BABA Alibaba Group Holding Limited

By Paul Page 

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Do e-commerce companies have the tools to save beleaguered traditional retailers? Alibaba Group Holding Ltd. is forming a strategic partnership with brick-and-mortar retailer Bailian Group, the WSJ's Liza Lin reports, the latest step by the Chinese online sales giant into the physical retail business. Alibaba is trying to find new ways to reach more customers and embed operations like its online payment system in the consumer world. The agreement also gives Alibaba new channel for managing goods, including coordinating inventory and distribution between online stocks and the goods needed for stores. Alibaba says it will "leverage the power of big data" to manage Bailian's supply chain most efficiently. That balance between online and store inventory has been a challenge for retailers, and competitors will watch to see whether Alibaba can solve that difficult equation.

After digging into a deep financial hole in recent years, some of the world's biggest mining companies are climbing out with copper. The industrial metal has surged more than 30% in the past year, the WSJ's Scott Patterson reports, with demand outpacing production while giving mining giants including Rio Tinto PLC, Anglo American PLC, BHP Billiton Ltd. and Glencore PLC relief after the recent commodities downturn sent them to the edge of financial disaster. The metal's resurgence partly has been driven by a government stimulus program in China, where over 40% of the world's copper is consumed. But the turnaround is also driven partly by restrained production, which explains why businesses like bulk shipping companies aren't reaping the benefits. Demand for copper is expected to outpace production in 2017 for the first time in six years, and it could remain in deficit for the next three or four years.

Kraft Heinz Co. and Unilever PLC will return to seeking savings in their supply chains now that Kraft Heinz's $143 billion bid to buy the rival packaged-food giant has fallen apart. The deal could have generated upward of $5 billion in savings, reports the WSJ's Annie Gasparro, and Kraft Heinz's decision to withdraw will revive cost-savings plans that so far haven't matched the changes in the food market that are pressuring both businesses. Kraft Heinz has scaled back spending under private-equity investment firm 3G Capital, including closing factories and consolidating sourcing for better prices. Unilever is also paring back, looking for $1 billion in savings over the next year, in part by acting more nimbly with packaging and other supply decisions in local markets. Getting bigger would help cut costs still further, but it won't respond to the fundamental changes in the consumer packaged-goods market that are hitting the industry's faltering giants.

SUPPLY CHAIN STRATEGIES

While some packaged-food giants are responding to nimbler competitors by getting bigger, others are trying to bring the upstarts into the fold. Some food giants are starting venture-capital funds to invest in startups focused on healthier and less-processed foods, the WSJ's Annie Gasparro reports, betting the younger companies can teach them to be more entrepreneurial and innovative. CircleUp, which connects private-equity firms and food startups, says large consumer-goods companies lost $18 billion in market share to smaller competitors between 2011 and 2015. The investments in general have kept operations mostly separate, rejecting the conventional approach of seeking savings by consolidating manufacturing and supply chains. Startups say the deals have brought help in particular areas such as packaging, but for now Big Food seems more interested in learning from the newcomers than in using them to build scale.

QUOTABLE

IN OTHER NEWS

The Trump administration is considering changing how it calculates trade deficits, a shift that would make the country's trade gap appear larger. (WSJ)

U.K. manufacturing orders rose to a two-year high. (MarketWatch)

The IHS Markit measure of eurozone manufacturing and service purchasing rose to its highest level since April 2011. (WSJ)

Deere & Co. says demand for its farm machinery is improving amid signs that depressed commodity prices are recovering. (WSJ)

German chip maker Infineon Technologies AG dropped its $850 million bid to buy a unit of Cree Inc. after failing to resolve national security concerns. (WSJ)

Air Canada lost $136 million in the fourth quarter as rising fuel and employee costs offset growing revenue. (WSJ)

Executives at big energy producers are considering scaling back oil-extraction plans amid forecasts that demand will slow in the coming decades. (WSJ)

General Mills Inc. cut its already-downbeat sales and earnings forecast on weakening sales in the U.S. (WSJ)

Campbell Soup Co. reported weak sales in its most recent quarter, with its fresh-food business reporting the steepest drop. (WSJ)

Amazon.com Inc. quietly lowered its threshold for free shipping to $35 in purchases. (USA Today)

Amazon says it will add 15,000 jobs in Europe this year, a third of them in the U.K. (euronews)

European Union member states cleared an 18-month extension of import tariffs on solar panels from China. (South China Morning Post)

Some international textiles buyers are switching from China back to Western suppliers because of China's rising costs. (Reuters)

Australia is having one of its busiest grain exporting seasons ever, with 3.5 million metric tons of shipping capacity booked this month. (Farm Weekly)

Toyota Motor Co. may raise wholesale steel prices it charges its component makers to make up for rising raw materials costs. (Nikkei Asian Review)

FedEx Corp. Chairman Fred Smith is pressing Congress to allow twin 33-foot truck trailers on highways over opposition from truckload carriers. (Supply Chain 247)

The Cass Freight Index of U.S. domestic shipments rose 3.2% year-over-year in January, as freight expenditures rose for the first time in 22 months. (Logistics Management)

Maersk Line brought one of its largest container ships to Vietnam's Cai Mep Thi-Vai seaport to test the port's ability to handle bigger vessels. (Viet Nam Net)

Fresh Del Monte Produce Inc. will expand import capacity by adding container ships at Florida's Port Manatee. (Bradenton Herald)

Gartner Inc. says more than 3 million drones will be produced this year, 39% more than in 2016. (Material Handling & Logistics)

Footwear manufacturer Timberland is launching a line of shoes made of trash discarded in Haiti. (Greenbiz)

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.

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

(END) Dow Jones Newswires

February 21, 2017 06:45 ET (11:45 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.