Today's Top Supply Chain and Logistics News From WSJ

By Paul Page Features Dow Jones Newswires

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Amazon.com Inc. will use its blockbuster acquisition of Whole Foods Market Inc. to become a major player in the bricks-and-mortar retail sector, promising new upheaval in an industry the online giant has already transformed with its e-commerce expansion. The $13.7 billion purchase gives Amazon hundreds of stores in prime urban locations that could serve as beachheads for in-store pickup and its distribution network. The WSJ's Laura Stevens and Annie Gasparro report it would make Amazon an overnight heavyweight in the $674 billion grocery business. That segment is changing as consumers ramp up purchases online and a new generation of startups remake food delivery to homes. Online grocery distribution is logistically complex, often requiring fast delivery of cold items as part of large orders on routes where stops are spread far apart. Amazon has struggled to gain a foothold there because it has a meager physical presence and shoppers still largely prefer to shop for food in stores, giving Amazon little opportunity until now to spread its costs across a broader network.

In adding Whole Foods to its business, Amazon may be gaining critical new nodes for its distribution network. Adding more than 430 stores, most of them in high-income, densely-populated areas, will give the online giant sites perfectly positioned to serve as pickup and delivery hubs for urban customers, WSJ Logistics Report's Erica E. Phillips and Jennifer Smith write. Amazon has been building out a network of urban warehouses, sites that are far smaller than the company's sprawling distribution centers on the outskirts of cities and that are aimed at providing one- or two-hour delivery to its Prime Now customers. Now, Amazon will have real estate to expand its neighborhood network by a factor of at least five. It also brings Amazon access to the Whole Foods refrigerated storage areas -- potentially saving significant costs. One outstanding question will be whether Amazon seeks to change relationships with Whole Foods' suppliers, many of them niche providers with limited distribution networks.

One of the biggest players in the logistics mergers-and-acquisitions marketplace is back in the hunt for new targets. XPO Logistics Inc. CEO Bradley Jacobs says the company is again looking for acquisitions, WSJ Logistics Report's Jennifer Smith writes, after taking nearly two years off to digest the numerous purchases that made XPO the fastest growing logistics operator in North America. XPO has put its time on the sidelines to work: the company has reported four straight profitable quarters and its stock price has more than doubled in the past year, signaling growing investor confidence that XPO can deliver efficiencies and growth from its many additions. Mr. Jacobs says he's most interested in larger targets, although the company may look at smaller, strategic targets. That could help revive logistics M&A activity that's been mostly quiet since a series of big buys that consolidated the logistics market in 2015.

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Wal-Mart Stores Inc. keeps adding pieces to its growing online business while the retailer's biggest competitor tries to transform the e-commerce landscape. Minutes after Amazon's blockbuster deal was announced, Wal-Mart completed a $310 million purchase of online menswear retailer Bonobos, the WSJ's Sarah Nassauer and Imani Moise report, the latest in a series of small acquisitions aimed at remaking Wal-Mart's web sales presence. The purchase gives Wal-Mart access to a brand that exists primarily online, as well as talent: Bonobos founder Andy Dunn will head Wal-Mart's efforts to build online, direct-to-consumer brands. The buys of niche online chains such as Bonobos and Moosejaw chains that appeal to wealthier or more fashion-forward shoppers are aimed at helping Wal-Mart reach beyond its core customers. Wal-Mart has also ramped up efforts to use its stores to ship online orders, but it's unclear whether the company will try to blend the supply chains of its new acquisition targets with its broader network of big-box stores.

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General Motors Co. is starting to reroute parts of its North American supply chain from Mexico to the U.S. The automaker is opening a supplier park near its Arlington, Texas, sport-utility factory, bringing some 600 jobs and a higher concentration of American-made parts in Chevrolet Suburbans and Cadillac Escalades. GM is one of several manufacturers rethinking the wisdom of shipping intermediate products through far-flung supply chains, the WSJ's Mike Colias and William Mauldin report. Global parts networks have long been seen as critical to cutting costs, but more companies are concluding they're a risky bet due to political shifts, protectionist measures and natural disasters. The auto maker says its new move was planned before President Donald Trump criticized GM's Mexican imports, and the new supplier park will trim logistics expenses and bring other gains from proximity of parts to the assembly plant.

American agriculture exporters are already feeling the impact of friction between the U.S. and Mexico over trade. Mexican imports of farm commodities including corn, soybean meal and chicken are in steep decline, the WSJ's Jacob Bunge reports, signaling that Mexico is buying food from a wider range of countries and reducing reliance on the U.S. That's rippling across American farms: Mexico is the third-largest customer for U.S.-produced farm goods overall, accounting for $18 billion in trade last year, and it's the No. 1 customer for corn. Mexico's declining purchases of some commodities runs counter to the Trump administration's goal to boost U.S. exports generally, as the White House moves to renegotiate the North American Free Trade Agreement in a bid to revive U.S. manufacturing. Now, however, U.S. officials worry the uncertainly around trade could jeopardize a market that last year bought roughly 13% of total U.S. agricultural exports.

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IN OTHER NEWS

Authorities are investigating the collision between a U.S. naval destroyer and an NYK container ship near Japan that left seven American sailors dead. (WSJ)

A closely-watched gauge of U.S. consumer sentiment dropped in early June to its lowest level since last November. (WSJ)

President Trump partially rolled back Obama administration initiatives that opened up U.S relations with Cuba. (WSJ)

Boeing Co. launched a new version of its narrowbody jet, called the 737 Max 10, to regain market share lost to Airbus SE. (WSJ)

U.S. poultry production is declining as the percentage of eggs hatching chicks falls at a steep rate. (WSJ)

The U.S. Justice Department cleared the way for the delayed merger of Dow Chemical Co. and DuPont Co. (WSJ)

The loss of baby-product sales to online competitors and the need to clear leftover holiday inventory pushed Toys "R" Us to a $163 million loss last quarter. (WSJ)

Japanese car companies say they are prepared to weather a bankruptcy of supplier Takata Corp. (WSJ)

An investigation shows Southern California port trucking companies are using onerous debt terms to force truck drivers into working long and largely unpaid work hours. (USA Today)

Truckers at Southern California ports fear the state's new zero-emissions efforts will cost them their jobs. (Long Beach Press Telegram)

The head of the Port of Los Angeles says China Cosco Shipping Corp. is diverting cargo to Long Beach because of easier environmental restrictions. (Long Beach Daily Breeze)

Japanese industrial robotics manufacturers are scrambling to boost output under growing demand from Chinese factories. (Nikkei Asian Review)

The challenge of managing large amounts of data remains a major hurdle to adopting artificial intelligence in managing supply chains. (Supply Chain Quarterly)

Moody's upgraded rating on Port of Oakland bonds and gave A2 ratings on the port's upcoming series of refunding revenue bonds. (Logistics Management)

California-based Lineage Logistics acquired European cold storage provider Partner Logistics, its first foray into international supply chains. (The Loadstar)

Taizhou Shipping, the bankrupt dry bulk subsidiary of Zhejiang Shipping Group, sold the last of its four ships to domestic Chinese operators. (Splash 24/7)

Amazon is planning to place a regional fulfillment center in Utah. (Orem Daily Herald)

Belgian railroad Lineas is starting a dedicated "beer train" from an AB inBev brewery to a regional supplier. (Rail Freight)

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 19, 2017 06:37 ET (10:37 GMT)