Today's Logistics Report: Cutting Rail Jobs; Warehouse Demand Peaks; Screening China's Ports
January 24 2020 - 10:48AM
Dow Jones News
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)
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