Today’s Top Supply Chain and Logistics News From WSJ

Delivering up-to-the minute news, analysis, interviews and explanatory journalism on logistics, supply-chain management, e-commerce and more............

The trucking industry is bracing for a downturn, and that’s a poor signal for the U.S. economy. Private trucking and logistics executives told the Cowen and Co. investment firm that spot-market demand has turned soft this month and that the contractual rate increases they’ve been seeking are cracking. WSJ Logistics Report’s Loretta Chao writes that the increasingly poor outlook suggests the market is adjusting to the stockpile of inventory that piled up earlier in the year as a result of the West Coast ports’ dispute. FedEx Corp. chief Fred Smith says many companies simply “over-ordered” to ensure they had enough goods on hand. For trucking companies, that means a tougher road for rate increases. And for the larger economy, it means many companies may choose to watch the inventories dwindle before they start ordering again.

Some companies already are trying to get XPO Logistics Inc. Chief Executive Bradley Jacobs to take apart Con-way Inc., even before he’s done buying the trucker. Jacobs confirmed on Wednesday that he’s received three offers for the truckload division at Con-way, deals he says he is considering. Selling the truckload business would change the financial framework of the acquisition. It also would redraw the contours of the finished business, carving away the truckload operation while allowing XPO to focus on the less-than-truckload Con-way Freight business central to XPO’s strategy. Meanwhile, XPO is lining up an asset-backed loan of more than $1 billion and a term loan for about $1.75 billion to finance the deal.
Shipping lines may get a big bonus in legislation to end the U.S. ban on oil exports. The WSJ’s Amy Harder reports that U.S. House Republicans are offering to boost payments to the shipping industry by $500 million over the next five years to win Democratic backing for the oil-export legislation. The money would go toward the niche operations that go through the Defense Department to companies including Maersk Line and APL through their limited U.S.-flag operations. It would come through the Maritime Security Program, which pays vessel operators to make ships and other resources available to the Pentagon in an emergency. Critics say it’s just old-fashioned horse-trading since it’s aimed at luring lawmakers from coastal states with big ports, where the money could boost hiring of union workers.

TRANSPORTATION

Photo: David Paul Morris/Bloomberg News

Iran’s main shipping line wants to join the global shipping industry in just about every way. The head of the Islamic Republic of Iran Shipping Lines tells the WSJ’s Costas Paris in a rare interview that the carrier plans to modernize its fleet, engage with other lines in alliances and serve major Western markets once Tehran exits a long period of sanctions. IRISL which manages 158 container vessels, dry bulk carriers and tankers, is expected to return to the market in early 2016 under a deal reached with Western nations. Mohammad Saeidi says he expects trade between Iran and Europe to reach $15 billion, where it was before the sanctions, within three years. He even wants to join the industry rush to megaships, saying “Triple-Es are a priority.”
The distribution channel for logistics talent may be getting bigger. WSJ Logistics Report’s Loretta Chao reports that Massachusetts Institute of Technology wants to build on the popularity of its MOOC program—that’s Massive Open Online Course—to expand participation in its supply-chain management master’s program. MIT will take 30 to 40 more students who complete a certification path and move them into the full master’s program. The announcement comes as others, including talent development firm SCM World and Georgia Tech, are creating customized training programs to help companies cultivate talent. That can’t come soon enough for some retailers and manufacturers that say they are having trouble finding people with the right skills to handle increasingly complex, global and technology-centric supply chains.
Companies are laying out plans to expand in Vietnam and Malaysia even before the ink is dry on the Trans-Pacific Partnership trade deal. The WSJ reports that the mammoth trade agreement is seen as a game-changer for those national economies, which depend heavily on external trade. Manufacturers of apparel, rubber gloves and bikes are among those considering increasing production in the Southeast Asian countries to capitalize on export growth expected from the accord. The Washington-based Peterson Institute for International Economics says membership of the TPP could boost exports from Vietnam by an additional 29% and from Malaysia by almost 12% by 2025.

QUOTABLE

‘Growth hides a lot of sins and covers up a lot of inefficiencies.’

—Fred Smith, chairman and chief executive, FedEx Corp.