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Parceling Out Growth; FedEx Building Capacity; Dealing Over Infrastructure

By Paul Page

 

A LaserShip delivery worker in New York. PHOTO: RICHARD B. LEVINE/ZUMA PRESS

The surge in digital commerce-driven package demand is fueling growth beyond the big national parcel carriers. Regional operators including Lone Star Overnight and LaserShip have been expanding well beyond their traditional markets, the WSJ Logistics Report’s Jennifer Smith writes, as they look to capitalize while retailers look for fast, cheaper options to deliver packages to customers’ homes. Their expansion comes as an array of delivery, logistics and technology businesses are finding room to grow as alternatives to the sector heavyweights Amazon, FedEx and United Parcel Service. LSO expects its e-commerce business to nearly triple this year. LaserShip’s demand is so strong it has already stopped taking new customers until January. They’re getting a boost from the surcharges the big parcel carriers have imposed as their networks fill up. Even with their rapid growth, the regional carriers still make up a relatively small share of the fast-growing parcel market.

 
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Transportation

PHOTO: ELAINE THOMPSON/ASSOCIATED PRESS

FedEx will spend $7.2 billion this year as it boosts capacity to cope with a surge in e-commerce volume that has taxed the company’s network. The new capital spending plan is 22% more than what the package giant had planned to invest, the WSJ’s Thomas Gryta reports, but the heavy demand has triggered delays in ground deliveries and pushed the company to suspend service to hundreds of its trucking customers. FedEx handled 783 million ground packages during the quarter ended May 31, down from 819 million from the holiday quarter but a big jump from 574 million in the quarter ended May 2019. Earlier this month, FedEx abruptly suspended service to about 1,400 of its less-than-truckload customers to relieve pressure on its congested network. FedEx has since resumed service to some customers but the action provided a stark warning of potential bottlenecks in the upcoming peak shipping season.

 
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Quotable

“What we agreed on today is what we could agree on. The physical infrastructure.”

— President Biden, on the infrastructure package in Washington
 

Government & Regulation

Construction of a rail extension to Orlando International Airport underway last month. PHOTO: PAUL HENNESSY/ZUMA PRESSConstruction of a rail extension to Orlando International Airport underway last month. PHOTO: PAUL HENNESSY/ZUMA PRESS

Construction of a rail extension to Orlando International Airport underway last month. PHOTO: PAUL HENNESSY/ZUMA PRESS

The White House and Congress have built a bridge toward an infrastructure agreement but face a lot of work to make sure it stands up. The long-sought bipartisan deal would spend roughly $1 trillion on transportation, water and broadband infrastructure. The WSJ’s Andrew Duehren, Kristina Peterson and Sabrina Siddiqui report that advancing the deal will hinge on the passage of more elements of Mr. Biden’s $4 trillion economic agenda. Democrats would have to thread a narrow legislative needle under the two-step process. The core of the plan would spend $579 billion on physical infrastructure above expected federal levels, and a total of $973 billion of investment over five years and $1.2 trillion over eight years. The transportation section includes $109 billion in above-baseline funding for roads and bridges, along with $66 billion for passenger and freight rail, $25 billion for airports and $16 billion for seaports and waterways.

 
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Number of the Day

7.44%

U.S. business logistics costs as a percentage of GDP in 2020, down from 7.57% the year before, according to the annual CSCMP State of Logistics Report.

 

In Other News

U.S. durable-goods orders rose 2.3% in May as April’s growth was revised upward. (WSJ)

New U.S. worker filings for new unemployment claims slipped by 7,000. (WSJ)

Pork prices in China have fallen by half since January. (WSJ)

The Teamsters union approved a resolution designed to help organize Amazon workers. (WSJ)

The White House will bar imports from China’s Xinjiang region of materials used in making solar panels. (WSJ)

Dynamo Ventures raised roughly $43 million for a fund focused on supply chain and logistics startups. (WSJ)

Electric-vehicle component supplier Luminar Technologies plans to increase production of its sensors. (WSJ)

Food giant Archer Daniels Midland is shoring up defenses against what it views as inevitable cyberattacks. (WSJ)

Russia is limiting natural gas sales to European customers, helping drive prices to a 13-year high. (Financial Times)

Amazon is adding regional turboprop freighters from ATR to its air cargo fleet. (The Air Current) 

Garment factories in Sri Lanka are struggling to keep up with resurgent orders as they cope with a new Covid-19 wave. (Sourcing Journal)

U.S. business logistics spending fell 4% to $1.56 trillion last year but transportation spending rose 0.8%. (Logistics Management)

Risk-management firm Interos says supply-chain disruptions are costing large companies an average of $184 million annually. (Port Technology)

U.S. transportation officials met with shipping and retail executives on persistent port congestion. (Journal of Commerce)

Hapag-Lloyd suspended a service at the Port of Rotterdam because of growing port congestion and schedule disruptions. (S&P Global Platts)

Congestion at European ports is triggering barge backups on the continent’s inland waterways. (The Loadstar)

Singapore shipyards Keppel and Sembcorp Marine are in merger talks. (ShippingWatch)

A semiconductor materials supplier says companies risk overbuilding capacity as they expand production to meet a global chip shortage. (Nikkei Asia)

China’s Yangzijiang Shipbuilding received orders for 14 ships that include mostly mid-size and smaller container ships. (Lloyd’s List)

Barge operator Bouchard Transportation will seek creditor approval for a bankruptcy reorganization plan that includes selling its assets. (Reuters)

Digital freight broker Convoy named longtime Amazon executive Dorothy Li as chief technology officer. (GeekWire)

Alibaba logistics arm Cainiao started direct airfreight service between Hong Kong and Lagos, Nigeria. (The Loadstar)

Canadian passenger airline Westjet is starting a freighter division. (Canadian Press)

A survey showed women under age 40 in supply chain jobs reported higher salaries on average than their male counterparts last year. (DC Velocity)

 

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, @CostasParis. Follow the WSJ Logistics Report on Twitter at @WSJLogistics.

 
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