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Shifting Flight Network for Packages; Bridge Disaster Roils Insurance Rates

By Paul Page

 

The FedEx air express hub in Memphis, Tenn. PHOTO: LUKE SHARRETT/BLOOMBERG NEWS

The map for air express package delivery in the U.S. is transforming. The U.S. Postal Service’s decision to swap its current transport deal with FedEx for a new agreement with United Parcel Service will shift big volumes of mail between the carriers, and shift the financial foundation for the air cargo networks. The WSJ’s Esther Fung and Will Feuer report the new contract between UPS and the USPS will begin in late September and run through at least March 2030. The change in providers comes as the package-delivery landscape is changing, with both UPS and FedEx looking to rein in costs and adjust their networks to changing retail customer patterns. The USPS is also reducing spending, and is seeking to cut its transportation costs by $3 billion over the next two years. FedEx says the agreement has been a drag on earnings and was looking to renegotiate the deal.

  • UPS is laying off 75 workers at a Charlotte, N.C., sorting facility. (Business North Carolina) 
 

Quotable

“Over time, our respective strategies have shifted as we transform our networks and operations for the future.”

— A FedEx spokeswoman, on the U.S. Postal Service and FedEx.
 
 
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Supply Chain Strategies

Workers have started the complicated process of clearing debris from around the collapsed bridge and the containership Dali. PHOTO: TASOS KATOPODIS/GETTY IMAGES

The fallout from the Francis Scott Key Bridge could trigger higher marine insurance rates around the world as reinsurers that backstop insurers bear the brunt of the losses. The collapse of the bridge in the collision with the containership Dali could be the biggest event in marine insurance in years, with insured losses potentially reaching $2 billion to $4 billion. The WSJ’s Telis Demos writes in a Heard on the Street column that the parceling out of the coverage may soften the blow to many individual firms, but the complexity of resolving the claims could still tie up capital. Morningstar DBRS notes the marine insurance market has already been roiled by global events, so losses linked to the bridge collapse may “add upward pressure” to marine insurance coverage pricing globally. The market may find that unforeseen tragedies can’t be eliminated, but they may be repriced.

  • The Singaporean owner of the Dali filed court papers seeking to limit its liability in the bridge disaster. (Baltimore Banner)
  • CMA CGM declared force majeure on shipments to and from the Port of Baltimore. (Seatrade Maritime)
  • Authorities opened a temporary shipping channel through the Port of Baltimore for salvage crews. (Baltimore Sun)
 

Number of the Day

58.3

The Logistics Managers’ Index for March, up 1.8 points from February in the fifth straight monthly increase and the highest level for the measure of U.S. logistics activity since September 2022.

 

In Other News

Federal officials plan to require that freight railroads operate trains with two-person crews.(WSJ)

A measure of U.S. factory activity turned positive in March for the first time in 17 months, as measures for new orders and production expanded sharply. (MarketWatch)

South Korea’s exports grew for a sixth consecutive month in March. (WSJ)

Construction spending in the U.S. slipped 0.3% in February. (MarketWatch)

Chinese automaker BYD’s first-quarter sales of electric vehicles and plug-ins rose 13%. (WSJ)

The parent of discount e-commerce star Temu uses extensive and aggressive noncompete agreements to limit the hiring of a wide swath of its workers. (WSJ)

Daimler Truck Holding and Volvo will face a retrial in a $603 million price-fixing case in Germany. (Bloomberg)

The Teamsters union authorized strike votes by Canadian National and Canadian Pacific Kansas City engineers and conductors amid protracted contract talks. (Trains)

Container lines are on track to increase capacity on Asia-U.S. lanes to the highest level in 17 months in May. (Journal of Commerce)

New network operations under the major shipping alliances appear to leave the Port of Hong Kong with sharply diminished business. (Splash 247)

QatarEnergy took its landmark liquefied natural gas tanker fleet past 100 vessels with charter contracts for 19 ships. (TradeWinds)

Alibaba is working with startup Space Epoch to test delivery of cargo anywhere in the world within an hour using a rocket. (South China Morning Post)

 

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 X at @WSJLogistics.

 
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