U.S. freight demand appears to be downshifting just as carriers are gearing up for the summer shipping season. Comments from trucking companies and a growing set of industry data signal that business is pulling back compared to 2018’s sizzling freight market, WSJ Logistics Report’s Jennifer Smith writes, as prices slide amid bad weather and escalating trade tensions. Retailers and manufacturers stung by double-digit rate increases last year are now gaining more leverage as trucks are easier to find. Shipments are sagging on severe flooding in the Midwest, inventories are rising and companies are holding off on big investments as they wait for clarity on U.S.-China trade. While trucking volumes ticked up in April, rail traffic has been declining. Analysts warn the bumpy ride could extend into the second half of the year if trade tensions get worse and retailers hunker down to burn off inventories.
A big shakeup in the U.S. warehousing market may be taking shape.
are bidding to buy the U.S. arm of Singapore’s GLP in a deal that could be worth roughly $20 billion. The WSJ’s Liz Hoffman, Cara Lombardo and Miriam Gottfried report the possible sale would change the landscape of American warehouse management. Prologis is already the biggest industrial real-estate investment trust, with a portfolio of 772 million square feet. The GLP business up for sale is the second-largest owner of industrial warehouses in the U.S., with almost 200 million square feet across some 1,350 properties. There is no guarantee a deal will be reached, and GLP is also considering an initial public offering for its U.S. business. The bidding comes after several years of rapid expansion in the market, with e-commerce growth fueling strong growth in distribution center construction and leasing rates.
Shipping across much of the U.S. Farm Belt has been underwater for much of the year. The wettest year on record is raising costs for agricultural companies, stalling fieldwork and slowing shipments, the WSJ’s Jesse Newman and Jacob Bunge report, leaving dismal economic prospects for farmers and companies that depend on the pillar of the American economy. While farmers rush to plant between rainstorms, time is growing short for agricultural companies to sell some of their most profitable products, as the weather woes reverberate across supply chains. Plantings are far off last year’s levels, and suppliers have been pressed to fill even the diminished need for seed and other farming products because of flooding. Mississippi River barge traffic was blocked for a time, pushing fertilizer supplier Mosaic Co., to costlier rail transport to deliver products. A large backlog is now waiting, and coming rains could shut the river again.
Investor interest in the food-delivery market is soaring. DoorDash Inc. just raised $600 million in a new funding round that values the San Francisco-based startup at $12.6 billion, the WSJ’s Eliot Brown reports, nine times the value the business reached just a year ago. The deal comes on the heels of a $575 million investment round last week in European food-delivery startup Deliveroo led by Amazon Inc., a sign that the competition in the market is getting increasingly fierce. The enormous investments highlight a contrast in the business, with companies pushing big money into mobile technology that pulls together a broad range of restaurants and takes wrinkles out of consumer ordering. The logistics operations rely more on “gig economy” principles with a strong focus on reducing the cost of delivery. Backers say it’s a compelling model with a clearer path to profitability than ride-hailing.
“There are some strong headwinds.”
Number of the Day
Decline in labor productivity in the warehouse and storage sector in 2018, according to the Bureau of Labor Statistics.
IN OTHER NEWS
Theresa May will quit as British prime minister, following her failure to win approval for a Brexit deal. (WSJ)
Europe’s economic growth appears to be stalling amid flagging international demand for its exports. (WSJ)
Japan downgraded its outlook for industrial production and other key parts of its economy. (WSJ)
New home sales in the U.S. declined in April in the largest monthly drop since the end of 2018. (WSJ)
London-based Arcadia Group, operator of the Topshop and Topman fast-fashion brands, filed for bankruptcy in the U.S. (WSJ)
Denver-based oil and gas producer Elk Petroleum Inc. filed for bankruptcy protection. (WSJ)
The International Monetary Fund says U.S. tariffs on Chinese-made goods are being paid almost entirely by U.S. importers. (CNBC)
Vietnam’s exports of goods the U.S. has targeted for tariffs in China are soaring. (Financial Times)
Office equipment makers Sharp and Kyocera are considering moving production from China to Southeast Asia to avert U.S. tariffs. (Nikkei Asian Review)
Moody’s Investor Service says escalating trans-Pacific trade tensions will choke off growth at China’s ports. (South China Morning Post)
Automotive parts supplier Y-tec Keylex Toyotetsu Alabama is opening a $220 million plant in Huntsville, Ala. (WAFF)
Furniture retailer IKEA will open its first store in Mexico next year. (Reuters)
The Organization for Economic Cooperation and Development predicts maritime freight demand will grow at a compound annual rate of 3.6% through 2050. (Lloyd’s List)
An analysis given to regulators shows U.S. railroads’ revenues from special fees charged to shippers rose 29% last year. (Journal of Commerce)
An investment consortium is interested in buying railroad operator Genesee & Wyoming Inc. (Bloomberg)
is laying off 195 workers as it scales back operations at an Oregon rail yard. (East Oregonian)
is launching a program to speed up development of warehouse automation and robotics. (Logistics Manager)
U.S. freight broker C.H. Robinson Worldwide Inc. brought Italian operator Dema Service SPA. (DC Velocity)
An Illinois jury ordered logistics operators to pay $1.9 million to a truck driver injured when a shipment he was unloading collapsed on him. (Law.com)
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