Today's Top Supply Chain and Logistics News From WSJ
July 20 2016 - 07:00AM
Dow Jones News
By Paul Page
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The surge in e-commerce spending is proving very profitable for
the world's biggest warehouse operator. Prologis Inc. reported
record profits in the second quarter as rental rates jumped while
demand swamped available space at distribution centers. Hamid
Moghadam, the company's chief executive, tells WSJ Logistics
Report's Brian Baskin that tight supply is helping keep vacancy
rates low and rental rates high. Prologis is pushing its
construction spending forecast up slightly for the year in what
looks like an increasingly confident market. Mr. Moghadam says the
company is seeing strong demand for "build-to-suit" warehouses --
the sites tailored to the specific needs of retailers and logistics
providers -- suggesting developers don't have to depend on
speculative building to keep up with the market.
Consumer-goods giant Procter & Gamble Co. is trying to cut
out the middleman . The company that has long relied on retailers
is testing new paths to consumers, efforts the WSJ's Sharon Terlep
reports include online subscriptions, free shipping and
rapid-ordering apps linked to Tide-branded couriers. The tests are
part of a growing move by manufacturers and distributors to reach
households directly rather than looking for space on store shelves.
P&G is facing a clear immediate threat from the Dollar Shave
Club, the online subscription service that has chipped away at the
dominance of Gillette razors. The response has P&G's burgeoning
research-and-development extending their own "Gillette Shave Club"
to include delivery services for other goods -- notably Tide
detergent. P&G may end up alienating its retailers with new
competition, but the bigger risk may be to ignore consumer demand
and the growing direct-sales market.
Some truck makers caught in a European cartel dragnet insist
their actions didn't raise prices for truck customers. The European
Union capped its long-running investigation into collusion on
prices and emissions by handing down some $3.3 billion in fines,
the WSJ's Natalia Drozdiak reports. EU Competition Chief Margrethe
Vestager says the record penalties are "a clear message to
companies that cartels are not accepted." The manufacturers set
aside hundreds of millions of dollars to pay the fines, but
companies including Volvo AB and Paccar Inc.'s DAF also say the
real impact of the collusion was limited. As Volvo Chief Executive
Martin Lundstedt, put it, "These events have not impacted our
customers." The companies may have to make that point in a more
formal way if some truck companies move forward with their own
civil complaints.
TRANSPORTATION
The biggest concern at Volvo right now may be its dwindling
order book. The world's second-largest truck maker reported a steep
decline in profit in the second quarter and lowered the outlook for
North American sales amid declining freight demand and competition
from a lively used-truck market. The WSJ's Dominic Chopping reports
North American truck orders fell 29% year-over-year, helping push
overall global orders down 8% in a depressed truck and construction
market. Truck orders generally have been in a deep slide this year.
ACT Research says North American orders hit a six-year low in June.
The group says cancellations reached 29% of the order backlog last
year and that 11% of previous orders were canceled in the first
five months of this year. There's little relief in sight: the
American Trucking Associations says its measure of shipping demand
fell 1.5% from May to June.
Time is getting short for Sports Authority and its suppliers.
The bankrupt retailer is scrambling to close most or all of its
stores by the end of the month, even as the battle between lenders
and suppliers over the remaining cash remains unresolved. Store
managers tell the WSJ's Peg Brickley they have been instructed on
procedures for wiping computers, locking up and walking away, as
the dying athletic gear seller prepares for the final stage of its
bankruptcy. Sports Authority has paid off its top-ranking lenders,
but lenders say they're still owed another $240 million. And
suppliers that shipped goods in recent months are on the hook for
some $50 million in merchandise as it appears unlikely any stores
will be open in just a few weeks.
QUOTABLE
IN OTHER NEWS
Kansas City Southern Inc.'s second-quarter earnings rose 7.4% as
the railroad benefited from improved freight volumes for certain
commodities. (WSJ)
U.S. exports to China fell 8.2% in the first five months of the
year. (WSJ)
German auto maker Volkswagen AG plans to start building electric
vehicles in North America by 2020. (WSJ)
The International Monetary Fund downgraded its forecast for
global economic growth to 3.1%, on par with last year's growth.
(WSJ)
EMC Corp. shareholders approved Dell Inc.'s $60 billion takeover
offer. (WSJ)
Monsanto Co. rejected Bayer AG's latest takeover proposal but
the biotech seed giant says it remains open to talks with Bayer and
"other parties." (WSJ)
Indian companies say they are confident about business
conditions yet a majority are putting investment plans on hold.
(WSJ)
Diesel prices in the U.S. fell for the third straight week.
(Commercial Carrier Journal)
FedEx Corp. plans to begin freighter service between Miami and
Matanzas, Cuba, in January under new authority granted by the U.S.
(Air Cargo World)
Analysts say the Global Logistics Property initial public
offering could spur more listings by Chinese logistics companies
serving e-commerce markets. (South China Morning Post)
The new Ocean Alliance that includes CMA CGM SA will deploy
ships with capacity for 18,000 twenty-foot-equivalent units on
trans-Pacific lanes. (Journal of Commerce)
The U.S. and Vietnam agreed to end two longtime trade disputes
involving imports of shrimp into the U.S. (American Shipper)
Distribution and aviation services company John Menzies named
Dermot Smurfit chairman amid growing pressure from activist
investors to split the company in two. (The Telegraph)
Singapore Post named former DHL executive Sam Ang chief
executive of Quantium Solutions, the business overseeing
e-commerce, freight forwarding and parcel distribution. (Straits
Times)
Global material-handling revenues are forecast to rise nearly
28% in the next five years, to $148 billion. (DC Velocity)
British parcel carrier Hermes says a Guardian newspaper claim
the company pays couriers below a living wage is "disingenuous."
(Logistics Manager)
Minnesota Gov. Mark Dayton set up a public-private working group
to study the state's freight rail services. (Progressive
Railroading)
Letter volume at the U.K.'s Royal Mail fell 2% in the last three
months. (MarketWatch)
Ford Motor Co. is studying with tequila maker Jose Cuervo
whether leftover agave plants can be turned into auto parts.
(TechCrunch)
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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Write to Paul Page at paul.page@wsj.com
(END) Dow Jones Newswires
July 20, 2016 06:45 ET (10:45 GMT)
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