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LogisticsLogistics

Railroad Service Slowing; Boeing's 787 Descent; Global Infrastructure Plan

By Paul Page

 

Shipping containers at a rail yard in Chicago. PHOTO: SCOTT OLSON/GETTY IMAGES

Supply-chain bottlenecks in the U.S. are spreading across the country’s freight rail networks. Shipping containers are piling up again at major freight hubs including Chicago, the WSJ Logistics Report’s Paul Berger writes, and delays in getting inbound boxes onto trains at the ports of Los Angeles and Long Beach are stretching to days and even weeks. BNSF Railway is limiting the boxes it will carry out of the region as it copes with the backups and some importers are turning to trucks to keep their supply chains moving. That is raising shipping costs and adding complications for many shippers, and providing a reminder that the pandemic-driven disruptions of the past two years are far from resolved. The rail backups come as the backlog of container ships off the Southern California ports has drifted to a nearly two-year low. But getting goods through inland distribution networks remains a challenge.

 

Quotable

“The numbers are not improving. At some point we will run out of space.”

— Dan Bergman, CEO of Port of Los Angeles terminal operator TraPac, on longer waits for rail transport.
 
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Supply Chain Strategies

Boeing’s Dreamliner 787 at the final assembly facility in North Charleston, S.C. PHOTO:
TRAVIS DOVE/BLOOMBERG NEWS

The innovative supply chain that Boeing built for its 787 Dreamliner is under stress. With more than 1,000 of the wide-bodies already delivered, the jet has become a popular choice among airlines for long-haul operations. The WSJ’s Andrew Tangel and Jemal R. Brinson report the plane has come under heightened scrutiny both inside and outside the company, however, and discoveries of production flaws have largely prevented Boeing from delivering new Dreamliner jets for nearly two years. The problems hit at the core of the company’s production strategy, which gathered up a global network of suppliers that helped make the 787 one of Boeing’s first planes to be designed largely by other companies. Concerns over various parts have emerged and some are still being resolved. As a result, Boeing now is retooling its factory process and supply chain to make sure Dreamliners are built correctly the first time.

 
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Economy & Trade

French President Emmanuel Macron, President Biden, European Commission President Ursula von der Leyen and Canadian Prime Minister Justin Trudeau at the Group of 7 summit in Germany. PHOTO: POOL/REUTERS

The West’s latest plan to challenge China’s growing global influence will be built on new infrastructure. The U.S. and its allies are setting plans to invest hundreds of billions of dollars for construction projects in developing countries, the WSJ’s Alex Leary and Tarini Parti report, in an apparent response to the Belt and Road Initiative that Beijing has used to build projects around the world. The U.S. intends to mobilize some $600 billion in investments with funding from allies by 2027 for an effort that Group of Seven leaders call the Partnership for Global Infrastructure and Investment. The effort could bolster transportation infrastructure, depending on how much spending targets ports, highways and rail lines. It would also boost the world-wide commodities and shipping operations that support construction projects. To start, the plan will focus on areas such as climate resilience and secure communications technology.

 
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Number of the Day

264,562

Average weekly intermodal loads carried by U.S. railroads in the first 24 weeks of 2022, down 6.3% from the same period last year, according to the Association of American Railroads.

 

In Other News

Global logistics giant DB Schenker is buying Van Buren, Ark.-based truckload carrier USA Truck in an all-cash deal valued at about $285 million, excluding debt. (WSJ)

A measure of U.S. consumer sentiment fell to another record low in June. (WSJ)

New home sales in the U.S. jumped 10% from April to May but were down 5.9% from the year before. (MarketWatch)

Ethanol prices have risen 14% so far this quarter. (WSJ)

United Airlines and its pilots’ union reached a tentative contract agreement that would raise pilot pay by more than 14% in 18 months. (WSJ)

Auto makers are raising prices for electric vehicles amid rising materials costs for batteries and growing consumer interest in the cars. (WSJ)

Vietnam's textile and apparel exports are expected to rise 23% to a record high of $22 billion in the first six months of 2022. (Nikkei Asia)

U.S. securities regulators are weighing a rule requiring that businesses disclose emissions data from suppliers and customers when assessing their climate-related financial risk. (Roll Call)

Inventory liquidation companies are seeing booming business as retailers cope with stockpiles of merchandise. (Modern Retail)

Corn is stacking up outside of Brazilian silos at the fastest rate in years after a bumper harvest. (Bloomberg)

Thousands of small U.K. construction companies have folded in the face of rising materials and labor costs. (Financial Times)

CSX is launching a $25 million expansion of its intermodal rail yard in Chicago. (Progressive Railroading)

President Biden is nominating Democrat Robert Primus to a second five-year term on the Surface Transportation Board. (Railway Age)

China’s plummeting steel demand and falling prices for the metal are raising alarms among operators of dry-bulk vessels. (Splash 247)

Maersk Line says its container ships are being delayed for up to three weeks at congested U.S. East Coast ports. (ShippingWatch)

DP World will help develop new cargo handling capacity at Romania’s Port of Constanta. (Port Technology)

A shipping insurance executive says new vessel types will be needed to transport electric vehicles and their highly flammable lithium-ion batteries on the water. (Lloyd’s List)

British parcel carrier Yodel swung to its first profit in 10 years in its latest fiscal year. (Motor Transport)

Private-equity firm Red Arts Capital acquired contract packaging services provider Coregistics. (DC Velocity)

 

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

 
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