Today's Top Supply Chain and Logistics News From WSJ

Features Dow Jones Newswires

ByPaul Page

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Mega container ships may not be translating into far bigger volume for U.S. West Coast ports. The growth in container throughput at California's neighboring ports of Los Angeles and Long Beach slowed sharply in May, WSJ Logistics Report's Erica E. Phillips writes, even as imports at Georgia and Virginia jumped at a rapid rate. The gap opened as the number of megaship arrivals at the West Coast ports has doubled since the beginning of the year. The apparent shift in Asia-US supply chain routes comes after two new global shipping alliances launched in April, reducing the number of major alliances from four to three, which are deploying more megaships on major routes. The Georgia and Virginia port authorities hosted their first megaship in May--a 13,000-TEU COSCO vessel that was the largest container ship to transit the Panama Canal since its expansion. The arrival of bigger ships on the East Coast together with the shake-up in the shipping industry may be triggering a new structure in volume flows for the ocean lines and their customers' supply chains.

U.S. consumers may be taking a break from propping up the U.S. economy. Retail sales fell 0.3% in May, the biggest decline since January 2016, the WSJ's Josh Mitchell and Khadeeja Safdar report, defying trends including low unemployment, a surging stock market and healthy late-spring imports by retailers. Although some of the decline reflected lower gasoline prices, sales suffered at big-box stores, car dealerships and electronics retailers. Shrinking profit margins and declining foot traffic have forced many retail chains to scale back, and retailer bankruptcies are growing as companies cope with a glut of stores and an ongoing shift to online shopping. Still, retailers are bringing in goods: The latest monthly Global Port Tracker from the National Retail Federation and Hackett Associates LLC projects relatively healthy import volumes from May through July. With online sales growth far outpacing other categories, most of those goods may have to go to e-commerce distribution centers to get the attention of consumers.

The U.S. auto industry is bracing for a long, slow summer. General Motors Co. will extend its traditional seasonal shutdown at certain U.S. factories to deal with slumping sales and bloated inventory, the WSJ's Mike Colias reports, the latest sign that the industry is shifting into a lower production gear. That's tough news from a field that's provided the U.S. industrial sector much of its engine power in recent years but now is clearly pulling back. U.S. car sales, after hitting a record in 2016, have fallen nearly 2% over the past three months and automobiles are piling up at dealer lots. GM, with its inventory almost 44% higher from a year ago, will idle a factory near Kansas City, Kan., for five weeks starting this month, and may face more job cuts. Auto-related shipments at U.S. railroads are down nearly 5% this year through May and the downshifting at factories suggest the traffic won't pick up anytime soon.

ECONOMY & TRADE

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Qatar is trying to build new supply lines around a blockade by its Arab neighbors, in an effort that could reshape trade and transport in the region. The ban on transport links has affected Qatar's food supply and aviation industry, disrupted container shipping traffic and caused confusion about its oil & gas shipments. Now, the WSJ's Nicolas Parasie and Summer Said report Qatar is importing food from Iran and using its airspace. Qatar Airways is redeploying aircraft to new routes and tankers are looking at other transit ports such as Oman to ship their cargo. Brokers say shippers that supply Qatar with food, clothing and electronics remain wary of accepting and sending cargo to and from the country. Qatari tankers are avoiding the Suez Canal and looking into using ports in Oman since they are shut out from the United Arab Emirates. Right now, the moves are considered temporary, but Qatar will have to make the new routes work on a long-term basis if there is no diplomatic solution.

QUOTABLE

IN OTHER NEWS

A gunman shot and killed three fellow employees at a United Parcel Service Inc. sorting facility in San Francisco before turning the weapon on himself. (WSJ)

The Federal Reserve will raise short-term interest rates this week and said it expects to raise rates again later this year. (WSJ)

Key oil-price benchmarks fell 4% on reports that a crude supply glut is persisting despite cuts in production. (WSJ)

Eurozone industrial output jumped 0.5% from March to April. (WSJ)

Overall U.S. business inventories fell 0.2% in April. (MarketWatch)

China approved imports of two new varieties of genetically modified crops, allowing U.S. agricultural companies to market biotech seeds there. (WSJ)

The European Union's antitrust regulator opened investigations into licensing and distribution practices by Nike Inc., Sanrio Co. and Universal Studios involving cross-border and online sales. (WSJ)

International Business Machines Corp. will provide cloud-based data management for BMW's new connected-car initiative. (WSJ)

Proterra Inc., the electric-bus maker heading toward a possible initial public offering, raised an additional $55 million in funding from investors. (WSJ)

Deutsche Post DHL Group signed Ford Motor Corp. as a components supplier for a line of large electric delivery vans the company plans to build. (Reuters)

A former Amazon.com warehouse manager is suing the company in California for failing to pay overtime wages. ( New York Times)

Amazon will open a distribution center outside Buffalo, N.Y., its first in upstate New York. (Buffalo News)

Vietnam's apparel shipments to the U.S. expanded 8.2% in April even as overall U.S. apparel imports slipped. (Sourcing Journal)

U.S. beef producers may soon be able to resume exporting to China. (American Shipper)

Scrapping of older container ships has slowed down, threatening to reverse an upturn in charter rates. (Lloyd's List)

Dissident shareholders are threatening to oust senior management at Japan's Kawasaki Kisen Kaisha, or K Line. (Splash 24/7)

DP World is in talks with Nigeria to invest $1 billion in the Lagos port to upgrade bulk and container handling. (Maritime Herald)

Intermodal operator Metrans opened a rail terminal in Budapest that can handle 250 trains a month between the North European seaports and South-East Europe. (Port Technology)

Growing automation in cargo handling may cut into the extensive logistics employment in Southern California, a report says. (San Gabriel Valley Tribune)

Workers at a Zep Inc. distribution center in Eastern Pennsylvania voted to unionize and a labor group promised more organizing efforts at the region's many warehouses. (The Morning Call)

Auto parts supplier Yanfeng Automotive Interiors opened a production plant in the Czech Republic. (Automotive Logistics)

Grocery delivery startup Instacart struck an agreement with East Coast grocery chain Wegmans. (recode)

ABOUT US

Paul Page is deputy editor of WSJ Logistics Report. Follow him at @PaulPage, and follow the entire WSJ Logistics Report team: @brianjbaskin , @jensmithWSJand @EEPhillips_WSJand follow the WSJ Logistics Report on Twitter at @WSJLogistics.

Write to Paul Page at paul.page@wsj.com

(END) Dow Jones Newswires

June 15, 2017 06:29 ET (10:29 GMT)