Logistics Report: Rail Fee Revolt; Cooling Warehouse Demand; Blockchain Takes Flight

Date: Thursday, May 30, 2019
Source: The Wall Street Journal

U.S. shippers are bristling at unexpected costs as railroads streamline freight networks. Big rail operators seeking efficiency by running longer trains on tighter schedules are shifting some of the burden to their customers, the WSJ’s Paul Ziobro reports, giving them less time to return empty railcars before late fees kick in. This year Norfolk Southern Corp. and Union Pacific Corp. cut the grace period in half, to 24 hours, prompting complaints to regulators. Pasta giant Barilla America Inc. and steel producer ArcelorMittal told the Surface Transportation Board that meeting the tighter window would involve costly upgrades and new construction, while some smaller shippers say the fees are wiping out profits. The railroads say the charges help keep networks fluid. But STB Chairman Ann Begeman says the board may change how the fees are applied: “None of us were convinced that the status quo is acceptable.”

The tight U.S. warehouse market is likely to loosen up in the next three years after a long boom fed by  e-commerce. The Deloitte Center for Financial Services says in a forecast that availability of industrial real estate will rise from 7% in 2018 to 10.3% by 2023 as new construction outpaces demand growth in a cooling U.S. economy, The WSJ Logistics Report’s Jennifer Smith writes that while Deloitte expects demand to keep expanding as online sales and business inventories grow, the race to secure warehouse space that defined much of the past decade should ease. The report forecasts that annual demand growth will drop to 129 million square feet in 2023 from a peak in 2018 of 227 million square feet. At the same time, new development, on-demand warehousing startups and adapted use of other commercial spaces will add to pressure on industrial real estate rents.


Logistics Technology

Blockchain is helping speed up sales in a heavily-regulated corner of the aviation supply chain. Honeywell International Inc. is using the technology to power an online marketplace for used aircraft componentsthat lets participants trade parts in real time, the WSJ’s Agam Shah reports, digitizing the process while also authenticating transactions. Sales in the $5.4 billion used aircraft-parts market require certification from the U.S. Federal Aviation Administration and others, and sending quotes and exchanging documentation by phone and email can stretch out the process to days or even weeks. Honeywell’s marketplace lets buyers like airlines find and purchase parts immediately by using blockchain to trace the history of each component. Eventually the company aims to sell whole used aircraft on the platform as blockchain, now being tested in food supply chains and to track drug shipments, gains broader acceptance.


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