Today's Top Supply Chain and Logistics News From WSJ

By Paul Page Features Dow Jones Newswires

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The U.S. scrap exporting boom may be going down the tubes. The giant trade surplus that the U.S. enjoys in, well, trash is in a heap of trouble since China imposed new restrictions on "foreign waste" and cracked down on the use of old newspapers, crumpled boxes and empty soda bottles in industrial operations. WSJ Logistics Report's Erica E. Phillips writes the shift has cut into the outbound volume of an enormous yet little seen U.S export commodity and left recycled materials piling up at the warehouses of American scrap traders. The U.S. exported $16.5 billion in scrap last year, and paper and plastic scrap exports to mainland China topped $2.2 billion. The trash gains new life in China, and sometimes comes back to America reincarnated at factories as new boxes, toys and other goods. Global prices have tanked since the biggest customer effectively withdrew from the market. Traders are looking for new customers, but none can make or trash a market like China.

Bigger is proving better at the Panama Canal. More than a year after completing the $5.4 billion, nine-year project to expand locks to meet the maritime world's drive toward mega-ships, the canal is helping reshape trade flows and supply chains. The WSJ's Costas Paris writes the bigger Panama Canal has handled more than 2,000 vessels that couldn't fit through the older canal, adding tens of millions of dollars in new tolls and triggering a trading boom at U.S. East Coast ports. The first year of operations has allayed some fears that investments at those ports to cater to the bigger vessels wouldn't pay off. The bigger Panama Canal instead appears to be drawing business away from the Suez Canal, where weekly capacity on Asia-North America lanes has fallen sharply since the new locks opened. It's also appears to be drawing some container volume away from the West Coast, a diversion that's likely to draw more investment beyond the gateways as railroads, truckers and other logistics operators follow the shifting trade.

Tesla Inc. is having deeper trouble than anyone imagined getting the supply chain for its new Model 3 sedan lined up with the company's futuristic transport vision. Unknown to the outside world, major portions of the car were still being banged out by hand as recently as early September, the WSJ's Tim Higgins reports, far from the advanced assembly line Tesla has boasted of building for a vehicle meant to take its luxury electric-car business into the mass market. The rough and highly manual operations -- one worker described workers last month struggling to move large pieces of steel to weld together instead of using robots -- came as Tesla cited "production bottlenecks" as the reason it gets only a fraction of its promised cars completed last quarter. The company faces an enormous challenge in getting its supply chain scaled up: Tesla plans to build 500,000 vehicles a year but produced only 84,000 Model S sedans and Model X SUVs last year. General Motors Co. delivered more than 27,000 vehicles every day last year.

SUPPLY CHAIN STRATEGIES

Nothing is slowing down the logistics hiring surge for the holidays. Warehousing and storage companies added 4,800 jobs from August to September and parcel carriers also boosted payrolls, WSJ Logistics Report's Jennifer Smith writes, as the freight and logistics sector defied a broader downturn in hiring in the U.S. last month. Back-to-back hurricanes that battered Texas and Florida tamped down overall economic activity in September, but the hiring at distribution centers and package operators is aimed at setting up operators for another forecast surge in online sales. Forecasts for this holiday season range from 11% to 21% growth in online sales over last year, well ahead of single-digit expansion at brick-and-mortar stores. That could strain some logistics operations, and a tight U.S. labor market is already accelerating seasonal recruiting efforts and calling for higher pay in warehouses.

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Costco Wholesale Corp. is stepping up its home-delivery capabilities in a bid to jumpstart its e-commerce strategy. The company has been slow to embrace online shopping and still would rather see its customers in its big-box stores, the WSJ's Sarah Nassauer reports, but competitive moves in the grocery arena are pushing Costco to bend in the direction of a changing business. That will include two-day delivery of certain items from its own website and an expanded partnership with Instacart. It's a sign that even skeptics of online grocery shopping are adjusting while still trying to figure out how to translate the difficult logistics into profits. The big driver is Amazon.com Inc.'s surprise buy of Whole Foods, an acquisition that sent grocers and the sector's investors scrambling to assess the impact on business. Costco still has to figure out if it can maintain its profit margins while delivering groceries, but the retailer has already decided it can't lose the revenue and its market share.

What a difference a month makes for CSX Corp. The freight railroad facing a revolt last month from its shipping customers now has many on board trumpeting a turnaround in the carrier's operations. A regulatory hearing this week on CSX service problems that was postponed in September because of Hurricane Irma is taking a new turn, the WSJ's Paul Ziobro reports, with several shippers now telling the Surface Transportation Board that the railroad looks like it has gotten its tracks in order. CSX itself says its transit times have improved and congestion has dissipated, with Chief Executive Hunter Harrison saying in a statement that "the previous transitional issues are resolved." The backing from its customers may carry more weight than the metrics, and will give Mr. Harrison more room to turn CSX operations toward "precision railroading" and give investors more confidence in the outcome.

QUOTABLE

IN OTHER NEWS

The Organization for Economic Cooperation and Development expects strong growth in the global economy to continue into 2018, but the U.K. and Russia will likely miss out. (WSJ)

The U.S. Postal Service is proposing to raise the price of a first-class stamp by a penny to 50 cents. (WSJ)

Japan's Denso Corp. will spend $1 billion to expand manufacturing in Tennessee aimed producing automotive parts for vehicles with electric engines and self-driving technology. (WSJ)

U.S. trade officials ruled Bombardier Inc. unfairly discounted sales of a new jet, setting up a battle over whether Boeing Co. suffered harm from the competition. (WSJ)

Canadian employment rose in September for a 10th straight month and wages increased at the fastest pace in over 17 months. (WSJ)

U.S. traffic fatalities surged nearly 6% last year, including a 5.4% increase in deaths in crashes involving large trucks. (WSJ)

Sembcorp Marine will sell nine oil drilling rigs to Borr Drilling Ltd. for more than $1.3 billion. (WSJ)

U.S. wholesale inventories rose at the fastest pace in nine months in August. (CNBC)

Container freight rates from Asia to Europe are sliding as a tepid peak season for carriers fizzles out. (The Loadstar)

Tesla is putting off the planned unveiling of its semi-truck until Nov. 16. (Reuters)

Belgian ports heavily dependent on trade with the U.K. are concerned about the impact of Brexit. (The Guardian)

Six rail unions bargaining together reached a tentative contract agreement with U.S. freight railroads. (Progressive Railroading)

Stolt-Nielsen Ltd. doesn't expect the chemical tanker market to improve until late next year. (Seatrade Maritime)

Technology-focused freight forwarder Flexport is adding supply chain finance to its services. (TechCrunch)

The U.K.'s Royal Mail says it will "use all legal options" to stop a strike by delivery workers. (Logistics Manager)

United Parcel Service Inc. took delivery of the first of 14 Boeing. Co. 747-8 freighters the carrier has ordered. (Louisville Courier-Journal)

APM Terminals dropped its lease at the Port of Tacoma after Matson Navigation Logistics Inc. let its service contract expire. (Port Technology)

West Memphis port authorities are completing a $10.9 million project to improve the Tennessee river port's road and rail connections. (Memphis Commercial Appeal)

Cardinal Logistics is laying off 69 workers in Virginia after unexpectedly losing a contract with Kroger Co. (Roanoke Times)

California startup Farmstead is expanding food-delivery service with "micro-warehouses" to provide rapid delivery. (San Francisco Chronicle)

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

October 09, 2017 06:55 ET (10:55 GMT)