Today's Top Supply Chain and Logistics News From WSJ
February 03 2017 - 7:42AM
Dow Jones News
By Paul Page
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Amazon.com Inc.'s profits are growing faster than even the
company's fast-growing logistics business. The e-commerce behemoth
posted a $749 million net profit in the fourth quarter, 55% ahead
of last year's December quarter, the WSJ's Laura Stevens reports,
as net sales expanded 22% to $43.7 billion during the key holiday
quarter. The big gains come as Amazon is laying the groundwork to
add even more of its own delivery capacity, with ambitions of one
day hauling packages for itself as well as other retailers and
consumers. The company says its Fulfillment by Amazon operation
delivered more than two billion units for sellers in 2016, and
active sellers using that business grew more than 70%. Traditional
freight companies warn the business has tight margins, and Amazon's
results show shipping costs still are growing well ahead of
shipping revenue. But the company is also reporting strong cash
flow, and with plans for more distribution centers and an air cargo
hub in the future, Amazon clearly wants to put its cash to
work.
The battle in Washington over trade is turning into the
exporters vs. the importers. U.S. exporters are starting to put
political weight behind "border adjustment," a House Republican tax
plan that would tax imports while exempting exports, the WSJ's
Richard Rubin reports. Companies including Dow Chemical Co. and
Lockheed Martin Co. are touting the idea on their earnings calls,
and a group of companies formed the American Made Coalition to push
the plan. The moves escalate a corporate tug of war against
businesses including retailers, toy makers and oil refiners who are
fighting the border-adjustment proposal, which is at the core of a
policy dispute in Washington as Republicans try to make the biggest
tax-code changes since 1986. Importers say it would drive their
costs, and consumer prices way up. There are traps for exporters as
well, including the risk that the plan would trigger a stronger
dollar that hurts overseas sales.
Only Hanjin Shipping Co.'s creditors can keep the business alive
now. A bankruptcy court in Seoul will decide on Feb. 17 whether to
liquidate a company that less than a year ago was the
seventh-largest container shipping operator in the world, the WSJ's
In-Soo Nam reports. The new deadline, some six months after Hanjin
filed for receivership in South Korea, puts new pressure on
creditors in the U.S. that are still looking for millions of
dollars they say Hanjin still owes them. The creditors in the U.S.
are trying to draw in the larger Hanjin Group, which counts Hanjin
Shipping under its corporate umbrella in the country's "chaebol"
structure of conglomerates. But dissolving the business in Seoul
likely will leave Hanjin's U.S. creditors and their legal claims at
sea.
SUPPLY CHAIN STRATEGIES
Amid sharp debates over jobs and the economy in the U.S., one
clear trend is that American companies have never before tried so
hard to employ so few people. The outsourcing wave that long ago
moved apparel-making jobs to China has taken hold within the U.S.
in a big way, the WSJ's Lauren Weber reports, and logistics
operations are at the heart of the shift. Sites like Wal-Mart
Stores Inc. warehouses managed by Schneider Logistics and a site
where United Parcel Service Inc. workers handle Pratt & Whitney
jet engine components are prominent features of the
contract-workforce landscape. In some cases, such as in Schneider
operation, the third-party logistics operator even contracts out
the hiring to staffing agencies. But the push to contract work also
means companies cede control of big parts of their operations,
which means that measures meant to cut costs may carry an unseen
price.
QUOTABLE
IN OTHER NEWS
Growing doubts about the potential for new infrastructure
spending and a tax overhaul sent the dollar to its lowest level in
more than two months. (WSJ)
President Donald Trump will have Wilbur Ross, his choice for
Commerce Secretary, lead talks to change the North American Free
Trade Agreement. (WSJ)
Mazda Motor Corp. has no immediate plans to build factories in
the U.S. despite threats of taxes on imports. (WSJ)
Auto-parts giant Eaton Corp. is maintaining its plans to close
an Ohio plant and ship components to a new factory in Mexico.
(WSJ)
New self-driving car technology in California suggest Alphabet
Inc.'s efforts remain ahead of rivals in the race toward autonomous
vehicles. (WSJ)
Johnson Controls Inc.'s quarterly profit declined on costs
related to its tie-up with Tyco International PLC. (WSJ)
United Continental Holdings Inc. is tapping Apple Inc. and
International Business Machines Corp. to upgrade the mobile
technology the airline uses in its operations. (WSJ)
Teen-apparel retailer Wet Seal LLC filed for chapter 11
bankruptcy protection. (WSJ)
Retailers and real estate companies are increasingly concerned
about the lack of warehouse space around London. (Financial
Times)
International air freight demand grew 7.5% in the fourth
quarter, the strongest quarterly growth since 2010. (Air Cargo
News)
New tanker deliveries reached a record level based on capacity
in January, pressuring crude-oil transport rates. (Splash 24/7)
Trucking company YRC Worldwide is laying off about 100 managers
at its national and regional operations. (Logistics Management)
U.S. trucking regulators delayed a new rule establishing
national driver standards, citing a White House directive freezing
regulations. (Commercial Carrier Journal)
C.R. England Inc. says it will appeal a judge's decision to
certify a class-action lawsuit by former drivers against the
trucker and two related leasing companies. (American Shipper)
Overstock.com is undertaking a "radical expansion" of the number
of products it carries to boost its sales. (Internet Retailer)
Demand for bacon depleted frozen pork-belly supplies in the U.S.
to a record low for December, but authorities said there is no
threat of a bacon shortage. (Associated Press)
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 and follow the WSJ
Logistics Report on Twitter at @WSJLogistics.
Subscribe to this email newsletter by clicking here:
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Write to Paul Page at paul.page@wsj.com
(END) Dow Jones Newswires
February 03, 2017 07:27 ET (12:27 GMT)
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