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LogisticsLogistics

Resetting Inventory Plans; Apple Spreads Out; Autos Drive South

By Paul Page

 

An intermodal container yard in Salt Lake City. PHOTO: GEORGE FREY/BLOOMBERG NEWS

Supply-chain challenges are causing companies to reconsider how they manage inventory to meet customer demand while preserving their balance sheets. Businesses including film and photographic supplies manufacturer Eastman Kodak and beauty-products maker Olaplex are among those that are holding more inventory as a strategy to guard against potential shortfalls from ongoing delays in shipments, the WSJ’s Jennifer Williams-Alvarez writes. Research group eeSea says the share of shipments arriving on time in North America from Asia ticked up from 9% in April to 11% this month, but that remains far below the 59% on-time arrival rate of May 2020. Some companies are pulling back on orders to guard against delayed inventory stacking up in distribution networks and on their books. Chemical company Chemours has cut down on the number of orders it takes and sports apparel merchant Under Armour has even canceled customer orders because of supply chain issues.
 

 
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Supply Chain Strategies

Wistron, a Taiwan-based iPhone assembler, operates factories in India. PHOTO: REUTERS

Apple is looking to shift one of the world’s crucial electronics supply chains away from its tight focus on China. The company has told some of its contract manufacturers that it wants to boost production outside the country, the WSJ’s Yang Jie reports, amid concerns that Beijing’s strict anti-Covid policy places too much risk on Apple’s distribution of its high-value parts and finished goods. India and Vietnam, already sites for a small portion of Apple’s global production, are among the countries getting a closer look as alternatives. Any move by Apple to emphasize production outside China could influence the thinking of other Western companies that have been considering how to reduce dependence on China for manufacturing or key materials. The impact may also reach beyond Apple and its direct suppliers because the company’s big shipping needs can set an economic foundation for new transportation capacity and infrastructure.

 
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Quotable

“Even if you domestically source, the raw materials come from all over the globe.”

— Amit Pandhi, CEO of Velocity Snack Brands.
 

Supply Chain Strategies

The move by automotive manufacturers to the U.S. South is picking up speed. South Korea’s Hyundai Motor Group plans to build a $5.5 billion manufacturing complex in Georgia dedicated to making electric vehicles, the WSJ’s Ryan Felton reports, adding to the drive by car makers that is recasting U.S. automotive supply chains. Like other car companies, Hyundai is moving to expand its electric-vehicle offerings, suggesting that the technology is triggering a new look at the big supply chains that have been built around the sector over decades. Hyundai’s plant is due to open in the first half of 2025 near Georgia’s Port of Savannah, and the production needs and supplier deliveries should add to the burgeoning business across the southeast. Savannah’s container imports are 40% ahead of pre-pandemic levels and box volumes at the Port of Mobile, Ala., were up in April by nearly 40% over April 2020.

 

Here are recent developments following Russia’s invasion of Ukraine:

Russia says it has taken control of the strategic port city of Miariupol. (WSJ)

Russia will stop exporting natural gas to Finland after the state-owned energy company Gasum refused to accept Moscow’s payment demands. (WSJ)

Japanese manufacturers face higher shipping costs as they seek alternatives to Russian coal. (Lloyd’s List)

Canada is barring the sale of Russian luxury goods, including caviar and vodka. (WSJ)

For the latest updates from Russia and Ukraine, click here

 
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Number of the Day

$59.3 Billion

Combined net profit for container shipping lines in the first quarter, more than three times the profit from the same quarter a year ago, according to Blue Alpha Capital’s John McCown.

 

In Other News

A survey shows a growing share of small businesses expect business conditions in the U.S. to worsen in the next year. (WSJ)

A roughly 7% slide in the euro against the dollar this year is bringing the currencies closer to parity. (WSJ)

Consumer prices in Japan rose at the fastest pace since 1991. (WSJ)

Applied Materials says supply-chain issues are holding back sales growth at the supplier of equipment for semiconductor manufacturing. (WSJ)

Deere & Co. raised its annual profit forecast for the year, even as rising materials and parts costs pressured margins. (WSJ)

Canada barred equipment made by China’s Huawei Technologies and ZTE from being used in the country’s 5G mobile network. (WSJ)

British rail executives are drafting emergency operating plans ahead of a strike vote by unionized workers. (Financial Times)

Some apparel retailers are dialing back policies that allow free returns of online orders. (Business of Fashion)

Asian and European buyers of liquefied natural gas are securing contracts with American producers, in some cases for projects years away from completion. (Nikkei Asia)

The West Coast dockworkers’ union wants to pause contract talks until June 1. (Journal of Commerce)

Rail delays at the ports of Los Angeles and Long Beach last month reached the highest level since last July. (Dow Jones Newswires)

Loaded container imports at the Port of Oakland fell 17% year-over-year in April. (DC Velocity)

Mediterranean Shipping Co. owner Gianluigi Aponte‘s fortune has doubled to about $19 billion. (TradeWinds)

Schneider National’s CFO says the freight market “will remain constructive”​ despite reports of excessive retailer inventories. (Fleet Owner)

Family Dollar is permanently shutting the Arkansas warehouse where a rodent infestation was discovered earlier this year. (New York Times)

 

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

 
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