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Panama’s Shallow Waters; Unplugged Supply Chain; FedEx’s Falling Revenue
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Large ships at the Panama Canal have reduced container loads because of low water levels. LUIS ACOSTA/AFP/GETTY IMAGES
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The Panama Canal’s driest spell in more than a century could saddle global supply chains with new delays and higher costs. The government agency that manages the waterway implemented transit restrictions in May, the WSJ’s Costas Paris reports, and since then some large vessels have had to reduce container loads by roughly one-quarter. The restrictions are expanding over the coming weeks, with the allowable draft of vessels stepping down to 43 feet from the 50-foot peak level. Restrictions aren’t uncommon there, but this year’s dry season is proving particularly harsh and water levels at the canal’s Gatún Lake could hit record lows next month. Officials have spent years planning for more extreme weather events
to preserve the canal’s role as a vital trade route. The outlook this year has shipowners and charterers adjusting operations to meet the lighter-load requirements and weighing the costs of routing shipments elsewhere.
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“The low water levels at the Panama Canal are a clear example of the effects of climate change, which causes a ripple effect through the supply chain.”
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— A spokeswoman for Maersk Line
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Federal and local governments are offering grants to offset the cost of building charging docks and buying electric trucks. PHOTO: BING GUAN/BLOOMBERG NEWS
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The rollout of heavy-duty electric trucks in the U.S. is facing a supply-chain problem. Executives say high competition for new electrification projects has led to a shortage of critical equipment, slowing the construction of crucial infrastructure such as charging stations. The WSJ Logistics Report’s Paul Berger writes the lack of transformers, switchgear and electrical steel is adding months to the time it takes to build charging facilities to power electric fleets. The problem is being fueled by the boom in big, power-hungry projects, including semiconductor plants, data centers and renewable-energy installations that tax the capacity of utilities. Truckload carrier Schneider National says
it took nearly three years to get a new charging station running in California, thanks to a long permitting process and delays in getting power to the site. Electrical equipment makers say delays will likely worsen as demands on power-generation supply chains grow.
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Electric-vehicle maker Rivian Automotive became the latest company to adopt Tesla’s car charging standard. (WSJ)
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FedEx Ground workers in New York City in April. PHOTO: RICHARD B. LEVINE/ZUMA PRESS
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FedEx is racing to cut its costs in step with fast-falling U.S. shipping demand. Revenue at the package giant fell 10% in the three months ending May 31, the WSJ’s Esther Fung and Ben Glickman report, as domestic volumes and revenues tumbled at its signature Express unit and also declined at the Ground business at the center of e-commerce services. The early steps in its cost-cutting efforts reduced expenses by a smaller margin and operating income fell 22% to $1.5 billion. The company, which is in the midst of combining its Express and Ground delivery networks into a single business, says it is extending that restructuring to Canada. FedEx says the overall effort combining the networks will take several
years. The bright spot for FedEx in its fiscal fourth quarter was that prices appear to be holding steady compared to levels last year, when demand was far stronger.
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9.1%
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U.S. business logistics costs in 2022 as a share of GDP, up from 8.3% the year before and the highest share recorded in the Council of Supply Chain Management’s annual State of Logistics Report.
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Construction of new American homes jumped 21.7% in May, as homebuilders ramped up work on single-family houses. (MarketWatch)
Alphabet’s Google is scouting for suppliers in India to assemble its Pixel smartphones. (Bloomberg)
Qatar struck its second large agreement in less than a year to supply liquefied natural gas to China. (Reuters)
A European group accused Germany’s top automakers of using forced labor in their China supply chains. (Financial Times)
Car carrier Wallenius Wilhelmsen is buying biofuel from Exxon Mobil for its shipping operations in Europe. (ShippingWatch)
A Russian car maker that acquired Volkswagen’s plant in western Russia is in talks with a Chinese company to provide assembly kits. (Automotive Logistics)
Russia’s TransContainer expects the country’s container volumes to grow 7% this year to a record 7 million boxes. (The Loadstar)
William Doyle abruptly resigned as head of the Maryland Port Administration. (Baltimore Sun)
Maersk Air Cargo added another 767 freighter to its fleet and increased trans-Pacific and Asia-Europe flights. (Air Cargo News)
Walmart is building a 1.2 million-square-foot highly-automated perishables distribution center near Rockford, Ill. (WREX)
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