By Paul Page 

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The shipping-industry downturn is still washing over shipbuilders. South Korea's Samsung Heavy Industries Co. is replacing its chief executive after warning of heavy losses last week that have wiped off nearly a third of its market value. The WSJ's Costas Paris reports the world's third biggest shipyard by capacity has seen its order book slump to roughly $20 billion this year, half of what it was four years ago, leaving the business looking to issue new shares to raise capital. The company's problems are part of the broader woes that have hit South Korea's big shipbuilding industry as a down cycle in shipping and vessel overcapacity sent orders plunging, leading to a painful restructuring at shipyards. Samsung Heavy under Park Dae-young's leadership has relied on offshore business for most of its sales. That trade has been hit hard by changing energy markets, however, and Mr. Park is taking the blame for decisions that have left Samsung Heavy behind its big local competition.

A new distribution center meant to smooth out Mattel Inc.'s deliveries is instead contributing to the toy maker's problems. The company issued a highly unusual and ominous warning on sales for the critical holiday season, the WSJ's Paul Ziobro writes, and said weak demand along with its own logistics stumbles in a changing market were to blame. The warning cast a grim shadow over Mattel during a period when most toy companies are racing to keep up with holiday demand, and as other retailers are signaling strong gains in a resurgent consumer-driven economy. But shifts by consumers toward online sales and digital devices are battering the maker of big brands including Barbie, Fisher-Price and Hot Wheels, and undercutting its usual market channels. Mattel has sought to solve that partly by opening a Pennsylvania distribution center to serve the dense eastern U.S. The site has struggled to ramp up, howver, adding pressure to other facilities just when it was supposed to provide a solution.

Work may finally start this week toward solving the biggest economic question posed by Brexit since Britain voted to leave the European Union. Now that they've set the framework for a breakup, the EU and the U.K. may set talks on the trade questions that are crucial to exporters in the region, the WSJ's Emre Peker, Jason Douglas and Stephen Fidler write. If EU leaders agree at a summit this week, they will work on a temporary transitional arrangement that will immediately follow Brexit in March 2019 and the outlines of a future trade deal. The outcome could set new restrictions as well as new rules for customs and other trading regulations that may complicate the flow of goods. U.K. Prime Minister Theresa May has said the U.K. will leave the EU's common zone of regulation and its customs union, which sets uniform external tariffs. That could create a raft of new border bureaucracy, creating delays at ports and disrupting international supply chains.

COMMODITIES

Electric vehicles may make up only a small share of traffic on roads but they're having an overriding impact on commodities markets. Investors eager to get in early have doubled the price of lithium and cobalt in the past two years, the WSJ's Amrith Ramkumar and Ira Iosebashvili write, the result of a boom in electric vehicles that is stoking demand for metals that are used in batteries and other components. For some investors, it's a bet that the push to replace gasoline-powered vehicles will trigger the biggest shift in commodities demand since petroleum took over more than a century ago. The push may hit the dry-bulk shipping sector, opening new markets and potentially raising prices for transporting higher-value metals. Still, investing in assets in those markets comes with a warning. Forecasts on the use of electric vehicles are highly uncertain, and higher prices for the commodities typically spur increased production, boosting supply and lowering prices.

QUOTABLE

IN OTHER NEWS

Corning Inc. will buy almost all of 3M Co.'s optical fiber and copper cable business for $900 million. (WSJ)

Steinhoff International Holdings NV appointed additional outside advisers as the retail giant battles a burgeoning financial crisis. (WSJ)

Japan and the European Union agreed to a new free trade accord. (Deutsche Welle)

Large Japanese manufacturers turned more optimistic about economic conditions in the December quarter. (Reuters)

Orders in the U.S. for manufacturing technology equipment rose 6.3% from September to October. (Industrial Distribution)

California is studying how to replace its gas tax with a miles-driven fee. (Sacramento Bee)

Maersk Line is starting to see "some pockets of downward pressure" in container freight rates. (Bloomberg)

Shanghai International Port Group started trials of its highly-automated container handling as it opened the newest phase of the Yangshan Port. (South China Morning Post)

Abu Dhabi Ports will expand its Khalifa Port to handle the world's largest bulk ships. (Port Technology)

Exports out of the Port of Virginia tumbled 7% in November. (Virginian-Pilot)

Spot rates for liquefied natural gas carriers are soaring on persistent strong demand. (Lloyd's List)

U.S. Customs and Border Protection will test electronic payment of shipping fees at four U.S. ports. (American Shipper)

Canadian National Railway Ltd. says it is trying to reverse a decline in grain transport service. (The Producer)

San Francisco is putting tough new regulatory limits on the testing of delivery robots on city streets. (TechCrunch)

Vinyl record sales are at a 25-year high, causing a severe backlog at vinyl factories. (The Guardian)

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

December 12, 2017 07:06 ET (12:06 GMT)

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