Today's Logistics Report newsletter was written by Paul Berger.

Prologis is making a big bet on strong demand continuing in the warehouse sector. The San Francisco-based logistics property giant is offering to buy Duke Realty in an all-stock deal that values Duke at about $23.7 billion, the WSJ’s Will Feuer writes. Prologis already operates about 1 billion square feet of industrial space worldwide for companies such as Amazon.com, Walmart and FedEx. Duke Realty would add another 165 million square feet to Prologis’s U.S. footprint. Prologis's offer comes as warehouse demand remains strong two years into the pandemic, with tight capacity continuing to drive up rents. Importers are looking for space while they stockpile goods as a hedge against shipping delays. Vacancy rates for logistics properties in the U.S. fell to 3.4% in the first quarter of this year, real-estate firm JLL says, and average asking rents rose 7%, the largest quarter-over-quarter increase in more than 20 years.

China’s Covid-19 lockdowns are crushing car sales. Passenger-car sales in China plummeted 36% year-over-year in April as prospective buyers stayed home and factory shutdowns in manufacturing centers caused shortages of parts and vehicles. Companies such as Tesla, Volkswagen and Nissan are among the hardest hit by the supply-chain disruptions, the WSJ’s Selina Cheng reports, as production stoppages and slowdowns also cut into exports. Tesla’s sales in China were down 94% year-over-year in April. Even with some restrictions now lifted, production at Tesla’s Shanghai factory, which exports one third of the vehicles it produces, is down more than 90% compared to a few months ago. There are few signs of a swift bounceback as the virulent Omicron variant wreaks havoc with China’s zero-Covid policy and exacerbates weakness in the Chinese economy. China’s Passenger Car Association forecasts continuing sales declines for May.

Soaring energy prices triggered by Russia’s invasion of Ukraine are threatening global economic growth through 2022 and beyond. Oil and gas prices could remain high for months as Russia hunkers down for a protracted conflict, the WSJ’s Paul Hannon and Alistair MacDonald report, stoking inflation, forcing consumers to cut spending and driving up transportation costs. The national average price for diesel in the U.S. reached a record-high of $5.623 per gallon in the past week, according to government figures, and the average price in California hit $6.461. Those prices are weighing on shipping operations, but the bigger impact may come as the cost hits the broader economy and Americans reduce spending on goods and services. The U.S. should benefit from surging revenues from domestic energy production. But import-focused Europe is expected to see more wealth flow overseas as some member nations teeter on the brink of recession.

Here are recent developments following Russia’s invasion of Ukraine.

A European forecast projects Ukraine’s economy will contract 30% this year. (WSJ)

Russian missiles fired into the port city of Odessa destroyed a consumer-goods warehouse. (WSJ) 

Ukraine says shiploads of stolen Ukrainian grain have reached the Mediterranean Sea on Russian-flagged vessels bound for the Middle East. (WSJ)

Ukraine could run out of civilian gasoline supplies within three weeks. (WSJ)

Ukraine says it will suspend the flow of gas through a key transit point that supplies Russian gas to Europe. (Reuters)

Ransomware attacks are declining because sanctions on Russia are making it harder for hackers to move money and make purchases overseas. (MSN)

For the latest updates from Russia and Ukraine, click here.

Oil futures slip below $100 a barrel on fears of global economic headwinds and Covid-19 lockdowns in China. (MarketWatch)

Toyota is projecting a 21% drop in profits this fiscal year as higher materials costs offset growing revenue. (WSJ)

Peloton Interactive says excess inventories contributed to a $757.1 million loss last quarter. (WSJ)

Arm­strong Floor­ing filed for bank­ruptcy protection on the impact of sup­ply-chain disruptions and rising ma­te­ri­als and trans­porta­tion costs. (WSJ)

Amazon is recruiting mom-and-pop shops in rural America to test delivery of the company’s packages through the stores. (Vox)

The CEO of Stellantis says the U.S. and Europe must produce more electric-vehicle batteries to keep pace with demand. (The Detroit News)

Panasonic is considering building a new battery plant in the U.S. to supply Tesla. (Nikkei Asia)

Problems implementing an enterprise resource planning software system cost J&J Snack Foods some $20 million in second-quarter revenue. (Supply Chain Dive)

KKR is expanding its warehouse investment business to include development of new distribution centers. (Bloomberg)

The Baltic Dry Index for commodities shipping rates reached its highest level since mid-December. (TradeWinds)

Beijing will allow non-Chinese container lines to serve domestic shipping lanes between four ports. (Lloyd’s List)

The U.S. Maritime Administration raised the funding for port infrastructure grants this year to $684.3 million. (Maritime Executive)

Rail regulators will require the four largest U.S. railroads to provide weekly updates on their service recovery plans. (Logistics Management)

Industrial parts distributor DXP Enterprises plans to make more acquisitions after increasing revenue 30% in the first quarter. (Industrial Distribution)
 

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

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