Today's Top Supply Chain and Logistics News From WSJ

By Paul Page Features Dow Jones Newswires

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The imports are coming, and now companies in the U.S. are hoping that the demand follows. U.S. importers are bringing goods at a fast pace this summer, building up inventories with record-setting inbound volumes hitting seaports on the Pacific and Atlantic coasts. The import volumes signal a far stronger start to the industry's peak shipping season than last year, WSJ Logistics Report's Erica E. Phillips writes, suggesting rising hopes that the U.S. economy will pick up steam this fall. An early estimate from the retail industry says shipments into major U.S. ports were up more than 5% in June, and projects that the business will accelerate at a healthy pace. So far, consumers haven't shown the same outlook, with measures of sales and of consumer confidence both slipping back. And data firm Panjiva says some of the growth this year has come in sectors facing fears of U.S. import tariffs, suggesting companies may be rushing in goods ahead of potential restrictions.

FedEx Corp. is still struggling with the June 27 cyberattack, and so are its customers. The delivery giant says the global cyberattack known as Petya significantly affected the operations of its Europe-based TNT Express business, and the WSJ's Imani Moise reports that although package depots are running they're still handling much of the operations and paperwork by hand. FedEx appears to be suffering deeper long-term problems following the ransomware attack than container shipping giant Maersk Line, which slowly ramped up operations at its liner business and at its sister APM Terminals unit after a direct hit from Petya. Some three weeks later, FedEx customers still face long delivery delays and erratic information, and the company expects to suffer a material financial impact. The attack hit the TNT Express operation that FedEx bought last year, a $4.8 billion acquisition that triggered a highly complicated effort to integrate information systems.

The freight business is about to get real for Flexport. The San Francisco-based company, one of several that have sought to use technology to insert themselves into the logistics market, is opening its first warehouse next month, WSJ Logistics Report's Erica E. Phillips writes, an expansion that will push the company more into the physical world while making it look more than ever like a freight forwarder. Flexport insists its software will have the company operating more nimbly than traditional companies that move goods around the world, but the expansion in California along with planned additions in Hong Kong and Shenzhen, China, suggest the company sees its best growth prospects in handling freight in the real world. Flexport is among the biggest of several startups attempting to digitize various logistics functions, including booking transportation and finding warehouse space. The biggest freight forwarders are building technology to meet the startups, but they also have the facilities that help put the goods into motion.

E-COMMERCE

Toys "R" Us Inc. has spent $100 million in recent years to boost its online sales, but the investment has only left the retailer falling further behind. The retailer is among many fighting to keep up with the big stakes counted in the billions of dollars that competitors are laying out in the e-commerce arena, the WSJ's Miriam Gottfried reports. High debt and heavy real-estate holdings weigh on the ability of many retailers to pull together their own matching investment. It's part of a tough riddle at the heart of e-commerce competition: High debt loads, nervous lenders and falling sales make it impossible to invest enough to compete online. And when companies generate online sales, the costly logistics leave margins so tight that future investments are harder to make. Toys "R" Us illustrates the tough position. The company had to halt some online sales last year after a deluge of web orders overwhelmed its ability to get products to customers in time for Christmas.

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The rapid development of warehouse space in New Jersey isn't coming fast enough to keep up with the demand for e-commerce logistics. Cushman & Wakefield says developers this year will more than double the addition of industrial space from a year ago, the WSJ's Keiko Morris reports, and that companies are now scrambling to find sites that can accommodate the sprawling facilities exceeding 750,000 square feet that are in demand. The big driver is e-commerce, with transportation and fulfillment operators coming in along with retailers to eat up distribution capacity in the region. The dynamic is playing out in other regions, where a mix of population density, high shipping demand and older warehousing has developers rushing to meet modern needs. The bottom line for distribution companies and retailers is higher prices for warehouses, adding to the tough economic calculations for online sales.

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IN OTHER NEWS

The U.K. and the European Union began the first round of serious Brexit talks. (WSJ)

The Trump administration unveiled its road map for an overhaul of the North American Free Trade Agreement, a move that allows talks on a revised pact to start in as little as a month. (WSJ)

Sales of existing homes in Canada fell 6.7% from May to June, the steepest decline in seven years. (WSJ)

A measure of New York-area manufacturing retreated in July from a two-year high. (MarketWatch)

An activist shareholder's proxy fight to gain a seat on the Procter & Gamble Co. highlights the growing strains in the consumer-goods retail industry. (WSJ)

Amazon.com Inc. applied for a trademark for prepared food kits, sending shares in Blue Apron Holdings in a steep decline. (WSJ)

U.S. allies barred from buying American-made drones are turning to China as a source of unmanned vehicles for military use. (WSJ)

General Motors Co. is extending a shutdown at its Michigan factory that builds the Chevrolet Bolt electric car as it tries to get control of bulging inventories of unsold vehicles. (Reuters)

J.B. Hunt Transport Services Inc.'s second-quarter profit fell 6.8% to $97.9 million as higher costs offset a 7% gain in revenue. (Journal of Commerce)

Grupo México, S.A.B. de C.V. completed its acquisition of Florida East Coast Holdings Corp. (Railway Age)

Officials in Orange County, Fla., won't give Amazon a tax break for its planned distribution center near the Orlando International Airport. (Orlando Sentinel)

Commercial real-estate group NAI Partners says nearly a dozen large distributors are seeking warehouses in the Houston area exceeding 500,000 square feet. (Houston Chronicle)

China's recent shipping investments are driven by a long-term push for control of strategic assets, trumping near-term economic calculations. (Financial Times)

CMA CGM SA struck a vessel-sharing deal to use Seatrade Group's specialized reefer transport. (Port Technology)

Maran Tankers Management ordered four very large crude carriers from South Korea's Daewoo Shipbuilding and Marine Engineering. (Lloyd's List)

The amount of idled container ship capacity has contracted by more than two-thirds since November, according to Drewry Shipping Consultants Ltd. (Global Trade)

A Federal Maritime Commission panel studying supply-chain innovation will focus on system visibility, reliability and resilience. (Material Handling & Logistics)

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 18, 2017 06:36 ET (10:36 GMT)