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LogisticsLogistics

Online Commerce Crunch; China’s Coal Squeeze; 3-D Printing Around Logjams

By Paul Page

 

A delivery worker on Wednesday ahead of Singles Day in Shanghai. PHOTO: ALEX PLAVEVSKI/SHUTTERSTOCK

The global supply-chain crunch is the main event in China’s biggest shopping season. The annual shopping festival known as “Singles Day” is beginning with product shortages, delivery delays and higher prices, the WSJ’s Stephanie Yang reports, in a potentially troubling harbinger of what’s to come this holiday shopping season elsewhere around the world. Some merchants are sticking with their usual price discounts during the festival in China, while others are offering smaller discounts and cutting online marketplace advertising to help maintain supplies and profit margins. Still, the Taobao and JD.com e-commerce platforms show that delivery of the latest smartphones from major suppliers could take up to some four weeks. Alibaba says it has helped its merchants navigate supply-chain disruptions by stocking warehouses and chartering flights. Still, one seller says it’s tough to find the right balance for inventories and prices: “Do we want to preserve sales or profits?”

Singles Day in China is the world’s largest annual shopping extravaganza. Its creator, the e-commerce giant Alibaba, is now exporting the event to the rest of the world as part of its push to challenge Amazon and others. A WSJ video report finds the company beefing up its logistics as it prepares for greater head-to-head competition with Amazon and other retailers. But Alibaba has to tackle some challenges if it hopes to take a bigger piece of a global e-commerce market expected to reach $1.4 trillion by 2025.

 
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Commodities

Trucks waiting in line for urea solution in Pyeongtaek, South Korea, last week. PHOTO: YONHAP NEWS AGENCY/REUTERS

A coal shortage in China is reaching operations beyond the country’s borders. South Korean truck drivers and farmers in India have been scrambling for a chemical that is extracted from coal since Beijing restricted coal exports. The WSJ’s Jiyoung Sohn and Vibhuti Agarwal report that prices for the ingredient known as urea, which is used in fertilizer and diesel exhaust systems, have soared up to 10 times on secondhand markets and South Korea has banned hoarding. Logistics executives say the shortage could start hitting supply chains in the next month if truck drivers aren’t able to operate. India’s government is trying to stave off a panic as farmers try to stockpile the ingredient for winter-sown wheat. South Korea says it should be able to avert urea supply problems for three months. For now, the country is seeing stark evidence of the sometimes surprising impact of intertwining supply chains. 

 
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Quotable

“Investors want to have exposure but there are very few options.”

— Peter Garnry of Saxo Bank, on the continuing surge in shares of electric-vehicle maker Rivian Automotive.
 

Supply Chain Strategies

3D Metalforge has a facility at the Port of Singapore. PHOTO: 3D METALFORGE

The supply-chain squeeze is giving a boost to 3-D printing. Some companies facing the prospect of late deliveries of critical components have been turning to the business known as additive manufacturing. The WSJ’s Stuart Condie reports that energy giant Chevron accelerated its 3-D printing research-and-development efforts after turning to a specialized manufacturing firm as it faced potential delivery delays of parts for a major project. Issues including cost and print speeds have constrained the 3-D printing industry. But high shipping rates and new techniques are making the technology more attractive, and the strong demand as economies come out of the pandemic has raised the stakes for production. For now, a lack of regulation remains an obstacle to widespread adoption in the oil-and-gas sector. Companies are required to use certified components and processes, so industry executives hope formal standards will help 3-D printing grow even as supply chains normalize.

 
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Number of the Day

$13,924

Average price, per 40-foot container, for Asia to U.S. West Coast transport over the past week, a 26% decline from the previous week but 261% higher than the same week a year ago, according to the Freightos Baltic Index.

 

In Other News

OPEC trimmed its forecast for global oil demand this year as soaring energy prices crimp purchasing. (WSJ)

Electronics conglomerate Toshiba plans to split into three companies in re­sponse to share­holder pres­sure for a more fo­cused struc­ture. (WSJ)

GoPro has been slashing its inventory levels as it adjusts its business model. (WSJ)

PepsiCo and Mars say big changes in supply chains and procurement are needed to meet environmental goals. (Yahoo Finance)

Getting goods to supply-challenged stores by Christmas is turning into a last-minute logistics battle. (NPR)

Soaring freight costs are eroding profits​ at smaller online merchants. (The Information)

Japan’s Isuzu Motors will start mass producing electric commercial trucks next year. (Nikkei Asia)

U.K. industrial company Johnson Matthey will stop producing chemicals for batteries used in electric cars. (Financial Times)

Trans-Pacific container lines are starting to remove premium fees and other charges as they lower freight rates. (The Loadstar)

Los Angeles and Long Beach port terminal operators want to double the fee for daytime truck moves to push more nighttime moves. (Journal of Commerce)

New queuing rules will push vessels waiting for berths at the Southern California ports some 150 miles offshore. (Dow Jones Newswires)

Product tanker operator Hafnia acquired Chemical Tankers and its 32 vessels in an all-stock transaction. (Lloyd’s List)

New York-listed ship owner Global Ship Lease quadrupled its third-quarter profit. (TradeWinds)

Union Pacific says congestion in its international intermodal network out of Southern California is easing. (Trains)

Jury awards against trucking companies in lawsuits over crashes are soaring and driving up insurance costs. (Commercial Carrier Journal)

Passenger airlines in a survey say they expect air cargo volumes to keep rising over the next year from already-elevated levels. (Dow Jones Newswires)

German e-commerce fulfillment technology startup Hive raised $34 million in a funding round that includes Tiger Global Management. (TechCrunch)

 

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  @LydsONeal and @pdberger. Follow the WSJ Logistics Report on Twitter at @WSJLogistics.

 
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