Today's Logistics Report: Raising Railroad Efficiency; Bulking Up Rates; Amazon's Merchant Deal

Date : 07/19/2019 @ 3:47PM
Source : Dow Jones News
Stock : Amazon com (AMZN)
Quote : 1839.34  0.0 (0.00%) @ 9:54AM

Today's Logistics Report: Raising Railroad Efficiency; Bulking Up Rates; Amazon's Merchant Deal

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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)

Copyright (c) 2019 Dow Jones & Company, Inc.

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