Today’s Top Supply Chain and Logistics News From WSJ
19, 2016 6:29 a.m. ET
This wasn’t the start to the fall that U.S. freight carriers were hoping for. Major measures of shipping demand turned down sharply in September, WSJ Logistics Report’s Robbie Whelan writes, suggesting that tepid manufacturing and excessive inventories are still weighing on supply chains heading deeper into the fourth quarter. The 5.8% month-to-month decline in the American Trucking Associations truck tonnage measure and the 3.1% drop in the Cass Freight Index are especially important because September is a crucial month for lining up goods to meet holiday expectations.
For transportation carriers, the pullback from what Cass called the “false hope” likely means capacity planning later this year and into early 2017 will remain conservative. Cass reports that truckload and intermodal pricing also declined in September, and those lower rates will convince carriers to hold back additional trucks and railcars until shipping demand grows for more than just a single month.
China is quietly causing another upheaval in global trade flows. The manufacturers that have made the country the world’s factory floor now are buying more raw materials and components from Chinese suppliers, taking control of a greater portion of the world’s supply chains. The WSJ’s Anjani Trivedi reports the shift towards local suppliers is moving from foundation materials such as industrial resins and pigments to higher-tech items, threatening to take a chunk out of flows.
Long-growing U.S. exports to China fell 14% last year and are down another 8.2% so far this year. More significantly, the value of materials that China imports for use in other products fell 15% last year, and it dropped another 14% in the first nine months of this year. It’s a disturbing trend for many global manufacturers, which have ceded low-end production to Chinese rivals but count on staying ahead in higher-end goods.
Their prospects for an exporting rebound are dimming as the value of China’s parts production grows.
Burberry Group BURBY -6.19 %  PLC is getting squeezed between its conflicting roles as a supplier and an apparel retailer. The British luxury house is seeing revenue slide as the company tries to match its inventory to a sales strategy that looks increasingly at odds with the plans of department stores and other sellers. Burberry is trying to burnish its upscale brand by keeping inventories lean and discounting rare, the WSJ’s Saabira Chaudhuri reports, and the company has even pulled certain supply agreements with some U.S. department stores that have slashed prices on its products.
The gap between suppliers and stores has grown across retailing as e-commerce grabs a bigger portion of sales, and the conflict is escalating in the apparel world as the lean supply chains that serve fast-fashion companies push consumers toward lower-cost goods. Burberry’s results so far are mixed, but the company says its efforts to closely manage inventories won’t let up.
The trucking industry often talks about the hurdles they face recruiting workers, but some prospective truck drivers say the business itself is setting up unfair barriers. Background checks for commercial drivers have become a lightning rod in trucking, WSJ Logistics Report’s Loretta Chao writes, drawing sharp criticism from those who say they have been wrongly blocked from taking the wheel because of inaccuracies in these employment-history reports. Many carriers use Drive-a-Check, or DAC, reports–dossiers from California-based HireRight LLC that include work histories, including accidents and alleged unethical behavior.
Such background checks are considered essential in a business that puts a premium on security, and where a high turnover rate can find drivers working for numerous companies over a short span. But many drivers have claimed the checks can be unfair, inaccurate and unverified, and HireRight has faced legal and regulatory challenges to its practices. With some 800,000 long-haul drivers on the road, and trucking companies saying they soon will need some 48,000 more drivers, questions over background checks will only grow more important in coming years.
IN OTHER NEWS
Paul Page is deputy editor of WSJ Logistics Report.
Follow him at @PaulPage, and follow the entire WSJ Logistics Report team: @brianjbaskin, @lorettachao, @RWhelanWSJ and @EEPhillips_WSJ, and follow the WSJ Logistics Report on Twitter at @WSJLogistics.
- ^ get this newsletter delivered to your inbox (www.wsj.com)
- ^ suggesting that tepid manufacturing and excessive inventories are still weighing on supply chains heading deeper into the fourth quarter (www.wsj.com)
- ^ the shift towards local suppliers is moving from foundation materials such as industrial resins and pigments to higher-tech items, threatening to take a chunk out of flows (www.wsj.com)
- ^ Burberry Group (quotes.wsj.com)
- ^ BURBY -6.19 % (quotes.wsj.com)
- ^ tries to match its inventory to a sales strategy that looks increasingly at odds with the plans of department stores and other sellers (www.wsj.com)
- ^ Background checks for commercial drivers have become a lightning rod in trucking (www.wsj.com)
- ^ increased steadily in September (www.wsj.com)
- ^ to sell its shipyard (www.wsj.com)
- ^ slight drop in optimism in October (www.wsj.com)
- ^ third-quarter earnings fell 8.4% (www.wsj.com)
- ^ trade ministers failed to support (www.wsj.com)
- ^ moving ahead with new spending (www.wsj.com)
- ^ United Continental Holdings (quotes.wsj.com)
- ^ UAL 1.23 % (quotes.wsj.com)
- ^ fell 4.7% in the third quarter (www.wsj.com)
- ^ Alibaba Group Holding (quotes.wsj.com)
- ^ BABA 0.49 % (quotes.wsj.com)
- ^ fund expansion of its Koubei (www.wsj.com)
- ^ International Business Machines (quotes.wsj.com)
- ^ IBM -2.62 % (quotes.wsj.com)
- ^ transition from core products (www.wsj.com)
- ^ Tesla Motors (quotes.wsj.com)
- ^ TSLA 2.65 % (quotes.wsj.com)
- ^ new orders of its Model 3 (www.wsj.com)
- ^ will grow to 18% in the next year (www.fibre2fashion.com)
- ^ General Electric (quotes.wsj.com)
- ^ GE 0.45 % (quotes.wsj.com)
- ^ upgrade freight transport in Nigeria (www.breakbulk.com)
- ^ Gap (quotes.wsj.com)
- ^ GPS -0.96 % (quotes.wsj.com)
- ^ close its eight U.K. stores (www.reuters.com)
- ^ no longer sell its decommissioned ships (cphpost.dk)
- ^ fell 3.6 percent in the third quarter (www.bloomberg.com)
- ^ grew 8.1% year-over-year (pilotonline.com)
- ^ automated container terminal at its Sohar Port (timesofoman.com)
- ^ Cosco Shipping (quotes.wsj.com)
- ^ 600428 3.22 % (quotes.wsj.com)
- ^ will buy a 40% stake (www.seatrade-maritime.com)
- ^ formed an alliance (www.buzzfeed.com)
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