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Supplying Disruption’s End Game; Uneasy Grain Harvests; Uber's Profits

By Paul Page

 

The container ship CMA CGM Laperouse at Georgia's Port of Savannah. PHOTO: STEPHEN B. MORTON/ASSOCIATED PRESS

Retailers and manufacturers trying to solve the supply-chain snarls before the holidays are turning to a bigger question: When will the disruption end? Projections for when the bottlenecks and materials shortages may ease are extending deeper into 2022 and even beyond, the WSJ Logistics Report’s Lydia O’Neal writes, and many companies are adjusting purchasing and production strategies for the long haul. That includes expanding lists of suppliers and reconfiguring factory lines to make them more modular and resilient to changes in the flow of components. Many companies already are building more safety stock into their planning. That suggests many of the changes built into supply chains over nearly two years are likely to outlast the pandemic and the bottlenecks that the virus has triggered. Some experts say real relief from the backups and uncertainty may only come when countries beat back Covid-19 or can adjust to the virus.

 
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Commodities

Wheat loaded for transport in Kentucky in June. PHOTO: AMIRA KARAOUD/REUTERS

Agriculture supply chains are getting scorched at the source. A poor spring wheat harvest and concern over the winter crop have pushed prices for the grain to their highest levels in years, the WSJ’s Ryan Dezember reports, as importing countries stock up while key producing countries see inventories declining. Domestic wheat stockpiles in the U.S. are down 18% from a year ago and at their lowest level since 2007, while production this year is expected to fall 10% below last year despite an uptick in acres planted with wheat. The tumult over wheat is the latest in a string of disruptions in global commodities, including turbulence over farm products that is feeding food inflation. U.S. farm shipments have been on a roller-coaster. After rising earlier this year, grain carloads on U.S. railroads fell 14.7% in September and 6% in October, according to the Association of American Railroads.

 
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Quotable

"We feel that the supply chain constraints will continue to be in the market all the way to the second half of calendar year 2022 before we see them abating.”

— Tarek A. Robbiati of Hewlett-Packard Enterprise
 

Transportation

PHOTO: JOHN MARSHALL MANTEL/ZUMA PRESS

Uber Technologies is getting closer to profitability and its delivery operations are along for the ride. The company reported an $8 million adjusted profit before interest, taxes, depreciation and amortization in the past quarter, the WSJ’s Preetika Rana reports, as a recovery in its rides business joined improvements in food delivery and freight operations. The Uber Freight brokerage business unit reported that revenue rose 40% from last year’s third quarter. That was behind the 65% growth rate in the second quarter, but the $402 million in revenue was 15.5% ahead of the previous three-month period. More significantly, Freight cut its adjusted loss on earnings before interest, taxes, depreciation and amortization by 52% to $35 million, getting the business closer to break-even as it prepares to close its acquisition of transportation management company Transplace. The unit has big ambitions in technology that may carry more weight under a profitable business.

 
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Number of the Day

$9,857

Average price for transporting a 40-foot container from Shanghai to Los Angeles the week of Nov. 4, down 20.7% since hitting an annual high six weeks before, according to the Drewry Shipping Consultants World Container Index.

 

In Other News

The U.S. trade deficit widened in September to a record level as imports rose 0.6% while exports tumbled 3%. (WSJ)

New worker filings for unemployment benefits in the U.S. fell to a pandemic-era low of 269,000 claims. (WSJ)

Labor costs in the U.S. rose at a sharp rate in the third quarter and labor productivity fell 5%. (MarketWatch)

New federal rules will require many employers to ensure by Jan. 4 that their workers are vaccinated or tested weekly for Covid-19. (WSJ)

Toyota shrugged off the effects of a semiconductor shortage and reported higher profit in the most recent quarter. (WSJ)

Tesla and Hertz Global Holdings are negotiating over how quickly Hertz will receive deliveries from a bulk order of 100,000 Tesla electric cars. (WSJ)

Electric-truck startup Nikola will likely pay $125 million to settle a regulatory investigation into allegedly misleading statements made by its founder. (WSJ)

A former Rivian Automotive executive is suing the electric-vehicle startup over alleged gender discrimination. (WSJ)

Peloton Interactive sharply lowered its outlook and warned its annual revenue could be nearly 20% below its earlier projection. (WSJ)

Kellogg is coping with rising costs from a monthlong strike alongside the impact of supply-chain disruptions. (WSJ)

Australian regulators say the global supply-chain crunch is creating “disastrous knock-on effects” on the country’s importers and exporters. (Sydney Morning Herald)

Deutsche Post DHL sharply raised its earnings outlook after operating profit jumped 29% in the third quarter to $2.1 billion. (Reuters)

Industrial parts distributor Fastenal’s daily sales are growing at a double-digit pace. (Industrial Distribution)

Tanker operator Euronav lost $105.9 million in the third quarter as revenue fell more than 140% to $99.1 million. (ShippingWatch)

Commodities carrier Safe Bulker’s $55.4 million third-quarter earnings marked its largest quarterly profit since 2008. (Lloyd’s List)

U.S. chassis manufacturers say they may not fill most of this year’s orders for the truck frames until late 2022. (Journal of Commerce)

Global air freight demand was up 9.1% above pre-Covid levels in September. (Lloyd’s Loading List)

TuSimple is working with UPS Supply Chain Services to begin commercial runs with its autonomous trucks to some airfreight terminals. (Transport Dive)

About 38% of shoppers in a Zebra Technologies survey say they trust retailers to fulfill their orders as promised. (Material Handling & Logistics)

Portland, Ore., is considering setting up “micro hubs” to serve cargo bikes to be used in last-mile delivery. (Bike Portland)

WSJ Pro is hosting the Sustainable Business Forum on Nov. 17. The program includes a discussion on supply chain standards with Jason Blake, chief sustainability officer at PBNA PepsiCo., and Jon Chorley, chief sustainability officer and group vice president, supply chain management product strategy at Oracle. Register here.

 

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

 
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