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Maersk Cashes In; India's Oxygen Breakdown; Pandemic Crop Uncertainty

By Paul Page

 

PHOTO: ALY SONG/REUTERS

Today's newsletter was written by WSJ Logistics Report's Jennifer Smith.

Robust consumer spending is delivering hefty rewards for Maersk Line. The world’s largest shipping line by capacity logged its best quarter ever, posting a record $2.7 billion in profit as retailers raced to stock pandemic-depleted U.S. inventories and meet surging e-commerce orders, the WSJ’s Costas Paris and Dominic Chopping write. A.P. Moller-Maersk’s shipping volumes rose 5.7% year-over-year as freight rates pushed 36% higher on average, generating more than $12.4 billion in revenue. The Danish container ship operator is considered a barometer of global trade, and CEO Soren Skou expects the demand to persist through the end of the year. The earnings boost will accelerate Maersk’s investment into its inland logistics business, and the company is planning a roughly $5 billion share-buyback program. China’s Cosco Shipping Holdings also posted a $2.4 billion quarter profit following a year in which container lines showed their strongest profits in recent memory.

 
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Transportation

A convoy of tanker trucks carrying oxygen arrived by train in New Delhi in April. PHOTO: ANINDITO MUKHERJEE/BLOOMBERG NEWS

Surging demand for oxygen to treat Covid-19 patients is pushing India’s distribution capacity to the breaking point. The country produces enough oxygen to meet the current need, the WSJ’s Suryatapa Bhattacharya reports, but the challenges in transporting the highly flammable gas have overwhelmed logistics networks. Moving medical-grade oxygen requires special tankers that keep liquefied gases at subzero temperatures, and they can’t be airlifted for safety reasons. The Indian government has pressed its national railway system into service, loading flatcars with tankers straight from the factories. The Indian Air Force is airlifting some empty containers back, a trip that can take more than a week by road. Officials are discussing building makeshift hospitals near the factories to cut down on transit time. The Indian health ministry says hundreds of oxygen plants will be created in the coming months, but only a fraction of those approved last year have been set up.

 
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Quotable

“It’s gambling with a perishable product.”

— Steve Church of Church Brothers Farms.
 

Supply Chain Strategies

Strawberries in a Driscoll’s test plot. PHOTO: TALIA HERMAN for THE WALL STREET JOURNAL

Produce suppliers whipsawed early in the pandemic are desperate to avoid landing in the same jam. Covid-19 crushed berry-seller Driscoll’s 2020 forecasting plans as restaurants and cruise lines shut down and spiked orders, prompting a cutback in planting that left the company shorthanded when consumers then went on a strawberry binge, the WSJ’s Jesse Newman reports. Food suppliers with long lead times that leave little room for error are scrambling to keep up as the economy reopens but risk being saddled with millions of dollars worth of perishable produce if demand falls short. Suppliers are staying in constant contact with retail customers, while buyers and restaurants make backup plans to cope with potential shortages due to bad weather or lack of labor. Broader supply-chain upheaval is complicating some growers’ efforts to expand their crops, with surging lumber demand leaving one mushroom farmer short of wood to build new growing beds.

 
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Number of the Day

425,000

Imported loaded container volume at U.S. east coast ports in April in 20-foot equivalent units, a record high and up 22.7% from the previous year, according to Panjiva.

 

In Other News

Increased service-sector activity suggests the global economy is rebounding. (WSJ) 

The Biden administration blocked a Trump-era rule that would have made it easier to classify gig workers as independent contractors. (WSJ)

Jeep maker Stellantis cut production by 11% in the quarter due to the global chip shortage. (WSJ)

General Motors says the semiconductor shortage cut as much as $2 billion from its bottom line. (WSJ)

Uber’s gross bookings rose 24% in the quarter as growth in food-delivery operations offset a ride-business slump. (WSJ)

Trucker Yellow swung to a $63 million quarterly net loss as bad weather hit operations. (Dow Jones Newswires)

Operating profit at DHL owner Deutsche Post more than tripled in the first quarter to $2.28 billion. (Dow Jones Newswires)

Peloton recalled its treadmills and halted sales of its latest model. (WSJ)

Michigan’s push to close a cross-border pipeline could curtail oil and gas supplies to the most populous parts of Canada. (WSJ)

The Lenzing Group is investing $240.6 million in sustainable fiber production. (Sourcing Journal)

Trading volumes for dry bulk freight futures hit a 13-year high. (Lloyd’s List)

Freight forwarder Expeditors International posted a 77% increase in revenue on strong growth in ocean and air freight shipments. (The Loadstar)

Turkish Airlines logged $61 million in net profit as cargo revenue rose 77% in the quarter. (TRT World)

Cold-chain specialist Cryoport’s revenue more than quadrupled to $53.3 million in the quarter. (Nashville Post)

Self-driving truck technology startup Plus appointed Wiley Deck, a former deputy administrator with the Federal Motor Carrier Safety Administration, as vice president of government affairs and public policy. (CDL Life)

Amazon’s work rules for its contract delivery drivers include drug testing and instructions on personal grooming. (Bloomberg)

 

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, @CostasParis. Follow the WSJ Logistics Report on Twitter at @WSJLogistics.

 
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