BG Bunge Global SA

By Paul Page 

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The world's big grain processing companies are having a hard time digesting the global glut in agriculture commodities. Grain trading and processing giants Archer Daniels Midland Co. and Bunge Ltd. are slashing hundreds of millions of dollars in spending and restructuring their operations, the WSJ's Jacob Bunge and Jesse Newman write, as they navigate a world awash in corn, soybeans and wheat. Several years of bumper crops in markets across the globe have kept grain prices low, upended traditional farm-sector dynamics and roiled supply chains. Farmers are storing grain rather than sell it to grain companies at low prices, and some food companies are placing fewer long-term orders since prices are expected to stay cheap. That's squeezing financial returns at trading companies like ADM, Bunge and Cargill Inc., and hitting agriculture suppliers. Fertilizer giant Mosaic Co. is idling a Florida plant as it grapples with an oversupply of crop nutrients, and farm cooperative CHS Inc. recently agreed to sell its Canadian retail locations.

Truckers are getting more confident than ever in the U.S. freight economy. Fleet owners ramped up orders for new heavy-duty trucks to the highest level in nearly three years, WSJ Logistics Reports Jennifer Smith writes, ordering 36,200 Class 8 trucks in a bullish start to the busiest part of the ordering season. ACT Research says the busiest month for big-rig orders since December 2014 likely signals even stronger orders in coming months. Truckers are glowing over robust demand and stronger prices for shipping services to go along with it. Truckload operator Werner Enterprises Inc. recently reported a 19% increase in third-quarter profit that was helped by a 3.4% gain in average revenue per mile -- the sort of increase many truckers now are trying to build into higher contract rates. The orders also provide a long-awaited boost to truck and engine makers that will pump up factory operations that were pulling back just a few months ago.

Growing use of consumer data is helping drive bigger gains in online sales at Alibaba Group Holding Ltd. The Chinese e-commerce giant more than doubled its net profit to $2.7 billion in a blockbuster second quarter, the WSJ's Liza Lin at and Maria Armental report, on a 61% gain in overall revenue and 63% more revenue from core online commerce. The gains suggest the integration of retail technologies is bringing more information that helps Alibaba tailor its buyer home pages to spur sales. The rising sales volume should be a boon to its logistics operation as Alibaba works with that business, Cainiao, after increasing its stake to a majority holding this fall. The Cainiao losses rose last quarter to $41 million, a slim amount given Alibaba's $8.3 billion in overall revenue. Like U.S. competitor Amazon.com Inc., the company also is investing in physical stores, and those are likely to figure more prominently in its development of logistics and data in the coming year.

ECONOMY & TRADE

Tensions over ongoing trade between the U.S. and Canada are growing just as the countries are trying to reset the map for the movement of goods across North America. The U.S. is launching big tariffs on imports of softwood lumber from Canada, the WSJ's William Mauldin and Paul Vieira report, bringing back to the forefront one of several targeted disputes buffeting relations between the countries while they renegotiate Nafta. The lumber dispute, a similar tariff fight over Bombardier Inc. jets made in Canada, and a disagreement over milk products have dominated business headlines in Canada this year, raising concerns that the trade friction could spill over into broader bilateral ties. The lumber tariffs, if they are permanently imposed, will a duty of around 20% or more on shipments from Canada, depending on the Canadian mill. That's lower than expected, however, and futures prices for lumber fell after the announcement from a more than two-decade high.

Blue Apron Holdings Inc. is having trouble fulfilling customer orders and investor expectations. The meal-kit delivery company more than doubled its net loss in the third quarter to $87.2 million, the WSJ's Heather Haddon reports, amid signs that the fulfillment operations at the heart of its business are growing costlier and slower. The company that made a splash with its initial public offering this summer is facing growing competition in the burgeoning food-delivery field, including service expansion at grocery stores that have bigger scale and are closer to consumers. Blue Apron is trying to offer more products and flexibility to its subscription service, but a shift to a new facility drove its costs up by 86% last quarter even as the company's number of customers shrank. The company and competitors like HelloFresh and Plated have drawn consumer interest to a new business, but the results suggest they're still working on a profitable logistics recipe.

QUOTABLE

IN OTHER NEWS

The Bank of England raised its benchmark interest rate for the first time in a decade. (WSJ)

U.S. worker productivity improved in the third quarter at the best rate in three years. (WSJ)

Rising iPhone demand and double-digit growth in iPad and Mac shipments pushed Apple Inc.'s quarterly net profit up 19% to $10.71 billion. (WSJ)

Online-furniture retailer Wayfair Inc. reported a steeper-than-expected $76.4 million quarterly loss on rising marketing and operations costs. (WSJ)

Bombardier Inc.'s third-quarter net loss expanded as it prepared for its new partnership with Airbus SE. (WSJ)

Etihad Airways pared its U.S. services after American Airlines Group Inc. ended a passenger cooperation agreement with the airline. (WSJ)

Tesla Inc. Chief Executive Elon Musk says its car production will start in China in 2019 at the earliest. (WSJ)

Driverless-car business Waymo LLC signed AutoNation Inc. to service robovans being tested in Arizona and California. (WSJ)

Starbucks Corp. is selling its Tazo tea business to Unilever PLC. (WSJ)

Personal-computer maker Lenovo Group Ltd. agreed to buy a controlling stake in a unit of Japan's Fujitsu Ltd. (WSJ)

DowDuPont Inc. will reduce its global workforce and shut assets to help reach a $3 billion cost-savings goal. (WSJ)

Commissioners at the ports of Los Angeles and Long Beach approved a plan to slash air pollution by phasing out diesel trucks. (Los Angeles Times)

U.S. midwest grocer Hy-Vee Inc. is resetting its supply chain expansion to focus on fulfillment operations for online shopping. (Des Moines Register)

CSX Corp. dropped plans to expand a tunnel to improve cargo transport connected to the Port of Baltimore. (Baltimore Sun)

Amazon is in advanced talks to cooperate on deliveries with Australia Post. (Daily Mail)

India is considering rules that would allow deliveries by drone. (Economic Times)

France's Marseille port will build a 750,000-square-foot logistics center near its container terminals. (Lloyd's Loading List)

Container ship owner Danaos Corp. does not expect "material improvement" in the charter shipping market next year. (The Loadstar)

The vessel-owning arm of Japanese shipyard Imabari Shipbuilding will double the size of its container ship fleet. (Splash 24/7)

Agriculture suppliers began the first avocado exports from Colombia to the U.S. (Fresh Plaza)

DistributionNow's third-quarter sales jumped 34% on stronger demand in energy markets. (Industrial Distribution)

Nevada is investigating allegations that a transportation employee who tests workers for substance abuse was selling moonshine on the job. (Las Vegas Review-Journal)

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

November 03, 2017 06:40 ET (10:40 GMT)

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