Logistics Report: Shipping More Steel; Harvesting Farm Aid; Migrating Asia Supply Chains

Date: Monday, May 20, 2019
Source: The Wall Street Journal

An end to U.S. tariffs on steel and aluminum from Canada and Mexico could open the door to more North American trade. The Trump administration reached agreements to end the levies and unwind retaliatory measures, the WSJ’s Vivian Salama, Josh Zumbrun and Kim Mackrael report, a major breakthrough for Ottawa and Mexico City and for congressional opponents of the tariffs in Washington who had threatened to block passage of a revamped North American trade pact over the issue. Removing the tariffs should allow metals to trade more freely in North America, where supply chains that often snake across borders have been hit with higher delivery charges to account for the levies. The WSJ’s Bob Tita reports that has driven up costs for companies like organic dairy producer Stonyfield, which uses metals in its packaging. Retaliatory tariffs have also cut into shipments for U.S. dairy and pork producers.

Fresh aid from Washington for farmers may not provide the fertile soil for growth sought by companies tied to agriculture supply chains. The U.S. Department of Agriculture is cobbling together a farm relief program of up to $20 billion, Josh Zumbrun and Jesse Newman report, but many farmers doubt the package will make up for a trade dispute that has shut them out of the big Chinese market. U.S. exports of many agriculture products have declined, dragging commodities prices down to the lowest levels in years. U.S. farm debt is mounting and farmers in the Midwest are filing for bankruptcy at levels not seen for at least a decade. Severe Farm Belt flooding has exacerbated the slump, and the impact is hitting companies that serve the sector. Deere & Co. lowered its outlook over slackening demand for its farm equipment and said progress in trade talks “is becoming increasingly important.”


Supply Chain Strategies

A migration of manufacturing from China to other parts of Asia may be starting. Economists say Ricoh Co.’s plans to shift some production of copiers to Thailand may be the only start for Japanese firms looking to sell to American customers. The WSJ’s Megumi Fujikawa reports the supply chain for copiers highlights how the U.S.-China trade dispute is spilling over to other countries that source parts and finished products from Chinese factories. Ricoh’s competitors say they are weighing similar steps, with Fujifilm saying it is waiting to see if Washington follows through on imposing the new tariffs. Experts say the shift will only accelerate, and that companies would be cautious about investing in China even if under a trans-Pacific trade truce. That may strain transportation and logistics infrastructure that has been built for trade flows through China, and may have operators scrambling to keep up.


The woman who helped build today’s boom in natural gas trade has died. Kathleen Eisbrenner was a rare female entrepreneur in the energy shipping world, the WSJ’s James R. Hagerty writes, and her pioneering efforts at El Paso Energy Corp. and Excelerate Energy and later as founder of Houston-based NextDecade Corp. made her a critical figure in the business. Ms. Eisbrenner and her team at El Paso developed technology allowing liquefied natural gas in liquid form to be “re-gasified” aboard ships, then piped to shore and into a domestic distribution network. The process made transporting LNG more efficient and less costly. Today 35 ships are equipped with the technology, and offshore re-gasification technology accounts for around 10% to 12% of LNG imports world-wide. Ms. Eisbrenner, who was 58, died May 9 of head injuries from a fall in her home in The Woodlands, Texas


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