Today’s Logistics Report: Exports Pull Back; Brexit’s Inventory Build; Getting Coffee to Go
Date: Friday, December 14, 2018
Source: The Wall Street Journal
Trade tensions are starting to show up in outbound business at U.S. ports. Seaborne exports at the big Southern California gateway ports took a dive last month, the WSJ Logistics Report’s Erica E. Phillips writes, in a new sign of the volatile impact tit-for-tat tariffs between the U.S. and China is having on container trade flows. Outbound container volume at the neighboring ports of Los Angeles and Long Beach fell 11.8% in November from a year ago. It was the first decline after seven straight months of annual growth in exports. Exports at the Port of Oakland were flat, meantime, while they fell 4.4% at Georgia’s Port of Savannah, the East Coast’s second-largest gateway. The drop follows sharp swings in import container volume, which peaked early this year as companies pulled forward shipments to get ahead of new rounds of tariffs.
Preparations at British and European companies for a chaotic Brexit are growing more urgent. Firms in the aviation, car, pharmaceuticals and food industries have already been stocking up on crucial ingredients and components, the WSJ’s Nina Trentmann reports, adding on average a month of working capital to their balance sheets. The efforts are intensifying with political showdowns in London that have left British Prime Minister Theresa May seeking new concessions from the European Union to win over testy lawmakers. German auto maker Volkswagen AG is among those creating buffer stocks in case of border disruptions, but Chief Financial Officer Frank Witter cautions there are “limited opportunities for stock and inventory building.” Car parts and logistics operator Unipart Group Ltd. warns that tight warehouse capacity is making stockpiling too expensive. And piling up inventory carries still greater risk if demand for the goods falls off.
Those increasingly crowded food delivery lanes are going to get more caffeinated. Starbucks Corp. is teaming up with Uber Technologies Inc.’s UberEats operation to expand coffee delivery across the U.S., the WSJ’s Julie Jargon reports, adding a new big-brand wrinkle to the booming business of delivering food to where consumers live and work. Delivery is becoming a source of added sales for many restaurant chains that have seen their dining room traffic erode. Many chains say delivery has attracted customers who don’t come in to eat. The new plan creates more of what shipping experts call density for Uber, which will be able to spread costs in its profitable UberEats unit across more deliveries. But the challenges in delivering food quickly and fresh are even greater for coffee, and delivery fees are likely to be a turnoff for customers placing small orders.
Commodities markets are sending worrying signals about global economic demand. Prices for key raw materials like iron ore, copper and lumber are on track to notch big declines this year, the WSJ’s Ira Iosebashvili reports, and measures of broader commodity markets are also down as global-trade tensions and a persistently strong dollar hammer prices for raw materials. The drops are driven by fears that trade tensions between the U.S. and China will hit global growth while expansion outside of the U.S. is already lackluster and China faces limited options to stimulate its economy. Experts say buyers are trying to avoid risk in a politically tense environment, but signs that industrial demand is sagging could create a drag on shipping. The dry bulk market focused on raw materials has been rebounding in recent weeks, with the Baltic Dry Index up about 35% since hitting a seven-month low in November.