By Paul Page
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Amazon.com Inc. has ambitions in the medical-supply business go
far beyond just offering rapid delivery. The company is trying to
become a major player in the high-value, high-stakes business of
delivering health-care supplies to hospitals, a strategy aimed at
pushing providers to change the medical world's distributor-based
procurement system. The WSJ's Melanie Evans and Laura Stevens
report Amazon is advancing a "marketplace concept" that would
compete with the entrenched network of distributors and
manufacturers that deliver items from gauze to major surgical
products. The company has been meeting with hospital executives and
testing new buying systems at a large hospital system as it seeks
to expand its business-to-business marketplace into the specialized
arena. The effort thrusts Amazon into a medical-supply business in
upheaval, with ongoing consolidation blurring the lines between
players in the supply chains. Amazon aims to show it can lower
costs, but medical providers say they can't let lower prices come
at the cost of missed or late deliveries.
Big players in pharmaceutical supply chains aren't simply
waiting for Amazon to change their distribution models. Walgreens
Boots Alliance Inc. is moving to take over AmerisourceBergen Corp.,
the latest combination of a drug distributor with the
consumer-facing retail side of the business. The WSJ's Michael
Siconolfi, Dana Mattioli and Joseph Walker report the companies are
in the early stage of talks to combine, a complicated effort made
easier because Walgreens already owns about 26% of Amerisource, one
of the country's largest drug distributors. A deal would come as
drugstore owners are seeking to insulate their businesses from
external threats. In December, Walgreens rival CVS Health Corp.
agreed to buy health insurer Aetna Inc., a deal likely spurred by
Amazon's interest in entering the pharmacy business. Even without
that direct competition, the consumer shift to online shopping is
eating into the sales of basic staples at drug stores, adding to
the pressure to maintain margins in pharmacy business.
Private-equity firms aren't seeing much to like in
public-private partnerships. Many of the big firms that raised a
record sum for infrastructure investment last year don't expect the
plan to pump new funding into America's aging roads and bridges
will open the floodgates for privatization deals. The WSJ's Miriam
Gottfried and Cezary Podkul report the plan, which seeks to use
federal spending to lure private investment, has a paradox at its
heart: It creates incentives for investment that most
infrastructure funds aren't much interested in. Fund fund managers
say they are mainly looking for assets that are already privately
owned -- such as renewable energy, railroads, utilities and
pipelines -- and not the deteriorating government-owned
infrastructure that helped attract the capital in the first place.
Even Blackstone Group LP, which plans to raise as much as $40
billion for North American infrastructure, may only devote 10% to
public assets.
SUPPLY CHAIN STRATEGIES
Blue Apron Holdings Inc. has been cutting its logistics costs
but its been shedding customers at the same time. The meal-kit
company's customer ranks fell by 15% in the fourth quarter, the
WSJ's Heather Haddon reports, as the food home-delivery service
suffered from the big logistics problems that have eaten into
profits and the ability to market its business. Blue Apron has made
progress on fulfillment challenges at a Linden, N.J., warehouse the
company opened last year. The company says it now has the "nimble
infrastructure" needed to get its subscription meals delivered to
homes. But Blue Apron also looks to be losing market share, and
it's struggling to get its infrastructure in place as other
operators push into the market. Blue Apron canceled plans last
quarter to open a site in California, a blow for a business that
needs a stronger physical footprint to match its online
ambitions.
The supply chain for minerals critical to electric cars begins
in Congo but increasingly runs through China. Wholesalers in the
central African nation that is the world's biggest producer of
cobalt sell most of their products in makeshift markets to Chinese
buyers, launching a long journey in which bags of the mineral are
shipped to China and processed into lithium-ion batteries for
electronics. The WSJ's Scott Patterson and Russell Gold write the
process is part of a world-wide race to lock up the supply chain
for cobalt, and that China is far in the lead. Chinese imports of
cobalt from Congo totaled $1.2 billion in the first nine months of
2017, compared with just $3.2 million by India, the second-largest
importer. The concentration is raising questions about market
control and conditions at the mines, where significant production
comes from freelance diggers working under grueling circumstances
likely to gain more attention as the demand for cobalt grows.
QUOTABLE
IN OTHER NEWS
Small-business owners' confidence reached a near-record high in
January. (WSJ)
U.S. household debt rose for the 14th straight quarter in the
final three months of 2017. (WSJ)
The Japanese yen is at a five-month high against the dollar.
(WSJ)
Canada says U.S. inflexibility has left "fairly limited
progress" in talks to revise the North American Free Trade
Agreement. (WSJ)
Congressional leaders may split the Trump administration's
infrastructure plan into smaller pieces of legislation. (WSJ)
General Motors Co. is closing a South Korean factory and
pressuring union officials there for additional cost cuts to stem
losses. (WSJ)
A new report says U.S. shale companies are churning out crude
oil at a record pace that could overwhelm global demand. (WSJ)
Walmart Inc. is eliminating some management positions at its
4,700 U.S. stores, while investing in higher wages and e-commerce
efforts. (WSJ)
PepsiCo Inc. is accelerating cost-cutting efforts after
reporting flat quarterly sales. (WSJ)
Under Armour Inc. is expanding a restructuring plan aimed at
saving $75 million annually. (WSJ)
Barnes & Noble Inc. is laying off a significant number of
workers as a result of poor holiday-season sales. (WSJ)
Top executives at Royal Dutch Shell PLC are facing trial in
Italy on charges they bribed oil officials in Nigeria. (WSJ)
J.C. Penney will close a 2 million-square-foot distribution
center outside Milwaukee as it scales down its supply chain
network. (Milwaukee Journal-Sentinel)
U.S. apparel imports from Vietnam rose 7% while shipments from
China slipped 3.2%. (Sourcing Journal)
McKinsey & Co. says container lines have returned an average
of less than 2% on invested capital in the last two decades. (The
Loadstar)
South Korea's Hyundai Merchant Marine full-year loss more than
doubled to $1.1 billion. (Shipping Watch)
Danaos Corp. swung to a $22.8 million fourth-quarter profit as
the impact of Hanjin Shipping's collapse faded. (Associated
Press)
Taiwan's Yang Ming Marine Transport will order 20 ships in a
fleet renewal program. (Lloyd's List)
An explosion at India's Cochin shipyard killed five workers and
injured more than a dozen others. (Splash 247)
The Philadelphia International Airport bought a large land
parcel it plans to use for air-cargo facilities. (Philadelphia
Inquirer)
Trade technology provider Amber Road rejected a $300 million
buyout offer from supply-chain software company E2open. (American
Shipper)
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
February 14, 2018 04:19 ET (09:19 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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