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Truckers Brake on Orders; Climate Quandary; Steeling for Oversupply |
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Today’s newsletter was written by WSJ Logistics Report’s Jennifer Smith
Trucking companies are slamming the brakes on new equipment buys. Orders for Class 8 heavy duty trucks plunged 15% last month to their lowest level in more than a year amid mounting signs that North American freight demand is slowing, the WSJ Logistics Report’s Erica E. Phillips writes. The pullback in what is typically the busiest time for new equipment orders ends an unprecedented runup over 2018 as trucking companies raced to meet surging freight demand. But strong orders earlier in the year appear to have flipped seasonal patterns. The resulting pause could help ease manufacturer backlogs that earlier this year extended as long as nine months, and
bring supply and demand in the truckload market closer to balance after a long stretch when tight capacity sent shipping rates soaring.
Truck manufacturers are walking an economic tightrope on climate change. Engine-maker Cummins Inc. is committed to reducing greenhouse gas emissions from heavy duty trucks, the WSJ’s Greg Ip reports, but trucking operators won’t invest in the technology unless it pays for itself within 18 months. It’s a strict measure that highlights the balance between economic and environmental concerns in a sector central to climate concerns. Road freight accounts for 7% of total emissions, and trucking’s share will expand as freight volumes grow. Cummins is leaving some innovations on the table because trucking customers won’t pay for them. Others aren’t as practical
for over-the-road transport, such as electric engines, where heavy batteries would reduce payload and limit trip length. A carbon tax or tougher emissions standards could get operators to spend more on lower-emission technology, though such changes seem less likely in the U.S. than in Europe.
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Trucks parked in a lot outside of a Navistar International Corp. facility/GETTY IMAGES
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Tariffs aren’t weaning the U.S. off foreign steel. The 25% levy on steel imports has boosted profits for domestic producers, the WSJ’s Bob Tita and Alistair MacDonald report, but sky-high prices have also deepened the U.S. market’s allure for foreign mills that fill more than a fifth of the nation’s steel supply. Hot-rolled coiled sheet steel is selling for 70% higher than elsewhere, tipping the balance for steelmakers in Europe and Asia despite higher tariff and transportation costs. Still, imports of finished steel are down 13% year-over-year through October, and domestic producers like U.S. Steel Corp. are rushing to fill the gap, restarting idled
blast furnaces and hiring back hundreds of workers. The expansions have raised concerns about another steel slump if U.S. manufacturing activity slows and demand plunges among customers like General Motors Co., which is planning to close several U.S. plants.
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More retailers are elbowing their way into the produce aisle. Walgreens Boots Alliance Inc. is teaming up with Kroger Co. to sell groceries at drugstores near the grocer’s Cincinnati headquarters, the WSJ’s Heather Haddon reports. Some Walgreens stores already serve as pickup points for online grocery orders from Kroger, and both merchants are trying to expand their reach as e-commerce rivals and discounters eat into market share. The competition is coming from all sides. Dollar General Corp. plans to add 200 new stores offering refrigerated products and produce, the WSJ’s Aisha Al-Muslim writes, a bet that expanded grocery options will boost the discounter’s traffic in “food deserts” where access to fresh food is limited. But branching into perishables will complicate logistics for companies whose stores are more heavily weighted toward shelf-stable consumer goods.
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“The foreign mills can pay the tariff now and still make money."
| — Bill Douglass of Chicago-based steel processor and distributor Lex Group. |
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16% |
Decline in Shanghai Containerized Freight Index for shipping from Asia to the U.S. West Coast from Nov. 2 to Nov. 30.
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Fumes from a punctured aerosol can of bear repellent sickened dozens of workers at an Amazon.com Inc. warehouse in New Jersey. (WSJ)
U.S. regional economies expanded at a moderate pace this fall. (WSJ)
China confirmed its agreement to a 90-day tariff truce with the U.S. (WSJ)
Corporate optimism about the U.S. economy fell to a two-year low. (WSJ)
Italian business activity contracted last month, putting Italy closer to recession. (WSJ)
Canada arrested the chief financial officer of China’s Huawei Technologies Co.’s at the request of the U.S. for alleged violations of Iran sanctions. (WSJ)
An automated flight-control system at the center of the Lion Air crash sparked a fierce debate at Boeing Co. over how much detail to disclose in a training manual. (WSJ)
A 7.3% jump in sales at Saks Fifth Avenue lifted third-quarter results at Hudson’s Bay Co. (WSJ)
Global consumer brands are spending billions on deals to enter the Indian market. (WSJ)
China-North Korea border trade is thriving again despite tougher sanctions. (Nikkei Asian Review)
Alibaba Group Holding Ltd. is investing $85 million in an e-commerce trade hub at Belgium’s Liege Airport. (Reuters)
Cambodia plans to develop a major freight hub west of Phnom Penh. (Phnom Penh Post)
Glencore PLC projects a 9.8% increase in coal production in 2019. (Lloyd’s List)
A surge in demand for transpacific ocean transport is easing after the tariff cease-fire between the U.S. and China. (The Loadstar)
France’s CMA CGM SA became the first ocean container line to list capacity on the Freightos marketplace. (American Shipper)
European regulators approved DP World’s acquisition of regional shipping line Unifeeder. (Shipping Watch)
South Korea’s Daewoo Shipbuilding & Marine Engineering Co. won a $370 million deal to build up to six liquefied natural gas carriers. (Splash 247)
Oil trading and bunkering operator Straits Inter Logistics Bhd wants to to expand into land transportation and logistics. (The Edge Markets)
Canadian forestry products suppliers say rail service delays have cost their industry $374 million this year. (iPolitics)
Maryland needs to close a $263 million funding gap for a tunnel expansion project considered critical to expanding mid-Atlantic intermodal rail service. (Business Journals)
Supply chain software company DiCentral is acquiring Compello Germany. (Houston Chronicle)
U.S. regional retail chain Shopko is closing 39 stores across the Midwest. (WLUK)
Espanyol became the latest La Liga soccer club to sell its merchandise on Amazon.com. (Sports Pro Media)
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