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LogisticsLogistics

Stepping Back From XPO; Alibaba’s Sales Slip; Directing Battery Supplies

By Paul Page

 

An XPO Logistics terminal in Barcelona. PHOTO: ANGEL GARCIA/BLOOMBERG NEWS

Brad Jacobs is closing the door on the aggressive roll-up strategy he launched at XPO Logistics a decade ago. Mr. Jacobs plans to step aside as CEO of the logistics company in the fourth quarter, the WSJ Logistics Report’s Liz Young writes, as XPO continues to carve away parts of the business and sell other pieces. Mario Harik, a company veteran hired in the early days of Mr. Jacobs’ logistics consolidation strategy, will take over as CEO of the remaining business, the pure-play, publicly traded less-than-truckload operation. Mr. Jacobs built XPO from a small freight brokerage into a sprawling, multibillion-dollar international supply-chain heavyweight with a strategy he’d used twice before in rolling up businesses in highly fragmented sectors. He will stay on as executive chairman and remains a major shareholder as he weighs options in a business with “no shortage of opportunities to create massive shareholder value.”

  • Less-than-truckload carrier Yellow swung to a $60 million net profit in the second quarter and operating measures improved sharply as revenue rose to $1.42 billion. (Logistics Management)
 

Quotable

“Every decade or so, I reinvent myself and find another industry to create outsize shareholder value, and XPO is in great shape.”

— XPO’s Brad Jacobs, on stepping aside as CEO.
 
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E-Commerce

Alibaba says it is "seeing signs of steady recovery in consumption." PHOTO: QILAI SHEN/BLOOMBERG NEWS

Alibaba’s once-inexorable growth has run out of steam. Quarterly revenue at China’s leading e-commerce firm fell for the first time since the company went public in 2014, the WSJ’s Shen Lu reports, in a stark sign of the changing market conditions for online business. The drop was a slim 0.1$, and Alibaba still took in $30.7 billion, but it was a notable shift for an operator that has been among China’s fastest-growing technology companies. Alibaba says its bread-and-butter domestic e-commerce business was hit by pandemic-related disruptions to supply chains and logistics that struck China’s economy in April and May. But the faltering demand isn’t limited to China. In the U.S., online retailers and other companies that thrived through the pandemic as more life and work shifted online have consistently reported slowing growth recently. Alibaba has also faced increasingly intense competition in its core domestic e-commerce business.

  • Wayfair’s business declined at a sharp pace in the second quarter as the online furniture seller struggled to maintain consumer interest. (WSJ) 
  • Hundreds of workers at an Amazon warehouse in the U.K. walked off their jobs in a protest over pay. (Daily Mail)
 
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Government & Regulation

Electric vehicles in production at General Motors, which is asking for more time to meet the proposed requirements. PHOTO: MANDEL NGAN/AGENCE FRANCE-PRESSE/GETTY IMAGES

Major auto makers are pressing for changes in legislation that could reshape a critical piece of production of electric vehicles. The proposed Senate climate package would extend until 2032 a current $7,500 tax credit for electric-vehicle purchases, the WSJ’s Mike Colias and Jennifer Hiller report, but it would also stiffen the requirements to qualify by making only U.S.-built vehicles eligible. It would also set minimum thresholds for the value of battery components manufactured or assembled in North America. These thresholds also target crucial battery materials, such as lithium and nickel, requiring a certain percentage to be sourced domestically or from the U.S.’s free-trade partners. It’s a sign of the battle going on within battery-cell supply chains that are still being developed. Most processing for major battery minerals is done in China, and lobbyists say most vehicles being sold today wouldn’t qualify for the tax credit.

  • Volvo will build a large battery-cell plant in Sweden to supply its commercial electric vehicles, including trucks. (Reuters)
  • Nikola says it is on track to deliver up to 500 trucks this year after delivering 48 electric rigs in the second quarter. (CNBC)
  • Electric-car maker Lucid Motors slashed its annual production target in half on “extraordinary supply chain and logistics challenges.” (TechCrunch)
 
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Number of the Day

60.7

The Logistics Managers’ Index showing logistics activity in the U.S. in July, down 4.3 points from June in the fourth straight monthly decline to the lowest level since May 2020.

 

In Other News

U.S. imports slipped 0.3% in June on cooling consumer demand while energy shipments helped boost exports 1.7% from May. (WSJ)

New claims for unemployment benefits in the U.S. rose again last week and remain near the highest level of the year. (WSJ)

China’s effective military encirclement of Taiwan has forced delays for cargo vessels and aviation at the self-governing island. (WSJ)

Ukraine says its first grain shipment since the start of Russia’s invasion was a success and could lead to a surge in exports to prewar levels within two months. (WSJ)

Freighter operator Atlas Air will be bought by a group led by Apollo Global Management in an all-cash deal that has an enterprise value of about $5.2 billion. (WSJ)

Authorities in India are investigating safety conditions at a factory in an apparel manufacturing hub for global clothing brands after more than 100 workers were hospitalized due to a suspected gas leak. (WSJ)

Commodities giant Glencore’s profit more than doubled in the first half of the year. (WSJ)

Kellogg raised its outlook, saying consumer demand is holding up despite rising prices. (WSJ)

Toyota now expects material costs this fiscal year will be $12.8 billion higher than the car maker earlier estimated. (Nikkei Asia)

A.P. Moller Maersk is moving into project logistics with the acquisition of Denmark-based Martin Bencher Group. (Splash 247)

China’s Hudong Zhonghua shipyard launched the world’s largest container ship by capacity for Mediterranean Shipping. (gCaptain)

Clarksons Research says June was the best month ever for resurgent product tankers. (TradeWinds)

Tanker operator Euronav slashed its quarterly loss to $4.9 million on stronger freight rates. (Lloyd’s List)

Sales last month at industrial parts distributor Fastenal increased at an accelerating pace. (Modern Distribution Management)

 

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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