The pandemic-fueled boom in warehousing demand looks to be over. The average warehouse vacancy rate across the U.S. reached 5.2% in the fourth quarter, according to Cushman & Wakefield, a steep rise from 4.6% the previous quarter and a big jump from the 3.1% vacancy rate the year before. The WSJ Logistics Report’s Liz Young writes that the last three months of 2023 marked the first time the vacancy rate surpassed 5% since 2020, when a surge in e-commerce sales kicked off a frenzied expansion in warehousing construction and leasing. The pace of leasing has been tumbling more recently as inventory levels contract and retailers show caution over consumer demand. Rents are still rising and construction projects are adding new industrial capacity. But the sector runs on long lead times, and with vacancy rates still low by historical standards, warehousing may face even leaner times ahead.

Tensions between food suppliers and their retailing customers are breaking out into the open. International supermarket chain Carrefour says it is dropping several PepsiCo products including Pepsi and Doritos to protest what it calls unacceptable price increases. The WSJ’s Mauro Orru and Jennifer Maloney report that the action marks a rare public standoff between a grocer and food maker after more than two years of rising prices that have roiled global consumer markets. Supermarket operators in the U.S. have also signaled concerns about rising prices in some aisles of stores, even as the overall rate of inflation has slowed. A number of companies boasted through the Covid-19 pandemic about their ability to raise prices without significantly damaging sales. PepsiCo has said product price increases would slow in 2024 following two years of sharp increases and would be roughly in line with the overall rate of inflation.

• U.K. retailer JD Sports is pressing ahead with international expansion despite declining demand. (Financial Times)
• Party City supplier Anagram emerged from bankruptcy following a sale of the business to the company’s bondholders. (WSJ)

One of the world’s biggest drug makers is taking a direct role in part of its supply chain. Eli Lilly will start home delivery of its new anti-obesity drug Zepbound, along with an online service offering telehealth prescriptions. The WSJ’s Peter Loftus reports that the service called LillyDirect marks an unusual step into the drug supply chain by a pharmaceutical company with one of the hottest-selling medicines. The foray takes Lilly into new terrain and turns it into something of a rival to firms and pharmacies that the company sells its drugs to. It is unusual for a drug manufacturer to get so involved in facilitating prescriptions for patients as well as direct shipping. Still, the pharma sector has been marked by turbulence in recent years, including product shortages and high demand for new pharmaceuticals like the Covid-19 vaccines and the new class of weight-loss drugs.

Autonomous driving technology supplier Mobileye Global warned of a steep revenue decline as top customers work off excess inventory built up during supply-chain disruptions. (WSJ)

China’s aviation regulator expects international flights to the country to grow sharply this year as passenger demand accelerates. (WSJ)

An avian influenza outbreak is expected to tighten the supply of egg-laying hens in the U.S. and raise wholesale prices. (WSJ)

Overall shipping activity through the Red Sea has fallen about 20%, but tanker and bulk carrier traffic is largely unaffected. (Lloyd’s List)

Shipping analysts say prices for tankers on Red Sea routes are surging. (TradeWinds)

Australian safety investigators found pilot ladders used in maritime operations made with fake materials and holding false certifications. (Seatrade Maritime)

Analysts expect global semiconductor demand to begin recovering in the second quarter. (Nikkei Asia)

U.S. steel production in 2023 slightly exceeded the previous year’s output with one week left in the year. (Recycling Today)

Alibaba is slashing its stake in Hong Kong-based logistics firm GoGoX amid heavy losses. (South China Morning Post)

Canadian Pacific Kansas City’s 0.1% freight gain in 2023 was the only volume growth reported among North America’s six Class 1 railroads. (Trains)

Third-party logistics provider Kenco is acquiring Dallas-based warehousing provider The Shippers Group. (Journal of Commerce)

Everstream Analytics says extreme weather events will be the top disruptor for supply chains in 2024. (DC Velocity)

The U.S. Postal Service wants to close Wyoming’s last in-state mail processing center and move the operations to Denver. (Laramie Boomerang)

Paul Page is editor of WSJ Logistics Report. Reach him at paul.page@wsj.com.

Follow the WSJ Logistics Report team: @PaulPage, @bylizyoung and @pdberger. Follow the WSJ Logistics Report on X at @WSJLogistics.