By Paul Page 

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A sudden snapback in freight demand has distribution networks out of the U.S. West Coast bursting at the seams. The crush of imports is straining capacity at seaports and in supply chains heading inland, the WSJ Logistics Report's Jennifer Smith writes, raising shipping prices for retailers and complicating efforts to replenish inventories following the coronavirus pandemic upheaval. Industry executives say the restocking is coming just as companies are also starting to line up goods for the coming holiday season. The surge marks a sharp turnaround from the downturn that hit freight markets in the spring and summer, when truckers and railroads slimmed down operations in the face of weak demand. Intermodal demand off the West Coast is especially high. Union Pacific Corp. has even raised surcharges on some of rail lanes for spot-market shippers looking to get goods on board, a move that seemed unthinkable just a few months ago.

SUPPLY CHAIN STRATEGIES

Some companies are trying something different to protect their businesses from the economic fallout from the coronavirus pandemic. Big manufacturers with complex global networks for parts and services are paying their suppliers early, the WSJ's Vipal Monga and Nina Trentmann report, as they try to reduce the risk of supply chain disruptions. Companies including Lockheed Martin Corp. and Micron Technology Inc. are pumping money into smaller businesses that could fail otherwise, effectively deepening ties with their suppliers. In one case, Lockheed started paying invoices to jet parts maker Perfekta Inc. in half the time it usually takes, helping the Wichita, Kan., company avoid a new round of layoffs. Such moves go against a tide of tough cash-management practices that have only gained strength during the recent crisis. On average, large nonfinancial U.S. companies took 60 days in the second quarter to pay suppliers, according to Hackett Group, a 10-year record.

E-COMMERCE

Spending hundreds of millions of dollars on digital technology hasn't proved to be enough for Kroger Co. The nation's biggest grocer has poured money into projects ranging from a self-driving grocery delivery robot to a big investment in automated fulfillment, but the WSJ's Jaewon Kang reports that Kroger was unable to meet higher demand when the pandemic caused a tsunami of customers to order groceries online for the first time. The chain has added new features aimed at e-commerce since March, but it has lagged behind its competitors in responding to the upheaval in customers' buying habits. The struggles show how complicated it can be to implement the right technology in the digital age. In Kroger's case, the company's wide-ranging investments may have slowed adoption of technology for grocery delivery that are perhaps less ambitious but more practical. That's left the grocer still seemingly in catch-up mode in e-commerce.

QUOTABLE

IN OTHER NEWS

Economists in a survey expect the U.S. economy to expand at an annualized rate of 23.9% in the third quarter, up from earlier an estimate. (WSJ)

The number of Americans seeking and collecting unemployment benefits remains at historically high levels. (WSJ)

The euro has appreciated by more than 10% against the dollar in recent months. (WSJ)

A large fire broke out at the Port of Beirut, near the site of last month's massive explosion. (WSJ)

U.S. regulators proposed a $13,494 fine for meat supplier Smithfield Foods for failing to protect workers from the coronavirus. (WSJ)

New York-based discount retailer Century 21 entered bankruptcy protection and plans to close its 13 department stores. (WSJ)

The owner of Garage and Dynamite clothing stores filed for bankruptcy protection and will close some locations. (WSJ)

European lawmakers are preparing to consider new environmental rules governing ships calling at European ports. (Lloyd's List)

Tesla Inc. plans to start exporting cars made at its Shanghai factory to Asia and Europe. (Bloomberg)

Shares of Nikola Motor Inc. tumbled on a short-seller's report the electric-vehicle maker is an "intricate fraud." (Financial Times)

Volkswagen AG's Traton trucking arm sweetened its takeover offer for Navistar International to $43 per Navistar share, up from $35. (Reuters)

Uber Freight chief Lior Ron says transport supply growth is lagging behind freight capacity growth. (Yahoo Finance)

Contract rates for trucking are rising amid tight capacity. (Journal of Commerce)

Amazon.com Inc.'s Japan business will return about $18.8 million to suppliers after having them shoulder the costs of the retailer's discounts. (Nikkei Asian Review)

Walmart Inc. is testing grocery delivery by drone with unmanned vehicle provider Flytrex. (Supermarket News)

E-commerce retailer 1-800-Flowers is adding 10,000 workers for the holiday season, 2,000 more than last year. (Chain Store Age)

Food supplier Nestlé is investing $30 million in a Closed Loop Partners investment fund aimed at recycling. (Supply Chain Dive)

Lehigh Valley, Pa., residents are protesting plans for an industrial park that would include large distribution centers. (Allentown Morning Call)

Pompano Beach, Fla., residents and city planners are questioning plans for a 1.2 million-square-foot distribution center for an unnamed client. (Orlando Sentinel)

Japan ended the search for 42 crew members missing since the sinking of a livestock carrier. (Splash 247)

ABOUT US

Paul Page is editor of WSJ Logistics Report. Follow the 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

September 11, 2020 10:57 ET (14:57 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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