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.

Subscribe to this email newsletter by clicking here: http://on.wsj.com/Logisticsnewsletter .

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

 

(END) Dow Jones Newswires

July 20, 2016 06:45 ET (10:45 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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