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LogisticsLogistics

High-Profit Parcels; Office Supplies Delayed; Buying Into Warehousing

By Paul Page

 

A container of high-yield UPS air shipments at Ontario, Calif., International Airport. PHOTO: WATCHARA PHOMICINDA/ZUMA PRESS

United Parcel Service profits keep growing as the company’s shipment count keeps shrinking. The package giant’s third-quarter revenue climbed 9.2% from a year ago to $23.2 billion and earnings reached $2.3 billion compared with $1.96 billion a year ago. The WSJ’s Paul Ziobro writes the earnings reflect UPS’s strategy to focus on business that generates more revenue and profit rather than sheer volume. The profit also shows the impact of stronger pricing and the leverage UPS holds in a market marked by strong demand and tight transportation capacity. Average revenue per piece grew at a double-digit pace across most of the company’s business lines, including a nearly 15% increase in yield for overnight air shipments. The company is benefiting as more customers try to ship around bottlenecks. UPS will maintain its disciplined approach during the holidays, with plans to tightly control parcel volume to avoid overwhelming its network.

 
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Supply Chain Strategies

Returning to the office in San Francisco in March. PHOTO: JUSTIN SULLIVAN/GETTY IMAGES

Workers in the U.S. are finding that supply-chain logjams are following them back to the office. Deliveries of laptops, desktop monitors and other necessities of technology-driven work are running late, the WSJ Logistics Report’s Lydia O’Neal writes, as shortages of components like semiconductors weigh on production while port delays and other transportation bottlenecks tie up distribution. It’s a turnabout from the scramble that companies faced last year, when millions of workers locked down at the start of the pandemic and sought to set up office work stations at home. The return to work is triggering surging demand for the electronics to provide shared desks and hybrid home-work arrangements. But supply chains haven’t caught up, and research group Gartner says deliveries may be delayed by several months. Manufacturers are trying to adjust operations to get more goods moving. But Gartner says world-wide personal computer shipments actually declined last quarter.

 
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Quotable

“We may have improvements in one commodity or in one business. But almost without fail, the next day, a commodity, a supplier, a logistics provider that we thought was good...offers up a revision to that outlook.”

— GE CEO Larry Culp
 

Supply Chain Strategies

Amazon owns 78 buildings spanning 83.6 million square feet, according to Real Capital Analytics. PHOTO: PATRICK T. FALLON/AGENCE FRANCE-PRESSE

Some retailers are concluding that there is more value in their warehouses than they thought. Some merchants like Amazon and Costco Wholesale are calculating that they can save money and boost their e-commerce operations by owning their facilities. The WSJ’s Mark Maurer reports the 25 largest U.S. retailers acquired about 38 million rentable square feet in new industrial space last year, the highest total for at least the past 10 years. Some are buying the space in an effort to counter an inventory squeeze caused by supply-chain bottlenecks, and the scramble to restock is triggering a need for industrial storage space. Buying is a break from usual industry practices, but for big retailers it can ensure they will have space in markets like the current warehouse capacity squeeze. It also makes a good business investment. Industrial real estate has become one of the best-performing U.S. property markets.

 
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Number of the Day

$11.19

Average revenue per domestic package for all services at United Parcel Service in the third quarter, 12% more than the same quarter a year ago.

 

In Other News

A measure of U.S. consumer confidence increased in October following three months of declines. (WSJ)

U.S. home prices rose 19.8% in the 12 months ending in August. (WSJ)

National emissions-reduction plans around the world fall short of targets set in the Paris climate accord. (WSJ)

General Electric's quarterly profit grew as cost cuts offset disappointing industrial sales and supply-chain challenges. (WSJ)

A major home builder is teaming with a Texas startup to create a community of 100 3-D printed homes near Austin. (WSJ)

A severe drought is hitting business in South America, including river transport for agricultural exports. (WSJ)

Walmart denies regulatory complaints that it forces Chinese suppliers into exclusive relationships. (Caixin Global)

Global container lines want shipping excluded from Europe’s emissions trading and fuel limits programs. (Lloyd’s List)

The ports of Los Angeles and Long Beach will levy fees on containers that remain on docks beyond certain time limits. (The Loadstar)

Union Pacific and BNSF are offering rebates to customers that bring containers to their Los Angeles terminals on weekends. (Journal of Commerce)

Truck drivers at Southern California ports say there is no shortage of drivers but that long waits and other challenges are hindering port trucking operations. (Yahoo Finance)

Japan’s All Nippon Airways projects an approximately $968 million operating loss for the first half of the year. (Nikkei Asia)

Third-quarter profit at C.H. Robinson Worldwide surged 81% to $247.1 million, led by strong gains in its freight forwarding segment. (Dow Jones Newswires)

Third-quarter operating earnings at Danish freight forwarder DSV surged 52.5% to about $699 million despite flat sea freight volumes. (Lloyd’s Loading List)

Grocery micro-fulfillment automation provider Fabric raised $200 million in a Series C funding round. (DC Velocity)

Canadian trucker XTL acquired Georgia-based freight broker CBT. (Today’s Trucking)

 

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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