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Railroads’ Labor Struggles; Robots Reset Warehouses; Building for Chips

By Paul Page

 

A Union Pacific yard in Council Bluffs, Iowa. PHOTO: NATI HARNIK/ASSOCIATED PRESS

The threat of a rail strike is over but that hasn’t solved all the labor problems at the U.S. freight railroads. The carriers are continuing to face service disruptions and restrictions on shipments, the WSJ’s Esther Fung reports, as they struggle to bring on enough staff to handle customer demand. Union Pacific and BNSF Railway this year have issued more embargoes than in previous years as they have coped with congestion in their networks. Railroad operators say they have had insufficient numbers of train and engine workers, and unions representing other types of railroad hands say they too have shortages. The slowdowns are troubling shippers, drawing the attention of regulators, and the Surface Transportation Board is holding a hearing on the embargoes later this month. Union Pacific calls embargoes a “tool of last resort,” but shippers say they are the first to feel the impact of the growing restrictions.

 

Quotable

“Congestion: a railroad euphemism for ‘we don’t have enough crews to move our trains to keep our network fluid.’”

— Martin Oberman, chairman of the Surface Transportation Board.
 
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Logistics Technology

Employees build robots at an Amazon facility in Westborough, Mass. JOSEPH PREZIOSO/AGENCE FRANCE-PRESSE/GETTY IMAGES

The new experimental robots that Amazon recently displayed represent a potentially crucial turning point for the company. The robot arm named Sparrow, the package-sorting machines called Robin and Cardinal and an autonomous goods-moving mechanism the company calls Proteus represent dramatic changes in how items are stored, retrieved and handled in warehouses. The WSJ’s Christopher Mims writes in a Keywords column that the innovations behind robotics represent existential questions for the company, both for how it will run its operations in the future and how it will manage the tens of thousands of people behind its supply chain. Amazon has continued to rely on human workers while using automation to keep costs low. New automation will shift those workers out of roles like picking and into other jobs to help the company better serve its customer. While the robots are being developed, the new roles for human workers haven’t been designed yet.

  • Uber Freight and Aurora Innovation are expanding their autonomous-truck pilot program in Texas. (Reuters)
 
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Supply Chain Strategies

TSMC headquarters in Hsinchu, Taiwan. PHOTO: LAM YIK FEI/BLOOMBERG NEWS

The $12 billion Arizona semiconductor plant that President Biden is scheduled to visit today represents U.S. hopes for a renaissance in production. But Taiwan Semiconductor Manufacturing says it faces high costs, a lack of trained personnel and unexpected construction snags in getting the plant up and running. The WSJ’s Yang Jie reports the company remains all-in on the Phoenix factory nonetheless, with backing from Washington as the Biden administration looks to bring high-value electronics supply chains back to the U.S. The visit to a foreign company’s factory reflects the U.S. reliance on TSMC to boost American chip manufacturing. The U.S. makes about 12% of the world’s chips compared with 37% three decades ago. TSMC has built a broad ecosystem of talent and suppliers in Taiwan that will be hard to duplicate. The company says the cost of making chips in Arizona may be at least 50% higher than in Taiwan.

 
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Number of the Day

8.6%

Annual decline in daily less-than-truckload tonnage at Old Dominion Freight Line in November, an acceleration from the 4.1% drop in the third quarter.

 

In Other News

Orders for U.S. manufactured goods rose a faster-than-expected 1% in October. (MarketWatch)

A measure of U.S. service-sector activity rose at a rapid pace in November. (MarketWatch)

European consumer spending fell 1.8% from September to October. (WSJ)

PepsiCo is laying off workers at the headquarters of its North American snacks and beverages divisions. (WSJ)

Foxconn’s revenue fell 11% from a year ago in November. (WSJ)

A traffic jam of oil tankers has built up in Turkish waters after Western nations capped the price of Russian oil. (Financial Times)

Japan's agricultural exports of products are on track to hit a record annual high. (Nikkei Asia)

U.S. steel imports rose 7.2% from September to October. (Recycling Today)

XPO Logistics will delay the divestiture of its European business due to weakened capital markets. (Transport Dive)

The price premium for diesel fuel over gasoline has expanded to as much as $2 per gallon. (Logistics Management)

General Motors opened a manufacturing plant in Canada for its BrightDrop electric delivery vans, with Deutsche Post DHL as its first customer. (Dow Jones Newswires)

DHL ordered 2,000 Ford electric delivery vans. (Forbes)

Container lines in the Ocean Alliance are shifting capacity from the Pacific amid stronger trans-Atlantic freight rates. (Journal of Commerce)

Container ship owner Seaspan is offering bondholders cash to avoid having to buy back its $300 million series bonds due in 2026. (TradeWinds)

Hong Kong-based Asia Maritime Pacific and Hamburg Bulk Carriers are merging into a single operator with 65 bulk vessels. (Ship Technology)

Spain’s Port of Valencia will spend $1.67 billion to build a fourth container terminal. (Port Technology)

Gap says its third-quarter operating margin improved in part because of lower airfreight rates. (Supply Chain Dive)

A Polar Air Cargo freight forwarding customer is suing the Atlas Air subsidiary for $6 million under racketeering allegations. (The Loadstar)

The U.S. Postal Service set Dec. 12 as the final day for delivery of letters to Santa Claus. (MassLive)

 

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.

 
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