ODFL Old Dominion Freight Line Inc

By Paul Page 

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The U.S. factory sector is barely growing and it's offering little hope for stronger expansion in the future. The Institute for Supply Management's latest index of manufacturing activity fell a full percentage point to 50.8 in April, the WSJ's Ben Leubsdorf reports, staying just above the 50 reading that divides expansion from contraction. Perhaps more significant for shipping business, the New Orders index fell back 2.5 percentage points, still above the threshold growth but suggesting that companies are looking more critically at bulking up business amid uncertain demand. That fits with comments from several freight operators that reported in the wake of their first-quarter earnings statements that shipping demand eased back in early April. Trucker Saia Inc. said its early-April shipment count was off 4.3% from a year ago, adjusting for Good Friday, signaling a "pretty soft" industrial economy. Old Dominion Freight Line Inc. says its second quarter started surprisingly "flattish." Based on the ISM reading, factories aren't promising much more than that.

Pricing power in the world-wide commodities business is shifting toward an obscure market exchange in China that is exerting growing influence on core industrial materials and the companies that move them. Chinese investors have been pouring billions of dollars into iron-ore futures traded on the Dalian Commodity Exchange in northeastern China, the WSJ's Rhiannon Hoyle reports, fueling surging prices even as forecasters project an iron-ore glut this year. The price-climb is reaching the hard-hit dry bulk shipping market, where the Baltic Dry Index has climbed 413 points since reaching a historic low of 290 in February. Iron-ore futures on the Dalian exchange have climbed 46% since the start of the year and prices for physical iron ore have risen 52%, sparking concerns that the volatile market is pushing miners to keep production high and creating a bubble. The supply is good news for bulk carriers now, and they can only hope that enough demand develops to keep the business going.

Oculus, the virtual-reality company, is trying to solve a manufacturing problem by effectively dividing its supply chain in two. Facing a parts shortage that will produce significant delays in production of its high-end Rift headsets, the company is arranging with Best Buy Co. to create demonstration areas in stores for people to try the devices, the WSJ's Nathan Olivarez-Giles reports. It's a bid for a workaround around a production slip-up that threatens to undermine the company's marketing buzz. Some of the Rifts will ship, and they'll be available for purchase at Best Buy and online in "extremely limited" supplies while the company catches up to the orders it has already taken. The company is hoping that in the end, its fans are so taken with the technology that they forget that the production and shipping takes place in the real world.

TRANSPORTATION

CSX Corp. is warning customers of shipment delays as it clears up a derailment that spilled hazardous chemicals in busy neighborhood in Washington, D.C. Crews were preparing to excavate soil where one of the tank cars leaked about 750 gallons of sodium hydroxide, the WSJ's Scott Calvert and Anna Louie Sussman report . The derailment near a subway station, and about three miles from the U.S. Capitol, highlighted how the freight trains, including tank cars and those carrying potentially hazardous chemicals, travel through population centers in the Northeast. There were no injuries or evacuations in the derailment, but officials said Amtrak services that share the track with CSX were disrupted. Besides the sodium hydroxide, derailed cars leaked ethanol and nonhazardous calcium chloride.

QUOTABLE

IN OTHER NEWS

Apparel retailer Aéropostale Inc. is preparing to file for bankruptcy protection this week and close more than 100 stores. (WSJ)

Greenpeace released internal documents for the trade pact being discussed by the European Union and the U.S., saying the papers raise serious concerns for consumers and the environment. (WSJ)

International Paper Co. will acquire the fluff-pulp operations of Weyerhaeuser Co.'s cellulose fibers unit, which includes several mills and other facilities. (WSJ)

Saudi Binladin Group laid off 50,000 people as the construction giant copes with business hammered by low oil prices. (WSJ)

Food and supplies distributor Sysco Corp. reported a 23% profit gain in fiscal third quarter profit on a 3.6% gain in sales volume. (WSJ)

South Korea's Hanjin Shipping Ltd. asked chartered fleet owners and terminal operators for help with its debt-restructuring efforts. (WSJ)

Tesla Motors Inc. is offering to place a distribution center in Connecticut to gain the right to sell vehicles there directly to customers. (Hartford Courant)

FedEx Corp. says it doesn't believe logistics expansion at e-commerce giants Amazon and Alibaba threatens its delivery business. (South China Morning Post)

A U.S. Marine Corps logistics unit is testing 3D printing to cut the wait times for equipment maintenance parts. (Marine Corps Times)

Greater delivery demands from online shopping are driving greater cooperation between Qantas Airways Ltd. and Australian Post. (Sydney Morning Herald)

TraPac may move from its Port of Jacksonville cargo terminal site if the port doesn't undertake an expensive harbor deepening project. (Florida Times-Union)

A years-long project to deepen the Delaware River is nearly complete and the Port of Philadelphia expects new shipping services to follow. (WPVI)

Gary LaGrange will retire as president and chief executive of the Port of New Orleans next April and chief operating officer Brandy Christian will likely replace him. (New Orleans Times-Picayune)

Truck manufacturer Paccar Inc. opened a $32 million parts distribution center in Renton, Wash. (Fleet Owner)

South Dakota sued four online retailers under a new state law that requires them to collect tax even if they have no physical presence there. (Internet Retailer)

DistributionNow will buy Wyoming-based industrial parts distributor Power Service Inc. (Industrial Distribution)

A solar-powered airplane left California for Arizona on an around-the-world trip using only energy from the sun. (Manufacturing.net)

ABOUT US

Paul Page is deputy editor of WSJ Logistics Report. Follow him at @PaulPage, and follow the entire WSJ Logistics Report team: @brianjbaskin, @lorettachao, @RWhelanWSJ and @EEPhillips_WSJ, and follow the WSJ Logistics Report on Twitter at @WSJLogistics.

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(END) Dow Jones Newswires

May 03, 2016 06:53 ET (10:53 GMT)

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