Logistic Report: CMA CGM's China Order; Apple Turns to Services; Building for LNG Exports

Date: Tuesday, March 26, 2019
Source: The Wall Street Journal

China is taking a bigger role in French transport. French shipping operator CMA CGM SA ordered 10 container megaships from state-owned China State Shipbuilding Corp., WSJ Logistics Report’s Costas Paris writes, as part of a string of deals announced while Chinese President Xi Jinping visited Paris. The agreements aren’t formally part of China’s Belt and Road Initiative like separate pacts with Italy last week. But container ships and a big order of Airbus SE aircraft by China will bolster the trading relationship between France and Beijing just as Paris presses to open the Chinese economy to more trade and investment. The ship orders also may signal new thinking in a shipping industry marked by excessive capacity in recent years. With capacity for 15,000 containers, the vessels are smaller than the sector’s biggest megaships but give CMA CGM more flexibility to deploy them in various markets.

The world’s biggest brand in consumer electronics is turning toward services for growth. Apple Inc. is betting on a suite of video and news-subscription services it hopes will generate billions of dollars in annual revenue, the WSJ’s Tripp Mickle reports, while also deepening ties between the company and users of its iPhone. Apple’s biggest strategic shift in more than a decade signals a recognition that its signature smartphone is running out of juice. That’s increasingly evident in global electronics supply chains that Apple built, with many components suppliers now pulling back production and airfreight providers reporting slowing volume growth. Apps and services have become more important to users than the devices that run them, leading consumers to keep phones longer and buy cheaper versions. That helped pull back Apple’s revenue and profit last quarter, but revenue from services business grew 33% last year to nearly $40 billion.
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The race to take part in the U.S. liquefied natural gas boom is picking up. Royal Dutch Shell and Energy Transfer LP are pursuing plans to convert an LNG import facility in Louisiana into an export terminal, the WSJ’s Ryan Dezember and Inyoung Hwang report, in a big new bet that the future of U.S. shale gas lies in selling it overseas for higher prices. The proposed Lake Charles, La., facility would have the capacity to ship 16.5 million tons of U.S. natural gas a year. The move by the Anglo-Dutch energy giant and U.S. pipeline operator adds to the surge in planned LNG export terminals expected to come online  as companies seek to turn the cheap gas into bigger profits in overseas markets. U.S. gas exporters have been scrambling to add capacity to meet demand, much of it in China.

Economy & Trade

The U.K. is stumbling toward withdrawal from the European Union with the terms and even the date for Brexit still uncertain. Prime Minister Theresa May intends to bring her battered plan for leaving the European Union to Parliament for a third time this week, the WSJ’s Jason Douglas reports. even as she fights back efforts by lawmakers to wrest control of the Brexit process from her divided government. The skirmish means the standoff over Brexit isn’t likely to be resolved soon. EU leaders have agreed to extend the U.K.’s exit to May 22 if Mrs. May’s plan passes, but Britain will fall out of the bloc April 12 otherwise. Logistics companies have won one round in the Brexit battle, with the government announcing it would expand simplified new customs procedures to cover all ports and operators beyond earlier narrow coverage.


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