By Paul Page 

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Union Pacific Corp. is banking on shrinking its way back to profit growth. The freight railroad says it will cut nearly 3,000 jobs in 2020, the WSJ's Paul Ziobro reports, adding to the rapid decline of rail payrolls over the past year as shipping volumes have fallen and carriers have implemented the lean operating strategy known as precision railroading. Union Pacific is transforming its operations, and the railroad now plans to cut its workforce by around 8% this year after reductions of 11% in 2019. Financial returns so far are mixed. Union Pacific's fourth-quarter net profit fell 10% as operating revenues tumbled 9%. Freight volumes fell a bit more, however, and a key measure of pricing power increased 1.4%. Union Pacific's trains also moved faster and spent less time at terminals, giving the railroad hope that financial gains will come along soon.

SUPPLY CHAIN STRATEGIES

A new report suggests the boom in North American warehousing may have peaked. Cushman & Wakefield PLC projects that warehouse construction is likely to outstrip demand over this year and next, the WSJ's Micah Maidenberg writes, suggesting a market long marked by tight capacity and rising rental rates may be shifting to favor tenants. The real-estate firm expects builders to deliver 301 million square feet of distribution space in 2020, and another 272 million square feet next year. Both figures are well ahead of demand projections, capping a turnaround in the market that has been boosted by surging e-commerce sales and a push by retailers to find new warehousing sites. Softer leasing rates would bring some relief to companies that have been stung by the high costs of digital strategies. Vacancy rates remain very low, however, and capacity for new sites near population centers is still hard to find.

ECONOMY & TRADE

The impact of China's rapidly-spreading coronavirus is starting to touch commercial trade. Authorities are holding back some ships from calling at the city of Wuhan, the WSJ Logistics Report's Costas Paris writes, extending efforts to quarantine the region into the shipping sector. The moves at the major trading center on the Yangtze River add to the concerns that the frightening respiratory infection will begin to affect China's economy. Beijing has expanded the lockdown on travel in the central Chinese city of Wuhan to other nearby cities, a crushing event for Chinese citizens just at the start of the Lunar New Year, when millions of people travel home for the country's most important family holiday. The efforts at the river ports have so far kept some cargo ships idling short of Wuhan, and one official says container ships are taking health precautions as they enter the area.

QUOTABLE

IN OTHER NEWS

The International Monetary Fund estimates Europe's economy slowed to a six-year low in 2019 as the manufacturing sector contracted. (WSJ)

Procter & Gamble's quarterly sales and profits rose as the household goods supplier convinced people to upgrade to premium products. (WSJ)

Amazon, DHL Express and other companies joined a coalition working to advance the use of electric vehicles in delivery fleets. (MarketWatch)

Houston-based helicopter companies Era Group Inc. and Bristow Group are in advanced deal talks. (WSJ)

The price of rhodium has soared 65% this year under growing demand for the metal that strips pollutants out of automotive exhaust fumes. (WSJ)

The prolonged grounding of the Boeing 737 MAX could stymie growth for U.S. airlines that operate the plane well into this year. (WSJ)

Xerox Holdings is stepping up efforts to complete a $33 billion unsolicited takeover bid for HP. (WSJ)

Mining giant BHP Group says poor air quality from Australia's bushfires is hurting its coal output in the country. (Reuters)

FedEx is warning of a digital scam in which people receive text messages purporting to be delivery notices. (CNN)

Operators of tankers with scrubber emissions systems are earning a large premium in charter rates over other crude carriers. (Lloyd's List)

Amazon appears to be working on plans to place its first two distribution centers in Louisiana. (Business Report)

Freighter operators Atlas Air and Cargolux both expect the airfreight market to remain soft through at least the first half of this year. (The Laodstar)

Paris authorities are developing "logistics hotels" that blend e-commerce delivery sites with other mixed-use development. (Wired)

ABOUT US

Paul Page is editor of WSJ Logistics Report. Follow the WSJ Logistics Report team: @PaulPage , @jensmithWSJ and @CostasParis. Follow the WSJ Logistics Report on Twitter at @WSJLogistics.

Write to Paul Page at paul.page@wsj.com

 

(END) Dow Jones Newswires

January 24, 2020 10:33 ET (15:33 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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