Today's Top Supply Chain and Logistics News From WSJ

By Brian Baskin Features Dow Jones Newswires

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It's China and Russia vs. Airbus SE and Boeing Co. in a fight to control the passenger jet market. The two countries are teaming up to take on the duopoly that dominates passenger aircraft production, the WSJ's Trefor Moss reports. The partnership is a sign of how jet production remains one of the most difficult sectors to break into, where Airbus and Boeing use enormous technical advantages in areas such as fuel efficiency to hold onto customers. China and Russia can marshal massive state resources to muscle their way in, with plans to build a 280-seat long-haul plane that would start flying toward the end of the next decade. The two countries have long been geopolitical rivals, but increasingly team up in the business arena, particularly in areas where they both lag European and American rivals. Widebody jets would be a particularly big prize, with Airbus estimating the market to be worth over $2 trillion over the next two decades.

Western companies operating in China will need to get used to having the government looking over their shoulder. Foreign firms will be a part of the Social Credit System, a state initiative that will use data collection and analysis to enforce norms in everything from factory emissions to worker safety, the WSJ's Andrew Browne writes in his "China's World" column. The program, which is expected to ramp up by 2020, is one of many ways China is attempting to exert greater control over how foreign manufacturers operate within its borders. It's a trend that rarely works out to the benefit of Western firms. Technology suppliers are being shut out of infrastructure projects in the name national security, and a "Made in China 2025" campaign would have Chinese technologies play a growing role in robotics and semiconductors. With the Social Credit System, companies would need to maintain ratings akin to credit scores, and would face taxes and other penalties for running afoul of a formula that is far from transparent, raising fears of antiforeign bias.

A proposed merger of two trading houses could place an enormous amount of the world's commodities under one roof. Glencore PLC has approached grain trader Bunge Ltd. about a takeover, in deal that would easily clear $10 billion and give the Swiss mining giant the major U.S. presence it has long sought. A tie-up would also help unlock the "frozen" grain market, where a glut of staple crops has farmers unwilling to sell at rock-bottom prices, and food processors won't buy in advance because they expect prices to stay low, the WSJ's Dana Mattioli, Jacob Bunge and Scott Patterson write. Consolidation would give the remaining players in the grain market more control over supply, potentially resulting in fewer and shorter gluts, and comes as other blockbuster mergers are being pursued in other corners of the agriculture sector, including pesticides and genetically engineered seeds. The status of talks is unknown, and a deal is far from certain. But the fact that Glencore, once thought by many analysts and investors to be close to insolvency, is in a position to make such an offer is a sign that the company has weathered the commodities rout.

POLITICS

The border tax is stuck in customs. Political prospects for border adjustment, where imports would be taxed and exports exempted, are fading amid opposition from corporations, antitax conservatives and Senate Republicans, the WSJ's Richard Rubin reports. Proponents say the tax will encourage more companies to make more goods in the U.S., but the proposal could harshly penalize companies like Target Corp. that rely on cheap imports from Asia and Latin America to keep prices low. Retailers appear to be winning the political fight, with border adjustment potentially failing even to make it out of the Ways and Means Committee. The provision's fate has implications beyond the border, as revenue generated by the tax is needed to pay for proposed cuts to the corporate tax rate.

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QUOTABLE

IN OTHER NEWS

Brazilian meatpacker JBS's shares fell and the company could sell some assets amid insider-trading accusations. (WSJ)

The U.S. is preparing to sue Fiat Chrysler Automobiles NV for allegedly cheating on government emissions tests. (WSJ)

Uber Technologies Inc. said it underpaid New York City drivers for more than two years. (WSJ)

The U.S. labor market still has room for improvement despite low unemployment, the Federal Reserve's Lael Brainard said. (WSJ)

Eurozone manufacturing added jobs at the fastest pace in 20 years. (WSJ)

Sears Holdings Corp. reached an agreement to extend the maturities for some of its debt. (WSJ)

Bond ratings companies are downgrading mall-backed debt as stores close. (WSJ)

Shipping lines and large shippers will need to join forces to optimize increasingly complex supply chains, a professor writes. (Splash 24/7)

Unionized pilots plan to picket Amazon.com Inc.'s annual meeting, protesting the wages paid by the retailer's cargo air service. (Quartz)

A union leader raised concerns about the cost of renting chassis at the Port of New York and New Jersey. (American Shipper)

Leased demand for industrial property lagged construction for the first time since 2010, CBRE said. (DC Velocity)

U.S. truck tonnage fell 1.8% in April compared with a year earlier. (Transport Topics)

Shares of Cosco Shipping Holdings remain halted amid rumors the company is planning a takeover bid for a rival. (Lloyd's List)

CMA CGM will introduce a $150 cancellation fee for shippers that fail to show up at certain ports in the Middle East and India. (Seatrade-Maritime)

Six state attorneys general are asking federal regulators to strengthen rules on trains transporting crude oil. (The Hill)

Fast-fashion leaders Inditex SA's Zara and Hennes & Mauritz are being challenged by even speedier online-only rivals. (RetailDIVE)

ABOUT US

Brian Baskin is editor of WSJ Logistics Report. Follow him at @brianjbaskin, and follow the entire WSJ Logistics Report team: @PaulPage, @jensmithWSJ and @EEPhillips_WSJ and follow the WSJ Logistics Report on Twitter at @WSJLogistics.

Write to Brian Baskin at brian.baskin@wsj.com

(END) Dow Jones Newswires

May 24, 2017 07:07 ET (11:07 GMT)