Todayâ€™s Top Supply Chain and Logistics News From WSJ

Brian Baskin

Brian Baskin

The Wall Street Journal

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Biography ^[2]
@brianjbaskin ^[3]
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April 1, 2016 6:43 a.m. ET

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Competitors in the logistics space are growing increasingly litigious, particularly when senior management jump ship. A spate of poaching lawsuits are rocking the supply chain and logistics worlds ^[7], including one filed by Amazon.com ^[8] Inc. AMZN 0.63 % ^[9] against a long-time executive who moved to Target ^[10] Corp. TGT 0.72 % ^[11], and several involving XPO Logistics ^[12] Inc. XPO -4.40 % ^[13] The legal spats underscore the rising importance of logistics expertise as businesses compete on warehouse design, the WSJ Logistcs Report's Loretta Chao writes, inventory management and distribution strategies. At the fast pace in which these functions are evolving, experienced executives are rare and "worth their weight in gold," says supply chain head hunter Peter L. O'Brien. No company better illustrates this than XPO, which is simultaneously being sued by C.H. Robinson Worldwide ^[14] Inc. CHRW -1.29 % ^[15] for poaching an executive in 2012, and is suing YRC Worldwide ^[16] Inc. YRCW -2.15 % ^[17] and R+L Carriers Inc. for similar alleged misdeeds.

The logistics behind a major energy project are never easy, but the challenges quickly multiply in isolated, corrupt locales. That's the lesson BP BP -2.32 % ^[18] PLC has learned with its oil and gas mega-projects in Azerbaijan, where the company has waged a constant fight against corruption and waste ^[19], writes the WSJ's Robbie Whelan and Sarah Kent. In one instance, a senior employee of Panalpina World Transport Ltd., BP's freight forwarder in Azerbaijan, charged $16 million for packing and shipping services the company never provided. Major contracts with state-owned oil services firms cost more than similar work elsewhere. Dodgy transport arrangements and cost overruns are a fact of life on large-scale construction projects, even in the developed world. But in the middle of a two-year slump in oil prices, companies are payin g closer attention to their logistics spending.

China is tapping the brakes on cross-border e-commerce. A new tax system on overseas purchases will make it more expensive for Chinese consumers to buy goods online from international retailers. The mix of taxes and import duties is aimed at promoting Chinese-made goods over foreign retailers ^[20], the WSJ reports. China's move is a blow to burgeoning online marketplaces run by JD.com ^[21], JD 1.75 % ^[22] Alibaba Group Holding ^[23] Ltd. BABA -0.94 % ^[24] and Amazon.com Inc., and to U.S. retailers of baby products, cosmetics and other goods that have gained a foothold among Chinese consumers looking to avoid locally made knockoffs. Logistics providers have also invested heavily in recent years in helping retailers navigate tricky international sales. Cross-border sales are unlikely to take too big a hit, as many Chinese consumers already willing to pay a premium for authentic foreign-made goods won't be dissuaded by a new surcharge.

SUPPLY CHAIN STRATEGIES

ENLARGE

Photo: Dustin Thomas Chambers for The Wall Street Journal

The e-commerce boom is blurring the line between trucking and delivery services. As more consumers purchase big-ticket - and just plain large - goods like appliances and furniture online, retailers are turning to traditional trucking companies to get these items to customers' homes ^[25], writes the WSJ's Betsy Morris. E-commerce makes up 10% to 20% of deliveries for less-than-truckload carriers, according to Chainalytics, but it's a business that comes with extra costs, chief among them the time it takes for big rigs designed for highways to navigate neighborhood streets. Some LTL carriers are specializing in last-m ile delivery and charging extra to shippers that demand it. Others are reluctant to make that leap, but feel compelled to meet online retailers halfway, or risk losing their business entirely.

The competition to deliver everyday goods is growing more competitive as well. A host of startups are looking to usurp Amazon.com Inc.'s status as the runaway leader in one-hour delivery ^[26], writes the WSJ's Greg Bensinger. Many rival services are focusing on prepared food from local restaurants, one of a few categories where online ordering is popular but Amazon isn't dominant. Pricing is another potential edge: Amazon provides free delivery within hours to Prime customers who pay $99 a year, and charges an extra fee for even faster service. Postmates Inc. thinks it has a winning formula with its "Plus Unlimited" option, where customers can get anything from burritos to T-shirts delivered from area merchants for $9.99 a month, and is tinkering with a model where deliveries cost a flat $1. One hurdle: same-day delivery isn't cheap, but Amazon has primed customers to think of it as such. Startups are struggling to maintain that illusion, with even Uber Technologies Inc. tacking on a $1.50 charge in San Francisco for restaurant-delivery service.

Independent truckers are making their stand against electronic logging on constitutional grounds. The Owner-Operator Independent Drivers Association filed a brief with the Seventh U.S. Circuit Court of Appeals arguing that the looming requirement for all truck drivers to electronically log their hours amounts to warrantless tracking ^[27] of drivers' movements, which they characterize as a Fourth Amendment violation. The argument is one of several made by the group, WSJ Logistics Report's Loretta Chao writes, including long-standing disagreements over whether the rules will make drivers safer or more efficient. An OOIDA complaint did force the Department of Transportation to scrap similar rules about five years ago, but with the large carriers on board, and e-logs set to become mandatory next year, small truckers face an uphill battle.

QUOTABLE

'They're worth their weight in gold.'
—Peter L. O'Brien, head of the global supply chain practice of Russell Reynolds Associates, referring to top logistics executives.

IN OTHER NEWS

Navistar International ^[28] Corp. NAV -1.76 % ^[29] will pay $7.5 million to settle charges it misled investors ^[30] about the ability of new truck engines to meet emission standards. (WSJ)

McDonald's ^[31] Corp. MCD 1.11 % ^[32] will open over 1,000 restaurants in China ^[33]and is looking for a partner to build out its franchise business. (WSJ)

The energy downturn has created a surplus of helicopters formerly used to service oil-and-gas fields ^[34]. (WSJ)

United Parcel Service ^[35] Inc. UPS -0.69 % ^[36] named longtime employee Juan Perez as chief information officer ^[37]. (WSJ)

Tesla Motors ^[38] Inc. TSLA 2.30 % ^[39] debuted the latest model of its electric car ^[40]in showrooms, more than a year before deliveries to customers are expected to start. (WSJ)

Foxconn Technology Group ^[41] 2354 0.28 % ^[42]'s planned acquisition of Sharp ^[43] Corp. SHCAY -3.91 % ^[44] thrusts the buyer's secretive billionaire owner ^[45], Terry Gou, into the spotlight. (WSJ)

U.S. farmers are planting more corn even as prices fall ^[46]. (WSJ)

The Tata Steel ^[47] Ltd. EQTATASTEEL -1.04 % ^[48] sale of its U.K. business will challenge logistics partners in the company's expansive supplier and payments system ^[49]. (Logistics Manager)

Bulk carriers scrapped a record 145 ships in the first quarter ^[50], according to Deutsche Bank. (Splash 24/7)

Japan's Mitsui OSK Lines ^[51] 9104 -2.62 % ^[52] will close its Singapore-based dry bulk shipping unit ^[53] under what it calls a "drastic business review." (Seatrade Maritime News)

Shippers are struggling to find transport ^[54] under rules barring lithium-ion battery shipments from passenger a ircraft starting April 1. (Lloyd's Loading List)

Mexpress Transportation Inc. is adding parcel and last-mile delivery service ^[55] to its U.S.-Mexico cross-border freight operation. (The Loadstar)

Blackberry unveiled a tracking system to help trucking and car fleet operators ^[56] improve delivery times. (Financial Post)

Five years after Japan's devastating earthquake some auto companies have adjusted supply chain practices ^[57]to limit any repeat of the costly global disruption. (Reuters)

XPO is partnering with Eurorail and Sogaris to bring goods into Paris via rail and truck ^[58]. (The Loadstar)

Maersk Line and Mediterranean Shipping Co. are adding a container shipping route ^[59] between Asia and U.S. Gulf Coast ports. (Journal of Commerce)

U.S. cargo rail traffic fell 16.5% from a year earlier ^[60], according to the Association of American Railroads. (Progressive Railroading)

A German supermarket chain will test growing herbs and vegetables at one of its wholesale stores ^[61]. (Fruitnet)

ABOUT US

Brian Baskin is editor of WSJ Logistics Report. Follow him at @brianjbaskin ^[62], and follow the entire WSJ Logistics Report team: @PaulPage ^[63], @lorettachao ^[64], @RWhelanWSJ ^[65] and @EEPhillips_WSJ ^[66], and follow the WSJ Logistics Report on Twitter at @WSJLogistics ^[67].