Today's Top Supply Chain and Logistics News From WSJ

By Paul Page Features Dow Jones Newswires

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Food suppliers may have another big worry on top of slowing sales and changing consumer tastes. Amazon.com Inc.'s deeper push into the grocery business with its purchase of Whole Foods Inc. may put new pressure on companies to cut their prices for a broad range of goods, eating into margins in a business that's been buffeted by change. Amazon's initial priority will likely be to lower Whole Foods' operating costs so that it can charge less for groceries in hopes of winning more customers, the WSJ's Annie Gasparro and Laura Stevens report. That's likely to include leveraging its negotiating expertise and the combined scale of the business to push for lower prices from suppliers. That would help Whole Foods shed its "whole-paycheck" reputation as a high-price provider, while squeezing suppliers. Pricing isn't the only threat: Amazon's extensive distribution channels could expand the reach of Whole Foods' many smaller natural and organic brands by putting them online, making them more competitive with traditional brands.

Tanker operator Frontline Ltd. is walking away from the mergers-and-acquisitions market empty handed. The firm owned by Norwegian billionaire John Fredriksen is pulling back its consolidation efforts as it abandons plans to acquire U.S.-listed rival Gener8 Maritime Inc., the WSJ's Costas Paris reports, weeks after it dropped a hostile bid for Oslo-based rival DHT Holdings Inc. Frontline has been trying to catch up to growing tanker companies operating very large crude carriers, the bigger ships that are becoming increasingly popular in turbulent oil markets. The tanker business has been marked by a glut of capacity, but Frontline's Fredriksen and others expect the trade to recover in coming years. Shipping data firm AXS Marine reports 49 crude and products tankers ordered in the first four months of this year, up from just 12 at the same point a year ago. One potential driver: declining fuel prices and freight rates have helped make storage of crude on tankers more economical than land storage.

The Trump administration's move toward imposing steel tariffs on national security grounds is drawing resistance from within the U.S. Senior lawmakers from both parties are raising concerns that other countries could use the same argument to block exports from their states, the WSJ's William Mauldin reports. The warnings include a caution from Rep. Kevin Brady, the Texas Republican who chairs the House committee that oversees trade policy, who joined critics in saying the moves could raise domestic prices for steel and undercut jobs and wages. The pushback from Congress could slow White House efforts to redraw the direction of global steel trade, a pillar of the global industrial economy, by erecting barriers to imported steel. U.S. Trade Representative Robert Lighthizer says steel and aluminum are national security issues, a rarely-used characterization that could set the groundwork for tariffs. For some lawmakers, however, the economic impact of steel shipping may carry more weight.

E-COMMERCE

For the slew of startups targeted in e-commerce consolidation, there is a sober reality to being acquired by Wal-Mart Stores Inc. Very sober. Workers at Jet.com Inc. found that one early change after Wal-Mart bought the Hoboken, N.J.-based business last year was that the office booze disappeared, the WSJ's Sarah Nassauer and Brian Baskin write, and that the startup's regular Thursday evening happy hour was moved out of the office. Those kind of office-culture changes aren't necessarily noticeable to customers, but they're getting greater attention as traditional companies use acquisitions to catch up to online commerce trends and run into the free-wheeling, casual practices at startups. The questions of culture arose in the United Parcel Service Inc. buy in 2015 of Coyote Logistics, a young freight brokerage with an energetic culture that UPS absorbed. For Wal-Mart, issues such as office happy hour were big enough to address in the buyout talks, and the 67-year-old retailer bent a bit without quite breaking its strict rules.

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IN OTHER NEWS

New-home sales rose in May and prices hit a record level, signaling strong demand and tight inventories in the U.S. housing market. (WSJ)

Takata Corp. placed its U.S. subsidiary into chapter 11 bankruptcy protection in move designed to keep the auto parts maker afloat. (WSJ)

Activist investor Third Point LLC hedge fund took a $3.5 billion stake in Nestlé SA, raising pressure on the world's largest packaged-foods company to find new ways to accelerate growth. (WSJ)

Glencore PLC sweetened its all-cash offer of $2.68 billion for Rio Tinto PLC's Australian coal assets. (WSJ)

China's crude-oil imports rose in May to their second-highest level ever. (MarketWatch)

Gasoline spilling from an overturned fuel truck ferrying fuel from Pakistan's port city of Karachi caught fire, killing at least 132 people. (WSJ)

Major prospective buyers have dropped out of the bidding for warehouse operator Global Logistic Properties Ltd. out of concerns over an insider bid. (Financial Times)

Grocery delivery services face challenging last-mile logistics and unbending deadlines in getting goods to customer homes. ( New York Times)

Analysts expect growing retailer attempts to compete directly with Amazon to feed greater demand for warehousing space. (CNBC)

The turmoil at Southern California ports in the wake of the Hanjin Shipping collapse has given way to smoother operations in a recovering container shipping market. (Long Beach Press-Telegram)

China Cosco Shipping plans to buy 14 new container ships, including six mega-ships, from Chinese shipyards. (China Daily)

J.B. Hunt Transport Services Inc. is testing augmented reality in some of its truck yard operations. (Talk Business)

Just over half of e-commerce retailers in a survey reported being satisfied with fulfillment services. (Inbound Logistics)

GE Capital Aviation Services is adding 30 more 737-800s to its freighter conversion program for the Boeing Co. jet. (Air Transport World)

Thailand is looking for private foreign investment, including backing from China, for a $44 billion plan to develop its eastern seaboard and ports. (Port Technology)

The Ohio Civil Rights Commission found evidence of potentially racially discriminatory practices at a UPS distribution center. (Toledo Blade)

McDonald's Corp. is using a deal with Uber Technologies Inc. to begin home delivery in the U.K. (The Telegraph)

ABOUT US

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

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

(END) Dow Jones Newswires

June 26, 2017 06:39 ET (10:39 GMT)