Today's Logistics Report: Tangled Supply Chains; Walmart Stocking Up; Targeting Soybeans
May 17 2019 - 11:04AM
Dow Jones News
By Jennifer Smith
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Questions over Chinese labor practices are weaving their way
into major Western supply chains. Factories that produce goods
found in Gap Inc., Adidas AG and Kraft Heinz Co. products are
filling up with workers from training programs tied to China's
campaign to forcibly assimilate its Muslim population, WSJ's Eva
Dou and Chao Deng report. The compulsory programs sending workers
to textile and food plants in the northwest region of Xinjiang
include political indoctrination and could violate corporate
policies requiring suppliers to maintain responsible workplace
conditions. The labor issues highlight the opacity of complex
apparel and food supply chains. Some companies apparently weren't
aware of links to subcontractors in Xinjiang, where boosting
manufacturing jobs is a key element of China's crackdown. Campbell
Soup Co. and Kraft say tomato paste from Xinjiang accounts for a
fraction of their worldwide supply, while apparel makers are
looking more closely at suppliers there.
Inventory is piling up at Walmart Inc. The retail behemoth's
lean supply chain is being tested as it amasses more goods to win
market amid the collapse of some store operators and to speed up
online delivery, the WSJ's Sarah Nassauer reports. Inventory jumped
5.9% in the first quarter as Walmart loaded up on patio furniture
and bought more toys and shoes to fill gaps left by as Toys "R" Us
and Payless ShoeSource Inc. The retailer is also putting more
inventory at e-commerce fulfillment centers that are the linchpin
of its plan to expand free next-day shipping. U.S.-China trade
tensions also played a role, as Walmart pulled some imports forward
ahead of rising tariffs. Carrying more inventory can add costs, but
Walmart's U.S. operating income grew 5.5% in the first quarter as
transport costs moderated and online sales margins improved.
ECONOMY & TRADE
U.S. export restrictions against China's Huawei Technologies Co.
could send shockwaves through Silicon Valley supply chains. The
Commerce Department's decision to impose licensing requirements on
firms that supply U.S. technology to the Chinese telecom giant
threatens Huawei's access to advanced components and could hurt
foreign suppliers who deal in U.S. parts, the WSJ's Dan Strumpf,
Yoko Kubota and Wenxin Fan report. Huawei is the world's leading
telecom-gear supplier and has been stockpiling inventories to guard
against such disruptions. Last year it bought some $11 billion in
U.S. components from suppliers including Qualcomm Inc., Intel Corp.
and Oracle Corp. But the Shenzhen-based company is also working to
reduce its reliance on U.S. suppliers, making more of its own
advanced chips and other technology. Huawei suppliers may have to
wait weeks or months for approvals--assuming U.S. regulators grant
any licenses at all.
Soybeans may be the next casualty in Canada's geopolitical
dispute with China. Chinese customs authorities are delaying
inspections of Canadian soybean imports and casting a wider net
that could undercut the country's agriculture sector, the WSJ's
Paul Vieira writes, as relations between the two countries fray in
the wake of Canada's decision to arrest a senior Huawei executive.
China revoked import licenses for Canadian canola seeds in March,
and on Thursday formally arrested two Canadian citizens on
espionage charges. Moves to limit soybean imports could jeopardize
some $743 million in annual sales to China, the top export market
for Canada's soybean growers. Canadian officials say they haven't
received a noncompliance notice from China relating to soybeans.
But a lobbying group representing Canadian growers highlighted the
increased risks and urged members to be on the lookout for enhanced
testing.
QUOTABLE
IN OTHER NEWS
U.S. housing starts rose 5.7% in April. (WSJ)
Amazon.com Inc. became the largest investor in British
food-delivery company Deliveroo as part of $575 million funding
round. (WSJ)
Defunct New England Motor Freight Inc. is preparing to sell
thousands of semi-tractors and trailers in the largest bankruptcy
auction of its kind. (WSJ)
The price of iron ore surged to a five-year high, buoyed by mine
closures in Brazil and strong demand for steel in China. (WSJ)
Iron-ore giant Vale SA warned authorities it faces another
potential tailings-dam burst. (WSJ)
Six more states are suing Purdue Pharma LP over its alleged role
in fueling the opioid epidemic. (WSJ)
Malaysia's economic growth slowed in the first quarter as
U.S.-China trade tensions took a toll on exports. (Nikkei Asian
Review)
First-quarter profit at South Korea's Daewoo Shipbuilding &
Marine Engineering fell 14% on declining sales. (Lloyd's List)
Container ship lessor Seaspan Corp. sealed a $1 billion
financing program that could be used in part to buy new vessels.
(Lloyd's List)
A.P. Moller-Maersk A/S is integrating warehousing and other
landside activities at APM Terminals into Maersk LIne. (Journal of
Commerce)
China's Dalian Shipbuilding Industry Co. may start building
large liquefied natural gas carriers. (Splash 247)
Infrastructure conglomerate Adani Group will invest $290 million
to develop a container terminal along Myanmar's Yangon River. (The
Hindu)
Deutsche Post AG's DHL Express and Chinese drone-maker EHang are
testing airborne delivery in Guangzhou. (Air Cargo World)
A Nevada developer is building a 558,000-square-foot warehouse
complex in the Lehigh Valley area. (Allentown Morning Call)
Cargo thefts in the U.S. increased 25% by volume in the first
quarter. (Commercial Carrier Journal)
ABOUT US
Paul Page is editor of WSJ Logistics Report. Follow the WSJ
Logistics Report team at: @PaulPage , @jensmithWSJ and
@CostasParis. Follow the WSJ Logistics Report on Twitter at
@WSJLogistics.
Write to Jennifer Smith at jennifer.smith@wsj.com
(END) Dow Jones Newswires
May 17, 2019 10:49 ET (14:49 GMT)
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