Trouble viewing this email?  View in web browser ›

The Wall Street Journal. The Wall Street Journal.
LogisticsLogistics

Resetting Logistics Expansion Plans; Hard Sell on Retailing Rebound

By Paul Page

 

Companies trying to expand logistics services have had difficulty duplicating the economies of scale of established operators. PHOTO: 

Note to readers: The Logistics Report won't be published Monday, May 29, in observance of Memorial Day in the U.S. We will be back in your inbox on Tuesday.

Some companies are finding that expanding their logistics services outside their core business hasn’t delivered the expected returns. Firms including apparel retailer American Eagle Outfitters, e-commerce technology platform Shopify and meal-kit maker Blue Apron have scaled back their ambitious logistics strategies in recent weeks. The WSJ Logistics Report’s Liz Young writes the companies came into the logistics sector from different directions and are pulling back amid signs that regularly and reliably delivering goods to people’s doorsteps has proven more challenging than expected. The companies are also coping with a cooling online commerce market, leaving fewer shipments flowing into logistics networks. That is undercutting the economies of scale that companies like American Eagle have sought by selling logistics services to other retailers. Blue Apron hopes to solve that problem by outsourcing its packaging and fulfillment to FreshRealm, a meal-kit provider that counts other merchants as its customers.

  • Indonesian social commerce platform Evermos raised $40 million in a new funding round. (Nikkei Asia)
  • Buzzfeed is expanding its online sales capabilities with an e-commerce retail storefront for lifestyle brand Goodful. (Axios)
 

Quotable

“I think that there's a lot less forgiveness in the marketplace where you can't just blame supply chain issues for things and you're being forced to account for your decisions.”

— Aaron Alpeter, founder of supply-chain consulting company Izba
 
Advertisement
LEAVE THIS BOX EMPTY
 

Economy & Trade

U.S. consumers don’t look ready to join a rebound in retail markets. Merchants including Best Buy, Lowe’s, Kohl’s and Dick’s Sporting Goods are flashing mixed signals on the retail economy, the WSJ’s Dean Seal and Sabela Ojea report, as consumers hunker down against high costs and target spending to activities outside the home. That is boosting sales at apparel retailers like Anthropologie, but bigger merchants like Best Buy are seeing sales volume and revenue sag as shoppers turn away from items like electronics and furniture. Still, Best Buy CEO Corie Barry believes that 2023 will see the bottom of the decline in tech demand. The company and other retailers in the meantime are paring inventories to get stocks better in line with demand. Best Buy’s inventories were 17% lower at the end of the past quarter than the same quarter last year and Kohl’s inventories were down 6%.

  • Sales at U.K. retailer Marks and Spencer jumped 9.9% in the year ending April 1. (Financial Times)
 

Quotable

“We’ve been seeing a consumer who is, whether or not you call it a recession, exhibiting some recessionary behaviors.”

— Best Buy CEO Corie Barry
 
 
Share this email with a friend.
Forward ›
Forwarded this email by a friend?
Sign Up Here ›
 
Advertisement
LEAVE THIS BOX EMPTY
 

Number of the Day

17,807

Grain carloads carried by U.S. railroads in the week ending May 20, down 12.7% from a year ago and leaving the commodity traffic down 7.1% so far this year, according to the Association of American Railroads.

 

In Other News

Germany’s economy contracted 0.3% in the first quarter, pushing the country into recession. (WSJ)

Updated figures show the U.S. economy grew faster than originally estimated in the first quarter. (MarketWatch)

Investments in solar power are on course to overtake spending on oil production this year. (WSJ)

Nvidia was on a pace to reach a nearly $1 trillion valuation on growing demand for the company’s chips in building AI tools. (WSJ)

Apple expanded its supplier base in India over the past year while cutting the number​ of mainland China suppliers. (South China Morning Post)

Master Lock is shuttering a Milwaukee factory and will outsource the manufacturing work. (Milwaukee Journal Sentinel)

Lufthansa is taking a 41% stake in Italy’s ITA Airways. (Reuters)

Container shipping lines have canceled fewer voyages this month as freight rates have stabilized. (Journal of Commerce)

Ocean Network Express will pay $1.7 million to settle charges of unreasonable storage fees and Wan Hai Lines will pay $950,000 over allegations on pricing for container returns. (Supply Chain Dive)

CMA CGM is withdrawing its air cargo service to the U.S. and sending its freighters to Asia and Middle East routes. (Port Technology)

Drewry estimates construction of shipping containers will contract 71% this year to a 14-year low. (Splash 247)

Commodities vessel operator Swire Bulk is consolidating its European operations amid a downturn in the sector. (TradeWinds)

Teamsters union members voted to authorize a strike at ABF Freight amid ongoing contract negotiations with the less-than-truckload carrier. (Logistics Management)

Freightos is freezing hiring plans after the cargo booking and payments platform incurred higher-than-expected costs in going public. (The Loadstar)

Frito-Lay is building a distribution center outside Youngstown, Ohio. (WKBN)

 

Executive Insights

Each week, we share insightful selections from WSJ Pro for your reading. The stories are unlocked for Journal subscribers.

Companies are facing more shareholder proposals from both sides of the political spectrum, dragging them into the increasingly fractious debates over environmental, social and governance issues.

Although AI offers benefits, some sectors are finding challenges. The tech was supposed to transform insurance; it hasn’t. And cybersecurity chiefs say the promises and risks of early generative AI are overblown.

Yield-curve pioneer Campbell Harvey believes an economic contraction could begin this month and last two to three quarters. “The question is how deep the recession will be,” he said.

 

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.

 
Desktop, tablet and mobile. Desktop, tablet and mobile.
Access WSJ‌.com and our mobile apps. Subscribe
Apple app store icon. Google app store icon.
Unsubscribe   |    Newsletters & Alerts   |    Contact Us   |    Privacy Policy   |    Cookie Policy
Dow Jones & Company, Inc. 4300 U.S. Ro‌ute 1 No‌rth Monm‌outh Junc‌tion, N‌J 088‌52
You are currently subscribed as [email address suppressed]. For further assistance, please contact Customer Service at sup‌port@wsj.com or 1-80‌0-JOURNAL.
Copyright 2023 Dow Jones & Company, Inc.   |   All Rights Reserved.
Unsubscribe