Today's Logistics Report: Mega-Ship Shopping; Apple's Core Conflicts; Oiling the Waters
June 21 2019 - 11:04AM
Dow Jones News
By Jennifer Smith
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Container lines are shopping for mega-ships again despite a
gloomy outlook for global shipping. Evergreen Marine Corp. of
Taiwan and Germany's Hapag-Lloyd AG are asking Asian shipyards to
build up to 15 supersize vessels worth about $2.2 billion combined,
WSJ Logistics Report's Costas Paris writes, in separate requests
that could widen the gulf between capacity and demand on critical
Asia-to-Europe trade lanes. The proposals from two members of
competing shipping alliances mark an end to a months-long lull in
orders even as demand for trans-Pacific shipments of retail and
manufacturing goods is waning amid trade tensions and the slowing
global economy. Operators say many older ships must be scrapped to
meet 2020 limits on sulfur-emissions, and Taiwan's Yang Ming Marine
Transport Corp. and China's Cosco Shipping Holdings Co. are also
looking for new vessels.
Apple Inc. is wrestling with sharply conflicting interests in
its supply chain. The company is asking suppliers to study shifting
final assembly of some products out of China, the WSJ's Yoko Kobuta
and Tripp Mickle report, as it seeks to balance cost-saving efforts
amid global trade tensions with its drive for a bigger share of
China's vast and growing market for consumer electronics. Any move
could take months to years to put into motion, and wouldn't affect
the iPhone in the near term. But Apple's requests to suppliers
underscore how companies are struggling to reconcile manufacturing
choices focused on cost and logistics with their attempts to sell
in particular markets. Apple faces big exposure in China in both
areas. The country accounts for about a fifth of its total sales
and some three million jobs there are tied to Apple's supply
chain.
SUPPLY CHAIN STRATEGIES
Murky maritime shipping practices are snarling energy supply
chains as the U.S. tightens sanctions on Tehran. Italian oil giant
Eni SpA has rejected a cargo of suspected Iranian crude bound for a
Silician refinery after its specifications didn't match those of
its contract for Iraqi oil, highlighting the challenges energy
companies face in determining the origin of shipments that pass
through multiple hands on the high seas. The WSJ's Sarah McFarlane
and Benoit Faucon report the cargo bought from Nigeria's Oando PLC
appears to have taken a circuitous route that included two
ship-to-ship transfers, one from a vessel that turned its radio
location signal off. U.S. officials say such tactics are red flags
for potential sanctions-evasion behavior. Oando says the cargo
passed muster on loading but that it has now rejected the crude and
sent it back to the supplier, which the company declined to
name.
Apple is showing support for a key supplier as both businesses
cope with slowing demand for smartphones. The electronics giant has
signaled it would consider requests for financial breaks for
struggling Japan Display Inc., the WSJ's Takashi Mochizuki and
Kosaku Narioka report, another sign of the growing stresses in
technology supply chains. Japan Display makes display panels for
the iPhone XR and is running out of cash because of
weaker-than-expected sales of the handset. Negotiations over a
Japan Display rescue have repeatedly stumbled because of
prospective investors' concern over the company's business outlook.
The company gets half its revenue from Apple and got hefty
financing help from the company to expand production, leaving it
with payments due to its American customer. Apple has been involved
in several run-ins with suppliers over the impact of strategy
changes, but could provide key help for foundering Japan
Display.
QUOTABLE
IN OTHER NEWS
U.S. initial jobless claims fell by 6,000 last week. (WSJ)
The Philadelphia Fed's manufacturing index slowed to its lowest
reading since February. (WSJ)
Factory output is faltering in many economies, darkening the
outlook for the global economy. (WSJ)
Canada's annual inflation rate climbed 2.4% in May. (WSJ)
Oil prices climbed sharply as pressures mounted in the Middle
East. (WSJ)
Walmart Inc. will pay $282 million to settle claims over corrupt
payments abroad. (WSJ)
Kroger Co.'s quarterly digital sales rose 42% while overall
revenue fell 1%. (WSJ)
Brexit uncertainty contributed to a 20% drop in quarterly profit
for cruise operator Carnival Corp. (WSJ)
Locusts from Iran are threatening Pakistan's cotton crop.
(Bloomberg)
Maersk Line will test the use of cooking oil as an alternative
biofuel in a project with shipping customer H&M. (Port
Technology)
U.S. port operators want the Trump administration to remove
cargo cranes from the latest round of tariffs on Chinese imports.
(Hellenic Shipping News)
The first common digital standards for container shipping are
expected to be proposed this year. (The Loadstar)
The average U.S. warehouse vacancy rate fell to 4.4% in the
first quarter. (Journal of Commerce)
The U.S. Army Corps of Engineers approved a project to deepen
the Brownsville, Texas, ship channel. (Brownsville Herald)
Qatar Airways ordered five Boeing Co. 777 freighters valued at
$1.8 billion. (Air Cargo News)
New Balance Athletics Inc. is opening a $33 million factory in
Massachusetts to test advanced manufacturing technology. (Boston
Globe)
Italy's Prada is now selling on Chinese e-commerce platforms.
(Glossy)
The Port Authority of New York and New Jersey completed the last
piece of an intermodal rail network aimed at inland hubs.
(Progressive Railroading)
Some supermarkets in Vietnam and Thailand are using banana
leaves as an alternative to plastic packaging. (Food Logistics)
ABOUT US
Paul Page is editor of WSJ Logistics Report. Follow him at , and
follow the entire WSJ Logistics Report team: @PaulPage ,
@jensmithWSJ and @CostasParis. Follow the WSJ Logistics Report on
Twitter at @WSJLogistics.
Write to Jennifer Smith at jennifer.smith@wsj.com
(END) Dow Jones Newswires
June 21, 2019 10:49 ET (14:49 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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