Today’s Top Supply Chain and Logistics News From WSJ

Paul Page

Paul Page

The Wall Street Journal

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paul.page@wsj.com ^[4]

April 6, 2016 6:20 a.m. ET

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The market for freight transport equipment is sitting almost completely in idle. Trucking companies and leasing businesses scaled back orders for heavy-duty vehicles at a steep rate in March, WSJ Logistics Report's Robbie Whelan writes ^[7], as a tepid freight market and uncertainty about futur e demand weighed on expansion plans. ACT Research says the 16,000 orders in March for Class 8 trucks, the biggest of the highway rigs, was a 37% decline from a year ago and a 12% dropoff from February. It's a response both to weak shipping demand and to ordering early last year that now looks overconfident. The manufacturing sector is showing some promising signals, but that may not trigger much new ordering in the near term since truck dealership inventories have soared to a nine-year high. And things are no better in the foundering freight rail business, where Greenbrier ^[8] GBX 4.63 % ^[9] Cos. reported its railcar orders plummeted 70% in its fiscal quarter ending Feb. 29.

Federal regulators are taking aim at food shipments. The U.S. Food and Drug Administration is proposing rules on transport and logistics operations intended to reduce the spread of foodborne diseases ^[10], the WSJ's Jesse Newman reports, including requirements that will touch every step of distribution channels. It's the latest step to shore up supply chains for perishables after deadly outbreaks in the past decade from tainted products. The growing attention to the so-called cold chain has already triggered big investment in perishables transport, and the ne w guidelines will likely prompt more upgrades from farms to stores. Some of the rules include basic guidelines for managing food shipments, but technology will also come into play since companies will have to maintain records on temperature controls throughout transport.

The Big Three U.S. automakers are making major production choices that will change the direction of automotive supply chains in the coming years. Ford Motor ^[11] Co. F -0.23 % ^[12]'s decision to build a $1.6 billion factory in central Mexico marks the latest in a series of auto industry investments flowing south of the border, the WSJ's Christina Rogers and In-Soo Nam report. The plant will double Ford's production in the country by 2018, and it will draw and draw more parts manufacturing along with shipping infrastructure to support the car making. The Mexican plant will take over production of smaller Ford cars from a U.S. site with far higher labor costs. General Motors ^[13] Co. GM -1.00 % ^[14], meantime, is holding firm on building small cars in the U.S. and is scrapping plans to move some full-size car production to South Korea. More production is on its way to Mexico, however, and experts believe the country will count more than half of North America's auto production by 2019.

SUPPLY CHAIN STRATEGIES

ENLARGE

Photo: Bloomberg News

Shipping flows across the Pacific Ocean appear to be shifting well ahead of the opening this summer of an expanded Panama Canal. New trade data shows Chinese exporters are sending more goods to the U.S. Southeast, measured by value, bypassing California ports that have long been the main gateways for Asian imports ^[15], WSJ Logistics Report's Erica E. Phillips writes. The draw looks to be the growing number of factories in the region that import parts from China, according to Jock O'Connell of Beacon Economics. The demand has raised the profile of ports such as Houston and Savannah, Ga., which both have seen container imports soar by more than 30% over the past two years. California's ports still hold a commanding share, but the draw from the industrialization in the Southeast may help set a new competitive balance: what O'Connell calls "extra-low" rates on mega-ships to the West Coast will line up against direct service through Panama targeting higher-value goods.

Competition in the supply chain is shaping up to be a battle between the robots. An annual survey by MHI and Deloitte of supply-chain professionals shows that a focus on robotics and automation as a competitive advantage is growing rapidly ^[16], writes WSJ Logistics Report's Loretta Chao. In fact, more of those surveyed singled out those fields than far more widely-used technologies, such as inventory management tools, cloud computing, and sensors. More than a third of those surveyed say they've already adopted robotics in their operations, and that should swell to 74% within 10 years. A separate survey of freight forwarders by software company Freightos says those executives believe robotic technology will be more important than drones, 3D printers and other forces that the report calls "over-hyped."

QUOTABLE

'There are too many trucks chasing too little freight.'
—Kenny Vieth, president of ACT Research.

IN OTHER NEWS

U.S. imports climbed 1.3% in February from the previous month ^[17], the largest jump in 11 months. (WSJ)

The eurozone economy grew at a weaker pace in March ^[18] than first indicated by a survey of purchasing managers. (WSJ)

Canada's exports declined in February ^[19] at the sharpest rate in nearly seven years. (WSJ)

More Americans were hired to start a new job in February than in any month ^[20] since before the recession that began in 2007, according to a new report. (WSJ)

Walgreens Boots Alliance Inc.says same-store sales grew 2.2% in the latest quarter ^[21], the slowest gain in about three years. (WSJ)

Teen retailer Pacific Sunwear of California ^[22] Inc. PSUN -78.20 % ^[23] is expected to file for chapter 11 bankruptcy protection ^[24] by the end of April. (WSJ)

BNSF Railway has furloughed some 4,600 workers across the U.S.^[25], or 10% of its workforce. (Dallas Business Journal)

Britain's exit from the European Union would severely disrupt the country's shipping sector ^[26], which gets 40% of its traffic at terminals from the EU. (Reuters)

FedEx ^[27] Corp. FDX -1.14 % ^[28] plans to finance part of its TNT Express ^[29] TNTEY 0.36 % ^[30] acquisition with a debt offering in euros ^[31], its first non-U.S. bond issue. (Memphis Commercial Appeal)

FedEx claims in its request for flight authority to Cuba ^[32] that it is the sole airline interested in cargo services to the country. (The Loadstar)

U.S. House transportation committee c hairman Bill Shuster said he opposes the ^[33]Canadian Pacific Railway ^[34] Ltd. CP -0.60 % ^[35] bid for Norfolk Southern ^[36] Corp. NSC -1.56 % ^[37] (Financial Post)

A new report says 83% of conventional cotton sold in apparel supply chains should be recognized as sustainable ^[38]. (Sourcing Journal)

The top U.S. customs broker group urged the Federal Maritime Administration to set tough standards for approval of vessel sharing agreements ^[39]. (American Shipper)

Maersk Line and Mediterranean Shipping Co. will jointly start direct service between Vietnam and South Carolina's Port of Charleston ^[40]. (Post & Courier)

The Port of Oakland released smartphone apps for harbor truckers ^[41] aimed at easing congestion at co ntainer terminals. (Logistics Management)

ABOUT US

Paul Page is deputy editor of WSJ Logistics Report. Follow him at @PaulPage ^[42], and follow the entire WSJ Logistics Report team: @brianjbaskin ^[43], @lorettachao ^[44], @RWhelanWSJ ^[45] and @EEPhillips_WSJ ^[46], and follow the WSJ Logistics Report on Twitter at @WSJLogistics ^[47].