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By Paul Page 

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The U.S. shale oil boom is fueling big export growth well beyond the energy industry. Chemical companies say the boom in drilling that has expanded output of oil and gas has also lowered the prices for the primary ingredients in plastic pellets, the WSJ's Christopher M. Matthews reports, putting a premium on the logistics needed to move the industrial materials through a U.S. Gulf Coast region largely focused on energy shipments. The pellets are used in manufacturing and turned into a range of goods, including plastic containers and toys. The growth has prompted staggering investment: Dow Chemical Co. is working on $8 billion in new and expanded U.S. petrochemical facilities, part of the industry's largest transformation in a generation. Chevron Phillips has met a shortage of shipping containers by creating a fleet of 2,750 railcars to get the pellets to ports in Long Beach, Calif., and Charleston, S.C., with strong demand in Asia and South America making up for the logistics costs.

There's a growing dark side to the parcel business bringing global trade to every American household. Authorities say synthetic narcotics are now streaming into the U.S. through international parcels delivered by the U.S. Postal Service and private carriers, helping fuel an opioid crisis that claims tens of thousands of U.S. lives each year. The WSJ's Arian Campo-Flores and Jon Kamp write the flow of drugs has gotten the attention of congressional lawmakers, who are proposing tougher rules and new resources to stem the flood. Seizures of fentanyl arriving by both international mail and express carriers have soared, but authorities say the enormous growth in the trade is far outpacing enforcement efforts. While Mexican drug cartels usually transport synthetic opioids like fentanyl in bulk by land across the southern U.S. border, many American dealers and users use the mail to receive smaller supplies, challenging efforts to find the drugs among the many millions of packages moving through distribution networks.

These are good times for Chinese logistics companies. Best Logistics Technologies Ltd., a business backed by Alibaba Group Holding Ltd. and Foxconn Technology Group, is planning an initial public offering in the U.S., the WSJ's Austen Hufford, hoping to draw from the rush of investment dollars that have flowed to companies supporting the country's rapidly growing e-commerce industry. China package delivery company ZTO Express Inc. raised $1.4 billion in its U.S. IPO last October, and shares in parcel carrier SF Express have soared since its listing last year in Shenzhen. Best Logistics has more of an industrial profile than those operators, with a lineup of warehouses it has used to build up distribution capability. The company was valued at more than $3 billion after raising $760 million from new investors last year. Its biggest asset may be its strategic partnership with Alibaba, which has fueled big revenue growth that may help cover over investor concerns over the company's persistent losses.

SUPPLY CHAIN STRATEGIES

Mescal, tequila's smokier cousin, is defying attempts to meet growing demand. The increasingly popular spirit has made the leap from the rugged mountains of Mexico to trendy U.S. bars, the WSJ's Robbie Whelan reports, but the world's biggest liquor companies are struggling to parlay its popularity into substantial profits. That's because mescal has become one of the rare products challenging attempts to speed up and build out supply chains. The things driving the spirit's rise -- including handcrafted production and the long growing time for the agave used in distillation -- also make it hard to produce on a large scale. France's Pernod Ricard SA, Bacardi Ltd., Jose Cuervo and Diageo PLC all have either acquired, launched or struck distribution deals with high-end mescal brands. They're looking to boost earnings hurt by declining world-wide alcohol consumption. Mescal exports are growing, but the contribution to profits so far remains a drop in the bucket.

Plenty of technology-focused startups are going after last-mile delivery, but New York-based Homer Logistics is taking an unusual path. The company is teaming its route-efficiency software with some 300 full-time couriers, and even provides them with benefits and stock options, the WSJ's Yuliya Chernova writes, a turn away from the "gig" economy model many companies use to enlist independent contractors. Homer Logistics has been capitalizing on the broader drive toward home delivery of consumer products that has retailers and food providers booting up local delivery efforts. The company has raised $14.5 million, and just closed its Series A funding round at $8.5 million. CEO Adam Price says he could scale the business up faster using contract workers, but the growth wouldn't be sustainable. And having employees also helps in implementing Homer's routing software, which Mr. Price considers a major advantage.

QUOTABLE

IN OTHER NEWS

U.S. durable goods orders fell 1.1% in May, the second straight monthly decline. (WSJ)

The captain of the NYK container ship that rammed the USS Fitzgerald says the destroyer failed to take evasive action or respond to warnings from the cargo vessel. (WSJ)

General Motors Co. lowered its projections for vehicle sales this year, the latest sign of a slowdown in the U.S. auto market. (WSJ)

BMW AG plans to create 1,000 American jobs through 2021 under a $600 million investment at its Spartanburg, S.C. factory. (WSJ)

Amtrak named former Delta Air Lines Inc. chief executive Richard Anderson as the new president and CEO of the national passenger railroad. (WSJ)

Building materials provider Martin Marietta Materials Inc. will buy Bluegrass Materials Co. for $1.63 billion, building up its geographic footprint and product range. (WSJ)

Google parent Alphabet Inc. will hire Avis Budget Group Inc. to store and service its self-driving cars, signaling its network of driverless taxis is getting closer to reality. (WSJ)

Delta Air Lines Inc. will expand its passenger network in Asia under a trans-Pacific joint venture with Korean Air Lines Co. (WSJ)

Brazil's agriculture minister says the country will take needed measures to reopen the U.S. market after the U.S. suspended imports of Brazilian beef. (WSJ)

A new report says the security of global food supplies is threatened by reliance on 14 increasingly vulnerable chokepoints, including U.S. rail and inland waterways networks. (The Guardian)

Amazon is likely to bring robotics to Whole Foods' warehouse operations as it makes the grocer's distribution more efficient. (Bloomberg)

Taiwanese container line Yang Ming Marine Transport Corp. is asking customers for more time to "achieve its recapitalization goal." (The Loadstar)

Amazon Japan aims to enlist 10,000 independent couriers in the Tokyo region by 2020 to continue offering same-day delivery without relying on the big parcel carriers. (Nikkei Asian Review)

U.K. grocer Tesco PLC started one-hour delivery in central London using third-party fulfillment company Quiqup. (Logistics Manager)

Industrial real estate firm CBRE expects growing e-commerce logistics demand to lead to more growth in secondary warehousing markets. (Logistics Management)

The BIMCO maritime group says contracts for new dry bulk and tanker shipping vessels are up sharply so far in 2017. (American Shipper)

Denmark's Port of Esbjerg plans a large expansion starting in 2022 to offer new competition to North Europe ports. (Port Technology)

Crown Enterprises Inc. demolished an old factory in Detroit to make way for a logistics hub for Fiat Chrysler vehicles. (Crain's Detroit)

The Corrugated Packaging Alliance says the industry reduced its greenhouse gas emissions 35% from 2006 to 2014. (Modern Materials Management)

French President Emmanual Macron named Florence Parly, who was chief of Air France-KLM Cargo from 2009 to 2013, as secretary of defense. (Lloyd's Loading List)

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. Follow the WSJ Logistics Report on Twitter at @WSJLogistics.

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

(END) Dow Jones Newswires

June 27, 2017 06:44 ET (10:44 GMT)

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