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Rail’s Labor Deadlock; Shipping Russian Crude; Reconsidering Private Labels

By Paul Page

 

A BNSF Railway terminal in Galesburg, Ill. PHOTO: SHAFKAT ANOWAR/ASSOCIATED PRESS

The clock is now ticking in earnest in the contract negotiations between freight railroads and their labor unions. President Biden’s appointment of a Presidential Emergency Board pushes back potential disruptions in rail services, and the WSJ’s Esther Fung reports the panel now has 60 days to broker a settlement between the Class 1 carriers and unions representing around 115,00 workers. Members of one of the 12 unions have recently voted to authorize a strike, adding urgency to contract talks that have been underway for nearly three years. The rail-labor tensions are the latest sign of workforce strains across the transportation sector. Airline pilots in the U.S., dockworkers in Germany and rail unions in the U.K. are among the labor groups that have recently been locked in disputes with employers. Dockworkers at U.S. West Coast ports also are working without a contract, raising anxiety levels in supply chains.

 

Quotable

“These disputes threaten substantially to interrupt interstate commerce to a degree that would deprive a section of the country of essential transportation service.”

— President Biden, announcing a federal board for rail labor negotiations
 
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Commodities

An oil tanker unloads imported crude at China’s Qingdao port. PHOTO: STR/AGENCE FRANCE-PRESSE

Tanker owners in Europe are rushing to ship as much Russian crude as possible before energy sanctions against Moscow take effect in December. The shipments are providing a windfall to operators of crude carriers, including Greek owners who control nearly a third of the global tanker fleet. The WSJ’s Costas Paris and Benoit Faucon report shipments to Asia have soared ahead of the Dec. 5 date for new European sanctions, with China nearly doubling its intake of Russian crude from February to June. Other shipments are following more shadowy paths, including ship-to-ship transfers at sea meant to disguise the transports. The long runway before the shipment ban is meant to give enough time for governments to switch to alternative energy sources outside Russia. In the meantime, it’s pushing prices for tankers to new levels, with expectations that longer voyages after sanctions take hold will push earnings still higher.

  • Spot market rates for suezmax crude tankers jumped nearly 81% in four days to the highest level in three months. (TradeWinds)
  • Bulk carrier and general cargo vessel sailings from Russia are approaching levels seen before Russia invaded Ukraine.  (Lloyd’s List)
 
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E-Commerce

Amazon says its house brands account for about 1% of its retail sales. PHOTO: MICHAEL NAGLE/BLOOMBERG NEWS

Amazon is in the midst of a potentially major upheaval in its private-label strategy. The e-commerce giant has started drastically reducing the number of items it sells under its own brands, the WSJ’s Dana Mattioli reports, and the company is considering exiting the private-label business entirely to alleviate regulatory pressure. Amazon’s private-label business counts some 243,000 products ranging from vitamins and coffee to clothing and furniture. The business line has been a source of controversy because it competes with other sellers on Amazon’s platform, angering third-party merchants and prompting criticism that the company was violating antitrust restrictions in favoring its own brands. Former Amazon executive Dave Clark launched a review of the program. The retailer’s focus now appears to be on its fast-selling items that can be positioned at numerous warehouses rather than high volumes of low-selling items. Amazon in a statement says it isn’t shifting its focus.

  • Grubhub is striking deals and offering sales as it tries to reclaim its place as a market leader in food delivery. (WSJ)
 
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Special Report

In a special report, WSJ Pro Private Equity examines trends driving the market for secondhand trades of private-equity assets, including the competition for talent in an increasingly volatile sector. The issue is free and downloadable.

 

Number of the Day

1.20

Inventory-to-sales ratio for U.S. retailers in May, up from 1.18 in April to the highest level since February 2021, but below the pre-pandemic level of 1.48 in May 2019, according to the U.S. Census Bureau.

 

In Other News

U.S. retail sales expanded 1% in June, led by spending on furniture, groceries and gas. (WSJ)

A measure of the dollar against a basket of currencies rose 2.5% last week to a 20-year high. (WSJ)

Eurozone imports increased 52% in the 12 months ending in May on rising energy costs. (Dow Jones Newswires)

Volkswagen will maintain production in the western China Xinjiang region that has been targeted over allegations of human-rights abuses. (WSJ)

Boeing says it is “very close” to resuming 787 Dreamliner deliveries after a nearly two-year pause. (WSJ)

Copper prices fell last week at the fastest pace since the pandemic began. (Financial Times)

Farmers are struggling to maintain crop yields as a shortage of fertilizer and rising prices for the material strain their planting capabilities. (Washington Post)

Chinese contract smartphone manufacturer DBG Technology is expanding its overseas production capacity. (South China Morning Post)

Japan’s government has told Mitsui & Co. and Mitsubishi to maintain their stakes in Russia's Sakhalin-2 liquefied natural gas project. (Nikkei Asia)

About 2,000 workers at a garment factory in Myanmar went on strike over working conditions. (Myanmar Now)

The average age of cargo vessels world-wide has increased by two years since 2017. (Reuters)

A group led by India’s Adani Ports won rights to operate Israel’s Haifa port under a $1.2 billion bid. (Economic Times)

More than 20% of supply-chain executives surveyed say they expect disruptions to continue until the second half of 2023. (Supply Chain Brain)

Oklahoma-based parts distributor Blackhawk Industrial acquired two companies that will expand its reach in Florida, Idaho and Montana. (Modern Distribution Management)

France is coping with a mustard shortage. (New York Times)

 

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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