Maersk
Line-IBM TradeLens blockchain platform. (gCaptain)
Developers bought 9.57 acres for an Amazon fulfillment center in
Tucson, Ariz. (AZ Big Media)
Amazon plans to place a small fulfillment center outside
Youngstown, Ohio. (The Business Journal)
On-demand warehouse technology startup Flowspace raised $12
million in a Series A funding round. (Business Journals)
ABOUT US
Paul Page is editor of WSJ Logistics Report. Follow the entire
WSJ Logistics Report team at: @PaulPage, @CostasParis and
@jensmithWSJ. Follow the WSJ Logistics Report on Twitter at
@WSJLogistics.
Write to Paul Page at paul.page@wsj.com
(END) Dow Jones Newswires
April 18, 2019 10:55 ET (14:55 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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