Today's Top Supply Chain and Logistics News From WSJ

By Paul Page Features Dow Jones Newswires

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Celadon Group Inc. is looking for a clear lane to financial recovery. The truckload carrier struck an amended credit agreement with lenders led by Bank of America Corp., WSJ Logistics Report's Jennifer Smith writes, giving Celadon breathing room as it undertakes an audit of financial statements and copes with troubles in its truck-leasing arm. Celadon is putting off reporting on its latest financial results, but still expects to post an operating loss. The company's financial woes follow strong expansion that boosted Celadon to the country's 12th-largest carrier in the truckload sector, with acquisitions since 2014 fueling the growth. Celadon says its operating numbers are "trending upwards," and the company is likely getting help from the direction of the market. The latest American Trucking Associations' tonnage index jumped 6.5% from April to May, and DAT Solutions LLC says demand in the spot market outpaced capacity through most of June.

The slowdown in the auto industry is only getting deeper, putting a cloud over U.S. industrial demand. Detroit's Big Three of General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV all reported sales declines of 5% to 7% in June, and the WSJ's Mike Colias and Adrienne Roberts report that left overall industry sales off 2% so far in 2017. Adding to the troubling trend are significant reductions in deliveries to car-rental companies, long the Motor City's biggest customers, suggesting that auto makers are girding for a longer-term retrenchment. Auto makers traditionally have used lower-margin sales to rental companies to keep factories rolling even as dealership traffic slowed, but now it looks like they want to clear unsold inventory from dealer lots before they take another look at factories. That's already evident in shipping networks, with U.S. railroad shipments of motor vehicles and auto parts down 4.9% in the first five months of the year.

Tesla Inc. is setting tough new production goals even as the auto maker continues to have trouble getting its supply chain into higher gear. The Silicon Valley business barely reached its sales goals in the first half of the year, but the WSJ's Tim Higgins reports that Tesla concedes it suffered a "severe production shortfall" of its battery packs that undercut efforts to sell its electric cars. The production cycle has been a major problem as Tesla has sought to challenge the big auto makers that manufacture and sell far more vehicles. Tesla is aiming to become more of a mainstream player with the rollout of its lower-priced Model 3. Chief Executive Elon Musk is setting an ambitious schedule, pushing suppliers to ramp up enough to push 20,000 of those cars a month through the assembly line by December. That would demand the kind of supply-chain discipline that Tesla so far has found difficult to find.

SUPPLY CHAIN STRATEGIES

Export documents are taking a role in a federal probe of Caterpillar Inc. Federal investigators believe the heavy-equipment manufacturer failed to submit numerous required export filings in recent years, the WSJ's Andrew Tangel and Aruna Viswanatha report, potentially as part of an effort to avoid paying taxes. It's the latest inquiry centered on Caterpillar's management of its international supply chain as the company handled sales and replacement-parts distribution overseas. Investigators are finding discrepancies between Cat's filings through the U.S. Automated Export System and documents seized from the company. That's also focusing attention on the export system, which receives hundreds of thousands of filings every week and industry experts say may be subject to technical glitches. Caterpillar has already faced scrutiny on the Swiss subsidiary at the heart of the investigation, with a U.S. Senate report saying the company had avoided taxes by assigning profits for overseas parts sales to the unit.

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QUOTABLE

IN OTHER NEWS

U.S. factory activity accelerated in June, with new orders growing as inventory growth retreated. (WSJ)

Eurozone factories had their busiest month in more than six years in June. (WSJ)

U.S. crude futures are on track for their longest stretch of daily gains in nearly eight years. (WSJ)

The White House pushed back a decision on tariffs on steel imports as opposition mounted in Congress. (WSJ)

The chairman of auto parts maker Johnson Controls International PLC is increasingly confident China will open its domestic market to foreign operators. (WSJ)

French dairy company Danone SA will sell its Stonyfield unit in the U.S. to Lactalis for $875 million. (WSJ)

Shipping lines have rapidly switched to bigger vessels on trips from Asia to the U.S. East Coast since the expanded Panama Canal opened. (Port Technology)

South Korea's STX Offshore & Shipbuilding left bankruptcy protection after restructuring. (Splash 24/7)

Italy is threatening to close its ports as the country copes with a large influx of refugees from North Africa. (BBC)

World ACD says global air freight tonnage jumped at a strong pace in June and stronger pricing pushed carrier yields up 5%. (Air Cargo News)

The freight railroads' move to longer trains is raising concerns about the impact on communities along rail lines. (Omaha World-Herald)

Amazon.com Inc. completed its acquisition of Middle East e-commerce site Souq.com. (TechCrunch)

Florida developers are expected to purchase 130 acres in Orlando for a massive warehouse for Amazon. (Orlando Sentinel)

Spot butter prices have soared 160% in the last 12 months to a record high because of problems across the supply chain. (Irish Examiner)

Less-than-truckload operator ArcBest Corp. is introducing dimensional pricing, with minimum charges for space taken up by shipments. (Logistics Management)

Hong Kong's Kerry Logistics Network Ltd. took a 50% stake in intermodal specialist Lanzhou Pacific Logistics Ltd., part owned by China Railway Container Transport Co. Ltd. (American Shipper)

Authorities in Calgary hope new investment in logistics operations help cushion the Canadian city from the impact of faltering oil business. (Global Trade)

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

July 05, 2017 07:16 ET (11:16 GMT)