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Canal Seeking Water; Importers Stuck at Customs; Commodities Are Tumbling

By Paul Page

 

The Hyundai Respect at the Panama Canal’s Culebra cut. PHOTO: TARINA RODRIGUEZ FOR THE WALL STREET JOURNAL

The Panama Canal is trying to do something about a worsening water problem disrupting operations at the key passageway for global trade. Canal officials say they face a creeping threat from climate change, the WSJ’s Santiago Pérez reports, including droughts so intense that ships sometimes reduce their cargo to keep from running aground, and giant storms that almost overwhelm its dams and locks. The biggest problem is a decline in rainwater needed to operate the 50-mile waterway, through which 4% of global trade passes. Canal authorities are working on a $2 billion plan to build infrastructure to manage and preserve freshwater reserves, one of the biggest projects so far around the world at maritime facilities facing environmental challenges. Authorities will choose from among 30 proposed solutions likely to include a combination of new dams and reservoirs, and seek bids in about two years, with completion targeted in 2028.

 
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Government & Regulation

The Port of Los Angeles in April. PHOTO: LUCY NICHOLSON/REUTERS

The latest big bottleneck for U.S. apparel importers is coming onshore, at customs checkpoints. Tougher Customs and Border Protection enforcement of import bans on products made from forced labor is tying up goods at ports, the WSJ’s Yuka Hayashi reports, raising complaints about new backups in supply chains that have been buffeted by disruptions and delays over the past year. The disputes follow multiple orders from Washington banning cotton and other products from China’s Xinjiang region. Apparel retailers and other importers have been caught up in the sweep, and have to prove that their often multilayered supply chains are free from forced labor. In one case, Japanese clothing giant Uniqlo had a shipment of men’s shirts held up, said the cotton hadn’t come from China and was told to provide documents such as time cards and pay stubs of workers who picked the cotton used to make the shirts.

 
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Quotable

“Our challenge is how to solve the water problem.”

— Ricaurte Vásquez, chief of the Panama Canal Authority
 

Commodities

A U.S. corn harvest. PHOTO: DANIEL ACKER/BLOOMBERG NEWS

The commodity roller-coaster is hitting a downhill track but experts say the descent isn’t steep enough to raise concerns. Many commodities have dropped at significant rates from their peak pandemic prices, the WSJ’s Ryan Dezember, Georgi Kantchev and Chuin Wei-Yap report, including double-digit drops in copper, corn and soybeans and a 54% slide in lumber futures. That would normally signal trouble in industrial markets. But lumber remains twice the typical price for this time of year while copper, row crop and swine prices are still around their highest levels in years. Shipping markets aren’t showing any stress over the commodities downturn, with the Baltic Dry Index measuring prices for bulk ocean transport surging this month to near-record highs. That suggests the recent drop is part of the broader disruption in traditional supply and demand patterns during the pandemic, and that suppliers and buyers are still struggling to adjust.

 
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Number of the Day

$68.3 Billion

Value of freight moved by truck in cross-border North American operations in April, up 77.5% from April 2020 and 5% compared to April 2019, according to the Bureau of Transportation Statistics.

 

In Other News

ShipBob raised $200 million in a funding round valuing the e-commerce fulfillment business at more than $1 billion. (WSJ)

United Airlines is buying 270 passenger jets from Boeing and Airbus in its largest ever aircraft order. (WSJ)

The United Auto Workers’ board elected its fourth new president in the past three years. (WSJ)

Goldman Sachs expects supply strains in many parts of the U.S. economy to diminish starting in the third quarter. (Dow Jones Newswires)

Inventory stockpiling and stronger compliance than expected with stricter customs rules helped the U.K. avoid border chaos after Brexit. (Financial Times)

China’s Envision Group plans to invest $2.4 billion in an electric-vehicle battery plant in France to supply Renault Group. (Nikkei Asia)

Amazon is increasingly ceding its human-resources to machines to manage and even fire workers based on algorithms and machine learning. (Bloomberg)

UBS says Walmart and Target have sites closer to more of the U.S. population than Amazon despite Amazon’s large logistics investments. (MarketWatch)

Best Buy plans to spend $1.2 billion between now and 2025 on purchasing aimed at making its supplier base more racially diverse. (Supply Chain Dive)

The European Commission will propose a phased-in inclusion of shipping into the bloc’s Emissions Trading System, with full compliance in 2026. (Lloyd’s List)

CMA CGM suspended a service at the Port of Le Havre because of heavy congestion at the French gateway. (ShippingWatch)

Seaspan added six vessels with capacity for 15,000 containers each to its hefty orderbook. (Splash 247)

Turkey broke ground on a planned six-year, $15 billion canal project. (Port Technology)

Singapore arrested two cargo vessels believed to be owned by Ocean Tankers and its defunct parent, Hin Leong Trading. (Ship & Bunker)

Norfolk Southern is reducing domestic intermodal service on two dozen rail lanes because of the safety recall of 5,100 chassis. (Journal of Commerce)

The Reading & Northern Railroad acquired a regional line in Central Pennsylvania for $4.7 million. (Progressive Railroading)

XPO Logistics and an investment affiliate of CEO Brad Jacobs are selling a combined 5 million shares. (Dow Jones Newswires)

 

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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