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Slow-Starting Late Shift; Resetting Chip Supplies; Rethinking Vietnam Factories

By Paul Page

 

A container ship at the Port of Long Beach on Wednesday. PHOTO: IMAGE OF SPORT/ZUMA PRESS

The extended gate operation at the Port of Long Beach appears to be a lonely business. A pilot program offering 24-hour container operations at the Southern California port hasn’t attracted any truckers more than two weeks since it began. The program is an attempt to cut into the congestion that has jammed the ports of Long Beach and Los Angeles, but the WSJ Logistics Report’s Paul Berger writes that it so far is demonstrating the challenges of clearing the backlogs created by a flood of imports. Total Terminals International, which is operating the extended gates, says it is looking to make adjustments to attract truckers. The program underscores the difficulties in aligning operations from the docks to truck drayage companies to warehouses. Terminal operators say many slots for container pickups are going unused at all times of the day, even as container ships continue to line up offshore.

 
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Supply Chain Strategies

Car companies are expected to report a drop in third-quarter U.S. sales, as the chip shortage dents vehicle production. PHOTO: BILL PUGLIANO/GETTY IMAGES

Auto makers are preparing for the global chip shortage that has slammed production to turn into a long-term challenge. Industry analysts say there is growing belief across the sector that the crisis will extend at least into next year, the WSJ’s Mike Colias reports, and that it could lead to a structural upheaval in automotive supply chains that could take years to overcome. Auto makers face a two-pronged challenge as they seek chips to keep their factories running today while game-planning to ensure future supplies. The growing strains in the auto business show how stresses on supplies and production that began early in the pandemic are growing deeper in some sectors, and triggering broader changes in supply chains. Auto makers now are finding fresh bottlenecks among suppliers even as semiconductor makers start to phase out the low-tech microprocessors prevalent in new vehicles, threatening availability in the future.

 
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Quotable

“So far we have had zero deliveries.”

— TTI CEO Bill Peratt, on the terminal’s extended gate hours.
 

Supply-Chain Strategies

Vietnam’s Hai Phong city port. PHOTO: KHAM/REUTERS

That rush toward factories in Vietnam is rapidly slowing down. Strict lockdowns to contain a Covid-19 wave in the largely unvaccinated country have crippled supply chains there. The WSJ’s Jon Emont reports that companies including Nike and Lululemon Athletica have shifted production to other countries, and that some businesses are rethinking their growing reliance on Vietnam. That marks a setback for a country that has taken a growing role in supply chains as companies have looked to spread their manufacturing, and their risk, beyond China. Jonathan Moreno of the American Chamber of Commerce in Vietnam says companies are realizing “you can’t be vulnerable to one country from a supply-chain standpoint.” Covid-19 cases and deaths have started to drop as the vaccination rate in the country rises. But business groups warn that it will take months to restore full production once they get the green light to restart operations.

 
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Number of the Day

91.5%

Increase in long-term contracted ocean container rates in September over the past year, following a 3.2% increase from August to September, according to Xeneta.

 

In Other News

House De­moc­rats put off plans to vote on a roughly $1 tril­lion in­frastructure bill. (WSJ)

New applications for jobless benefits in the U.S. remained near a pandemic low. (WSJ)

Electric-pickup truck maker Lordstown Motors struck an agreement to sell its Ohio factory to contract assembler Foxconn Technology Group. (WSJ)

Electric cargo delivery van maker Workhorse undertook a management shakeup as it worked to restore production. (WSJ)

Retailer Bed Bath & Beyond says supply-chain challenges helped drive a sharp decline in quarterly sales. (WSJ)

Used-car seller CarMax’s quarterly sales jumped 48.7% to a record of $8 billion on rising demand and pricing. (WSJ)

Drug maker Merck is buying Acceleron Pharma for $11.5 billion. (WSJ)

The pandemic has exposed longstanding weaknesses in U.S. transportation networks that are exacerbating disruptions in supply chains. (Washington Post)

China is raising its rare-earths output by 20% to shield its supply chain from U.S. sanctions. (Nikkei Asia)

Apparel retailer H&M says supply-chain disruptions from factories to ports cut into its quarterly sales. (Reuters)

Auto-parts retailer AutoZone is adding 20 large distribution hubs to improve inventory replenishment at its U.S. stores. (Supply Chain Dive)

Grocery chain Albertsons is adopting a technology-heavy procurement system for its perishables supply chain. (Supermarket News)

A strike at a Carrefour distribution center in Belgium operated by Kuehne+Nagel is leaving the retailer’s stores short of inventory. (Retail Detail)

British online fashion retailer Boohoo says higher transport costs cut sharply into the company’s quarterly earnings. (Financial Times)

Home Depot will offer its flatbed capacity to other shippers under an agreement with Loadsmart. (Journal of Commerce)

China’s government is encouraging exporters to sign long-term shipping contracts as a hedge against skyrocketing container freight rates. (The Loadstar)

The Port of Jacksonville, Fla., will spend $48 million to expand container handling capacity. (Port Technology)

The market for supply-chain analytics is projected to more than double to $13.7 billion by 2028. (Modern Materials Handling)

 

About Us

Paul Page is editor of WSJ Logistics Report. Write to him at paul.page@wsj.com.

Follow the WSJ Logistics Report team: @PaulPage, @jensmithWSJ, and @pdberger. and @LydsOneal. Follow the WSJ Logistics Report on Twitter at @WSJLogistics.

 
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