TGT Target Corp

By Paul Page 

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The push by retailers toward delivery services is picking up speed. Target Corp's agreement to acquire grocery delivery startup Shipt Inc. takes consolidation in the retail-fulfillment arena to a new level, expanding the competition that so far has seen Amazon.com Inc. and Wal-Mart Stores Inc. pull together services aimed at getting goods to customers' homes faster and more efficiently. Shipt, like rival Instacart, uses thousands of contractors to buy products at retail stores and deliver them to consumers, the WSJ's Khadeeja Safdar writes, and pulls in products from local stores, including grocers like Kroger Co. and Costco Wholesale Corp. The $550 million deal will help Target quickly expand its delivery service, including offering same-day delivery from about half its Target stores by early 2018. Target has been struggling to scale up its e-commerce operations, and the deal may help the retailer build up that business by essentially using its stores as virtual distribution centers and Shipt's operation as the fulfillment arm.

Retailer Zara's trend-setting fast-fashion supply chain may be fraying at the edges. Profit margins at parent company Inditex SA are narrowing even as sales are still growing, the WSJ's Jeannette Neumann reports, a sign that the cost pressures of online sales and delivery are weighing on a company known for its logistics smarts. The company sources and produces the bulk of its garments close to home, and delivers to stores in as little as two weeks -- a rapid-fire turnaround that has transformed Zara's parent company into one of the world's most profitable retailers. Inditex is being whipsawed by several big international forces, including shifting currency values, but some analysts believe the cost of delivery for its growing online sales also is cutting into profits. The company is testing various cost-saving strategies, including a click-and-collect kiosk. But the stress on margins suggests that even Zara's pioneering supply-chain strategy won't fully insulate the company from the realities of digital commerce.

The world's most ambitious free-trade area is colliding with a surge in economic nationalism. From the nationalization of a shipyard in France to strict new rules for chocolates made in Italy, new barriers are going up in the supposedly borderless 28-country European Union, the WSJ's Valentina Pop writes. The actions are overturning a generation of moves toward trade liberalization -- and driving countries further away from a well-functioning common market. The new trade hurdles increase the cost of doing business, and already appear to be disrupting cross-border supply chains and discouraging multinational investments. The retreat is coming in slow steps through one administrative rule after another, and as big actions in the U.S. and the U.K. look to more fully reverse two decades of moves toward global trade liberalization. Many multinational companies that thrived selling standardized products across dozens of countries are now worried, saying they are now competing with voters, unions and other groups that complain their home countries ceded too much autonomy to Brussels.

COMMODITIES

There may be few companies more enthralled with the global push for electric vehicles than coal-trading giant Glencore PLC. The Swiss mining giant is already benefiting from a coming boom in electric-vehicle production, which is driving up the value of commodities critical to the vehicles, the WSJ's Scott Patterson reports, giving a company that built its profile on coal a big stake in technology meant to curb global warming. Tumbling coal prices in recent years have dinged Glencore's earnings, but the new commodities are becoming a primary earnings driver for the business. The company now is projecting strong surges in production of copper, cobalt and nickel, growth that will ripple across commodity supply chains and reset distribution channels to funnel the metals to factories that make batteries for the new generation of cars. The biggest question hanging over Glencore now may be whether there is enough cobalt supply in the pipeline to keep up with forecast demand.

QUOTABLE

IN OTHER NEWS

The U.S. Federal Reserve will raise short-term interest rates for the third time this year and remained on track for a similar path next year. (WSJ)

U.S. consumer prices rose 0.4% in November largely because of higher energy costs. (WSJ)

Ministers from 164 countries concluded negotiations at a World Trade Organization meeting without agreements on how to modernize global trade rules. (WSJ)

Toyota Motor Corp. expects half the auto maker's global sales will come from hybrid and electric vehicles by 2030. (WSJ)

Toshiba Corp. and Western Digital Corp. settled a dispute over Toshiba's sale of its memory-chip unit. (WSJ)

Sears Holdings Corp. extended the terms of a $400 million loan while announcing a new planned borrowing to cover pension contributions. (WSJ)

Mall-based retailer Charming Charlie LLC told a bankruptcy judge it believes it can survive its trip through chapter 11. (WSJ)

Toyota is considering making batteries for electric vehicles with Panasonic Corp. (Reuters)

Investigators blamed the El Faro disaster that killed 33 mariners on a "weak safety culture" at owners Tote Maritime and poor decisions by the cargo ship's captain. (ABC)

Maersk Line is withdrawing from container shipping's Transpacific Stabilization Agreement this month. (Shipping Watch)

The Los Angeles City Council will consider blocking trucking companies that use independent contractor drivers from working at the Port of Los Angeles. (Daily Breeze)

Thirty-five nations agreed that action on shipping-industry emissions should be aligned with objectives of the Paris climate change accord. (Ship & Bunker)

South Korean container line Hyundai Merchant Marine will start rail service to Europe through the Trans-China Railway. (Splash 24/7)

German technology-focused forwarder FreightHub took in $20 million in a Series A funding round. (TechCrunch)

An ongoing investigation on Islamic State weapons suggests some of the group's munitions supply chain traces back to the U.S. (Wired)

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 14, 2017 07:10 ET (12:10 GMT)

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