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The peak-season shipping stakes are getting higher for carriers and customers alike.
is asking major retailers to help pay for the extra workers and added space needed during the year’s busiest shipping periods, the WSJ’s Paul Ziobro reports, and wants them to pay when their forecasts veer of course. UPS, like rival
, is grappling with the e-commerce boom, and the company wants to recoup the billions it is investing to handle the surge in online shopping, a shift that’s triggered an upheaval in distribution networks, fractured traditional forecasting and carved back profit margins. FedEx has dropped some retailers that refused price increases, while UPS appears to be taking a more targeted “surge pricing” approach. Amazon.com Inc. tried a variation on the strategy last year when it started charging a premium for merchants to use its warehouses in November and December. UPS appears to be saying with the new effort that it will take on the investment but not all of the risk.
America’s packaged-food giants are being pushed out of the most coveted space in the grocery supply chain. Instead of promoting canned soup, cereal and cookies, grocery stores are giving better play to fresh food, prepared hot meals, and items from local upstarts favored by increasingly health-conscious consumers. The WSJ’s Annie Gasparro reports that’s changing the very physical structure of stores, with grocery chains increasingly carving out space for counters with fresh meals that shoppers can take home. That leaves less room for the industry heavyweights and the packaged goods that saw sales volume fall 2.4% in the first quarter, part of a long-running trend that has accelerated during a long stretch of falling food prices. The push has been fueled by excess supplies of staples like meat and dairy, and left companies like
to win back prime space in shopping carts and grocery shelves.
isn’t playing around in getting its new game console to market. The electronics giant shifted from ocean to air to ship its new Switch machine in its first month on the market, the WSJ’s Takashi Mochizuki reports, a costly logistics measure responding to unexpectedly high demand. One analyst says the change could add $45 in expense per unit, highlighting the premium on early sales in the fiercely competitive game-console market. Strong early sales can help form a kind of eco-system of games built around a particular console, fueling still more sales. Turbulent trends in shipping may not have helped keep Nintendo on the ocean, with lengthy backlogs reported at seaports in Asia and Europe as container lines align capacity with new alliances. Air operators seem to be benefiting: analysts WorldACD say global airfreight volume jumped 16.4% in March, and business out of Europe and Asia soared 19%.
ECONOMY & TRADE
Depressed commodity prices and sagging currency values are adding up to a toxic mix for food distribution in Africa. Along with bad weather and civil conflict in some countries, the conditions are fueling record starvation levels across the continent, even in politically stable countries, amid the worst harvests in three decades. The WSJ’s Nicholas Bariyo reports that falling commodity prices across central and southern Africa have sent currencies more than 30% lower against the dollar in the past six months, spiking inflation and undermining purchasing power. Commodity prices have moderately recovered since last year, but they remain far below their 2013 peak, and the growing toll on populations shows how big shifts in global trading markets can reverberate for years across countries that depend on commodities. Relief groups are struggling to respond since the impact is hitting such a broad swath of the continent.
‘The problem for the shipper is that nobody is able to accurately forecast e-commerce because things are changing so rapidly.’
Number of the Day
Percentage point decline in New Orders index in the Institute for Supply Management report on manufacturing for April, which still left that category in growth territory at 57.5.
IN OTHER NEWS
U.S. factory activity decelerated in April, and measures of new orders and employment signaled slowing momentum in the sector. (WSJ)
Americans’ spending was flat in March, marking the weakest two-month stretch of spending in more than two years. (WSJ)
Crude futures are falling on concerns about growing U.S. oil production in an oversupplied market. (WSJ)
Atlanta officials expect a rebuilt section of Interstate 85 to reopen by Memorial Day, three weeks ahead of schedule. (WSJ)
Rue21 Inc. and its lenders are in negotiations surrounding the teen apparel retailer’s likely bankruptcy filing. (WSJ)
for about $4.3 billion in a deal creating one of Canada’s biggest energy infrastructure companies. (WSJ)
A coalition of big investor groups urged food companies to restrict the use of antibiotics in their meat supply chains. (Financial Times)
Six people were killed and 19 injured when a crane collapsed at a
shipyard in South Korea. (Yonhap)
Flatbed trucking company Daseke Inc. acquired Indiana-based The Schilli Cos. and Big Freight Systems of Winnipeg, Ontario. (Heavy Duty Trucking)
The union representing UPS aircraft mechanics said it will try for a second time to gain clearance to strike in a long-running contract negotiation. (Reuters)
China’s online sales grew 32% in the first quarter. (Xinhua)
Cotton prices world-wide have increased about 9% since the start of the year. (Sourcing Journal)
Japan’s big three shipping lines lost a combined $691 million on container operations in the fiscal year ending March 31. (American Shipper)
Sagawa Express will follow
in raising rates in Japan’s labor-starved parcel delivery market. (Nikkei Asian Review)
First-quarter revenue at Hong Kong’s Orient Overseas Container Line grew 6.4% from a year ago as freight rates were almost flat. (The Loadstar)
Third-party logistics is one of the fastest-growing sectors in the busy transport hub of Chicago. (Chicago Magazine)
will start using North America’s first 60-foot intermodal container to carry goods for Canadian Tire Corp. (Progressive Railroading)
Pennsylvania’s powerful alcohol control agency is seeking a federal waiver to import rum from Cuba. (ABC News)
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 and follow the WSJ Logistics Report on Twitter at @WSJLogistics.
Write to Paul Page at email@example.com