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Parcels Priced to Profit; Heating Up EV Production; Hiring Factory Robots

By Paul Page

 

FedEx Ground's operating margin fell from 13.6% to 10%. PHOTO: ANDREW KELLY/REUTERS

FedEx is pushing to make more money by handling fewer packages. The express giant’s revenue rose 8% to $24.4 billion in its fourth quarter and profit increased 6.7% from last year to $1.9 billion. The WSJ’s Esther Fung reports the gains came despite falling shipment counts across its Express and Ground operations, including an 11% slide in average daily shipments in the Express unit. But the critical measure of yield, or revenue per package, jumped by double digits at its Express services and at the Ground segment at the heart of the carrier’s e-commerce delivery. Operators across the parcel sector, including FedEx rival United Parcel Service, have been pushing to make deliveries more profitable even if the higher pricing costs them some packages. FedEx’s Ground business still faces challenges. The operating profit tumbled 23% and operating margins narrowed sharply on rising costs outpaced the carrier’s improving revenue per package.

  • U.K. delivery company Yodel is scrambling to restore its computer networks after a “cyber incident” left shipments in limbo. (WSJ)
 
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Transportation

BMW's new electric-vehicle plant in Shenyang, China. PHOTO: BMW

The stakes in the race to sell more electric cars are growing. Tesla CEO Elon Musk says in a newly released interview that the company’s new plants in Germany and Texas are “gigantic money furnaces,” the WSJ’s Rebecca Elliott reports, as they burn up investment while challengers to the company’s dominant position in the EV market are accelerating their efforts. BMW just ramped up its bid for a bigger market share by opening a $2.2 billion plant in China to build electric cars, its third factory in China and its biggest investment yet in the country’s booming market for the vehicles, the WSJ’s Raffaele Huang reports. BMW’s once strong place in China has been eclipsed in recent years by Tesla and Chinese brands. Tesla’s experience shows that new factories are cash-hungry ventures: The company spent $11 billion in the first quarter on items including materials, manufacturing and shipping.

  • China-based Tesla battery supplier Contemporary Amperex Technology raised about $6.7 billion in one of the world’s biggest share sales this year. (WSJ)
  • Some developers are rolling out faster, more powerful vehicle chargers that may boost adoption of heavy-duty electric trucks. (Bloomberg)
 
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Quotable

“Overwhelmingly our concern is, how do we keep the factories operating so we can pay people and not go bankrupt?”

— Tesla CEO Elon Musk, in a May 30 interview with a Tesla owners’ club that was released this week.
 

Supply Chain Strategies

A robot carries a pod containing wafers in a GlobalFoundries facility in Singapore. PHOTO: ORE HUIYING FOR THE WALL STREET JOURNAL

A new GlobalFoundries semiconductor factory in Singapore shows both the potential behind innovation in manufacturing and the challenges. With the persistent beeps, whooshes and whirs of robotic arms and other machinery in motion, the plant is a shining example of automation in action, and of Singapore’s success in reversing its downturn in industrial production. The WSJ’s Jon Emont reports the new factories are bringing more jobs for robots than people, highlighting a dilemma for countries that want to expand employment by luring more manufacturing. The city-state has aggressively wooed such highly automated factories. But Singapore has more factory robots per employee than any country other than South Korea, by one measure, and the number of manufacturing workers there has declined for eight straight years. Singapore’s economy is well-suited to the approach, but the highly automated model could prove unpopular in populous countries such as the U.S.

  • Singapore’s core inflation rose to a 13-year high of 3.6%. (Straits Times)
 
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Number of the Day

$7,981

Average rate per 40-foot container for shipping from China to the U.S. West Coast in June, up 160% from a year ago and 2.7% higher than average spot rates, according to Xeneta.

 

In Other News

Purchasing managers’ surveys show U.S. and European economies slowing sharply this month. (WSJ)

New applications for unemployment benefits in the U.S. remain near historic lows. (WSJ)

China has slashed its imports of liquefied natural gas from the U.S. while stepping up shipments from Russia. (WSJ)

United Airlines is cutting dozens of domestic flights at heavily-congested Newark Liberty International Airport. (WSJ)

Industrial baked-goods supplier Gold Standard Baking is preparing to sell itself out of bankruptcy after succumbing to high labor and materials costs. (WSJ)

Toyota cut its July global production plan by 50,000 vehicles amid semiconductor shortages and Covid-related supply disruptions. (Reuters)

The chief supply chain officer at Walgreens says the chain is relying more on micro-fulfillment centers and other strategies to reach customers faster. (Sourcing Journal)

Workers at three German ports walked off their jobs again over increasingly contentious contract negotiations. (The Loadstar)

The U.S. Army Corps of Engineers endorsed a plan to deepen the channel at the Port of New York and New Jersey. (Journal of Commerce)

Product tanker operators say robust demand and high rates suggest “we're going to have fun for a number of years.” (Shipping Watch)

A survey shows 247 ships with some 3,500 seafarers have been abandoned around the world. (Lloyd’s List)

The number of shipping containers lost at sea quadrupled to 3,113 in 2020 and 2021 from the previous two-year period. (gCaptain)

Container throughput at Australia’s Port of Melbourne tumbled 6% in May. (Port Technology)

U.S. regulators granted drone company Zipline International status as a small air carrier. (Air Cargo World)

 

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

 
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