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LogisticsLogistics

Supply Chain Crisis Fades; Dropping Ship Charters; Building for Delivery

By Paul Page

 

The Garden City Port Terminal at the Port of Savannah, Ga., in November 2021. PHOTO: SEAN RAYFORD/GETTY IMAGES

Note to readers: The Logistics Report will be on a break for the holidays through Jan. 2, 2023. Check our home page for any breaking news, and look for us back in your inbox on Jan. 3.

From the docks of Southern California and Europe to the parcel hubs in the Midwest and the store shelves in New York, signs are growing that the global supply-chain crisis is over. The Covid-19 pandemic that spawned product shortages, shipping bottlenecks and soaring transport costs may not be gone, but the WSJ’s Esther Fung, Costas Paris and Sharon Terlep report goods are moving around the world again, reaching companies and consumers. Despite widespread government and industry attempts to unwind the bottlenecks, the real break may have come in the demand slowdown that has eased the pressure on strained operations. U.S. container imports reached their lowest level in November since early 2020, and shipping heavyweight Maersk Line projects demand will decline next year from 2% to 4%. Freight rates that busted shipper budgets last year are sliding and broader costs for suppliers heading into 2023 are also retreating.

 

Quotable

“As some of commodity prices and transportation costs begin to come down, we're revisiting these costs with our suppliers.”

— Bill Boltz of retailer Lowe's, on easing supply-chain pressures.
 
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Transportation

A container ship at the Lianyungang Port, China, in early December. PHOTO: CFOTO/ZUMA PRESS

Easing pressure in supply chains is leading retailers to pull back on emergency measures they used to keep goods moving over the past two years. Retailers including Costco Wholesale, Home Depot and Party City have scaled their use of charters, the WSJ Logistics Report’s Paul Berger writes, all but ending a rare and high-stakes tactic they undertook to get better control of their supply chains. With shipping rates coming down and space on vessels generally plentiful, the financial math no longer adds up. Managing ship charters and alternative ports added to the logistics complications for some of the retailers but the tactic also got goods around bottlenecks. German discount grocer Lidl even says it is maintaining the specialty shipping line that it launched to serve its expansive chain of stores. Lidl says the operation provides flexibility and resilience, although it hasn’t been tested yet in a downturn.

 
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Supply Chain Strategies

An American Eagle Outfitters store in Arlington, Va. PHOTO: ERIN SCOTT/REUTERS

Quiet Platforms is looking to use its aggressive new expansion of logistics real estate for more than just storing goods. The logistics subsidiary of apparel retailer American Eagle Outfitters wants to roll out next-day delivery across the U.S. within three years, the WSJ Logistics Report’s Liz Young writes, and wants new fulfillment centers to provide some of the physical backbone for the operations. The business just struck a deal with real-estate services provider JLL to open sites in 10 cities next year, with dozens more slated to come on board soon after. Quiet Platforms provides logistics service to a handful of specialty retailers, an offshoot of the operations it handles for American Eagle. The growth plan suggests the company wants to help its customers compete on logistics with bigger merchants and their delivery capabilities. To do that, Quiet Platforms is moving closer to the last mile. 

 
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Number of the Day

$1,992

The Drewry Shipping Consultants’ index for spot prices to ship a 40-foot container from Shanghai to Los Angeles the week of Dec. 22, down from $2,000 the week before and 82.2% below the 2022 high set in January.

 

In Other News

U.S. economic output expanded at a more robust 3.2% rate than earlier estimated in the third quarter. (WSJ)

The U.S. leading economic index fell a sharp 1% in November. (MarketWatch)

A heavy winter storm rolling across the U.S. threatened to delay parcel deliveries heading into the holiday weekend. (WSJ)

U.S. airlines canceled thousands of flights as a winter storm wreaked havoc on operations. (WSJ)

A Senate panel is investigating whether car makers including Tesla and General Motors are using parts made with forced labor in China’s Xinjiang region. (WSJ)

Chinese imports of semiconductor-making equipment plunged by 40% in November. (WSJ)

Europe is burning more coal than it has in years as it goes through winter without Russian energy supplies. (WSJ)

Egg prices have surged to record levels as avian influenza hits poultry flocks. (WSJ)

The year-end spending bill in Congress includes a measure targeting the sale of counterfeit goods online. (MarketWatch)

Spot rates for dry-bulk shipping’s largest Capesize vessels are surging. (Lloyd’s List)

Product tanker operators are rushing to move Russian diesel to Europe before an import ban. (TradeWinds)

China is running out of package-delivery drivers amid a wave of Covid-19 infections. (South China Morning Post)

IKEA plans to roll out solar-powered delivery bikes around the world. (Elektrek)

Union Pacific wants to launch a pilot program to replace freight train conductors with “ground-based expeditors.” (North Platte Bulletin)

Union Pacific was added to the​ Dow Jones Sustainability Index. (Progressive Railroading)

Virginia-based truckload carrier Cox Transportation acquired Texas-based cross-border operator Outwest Express. (Commercial Carrier Journal)

Officials in Stafford County, Va., approved a logistics development totaling 2 million square feet. (Fredericksburg Free-Lance Star)

Salesforce projects this season’s holiday returns will rise 57% over last year. (Retail Dive)

 

About Us

Paul Page is editor of WSJ Logistics Report. Reach 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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