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LogisticsLogistics

Tension on the Waterfront; Resetting Precision Railroading; Sugar Rush

By Paul Page

 

The APM container terminal at the Port of Los Angeles. PHOTO: PATRICK T. FALLON/BLOOMBERG NEWS

Growing job actions on the docks are triggering greater frustration over the protracted pace of West Coast port labor talks. Unionized longshore workers have been staging a series of targeted job actions at Southern California ports, sparking fears that wider work stoppages may hobble the flow of goods as companies gear up for the peak shipping season. The WSJ Logistics Report’s Paul Berger writes the port employers call the steps to withhold workers at particular points “illegal work actions” by the union. The actions don’t appear to be having much impact on cargo flows, in part because inbound volumes have been weak lately. Port of Los Angeles imports were down more than 35% in March from the year before. But retailers are troubled by the trends with back-to-school and holiday seasons on the horizon, and they’re anxious for progress after nearly a year of negotiations.

 
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Transportation

Joe Hinrichs became CEO at CSX after 30 years in the automotive industry. PHOTO: AGNES LOPEZ FOR THE WALL STREET JOURNAL

The head of one major U.S. railroad says the industry’s popular management strategy needs retooling. Precision-scheduled railroading remains crucial to rail operations, says CSX CEO Joe Hinrichs. But he tells the WSJ’s Esther Fung the execution has missed the mark as carriers have pushed efforts to control costs by keeping trains to preset schedules without adequately considering the impact on customers and employees. The strategy known as PSR has come under more scrutiny lately, with derailments prompting concerns that the aggressive cost-cutting has come at the expense of safety. Mr. Hinrichs says PSR principles remain sound but that precision scheduling “was heavily indexed toward controlling costs and improved asset utilization and, in many ways, didn’t prioritize improving the employee experience and improving customer service.”  He says experience shows that railroads need to strike a balance, and focus on “including employees and customers in how you implement scheduled railroading.”    

  • A railroad industry trade group dropped its call to inspect railcars that could contain loose wheels after a spate of train derailments. (WSJ)
 
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Quotable

“We are on the cusp of maybe the most momentous population transition of the last 200 years.”

— Irfan Nooruddin, director of the South Asia Center at the Atlantic Council, as India prepares to surpass China’s population.
 

Commodities

A sugar cane farm in Uttar Pradesh, India. PHOTO: PRAKASH SINGH/BLOOMBERG NEWS

Commodities prices are providing bitter news for food suppliers. Sugar prices have shot to their highest level in more than a decade, the WSJ’s Yusuf Khan reports, boosted by disappointing harvests in some of the world’s largest producers and strong demand in China. Winners from the rally include Brazilian farmers, who are on track for a solid crop, while food companies and retailers are weighing how much consumers will tolerate rising prices. The upswing comes as many other commodities have held broadly steady or fallen this year. Prices for wheat, corn, nickel and natural gas are all lower, while Brent crude oil is close to flat. But some agricultural futures, like cocoa and orange juice, are defying the raw-materials pullback. That’s propping up inflation at supermarkets even as prices slide in areas such as energy and freight transport.

  • Poland and Hungary are moving to suspend imports of Ukrainian grain to appease farmers hit by falling prices. (WSJ)
 
 
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Number of the Day

1.155

Year over year decline in Cass Freight Index of shipments in December, the first annual decline in two years.

 

In Other News

U.S. retail spending declined 1% from February to March as falling sales at stores and gas stations offset rising online revenues. (WSJ)

Walmart is selling Bonobos for a fraction of what it paid for the menswear brand, as it unwinds some of its e-commerce plays. (WSJ)

Boeing is pausing delivery of some 737 MAX jets because of incorrectly installed parts. (WSJ)

Best Buy is cutting hundreds of store jobs across the U.S. as the electronics retailer shifts more business online. (WSJ)

Companies nearly doubled their U.S. manufacturing commitments last year, to more than $200 billion, after Congress passed sweeping subsidies. (Financial Times)

Vietnamese factories are reporting a sharp decline in orders from overseas buyers. (Nikkei Asia)

South Asia apparel suppliers say major brands are strong-arming them to slash prices, in some cases below breakeven rates. (Sourcing Journal)

U.K. retailer Sainsbury’s is undertaking an approximately $270 million overhaul of its logistics operations that will include shifting about 3,000 workers to its third-party providers. (The Loadstar)

Retailer David’s Bridal is laying off more than 9,000 U.S. workers as the retailer evaluates “strategic options.” (Philadelphia Inquirer)

Parcel carriers are starting to implement dynamic pricing that adjusts rates based on supply and demand. (Supply Chain Dive)

The U.S. Energy Department approved a plan $39 billion liquefied natural gas export terminal in Alaska. (Maritime-Executive)

VesselsValue says older, medium-range crude tankers are selling for the highest prices since 2008.  (TradeWinds)

Russia’s oil exports rose in March to the highest level in three years. (Lloyd’s List)

Interact Analysis projects warehouse construction worldwide will fall by 35% this year from 2022. (Supply Chain Quarterly)

Local authorities approved a plan to turn a former Honda plant in the U.K. into a 7.2 million-square-foot industrial and logistics development. (Logistics Manager)

 

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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