Today's Top Supply Chain and Logistics News From WSJ

By Paul Page Features Dow Jones Newswires

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The shipping industry's recovery may be in danger running out when it's barely just started. A glut of tonnage that will hit the water over the next two years threatens to derail a nascent recovery, the WSJ's Costas Paris writes, after a six-year slump that triggered broad consolidation and reset the lineup for top global shipping providers. Demand is expanding this year as global trade grows, but analysts say a rush of orders for mega-ships capable of carrying more than 20,000 containers suggest shipping's supply-demand balance will soon take another turn. Shipowners insist rising demand will absorb the new capacity, and those with the biggest ships stand to benefit. But analysts like Alphaliner say trade would have to grow at an 8% annual rate to fill the new ships and prevent new price wars. Rates have been slipping this fall after an upturn earlier in the year, a decline carriers hope is just a seasonal blip and not a harbinger for the market in 2018.

Sears Holdings Corp.'s battle for survival is turning into a struggle between the iconic retailer and its suppliers. Bleeding cash and losing customers, Sears is scrambling to keep the companies that provide its products from bolting, even as the suppliers cut off credit lines, toughen payment terms and withhold shipments. The WSJ's Suzanne Kapner reports Sears is paying some companies including LG Electronics Inc. and Samsung Electronics Co. in cash to guarantee shipments, signaling the declining confidence suppliers have in a retailer that once accounted for nearly a full percentage point of U.S. economic output. Companies that serve retailers have grown more wary of customers as bankruptcies among brick-and-mortar stores have mounted this year, in some cases sending disputes over inventory to court. Sears is trying to avoid bankruptcy by slashing costs, but the shorter payment terms with suppliers tie up capital and cash, and making it harder for the retailer to win back shoppers with the right merchandise at the right time of year.

Tesla Inc.'s bid to crank up production of a mass-market electric car is hitting a critical hurdle in the company's supply chain: labor. After tough experiences boosting production of its first sport-utility vehicle and the first editions of its Model 3 sedan, the auto maker is wrestling with mounting signs of labor unrest that the WSJ's Tim Higgins writes could disturb its effort to build its first electric car for the masses. Tesla made just 260 Model 3 cars during the third quarter, missing its projection of more than 1,500 while workers undertook some assembly by hand. The ramp-up has stirred the United Automobile Workers union, which since last fall has kept organizers near Tesla's factory. There have already been disputes between the UAW and Tesla, raising questions of whether the factory will struggle with the demands of a leader whose vision of Tesla bucks tradition and who sees the business more as a Silicon Valley software pioneer than as manager of auto plants.

ECONOMY & TRADE

New trade restrictions that could help revamp or restrict the U.S. solar power industry are taking shape. Federal trade officials are recommending the Trump administration impose a tariff of up to 35% on imported solar panels, the WSJ's Erin Ailworth reports, a step toward new barriers aimed at protecting domestic solar manufacturers from low-priced foreign products. The U.S. International Trade Commission recommendations also include import quotas and a licensing fee, and the White House has until January to decide on any actions. The trade dispute in a small but growing field has become a flashpoint in debates over global trade, energy policy and domestic jobs. Some panel makers say they need protection against a flood of underpriced imports, but panel installers and others in the solar industry say a tariff would raise prices and hurt demand in a business made more affordable by cheap imports. Both sides claim thousands of American jobs are on the line.

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QUOTABLE

IN OTHER NEWS

A measure of U.S. consumer confidence rose in October to the highest level in nearly 17 years. (WSJ)

U.S. home prices rose in August at their strongest rate in more than three years. (WSJ)

Transportation, materials-moving and warehouse employment costs rose 1.1% in the third quarter, faster than the U.S. average growth rate. (WSJ)

Mexico's economic output declined in the third quarter. (WSJ)

Canada's economy contracted in August on a slump in manufacturing and lower energy production. (WSJ)

A U.S. Senate panel will hear testimony today on former congressman Scott Garrett's nomination to head the Export-Import Bank. (WSJ)

Airbus SE will miss delivery targets for one of its most popular jets after a series of production hiccups involving key suppliers. (WSJ)

Blackstone Group LP bought a 4-million-square-foot portfolio of Southern California logistics properties for $500 million. (WSJ)

Under Armour Inc. will push more direct-to-consumer sales after reporting its first-ever quarterly sales decline. (WSJ)

Industrial equipment supplier Rockwell Automation Inc. rejected a roughly $27.5 billion takeover bid from Emerson Electric Co. (WSJ)

Chicago-based exchange operator CME Group plans to launch a futures contract based on bitcoin. (WSJ)

Kellogg Co. saw a surprise improvement in sales as growth abroad offset trouble in the U.S. (WSJ)

Startup Latch began deliveries using special locks at customer homes in New York under an agreement with Jet.com. (TechCrunch)

Overseas demand fueled a $453 million third-quarter profit at truck engine maker Cummins Inc., 57% better than a year ago. (Indianapolis Business Journal)

U.S. average national diesel fuel prices rose to the highest level since mid-2015. (Commercial Carrier Journal)

China's Cosco Shipping Holdings swung to an $810 million profit in the first nine months of the year on strong revenue and pricing growth. (The Loadstar)

Cosco's energy unit will order 14 very large crude carrier tankers from state-run China shipyards. (Splash 24/7)

Japan's big three container lines all reported double-digit revenue gains in the six months ending Sept. 30. (American Shipper)

Shipping line Nippon Yusen K.K. agreed to acquire the 41% of Yusen Logistics that it does not already own. (Air Cargo News)

The U.S. Army Corps of Engineers approved a $213 million plan to deepen South Carolina's Port of Charleston harbor. (Charleston Post and Courier)

Authorities say robberies of freight trains in Mexico are rising. (Journal of Commerce)

Amazon is building a 1 million-square-foot distribution center in Macon, Ga. (Macon Telegraph)

United Parcel Service Inc. signed leases for two sites in Brooklyn and Queens for distribution centers totaling 1.7 million square feet. (Real Deal)

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

November 01, 2017 06:47 ET (10:47 GMT)