Today's Top Supply Chain and Logistics News From WSJ

By Brian Baskin Features Dow Jones Newswires

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Wal-Mart Stores Inc. wants to turn its army of store workers into a delivery fleet . Employees can download a mobile app that suggests orders they could deliver on their commutes to and from work, the latest in a series of e-commerce fulfillment innovations the retailer has deployed to stay competitive with Amazon.com Inc., the WSJ's Sarah Nassauer writes. The service, available from just three stores, is the latest example of e-commerce operations searching for alternatives to relying on FedEx Corp. and United Parcel Service Inc. to handle home delivery. So-called last-mile service is among the more complex and logistically difficult aspects of e-commerce, and retailers are experimenting with all sorts of ways to lower costs. Store workers moonlighting as delivery drivers fits alongside Wal-Mart's use of Uber and Lyft drivers, or Instacart's app that lets anyone sign up for shopping and delivery jobs. Cheaper last-mile delivery is also driving investment in autonomous cars and drones. Wal-Mart's chief advantage is scale - it's the largest private employer in the U.S. - but smoothly operating so many distribution channels will be a challenge.

Deere & Co. is changing lanes with its biggest-ever acquisition. The agricultural-machinery giant said it will acquire Germany's Wirtgen Group, which specializes in road pavers and other construction equipment, for $4.9 billion, the WSJ's Bob Tita and Austen Hufford report. The deal gives Deere greater exposure to a global boom in infrastructure spending, driven by developing economies like China and Brazil that are expanding road networks and ports to lower transportation costs for farmers and manufacturers. Construction equipment accounts for a fifth of Deere sales, but is playing a growing role in the company's future as sales of farm equipment in the key U.S. market slow. Record grain harvests have depressed prices for major crops, leaving U.S. farmers with less money to spend on new equipment, and little incentive to expand. Farmers in South America are faring better, and governments are literally paving the way for those crops to reach the international market by splurging on infrastructure.

Marine shipping rates are on the rise, but the recovery is coming too late to save one container fleet. Rickmers Holding AG said it would file for insolvency after a proposal to refinance was "surprisingly denied" by creditor HSH Nordbank, the WSJ's William Wilkes writes. Both the carrier and its creditor are victims of the deep slump in global ocean freight, where stagnant volumes and a glut of ships drove down rates. The biggest shipping lines consolidated into a handful of alliances to weather the downturn, while many smaller carriers went bust, saddling banks like HSH Nordbank with bad loans. The financial firm is under pressure from regulators to clean up its balance sheet, likely reducing its flexibility to extend more loans to keep Rickmers afloat. As a charterer leasing ships to third parties, a Rickmers bankruptcy likely wouldn't cause the sort of disruption seen after Hanjin Shipping's filing, which left billions of dollars in cargo stranded at sea. But it does serve as a reminder that the shipping industry is still cleaning up the fallout from its slump, even as survivors show signs of returning to profitability.

AUTO SUPPLY CHAIN

Auto makers see small cars as a big business, despite shrinking sales. Midsize sedan sales are down 16% this year, as drivers lulled by cheap fuel prices buy more trucks and SUVs. The auto industry continues to invest in smaller vehicles despite a bleak outlook for that market, the WSJ's Chester Dawson and Michael Colias report. The realities of the auto supply chain are a big reason why they're keeping the faith. Each car contains thousands of parts, many customized for a particular model. Auto makers rely on bulk purchases of parts to keep costs down, and shifting their model mix to bigger vehicles would reduce those economies of scale and require months of planning to give suppliers enough notice to adjust. Fuel prices could creep higher in the meantime, sending drivers back to sedans. Smaller, cheaper cars also appeal to first-time buyers, who auto makers hope will become lifetime customers.

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QUOTABLE

IN OTHER NEWS

Uber Technologies Inc. reported a $708 million first-quarter loss and said its head of finance is leaving. (WSJ)

Boeing lined up guarantees for $1.25 billion in jet liner sales from an Italian credit agency, replacing a service formerly offered by the U.S. Export-Import bank. (WSJ)

U.S. manufacturing activity expanded in May. (WSJ)

President Donald Trump said he will withdraw the U.S. from the Paris climate deal. (WSJ)

U.S. jobless claims rose last week while remaining at a low level. (WSJ)

General Motors Co. reported declining sales in May, while Nissan Motor Co. and Ford Motor Co. reported increases. (WSJ)

An index of U.S. trucking activity rose 4% from a year earlier in April. (Transport Topics)

U.S. railroad volumes rose 6.7% from the same week last year. (Progressive Railroading)

Several California trucking companies are suing to halt a U.S. Environmental Protection Agency rule requiring heavy-duty trucks to reduce emissions by 9% by 2027. (Trucks.com)

McDonald's will offer delivery from 3,500 U.S. restaurants by the end of June. (Post & Parcel)

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. Follow the WSJ Logistics Report on Twitter at @WSJLogistics.

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

(END) Dow Jones Newswires

June 02, 2017 06:46 ET (10:46 GMT)