Today's Top Supply Chain and Logistics News From WSJ
February 21 2018 - 5:05AM
Dow Jones News
By Paul Page
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Walmart Inc. is rethinking its online strategy after seeing the
tough logistics behind e-commerce weigh on sales and profits. The
world's biggest retailer says holiday goods crowded out space for
everyday items at its warehouses and stores, leading to stock-outs
and slower online sales growth in the key fourth quarter. The
results, including a 28% slide in operating profit, mark a
disappointment for a business that has spent billions building up
online capabilities, the WSJ's Sarah Nassauer reports, and show how
retailers are struggling to challenge Amazon.com Inc.'s relentless
growth. Walmart's online sales rose 23% year-over-year growth
during the holiday quarter, behind its own earlier growth and
Amazon's expansion. Perhaps more important, overall profit margins
were hurt by growth in less-profitable online sales -- a key
economic quandary that continues to trouble retailers. Walmart now
will stress its main web presence for customers over the Jet.com
operation it acquired, and will go back to trying get the right
goods in the right place at the right time.
Albertsons Cos. believes the first step to holding back Amazon
is to get bigger. The supermarket chain plans to buy the share of
drugstore operator Rite Aid Corp. that isn't being sold to
Walgreens Boots Alliance Inc., the WSJ's Heather Haddon reports, a
new step in the increasingly frantic consolidation underway as
retailers respond to changing consumer shopping patterns. The
transaction would create a company with revenue of $83 billion, and
around 4,900 stores and 4,300 pharmacies across 38 states. Grocery
stores and pharmaceutical sellers have been especially active
lately in adjusting to broad changes in the business, shifts
Albertsons' executives say put a greater premium than ever on
scale. Albertsons has made several technology plays as sales in
physical stores have softened, including last year's acquisition of
the Plated meal-kit service. Combining the food and drugstore
business, the company chief executives say, is the best way to
respond both to Amazon and an increasingly aggressive Walmart.
The robots are coming for the world's low-cost knitters. Garment
factories across Bangladesh have been bringing in automated
cutting, stitching and knitting machines in a bid to hold onto
their place in global supply chains, a trend that's rolling across
the apparel business as retailers push to keep consumer costs down
and suppliers respond by cutting costs that already seem impossibly
low. The WSJ's Jon Emont writes labor costs in some developing
countries have been rising, however, pushing companies to turn to
technology like "sewbots" in a drive that is upending the economics
of the apparel industry and potentially threatens social fabrics in
developing nations. A crucial part of the supply chain --
production of basic textiles -- is seeing an outright decline in
jobs even as apparel production in Bangladesh surges. Garment
exports rose by 19.5% from 2013 to mid-2016, expanding the
country's essential role in garment trade while proving that even
low-wage workers are vulnerable to automation.
SUPPLY CHAIN STRATEGIES
DHL said in announcing an ambitious new contract in the U.K.
with KFC last year that the deal would "set a new benchmark," but
this wasn't what the company had envisioned. Soon after taking over
the fast-food chain's deliveries along with logistics partner QSL,
media around the world are reporting on a "KFC crisis" after the
unit of Yum! Brands Inc. closed more than half its U.K. stores
because they'd run out of chicken. One local police office even
pleaded with residents to not call the station "if your favourite
eatery is not serving the menu you desire." It's a nightmare for
the logistics operators, and a sign of the difficulty in pulling
off big changes in a supply chain operation in a single swoop --
particularly in a far-flung network with some 900 sites facing
consumers. DHL is apologizing as the company and QSL scramble to
get the chicken shops open. At that point, they'll try to figure
out what got such a basic distribution operation so deeply
fried.
QUOTABLE
IN OTHER NEWS
Eurozone consumer confidence fell in February, a tentative sign
the currency area's economic recovery may have leveled off.
(WSJ)
BP PLC says global demand for crude oil could peak in the next
two decades as renewables take a greater share of the world's
energy needs. (WSJ)
Israel-based Delek Drilling LP and Houston's Noble Energy Inc.
will supply an Egyptian company with natural gas valued at $15
billion. (WSJ)
Qualcomm Inc. raised its bid for NXP Semiconductors NV as the
chip maker seeks to fend off a hostile takeover approach by
Broadcom Ltd. (WSJ)
Unilever PLC as part of its sustainable sourcing plan will
publicly disclose the suppliers and mills that provide its
products. (Supply Chain Digital)
Prime Shipping Foundation, a partnership between Quorum Capital
Ltd. and ship broker Interchart LLC, is seeking $150 million to
launch its own cryptocurrency. (Bloomberg)
Standard & Poor's parent S&P Global is acquiring
trade-data specialist Panjiva Inc. (American Shipper)
Thailand's auto makers are fighting a proposal to cut import
tariffs on cars. (Nikkei Asian Weekly)
AP Moller-Maersk says bulk and tanker operations acquired with
Germany's Hamburg Süd won't become part of the Danish group's core
shipping business. (Lloyd's List)
Opponents of a planned $500 million rail yard near the Port of
Long Beach are asking California's Supreme Court to halt the
project. (Press-Telegram)
European road freight rates soared to their highest point in
more than a decade in the fourth quarter despite a 6% gain in
capacity. (Lloyd's Loading List)
China's Wuhan Han'ou International Logistics Co. expects 30%
growth this year in freight rail services to and from Europe.
(RailFreight.com)
Developers expect to open a 64-acre logistics facility next to
Mexico's Tijuana International Airport next month. (Voice of San
Diego)
Southwest Airlines will start handling international cargo
shipments in May, starting with traffic to and from Mexico. (Air
Cargo News)
The New York Shipping Exchange added supply-chain executives
from Electrolux AB and Nestle SA to its board of directors.
(Journal of Commerce)
New Zealand barred entry to three cargo ships carrying
automobiles from Japan because the vessels were infested with
"stink bugs." (CNN)
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. Follow the WSJ
Logistics Report on Twitter at @WSJLogistics.
Write to Paul Page at paul.page@wsj.com
(END) Dow Jones Newswires
February 21, 2018 04:50 ET (09:50 GMT)
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