AMZN Amazon.com Inc

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Amazon.com Inc. has designs on the distribution of more than just its own packages . The e-commerce giant has publicly outlined efforts to build out a logistics network aimed at handling more of its own deliveries, but the WSJ's Laura Stevens and Greg Bensinger report the company has grander ambitions that could upend the traditional relationship between seller and shipper. Interviews with current and former Amazon managers and business partners indicate the retailer aims to one day haul packages for both itself and other retailers and consumers. Some executives call the initiative "Consume the City," a nod to the company's plans to build a massive delivery network that could eventually compete with partners including United Parcel Service Inc. and FedEx Corp. Amazon's ambitions have been the subject of fierce speculation in the shipping business, with companies wondering whether the retailer's logistics plans present an opportunity or a threat. Executives at UPS and FedEx are skeptical Amazon can scale up to compete with their services. But as Amazon moves more of its own goods, the company will find that adding packages and freight from other customers will only make the economics behind its own logistics operation more attractive.

Beyond the upheaval in the global shipping industry this year, container ship operators are facing one clear and disturbing reality: the business is on track for its worst performance since the 2009 economic crisis. Overall shipping volume will likely be flat and freight rates have been sinking, the WSJ's Costas Paris reports, providing a catalyst for further bankruptcies and possible acquisitions in a beleaguered industry. Despite an earlier upward spike in prices in the wake of Hanjin Shipping Co.'s bankruptcy filing, rates fell 20% in the Asia-to-Europe trade route this week, and have stayed well below $1,000 all year. With the slow shipping season approaching, many industry experts say the business is on a path toward a broad restructuring that will wipe several familiar names from the water. Shipping analysts say any operator with less than 5% global share of the market may be taken over or confined to regional business. Right now, only four of the world's top 20 companies surpass that threshold.

An unusual disconnect in the craft beer supply chain is undermining growth in the business. The problem is that craft brewers are proliferating so rapidly, the WSJ's Tripp Mickle reports, they are outpacing the growth in production of hops, the key ingredient in many microbrews. Hops farmers are doing their part: Farmland devoted to the crop has increased 65% in the last five years, and growers have spread out into aromatic varieties that give ales a wider range of bitter and fruity flavors. But the brewer population has doubled to more than 4,000 in that time, leaving supplies short and distribution channels tougher to serve. With so many small customers, farmers are hard-pressed to fulfill so many small orders, and production across the industry has slowed, casting a cloud over the business. After several years of rapid growth, hops farmers now fear they could end up bearing the bitter results of a supply glut.

ECONOMY & TRADE

World trade isn't going to bail out the shipping industry this year, and probably not next year. The World Trade Organization's latest assessment of international trade offers a grim view of global business, with growth projections scaled back sharply from just five months ago. The WTO now foresees an increase of just 1.7% in 2016 and as little as 1.8% in 2017, the WSJ's Paul Hannon and William Mauldin report, thanks to weak trade growth in China, North America and Brazil. The growth would be the slowest since the financial crisis, and comes with an extra warning for shipping businesses. World trade over the long term has grown at 1.5 times the rate of total economic output. But 2016 will mark the first time in 15 years that trade will grow more slowly than total output, suggesting the role of moving goods across borders has diminished in national economies since the financial crisis.

QUOTABLE

IN OTHER NEWS

A South Korean bankruptcy court said a sale of Hanjin Shipping is possible. (WSJ)

A key measure of U.S. consumer confidence rose to its highest level since August 2007. (WSJ)

Mexico's trade deficit narrowed in August as exports rose 4.5%, including 4.8% growth in exports of manufactured goods. (WSJ)

Nike Inc.'s futures orders for products for delivery the rest of the year rose 5% in the third quarter, below the increase of 9% a year earlier and the 8% growth in the previous quarter. (WSJ)

Car parts retailer Autozone Inc. is seeing strong sales gains by expanding inventory availability at its stores. (WSJ)

A move by a pair of mall owners to rescue retailer Aéropostale Inc. shows how some landlords are getting more aggressive to stem store closings. (WSJ)

Amazon is looking for its first warehouse space in Australia, with a focus on an area west of Sydney. (Sydney Morning Herald)

Suppliers of low-margin goods to Wal-Mart Stores Inc. face tough logistics and cost questions in meeting the retailer's stricter delivery demands. (Supply Chain Brain)

UPS signed a long-term lease for a 525,400-square-foot distribution center in Compton, Calif., east of Los Angeles. (The Real Deal)

Uber Technologies Inc. is making an aggressive drive into meal delivery, backed by new staff recruitment and a goal to enter at least 22 new countries. (Reuters)

Concern is growing among seaport and terminal operators over the impact of climate change on their facilities. (IHS Fairplay)

International air cargo carriers are seeing high-value goods such as electronics and machinery shift to ocean freight. (Air Cargo News)

Sales of used Class 8 trucks in the U.S. slipped 2% year-over-year in August but expanded 19% from July. (Heavy Duty Trucking)

Baltic Shipping Exchange shareholders approved a $113 million takeover offer from the Singapore Exchange. (MarineLink)

British grocer Sainsbury PLC opened a 185,000-square-foot distribution center in East London dedicated to online grocery fulfillment. (Logistics Manager)

Greenpeace activists blocked operations of a Malaysian ship hauling palm oil into the Port of Rotterdam. (Maritime Executive)

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

September 28, 2016 06:53 ET (10:53 GMT)

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