Sign up: With one click, get this newsletter delivered to your inbox.
Continue Reading Below
The "Amazon effect" is shaking up the big and tradition-bound business of industrial suppliers. Amazon.com Inc.'s expansion in the business-to-business market has been going on without the fanfare the e-commerce giant generates in consumer initiatives, but the WSJ's Brian Baskin and Laura Stevens report the company now counts more than one million customers in the field, and its moves are rippling across distribution in the industrial supply world. That business, estimated at roughly $130 billion in annual sales, has been slow to adapt to e-commerce, but business-to-business supply companies including W.W. Grainger Inc. and MSC Industrial Direct Co. are moving to catch up, lowering prices and updating sales strategies long built around weighty printed catalogs. Amazon is upending conventions by allowing distributors and manufacturers to sell directly on its marketplace, eliminating middlemen and often undercutting traditional local suppliers, especially for one-time "spot" sales. Industrial suppliers depend on bigger, long-term sales, of course, but even that business faces upheaval in the face of the sheer convenience of online ordering.
The budding U.S. armada of tankers transporting natural gas is facing new competition. Russia is moving quickly to contain the openings U.S. suppliers of liquefied natural gas are seeking in Europe, the WSJ's Georgi Katchev reports, with state-run companies lowering prices and developing their own LNG export facilities to protect their grip on the country's largest energy market. The U.S. is making small inroads in Europe, including the delivery to Lithuania this week of the first shipment of U.S. natural gas to a former Soviet republic. There are widespread predictions that the American exports will help break Russia's dominance of the European energy market, and with it Russia's political leverage there. Europe's consumers are looking beyond politics for the lowest prices, however, and U.S. exporters will have to find ways to lower their delivery costs to go beyond just grabbing Russia's attention and take a meaningful share of the market.
The increasingly fierce competition in retail's sportswear market is triggering new conflicts between supplier and sellers. Under Armour, Dick's Sporting Goods and Kohl's have gotten ensnared in a love-hate triangle, the WSJ's Miriam Gottfried reports, highlighting how brands and retailer are tripping over each other as they try to address changing consumer shopping patterns. Store owners like Dick's and Foot Locker Inc. have been foundering as suppliers look for new sales outlets, including big-box retailers and online markets. Under Armour struck a deal with department store Kohl's that Dick's Sporting Goods suggests is cannibalizing its sales. That's the kind of impact store owners fear as sportwear's heavyweight supplier Nike Inc. rolls out a new agreement to support sales of its goods on Amazon. The apparel makers are trying to protect themselves from a downturn that has led to an epidemic of store closings. But the sales strategies carry risks for the suppliers, opening their products to more discounting and deeper reductions in revenue.
SUPPLY CHAIN STRATEGIES
A disconnect in electronics supply chains looks to be sending suppliers and manufacturers in different financial directions. A shortage of memory chips is hampering Lenovo Group Ltd.'s turnaround strategy, the WSJ's Dan Strumpf reports, pushing the PC and phone maker to its first quarterly loss in nearly two years. Surging demand for memory chips has led to shortages and higher prices of the components across the electronics industry. The tighter supply has boosted the bottom lines of top semiconductor makers like Samsung Electronics Co. and Intel Corp. But the higher costs have squeezed Lenovo's margins, and the company has had difficulty passing the higher costs along because prices for most large customers are set by long-term contracts. Chip makers look to be scaling up production: Research group Gartner Inc. sees "aggressive investment" underway, and recently raised its forecast for semiconductor industry capital spending world-wide this year. That should make more chips available, although there's no guarantee manufacturers will want to bring prices back down.
Continue Reading Below
IN OTHER NEWS
A.P. Moeller-Maersk A/S will sell its Maersk Oil operations to Total S.A. in a deal worth $4.95 billion, separating the energy business from the ownership of Maersk Line. (WSJ)
U.S. consumer sentiment increased in the first half of August to its highest level since January. (WSJ)
The first round of North American trade talks ended with deep fissures over a Trump administration proposal to require a "substantial" portion of autos and auto parts be made in the U.S.. (WSJ)
The U.S. formally launched an investigation into Chinese efforts to secure technology and Beijing's treatment of intellectual property. (WSJ)
United Parcel Service Inc.'s rollout of virtual-reality training for drivers is part of the growing corporate acceptance of the technology. (WSJ)
Deere & Co. farm-equipment sales rose 17% in the last quarter amid declining dealer inventories of used equipment. (WSJ)
Four workers were killed in an explosion at an STX Offshore and Shipbuilding shipyard in South Korea. (Korea Times)
Non-operating ship owners Döhle and Costamare are seeking approval for a chartering brokerage joint venture that could become the largest such operator in the world. (Lloyd's List)
Thieves are using increasingly sophisticated methods to hack into shipping and logistics systems to garner information and divert funds. (BBC)
Canada's Port of Vancouver is asking cargo ships to slow down to protect killer whales. (Vancouver Sun)
The Suez Canal will sharply reduce transit rates for container ships effective Oct. 1. (American Shipper)
TOTE Inc. will expand U.S. domestic container shipping operations with service to Hawaii. (MarineLink)
Australia's Port of Melbourne is starting a rail project aimed at having shuttle trains replace 3,500 trucks movements a day. (The Age)
South Korea's Hyundai Merchant Marine is studying the launch of a polar shipping route starting in 2020. (Splash 24/7)
Overstock.com is in talks with XPO Logistics Inc. to outsource distribution and provide two-day delivery of furniture and other bulky items. (New York Post)
A survey shows Amazon overtaking Flipkart in consumer popularity in India, mainly because of its Prime service and logistics. (Times of India)
Pennsylvania and other states are worried about road funding as growing use of fuel-efficient vehicles cuts into gas tax receipts. (Sharon Herald)
U.K. parcel carrier Hermes opened a 270,000-square-foot sorting hub in the Midlands region. (Logistics Manager)
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 firstname.lastname@example.org
(END) Dow Jones Newswires
August 21, 2017 06:55 ET (10:55 GMT)