AMZN Amazon.com Inc

By Paul Page 

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Amazon.com Inc.'s profits are growing faster than even the company's fast-growing logistics business. The e-commerce behemoth posted a $749 million net profit in the fourth quarter, 55% ahead of last year's December quarter, the WSJ's Laura Stevens reports, as net sales expanded 22% to $43.7 billion during the key holiday quarter. The big gains come as Amazon is laying the groundwork to add even more of its own delivery capacity, with ambitions of one day hauling packages for itself as well as other retailers and consumers. The company says its Fulfillment by Amazon operation delivered more than two billion units for sellers in 2016, and active sellers using that business grew more than 70%. Traditional freight companies warn the business has tight margins, and Amazon's results show shipping costs still are growing well ahead of shipping revenue. But the company is also reporting strong cash flow, and with plans for more distribution centers and an air cargo hub in the future, Amazon clearly wants to put its cash to work.

The battle in Washington over trade is turning into the exporters vs. the importers. U.S. exporters are starting to put political weight behind "border adjustment," a House Republican tax plan that would tax imports while exempting exports, the WSJ's Richard Rubin reports. Companies including Dow Chemical Co. and Lockheed Martin Co. are touting the idea on their earnings calls, and a group of companies formed the American Made Coalition to push the plan. The moves escalate a corporate tug of war against businesses including retailers, toy makers and oil refiners who are fighting the border-adjustment proposal, which is at the core of a policy dispute in Washington as Republicans try to make the biggest tax-code changes since 1986. Importers say it would drive their costs, and consumer prices way up. There are traps for exporters as well, including the risk that the plan would trigger a stronger dollar that hurts overseas sales.

Only Hanjin Shipping Co.'s creditors can keep the business alive now. A bankruptcy court in Seoul will decide on Feb. 17 whether to liquidate a company that less than a year ago was the seventh-largest container shipping operator in the world, the WSJ's In-Soo Nam reports. The new deadline, some six months after Hanjin filed for receivership in South Korea, puts new pressure on creditors in the U.S. that are still looking for millions of dollars they say Hanjin still owes them. The creditors in the U.S. are trying to draw in the larger Hanjin Group, which counts Hanjin Shipping under its corporate umbrella in the country's "chaebol" structure of conglomerates. But dissolving the business in Seoul likely will leave Hanjin's U.S. creditors and their legal claims at sea.

SUPPLY CHAIN STRATEGIES

Amid sharp debates over jobs and the economy in the U.S., one clear trend is that American companies have never before tried so hard to employ so few people. The outsourcing wave that long ago moved apparel-making jobs to China has taken hold within the U.S. in a big way, the WSJ's Lauren Weber reports, and logistics operations are at the heart of the shift. Sites like Wal-Mart Stores Inc. warehouses managed by Schneider Logistics and a site where United Parcel Service Inc. workers handle Pratt & Whitney jet engine components are prominent features of the contract-workforce landscape. In some cases, such as in Schneider operation, the third-party logistics operator even contracts out the hiring to staffing agencies. But the push to contract work also means companies cede control of big parts of their operations, which means that measures meant to cut costs may carry an unseen price.

QUOTABLE

IN OTHER NEWS

Growing doubts about the potential for new infrastructure spending and a tax overhaul sent the dollar to its lowest level in more than two months. (WSJ)

President Donald Trump will have Wilbur Ross, his choice for Commerce Secretary, lead talks to change the North American Free Trade Agreement. (WSJ)

Mazda Motor Corp. has no immediate plans to build factories in the U.S. despite threats of taxes on imports. (WSJ)

Auto-parts giant Eaton Corp. is maintaining its plans to close an Ohio plant and ship components to a new factory in Mexico. (WSJ)

New self-driving car technology in California suggest Alphabet Inc.'s efforts remain ahead of rivals in the race toward autonomous vehicles. (WSJ)

Johnson Controls Inc.'s quarterly profit declined on costs related to its tie-up with Tyco International PLC. (WSJ)

United Continental Holdings Inc. is tapping Apple Inc. and International Business Machines Corp. to upgrade the mobile technology the airline uses in its operations. (WSJ)

Teen-apparel retailer Wet Seal LLC filed for chapter 11 bankruptcy protection. (WSJ)

Retailers and real estate companies are increasingly concerned about the lack of warehouse space around London. (Financial Times)

International air freight demand grew 7.5% in the fourth quarter, the strongest quarterly growth since 2010. (Air Cargo News)

New tanker deliveries reached a record level based on capacity in January, pressuring crude-oil transport rates. (Splash 24/7)

Trucking company YRC Worldwide is laying off about 100 managers at its national and regional operations. (Logistics Management)

U.S. trucking regulators delayed a new rule establishing national driver standards, citing a White House directive freezing regulations. (Commercial Carrier Journal)

C.R. England Inc. says it will appeal a judge's decision to certify a class-action lawsuit by former drivers against the trucker and two related leasing companies. (American Shipper)

Overstock.com is undertaking a "radical expansion" of the number of products it carries to boost its sales. (Internet Retailer)

Demand for bacon depleted frozen pork-belly supplies in the U.S. to a record low for December, but authorities said there is no threat of a bacon shortage. (Associated Press)

ABOUT US

Paul Page is deputy editor of WSJ Logistics Report. Follow him at @PaulPage, and follow the entire WSJ Logistics Report team: @brianjbaskin, @jensmithWSJ 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

February 03, 2017 07:27 ET (12:27 GMT)

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