Today's Logistics Report: Fred Smith's Growing FedEx Challenge; Seeking Rail Volume; Brexit's Next Deal
October 18 2019 - 10:06AM
Dow Jones News
By Paul Page
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Nearly five decades after pioneering the air express business
with the launch of FedEx Corp., Fred Smith is trying to reset the
delivery giant for a changed world. Global trade is slowing, tariff
fights have companies rethinking supply chains and the rise of
one-time customer Amazon.com Inc. as a competitor show FedEx is
operating in a very different business environment than the one
that Mr. Smith himself helped create. The WSJ's Paul Ziobro writes
that the threats have sapped FedEx's finances at a time when the
company is racing to adjust to modern delivery demands. Some
investors say the company has hewed too closely to its Express
operations even as the growth of e-commerce means shipments
increasingly need to travel from warehouses to nearby homes, not
long distances overnight. Mr. Smith is changing the operations,
though some analysts question whether the changes are big enough or
coming fast enough.
TRANSPORTATION
Tighter operations are helping CSX Corp. and Union Pacific Corp.
run more efficiently but they're not helping lure many more
customers. Both railroads are implementing precision railroading
techniques and both used cost cutting to keep profit erosion in
check in the third quarter despite sharply falling volumes. The
WSJ's Paul Ziobro reports the shipment figures suggest the
railroads still face a challenge in convincing shippers the
operations are faster and dependable enough to shift more business
from rail to truck. Union Pacific Chief Executive says plentiful,
cheap trucking capacity has undercut the railroad's attempts to
boost intermodal business. Intermodal trade gives the railroads
their strongest exposure to the relatively strong consumer economy.
But those volumes have been crumbling this year, falling 5.9% in
September from a year ago, according to the Association of American
Railroads, and then 6.6% in the second week of October.
ECONOMY & TRADE
A potential deal to avoid a messy break between the U.K. and
European Union isn't likely to pull stalled corporate investment
plans in Europe out of storage anytime soon. The agreement faces
tough odds in the U.K. parliament, the WSJ's Alistair MacDonald and
William Boston report, and business leaders say even an assent from
lawmakers won't solve the big clouds looming over their decisions.
The deal spells out the terms of Britain's departure from the bloc,
but not the terms on which both sides will trade -- the most
important factor for many companies. Business investment in Britain
has fallen amid uncertainty and companies have been stockpiling
goods. If lawmakers approve the deal, a 14-month transition would
begin. Trade talks between the U.K. and EU would also start,
offering businesses hope a pact for a pact before the end of that
period. But negotiations to set new terms could take years.
QUOTABLE
IN OTHER NEWS
China's economic growth slowed to 6% in the third quarter.
(WSJ)
U.S. manufacturing output fell 0.5% in September. (WSJ)
The United Auto Workers will extend the monthlong strike at
General Motors Co.'s U.S. factories until workers have approved a
new labor deal. (WSJ)
Walmart Inc. and Mattel Inc. are taking part in a virtual store
called KidHQ that sells toys through interactive video. (WSJ)
Honeywell International Inc.'s third-quarter profit dropped 30%
and the industrial conglomerate tempered its sales forecast over
economic uncertainty. (WSJ)
Paint maker PPG Industries Inc.'s higher prices helped offset
lower third-quarter sales volume and rising raw materials costs.
(WSJ)
Nestle SA is overhauling its water business amid slowing growth
and a backlash against single-use plastic. (WSJ)
Renault SA cut its guidance, citing slumping sales and higher
costs associated with developing cleaner car models. (WSJ)
Singapore's exports shrank in September for the seventh month in
a row. (Straits Times)
Amazon says brands are refusing to use anti-counterfeiting tools
that guard against fakes being sold on its marketplace. (Sourcing
Journal)
International Business Machines Inc. and LevaData will cooperate
on analytics technology services that advance direct procurement
sourcing. (Supply Chain Digital)
Tanker charter rates are retreating rapidly from recent 15-year
highs. (Lloyd's List)
Mediterranean Shipping Co. joined carriers saying they won't use
the Northern Sea Route over Arctic waters. (The Loadstar)
GlobalTranz Enterprises Inc. bought Chicago-based freight broker
Global Freight Solutions. (DC Velocity)
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
October 18, 2019 09:51 ET (13:51 GMT)
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