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LogisticsLogistics

Tracking Global Supply Chains; Mining’s Supply Gaps; Russia's Essential Sales

By Paul Page

 

Global supply chains have been through a period unlike any other, as the pandemic exposed fault lines in long-established networks handling the flow of goods around the world. In a WSJ documentary, technology columnist Christopher Mims takes viewers through distribution channels that have been fundamentally altered as changes in consumer expectations and challenges in the flow of raw materials have changed. Every day, millions of sailors, truck drivers, longshoremen, warehouse workers and delivery drivers keep mountains of goods moving into stores and homes to meet consumers’ increasing expectations of convenience. But this complex movement of goods underpinning the global economy is far more vulnerable than many imagined.

 
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Commodities

A coal train in Gunnedah, Australia. PHOTO: DAVID GRAY/BLOOMBERG NEWS

Don’t expect the mining sector to fill gaps in supplies for commodities buyers and their transport carriers anytime soon. Prices of metals and minerals including copper and nickel are booming on fears of shortages, the WSJ’s Rhiannon Hoyle writes, as Russia’s invasion of Ukraine raises concerns about supply shocks that could shake the global economy. But years of underinvestment mean companies don’t have additional production that can be brought online quickly, and existing operations are mostly running full tilt after a decadelong focus on productivity. The International Energy Agency estimates that it takes more than 16 years on average from the discovery of a potential mine site through to first production. That won’t help countries looking for alternatives to Russia’s thermal coal, potash and other foundation commodities used in industrial and agricultural production. It will also leave bulk carriers continuing to scramble to redirect vessels in a volatile market.

 

Here are other recent developments following Russia’s invasion of Ukraine:

President Biden and alliance leaders are gathering in Brussels for a summit on Ukraine support as NATO estimates Russia may have lost as much as one-fifth of its combat forces in about a month of fighting. (WSJ)

The U.S. Export-Import Bank faces a big bill with Russian airlines refusing to return planes to their lessors. (WSJ)

Russian President Vladimir Putin wants his country to only accept rubles in gas deals with European countries and other customers. (WSJ)

Large French companies including Renault and TotalEnergies are maintaining their connections in Russia. (WSJ)

The number of ships leaving Russian ports for international destinations has declined 35% since the invasion of Ukraine. (Lloyd’s List)

Russia’s attack on Ukraine is sending shippers on China-Europe rail services looking for alternatives. (Bloomberg)

Commodity giant Trafigura doubled the size of a credit facility to more than $2 billion to weather extreme price moves sparked by Russia’s attack on Ukraine. (WSJ)

Nestlé is scaling back what it sells in Russia amid mounting pressure from politicians, employees and consumers. (WSJ)

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

 
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Quotable

“Finding a [drill] rig at the moment is harder than finding a purple-spotted unicorn.”

— James Wilson, CEO of metals Alchemy Resources, on mining equipment shortages
 

Economy & Trade

A retail store in Moscow last year. PHOTO: SERGEI SAVOSTYANOV/ZUMA PRESS

Embargoes by household goods makers on most shipments to Russia turn out to have some wide gaps. Companies including Pepsico, Procter & Gamble, Unilever and others have vowed to stop selling all but essential goods in Russia following the invasion of Ukraine. The WSJ’s Saabira Chaudhuri and Sharon Terlep report that Lay’s potato chips, Gillette razors and Air Wick home fragrances are still on sale there, highlighting the complications companies face with the restrictions and the challenges of pulling particular products out of long-established supply chains. Consumer-goods suppliers are under growing pressure to further curtail sales and manufacturing in Russia. Some companies say they are keeping plants operating to support their own workers and those employed by suppliers. Others declined to discuss their reasoning. Many are trying to balance the benefits of maintaining business relationships with Russian partners against the damage to their reputations of continuing operations.

 
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Number of the Day

$113.7 billion

Value of North American trans-border freight carried by all modes in January, up 20.6% from the year before and 17.1% higher than the January 2020 level, according to the Bureau of Transportation Statistics.

 

In Other News

Amazon over the next month will face union elections at separate warehouses in New York City. (WSJ)

Sales of new homes in the U.S. fell 2% from January to February despite rising inventory. (MarketWatch)

The U.K. government slashed the country’s fuel tax after inflation in February reached a 30-year high. (WSJ)

The Biden administration will allow hundreds of goods from China to avoid paying tariffs. (WSJ)

Chinese authorities found a black box believed to be the cockpit voice recorder of the crashed China Eastern passenger jet. (WSJ)

General Mills raised its outlook on resilient demand and expectations that higher prices will help offset cost pressures. (WSJ)

A Senate panel passed and sent to the Senate floor a measure that would overhaul U.S. maritime regulation. (gCaptain)

Ocean Network Express plans to invest $20 billion under a strategic plan that would boost container shipping capacity by more than a third by 2030. (The Loadstar)

South Carolina's Port of Charleston has stopped forecasting when it will clear a backlog of more than two dozen vessels . (Journal of Commerce)

The U.S. seized suspected Iranian oil cargoes being carried on two Greek-owned tankers. (TradeWinds)

Goldman Sachs will pay $140 million for a stake in thermal packaging specialist TemperPack Technologies. (DC Velocity)

Idaho-based building materials distributor Woodgrain will acquire Huttig Building Products for $350 million in cash. (Modern Distribution Management)

Amazon plans to build a 600,000-square-foot distribution center near Northern Colorado Regional Airport under a plan originally called “Project Sugar.” (Daily Coloradoan)

 

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

 
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