Today's Logistics Report: Raising Railroad Efficiency; Bulking Up Rates; Amazon's Merchant Deal
July 19 2019 - 10:47AM
Dow Jones News
By Paul Page
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Freight railroads are demonstrating that falling shipping
volumes don't always mean slimmer profits. Union Pacific Corp.
reported a 4% gain in profit to $1.57 billion in the second quarter
and improved its operating ratio, even though the slack demand that
is rolling across the rail industry helped cut shipping volumes by
4%. The WSJ's Paul Ziobro reports that UP slashed its expenses by
7% in the quarter, in part through operating efficiency efforts
that have been sweeping across rail networks. Railroads need the
productivity drive: Carload volumes are off 3.1% this year, and the
decline has been accelerating across most business lines. But the
railroads are displaying financial and operating discipline.
Canadian Pacific Railway Ltd.'s profits jumped 33% on a 13% gain in
revenue, and even a downbeat report from CSX Corp. included a
strong improvement in the carrier's operating ratio.
Bulk shipping companies are enjoying a resurgence in freight
rates while they can. Prices for seaborne bulk industrial shipping
are soaring, with the Baltic Dry Index that measures rates reaching
its highest level in more than five years. The WSJ Logistics
Report's Costas Paris writes some ship brokers are reporting daily
charter rates for the dry-bulk world's biggest capesize vessels
have grown three-fold this year. Still, carriers say the increases
don't signal a rebound in global industrial demand over the long
haul. Instead, the gains are driven by Brazilian mining giant Vale
SA's resumption of iron ore exports from the country after a series
of fatal mining accidents closed down output for several months.
Capacity also remains tight, but that will change this fall as
vessels being retrofitted to meet new emissions rules return to
service.
E-COMMERCE
Amazon.com Inc. has a special deal for independent merchants on
its platform, but it comes with a catch. The e-commerce giant is
offering hefty marketing support for the sellers, the WSJ's Jon
Emont writes, as long as they give Amazon the right to buy the
entire brand at any time for a fixed price, often $10,000. The
program is part of a push by Amazon to obtain a stable of exclusive
brands for its marketplace, and some critics say it demonstrates
the power the big digital commerce platform has over merchants and
the tough choice that sellers face in working with the retail
behemoth. The brand-acquisition program is called Amazon
Accelerator, and the company says it creates opportunities for
sellers to gain traction on Amazon's site while offering consumers
a wider selection of products. Some sellers have a different view,
with one calling it "a pseudo-partnership that's completely
one-sided."
QUOTABLE
IN OTHER NEWS
Manufacturing activity leapt in the mid-Atlantic region in July,
rebounding from June's four-month record low. (WSJ)
Nickel prices have increased 39% this year to a 12-month high.
(WSJ)
Iran seized a small tanker it said was carrying smuggled fuel in
the Persian Gulf. (WSJ)
Boeing Co. said it will book a nearly $5 billion charge related
to compensating customers for the prolonged grounding of its 737
MAX jet. (WSJ)
PPG Industries Inc. says weak demand from industrial clients is
hurting sales. (WSJ)
Steelmaker NLMK Pennsylvania is laying off workers at its Mercer
County, Pa., and reducing output as it copes with rising costs from
tariffs. (Pittsburgh Post-Gazette)
United Parcel Service Inc. drivers say the lack of air
conditioning in vans and warehouses leaves them at risk of serious
illness. (NBC)
Amazon says it sold more than 175 million items during its Prime
Day sale. (Sourcing Journal)
Online fashion retailer Asos pulled back its sales outlook after
a botched rollout of new warehouses. (Financial Times)
Residents in suburban Washington, D.C., question an apparent
Amazon plan to put a massive warehouse in their mostly
white-collar, African-American neighborhood. (Washington Post)
J.C. Penney Co. Inc. has hired advisers to explore debt
restructuring options that would buy time for the retailer to forge
a turnaround. (Reuters)
North Dakota and Montana authorities want the Trump
administration to overrule a Washington state law mandating safety
restrictions for crude oil rail shipments. (Associated Press)
Japan's Nippon Express will start road tests of autonomous
trucks next month with a unit of Volvo AB. (Nikkei Asian
Review)
U.S. regulators say they will permanently ban from trucking any
drivers convicted of human trafficking. (Heavy Duty Trucking)
Port terminal operator DP World is laying off 200 workers in
Australia amid stalled union negotiations. (Sydney Morning
Herald)
A London-based shipbroker says it arranged the first freight
derivatives trade for liquefied natural gas. (Lloyd's List)
Officials in the landlocked Himalayan nation of Bhutan began an
ocean shipping service. (Times of India)
ABOUT US
Paul Page is editor of WSJ Logistics Report. Follow the entire
WSJ Logistics Report team: @PaulPage , @jensmithWSJ and
@CostasParis. Follow the WSJ Logistics Report on Twitter at
@WSJLogistics.
Write to Paul Page at paul.page@wsj.com
(END) Dow Jones Newswires
July 19, 2019 10:32 ET (14:32 GMT)
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