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LogisticsLogistics

Seeking Supply Reliability; Rivian’s Output Ambitions; Jabs for Sailors

By Paul Page

 

Majestic Steel USA is placing plants closer to its suppliers, including Nucor, shown above. PHOTO: TIMOTHY D. EASLEY/ASSOCIATED PRESS

The steady drive to push manufacturing to offshore suppliers may be reversing. Growing numbers of companies are ditching longtime supply-chain strategies built on outsourced overseas operations, the WSJ’s Thomas Gryta and Chip Cutter report, as they choose greater reliability and resilience even if it costs more. Some are moving workers and production facilities closer to home and relocating plants closer to suppliers. Others are buying their suppliers or bringing contract work in-house. It’s a reversal from the yearslong push to secure inexpensive manufacturing in distant locales while relying on just-in-time production and ocean transportation to grind down costs. But some companies say shortages of raw materials and labor have endangered their businesses while bottlenecks in ocean and trucking transportation have left them scrambling for stopgap solutions. The uncertainty is especially hard on startups, with one executive saying he’s learned, “We can’t be at the mercy of our suppliers.”

 
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Transportation

Rivian’s pickup truck in New York City last month. PHOTO: JOHN MARSHALL MANTEL/ZUMA PRESS

Two electric-car startups just delivered their first vehicles. Now they have to prove they can do it again, and again. Rivian Automotive and Lucid Group shipped their first models to customers, the WSJ’s Ben Foldy reports, and now are trying to scale up manufacturing to produce thousands more while building supply chains for the vehicles effectively from scratch. The stakes for the logistics sector are particularly high for Rivian, the startup backed by Amazon and Ford that aims to add an electric parcel van to the lineup it launched this month with delivery of an electric pickup truck. Rivian is seeking an approximately $60 billion valuation in an initial public offering next week to support plans that include a second U.S. assembly plant to expand production. Amazon is along for the ride: The e-commerce giant owns about 20% of Rivian and values its stake at $3.8 billion.

 
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Quotable

“They’re realizing, right now, they’re losing business because they’re kind of stuck with a very long, very efficient but very inflexible supply chain.”

— Ellen Kullman, CEO of 3-D printing company Carbon, whose corporate customers increasingly want a presence in North America.
 

Transportation

Seafarers aboard the bulk carrier Kagawa Maru lined up for vaccines off Canada's Port of Vancouver. PHOTO: ALANA PATERSON for THE WALL STREET JOURNAL

Efforts are growing to end the crushing isolation that Covid-19 has imposed on seafarers. Health workers and humanitarian groups at more than 200 ports around the world are pushing to vaccinate thousands of mariners, the WSJ’s Vipal Monga reports, in programs aimed at ending an ordeal for a population of essential workers that has been largely neglected during the pandemic. Many of the thousands of global mariners that are unvaccinated have been unable to disembark and been stuck on board for months. At the same, infections at ports or on ships have added to the disruptions in global shipping this year. Port authorities and nonprofits at ports including Los Angeles, Rotterdam and Singapore now are offering Covid vaccines to international seafarers. One Christian charity carrying out vaccines said it convinced authorities to support the program by noting outbreaks would affect deliveries: “Our products can’t make it to us.”

 
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Number of the Day

412%

Increase in mentions of “supply chain” in third-quarter earnings calls by Fortune 500 companies over last year, up from 123% growth in the second quarter, according to Bank of America Global Research.

 

In Other News

Growth in factory activity in the U.S. slowed in October as supplier deliveries slowed and the pace of new orders declined. (WSJ)

A.P. Moller-Maersk is buying freight forwarder Senator International and adding two Boeing aircraft to its logistics operations. (MarketWatch)

Construction spending in the U.S. declined in September for the first time since February. (Dow Jones Newswires)

Leaders of the world’s biggest economies endorsed a deal on corporate taxation that they hope will offer stability to businesses that operate internationally. (WSJ)

American Airlines canceled hundreds’ more flights, facing more of the trouble that began during the weekend. (WSJ)

Striking workers for Deere & Co. are scheduled to vote today on a contract proposal offering bigger raises and bonuses. (WSJ)

Jaguar Land Rover’s losses deepened last quarter and revenue fell 11% on the impact of chip shortages on production. (Financial Times)

Sea-Intelligence says the average delay world-wide for container ships reaching port was 7.32 days in the third quarter. (Splash 247)

Charter rates for container ships fell for the first time this year. (Lloyd’s List)

The German shipping company set up to deal with the toxic shipping portfolio of HSH Nordbank is selling off big loan volumes in the resurgent vessel market. (TradeWinds)

State-owned China Merchants is incorporating the Sinotrans shipping operations into a single container line under its ownership. (The Loadstar)

A.P. Moller-Maersk and the Saudi Ports Authority will work together to establish a logistics park at the Jeddah port. (TradeAsia)

Norfolk Southern is slashing the free time it allows importers’ containers to remain in many of its yards to cope with heavy congestion. (Journal of Commerce)

Germany’s DB Cargo and DHL are expanding an agreement that aims to put more parcels in freight rail networks. (RailFreight)

Boeing cargo analyst Tom Crabtree says Amazon’s Prime model offering free shipping is a hurdle to selling the company new freighters. (Dow Jones Newswires)

Turkey-based grocery delivery firm Getir stepped up its U.K. expansion with the acquisition of three London-area warehouses. (Logistics Manager)

Austria’s Gebrüder Weiss acquired Turkish freight forwarder 3S Transport & Logistics. (Lloyd’s Loading List)

 

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

 
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