By Paul Page 

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Amazon.com Inc. isn't letting rising shipping costs get in the way of profits. The e-commerce giant reported a record $857 million net profit in the second quarter on a 31% gain in revenue, the WSJ's Greg Bensinger reports, and suggested in its outlook that the company sees no slowdown in the online sales juggernaut that has reshaped the retail world. The strong quarter, boosted by strong results in the Amazon Web Services cloud computing division, came even as shipping costs soared 44%. That marked an acceleration of the 42% jump in shipping costs Amazon saw in the first three months of the year, but the growth underscored Amazon's rapid gains in the consumer marketplace rather than an unwieldy grip on distribution expenses. In fact, Amazon's operating profit nearly tripled, and the 28% jump in inventory on the balance sheet from a year ago was behind the growth in sales. The company may see its costs rise as it takes over more of its own delivery, but the latest financial report suggests Amazon is expanding its reach into retail with a strong grip on logistics efficiency.

Freight can wait, as far as the rail industry's top regulator is concerned. The Surface Transportation Board is dropping a proposal backed by the freight railroads that would have given the cargo haulers leeway in deciding whether Amtrak passenger trains get priority on tracks, the WSJ's Laura Stevens writes. The STB proposal would have resolved a longstanding and sometimes very heated dispute between the passenger railroad and the freight carriers over the legal requirement that the cargo carriers give passenger trains "preference" on the tracks. The freight operators say that's not an absolute right for passenger trains, merely a call to weigh the balance of interests. The issue is sidetracked for now, but it may not be gone. The board may still address the question if individual cases bring it up, and STB members want to face the fallout again.

DP World is expanding in North America, even if the Dubai-based shipping terminal operator can't get into the U.S. The company struck a deal to operate a container terminal in Saint John, New Brunswick, the WSJ's David George-Cosh reports, a move that will allow DP World to compete with U.S. ports along the eastern seaboard while boosting its operations in Canada. It's DP World's fourth site in Canada, and gives the operator a beachhead to offer "an alternative gateway opportunity" to shippers and shipping lines pushing goods through the East Coast. The 30-year pact starts in January and comes as the port is looking to nearly triple its container-handling capacity. DP World remains outside the U.S. market, after backing down from acquiring five U.S. terminals in 2006 amid a politically-charged backlash from lawmakers in Congress.

E-COMMERCE

Traditional retailers are trying to use their storefronts to their advantage as they compete with burgeoning e-commerce sales, but the strategy has a critical flaw. In a Guest Voices commentary, Yossi Sheffi of the Massachusetts Institute of Technology's Center for Transportation and Logistics writes that the brick-and-mortar retailers are essentially fighting with their own cost-saving efforts at stores with their wide-ranging omnichannel solutions. The efforts are aimed at giving consumers their goods when and where they want, and essentially using stores as distribution centers for "click-and-collect" and "click-and-deliver" operations. But the new tasks being added at stores are running counter to bigger drivers in the business toward "load shifting," or getting consumers to handle more of the routine checkout work at stores. Reversing those efforts, Mr. Sheffi writes, won't help the retailers meet their critical need to improve the margins on their e-commerce sales.

QUOTABLE

IN OTHER NEWS

Shares in Roadrunner Transportation Systems Inc. plunged nearly 20% after the trucking company reported a steep decline in net profit and cut its earnings guidance by almost half. (WSJ)

The number of Americans filing new applications for jobless benefits climbed last week, but the overall level showed an expanding labor market. (WSJ)

Dollar General Corp. bought 41 former WalMart Express locations left behind after Wal-Mart Stores Inc. abandoned its small-store strategy. (WSJ)

U.S. electronics company Avnet Inc. agreed to buy Premier Farnell PLC for $907 million, trumping a previous bid for the maker of the $5 Raspberry Pi computer. (WSJ)

British Airways parent IAG is further cutting back growth plans in the face of slack passenger demand and the U.K.'s Brexit vote. (WSJ)

Lumber Liquidators Holdings Inc. posted a big second-quarter loss as the company felt the impact of an investigation into its Chinese-made laminate flooring. (WSJ)

The U.S. home ownership rate fell to the lowest level since 1965 in the second quarter. (WSJ)

Lab equipment maker Thermo Fisher Scientific Inc. raised its outlook for the year after reporting a 6.2% gain in revenues. (WSJ)

Fertilizer giant Potash Corp. of Saskatchewan Inc. slashed its outlook for the second time this year but said the commodity market may have hit bottom. (WSJ)

The U.S. Surface Transportation Board is proposing to loosen the restrictions shippers face in switching cargo among large railroads. (Progressive Railroading)

Members of a militant teachers' union ended their week-long blockade of a freight rail line in western Mexico. (EFE)

YRC Worldwide's second-quarter profit expanded 4.2% to $27.1 million despite declining trucking revenue. (Kansas City Star)

Less-than-truckload carrier Old Dominion Freight Lines Inc. said net profit fell 5% in the second quarter to $81.4 million. (Transport Topics)

Some of the world's biggest car makers are investigating their paint supply chains after their suppliers were linked to sites in India where child labor and debt bondage are widespread. (The Guardian)

Freight forwarder DSV A/S says it expects to be in the market soon for another big acquisition after taking in UTi Worldwide this year. (Shipping Watch)

India is spending $4 billion to build a transshipment port, part of the growing investment the country is making to compete with China in trade. (Reuters)

Scorpio Tankers, the crude oil-hauling arm of Scorpio Group, posted sharply lower net profits for the second quarter. (Lloyd's List)

Kmart has started pushing most of its goods straight to store shelves rather than stockrooms as it pares back on overall inventory. (New York Post)

Isuzu Commercial Truck of America opened a 100,000-square-foot parts distribution center in northeastern Pennsylvania. (Fleet Owner)

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 29, 2016 06:39 ET (10:39 GMT)

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