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Launching Labor Talks; Europe Targets Tankers; Re-Shoring Supply Chains

By Paul Page

 

A worker checks a truck chassis at the APM container terminal at the Port of Angeles. PHOTO: PATRICK T. FALLON/BLOOMBERG NEWS

Contract talks due to start this week between West Coast dockworkers and cargo-handling companies carry high stakes for U.S. supply chains. The negotiations covering 29 ports have proven highly contentious and disruptive in years past, and the WSJ Logistics Report’s Paul Berger writes that the risks are even greater this year with freight networks still backed up and the American economy looking increasingly fragile. Leaders of the International Longshore and Warehouse Union and the Pacific Maritime Association both are expressing optimism they can reach an agreement. The early start to talks to replace a contract expiring this summer suggests there is some urgency backing up the public statements, partly because importers are already looking for alternatives to the congested Southern California ports. Automation on the docks is shaping up as the biggest issue, with big questions that were pushed back in earlier contracts now growing more pressing.

 
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Transportation

A tanker delivering Russian diesel to a U.K. terminal last month. PHOTO: CHRIS J. RATCLIFFE/BLOOMBERG NEWS

Europe is taking new aim at Russia’s energy exports by targeting transportation networks more directly. European Union officials are proposing a ban on insuring ships that carry Russian oil, the WSJ’s Julie Steinberg, Laurence Norman and Joe Wallace report, the latest in a series of moves to isolate Moscow already buffeting global energy trade. The CEO of tanker giant Frontline says a bar against insuring the vessels “would be a very strong hindrance to export Russian crude.” The insurance proposal has been subject to hard negotiations among EU member states, with shipping-focused nations like Greece raising concerns. The sanctions would push Russian oil further into a shadow market facilitated by lesser-known traders and shipowners willing to operate without insurance. New Western sanctions on Russian trade are still rolling out, with the U.S. imposing new export controls on a variety of equipment and items, including wood products, industrial engines and bulldozers.

 

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

A Russian airstrike is believed to have killed some 60 villagers who had taken refuge in a school in Ukraine’s Luhansk region, while embattled Ukrainian forces making a last stand in Mariupol vowed to fight till the end if they aren’t rescued. (WSJ)

The EU is struggling to finalize the terms of an oil embargo on Russia amid resistance by Hungary. (WSJ)

Ukraine is in talks with Poland and Lithuania to export its summer grain harvest through the countries’ ports. (WSJ)

Ukraine says Russian forces have taken grain from Ukrainian farms as part of an effort to hobble the country’s agriculture sector. (WSJ)

Moscow is allowing importers to bring in Apple smartwatches and dozens of other imported goods by exempting the products from trademark laws. (WSJ)

For the latest updates from Russia and Ukraine, click here

 
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Supply Chain Strategies

Salomon’s factory in Ardoix, France, will be able to produce one million pairs of shoes a year with 15 employees per shift. PHOTO: FELIX LEDU for THE WALL STREET JOURNAL

French sportswear firm Salomon’s efforts to bring production closer to home proved more complicated than the company imagined. The company is trying to cut emissions and reduce bottlenecks after 15 years of manufacturing entirely in Asia, and the WSJ’s Trefor Moss writes that its efforts have included building an automated sneaker factory and redesigning its shoes to drastically shrink its supply chain. But Salomon has struggled to source materials in a region largely devoid of suppliers. For decades, a company executive says, “all the innovation, all the capacity in sports footwear has been in Asia.” Roughly two-thirds of U.S. and European manufacturers say they will bring some Asian production home by 2025, according to a survey by BCI Global, signaling supply shocks are eroding the business case for off-shoring. Salomon’s experience shows supply chains have grown deep roots in Asia, however, and moving business may be a yearslong undertaking.

 

Quotable

“Re-shoring used to be a topic for boring conferences; now it’s a topic for the boardroom.”

— René Buck, CEO of supply-chain consulting firm BCI Global
 
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Number of the Day

2.3 Million

Projected container imports, in 20-foot equivalent units, into major U.S. ports in May, an increase from April and a 1.4% decline from the record level in May 2021, according to the Global Port Tracker.

 

In Other News

The U.S. economy added 428,000 jobs last month as service and hospitality companies stepped up hiring. (WSJ)

Average hourly earnings for U.S. private-sector workers rose 5.5% in April, a pace behind the inflation rate. (WSJ)

Production in Germany’s manufacturing sector slumped 3.9% in March. (WSJ)

Under Armour has been canceling orders as it deals with production constraints and shipping delays from Covid-related restrictions in China. (WSJ)

Lucid’s losses narrowed in the first quarter as the electric car maker said it plans to raise prices starting in June. (WSJ)

Goodyear Tire & Rubber’s first-quarter sales rose as the tire maker’s price increases outpaced surging costs. (WSJ)

Tesla struck a deal with Vale for a long-term supply of nickel from the mining giant’s Canadian mines. (Financial Times)

U.S. maritime regulators want the three major container shipping alliances to report more detailed information on pricing and capacity. (Journal of Commerce)

China’s national energy company ordered 12 new liquefied natural gas tankers for $2.4 billion. (Splash 247)

The U.S. trucking sector added 13,000 jobs in April after payrolls fell by 3,400 jobs in March. (Dow Jones Newswires) 

Swedish electric maker Volta Trucks plans to launch its commercial vehicles in North America by the end of next year. (Motor Transport)

Freight broker Echo Global Logistics is acquiring New Jersey-based refrigerated trucking operator Roadtex. (NJBiz)

The U.S. Postal Service lost $1.7 billion in its fiscal second quarter despite rising revenue and volume. (Logistics Management)

Venture-capital firms are pouring money into startups offering ways to make freight transport more efficient. (The Economist)

 

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

 
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