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Enduring Supply Chain Changes; Reshoring Hurdles; Russia’s Shortfall
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The APM Terminals container terminal at the Port of Los Angeles. PHOTO: DAMIAN DOVARGANES/ASSOCIATED PRESS
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A return to normal for supply chains is becoming anything but a return to prepandemic conventions. Industry experts say experiences during the past three years of disruption, along with a changing geopolitical environment, are leading to broader, potentially long-lasting changes in how companies manage the flow of goods, from the sourcing of raw materials to manufacturing and distribution. The WSJ Logistics Report writes that changes include a greater focus on regional production, efforts to diversify sourcing of raw materials and parts, and moves to gain greater visibility into both suppliers and the suppliers’ suppliers. The broad changes in supply chains are aimed at ensuring resilience. Taken together they
mark the biggest shift in how supply chains are managed since China’s entry into the World Trade Organization in 2001 ushered in a new era of globalization. Experts say some efforts may fade over time, but many changes will prove enduring.
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“The move away from China, to rewire supply chains to where you have multiple local supply chains, is really just starting.”
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— Kearney’s Patrick Van den Bossche
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Trucks in Mexico wait to cross into the U.S. at the Ciudad Juarez border crossing. PHOTO: JOSE LUIS GONZALEZ/REUTERS
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Companies looking to solve various supply-chain problems by making goods closer to home are finding that nearshoring is easier to talk about than to implement. The strategy of shifting production from Asia to North America has accelerated in the wake of the Covid-19 pandemic and growing geopolitical tensions. The WSJ Logistics Report’s Paul Berger writes the move has also brought new costs and logistics hurdles for supply chains that are adding a new twist to globalization. Automotive-parts supplier Premium Guard started manufacturing in Mexico in 2020, helping it avoid many of the bottlenecks that hit international shipping. But the company has also had to develop new suppliers, and its
factory struggles to compete with Chinese prices because the range of raw materials available in Mexico is limited and more expensive than in China. Still, many companies say shorter transit times and other benefits offset the complications.
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“China’s losing out, but it’s not lost.”
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— Chris Rogers, head of supply chain research at S&P Global Market Intelligence
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The Russian shipbuilding sector is facing its biggest challenge since the collapse of the Soviet Union, some executives say. PHOTO: PETER KOVALEV/ZUMA PRESS
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Russia’s shipyards are running out of key engine parts. The shortfall at the country’s big United Shipbuilding operation is delaying or halting the production of tankers and ocean vessels the country needs to move its oil and cargo. The WSJ’s Costas Paris reports the shortfall is the result of sanctions since Russia invaded Ukraine, disrupting the flow of engine parts, propellers and fuel pumps. Clients for the ships are mostly from inside Russia and so production problems will mostly be felt within the country, with a limited impact on global shipbuilding. Still, delays could send waves across some markets such as the oil sector, where prices for older tankers have been rising sharply as
companies seek vessels to move Russian crude. Yards are trying to make some parts themselves or replace them with imports from China, but creating new supply chains in shipbuilding is slow and costly.
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Russian ships are ferrying Iranian artillery shells and other ammunition across the Caspian Sea to resupply troops fighting in Ukraine. (WSJ)
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Companies, countries and organizations are attracting consumers and investors with promises to be more environmentally friendly. But what happens when they fall short?
In a video report, the WSJ looks at how greenwashing is used to mislead consumers about the sustainability of products and services.
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$2.56
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Average airfreight rate per kilo worldwide in the week ending April 16, down 37% from the same week last year, according to WorldACD.
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Carrier Global is in talks to acquire German industrial manufacturer Viessmann for about $13 billion including debt. (WSJ)
The Supreme Court turned away appeals by oil companies seeking protection from potential liability under state laws for harms caused by climate change. (WSJ)
Criminal groups have used sophisticated phone encryption services to advance cocaine smuggling on container ships to European ports. (New Yorker)
The European Union is setting plans to allow it to take control of the manufacture of drugs and vaccines during a public health emergency. (Financial Times)
Indonesia is barring export of raw materials critical to electric-vehicle production in an effort to attract investment for related industries at home. (Nikkei Asia)
SpartanNash CEO Tony Sarsam says the grocery distributor is still facing supply chain problems and inflation pressures. (Supermarket News)
Container throughput at the Port of Rotterdam declined 11.5% in the first quarter. (Container News)
Canada approved a fourth container terminal at the Port of Vancouver. (The Loadstar)
Ocean Network Express is testing the use of a wind foil system on one of its feeder container ships. (Maritime Executive)
Union Pacific is considering slowing the pace of hiring in the second half of the year amid a cloudy economic outlook. (Reuters)
Germany’s Berlin-Brandenburg airport canceled all passenger flights and Hamburg flights were disrupted after ground services workers staged a one-day strike. (Deutsche Welle)
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The Risk & Compliance Forum on May 9 will feature speakers including Glenn Leon, chief of the fraud section at the Justice Department, Assistant Secretary for Export Enforcement Matthew Axelrod and Elizabeth Atlee, chief ethics & compliance officer at CBRE.
You can register here.
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