Terminal for Sale; FedEx Gets Electric; Retailing Boosts Logistics

Date: Monday, November 26, 2018
Source: Wall Street Journal

One of the Port of Long Beach’s most technologically-advanced container-cargo terminals is up for sale. China’s Cosco Shipping Holdings Co. is beginning a process that will shift ownership of the terminal at the nation’s second-largest port in a period of rapidly growing trade volumes. The WSJ’s Costas Paris and Joanne Chiu report that insiders believe the site could go for more than $1 billion, with many global port operators likely to bid for the property. The sale is part of an agreement with U.S. regulators that gave Cosco the green light to buy Hong Kong-based container shipping line Orient Overseas International Ltd. OOIL operates the Long Beach Container Terminal, but Cosco agreed earlier this year to place it into a U.S.-run trust and sell it within a year to allay national security concerns. The sale comes in a U.S. container terminal market that’s been relatively static in recent years even as big operators have consolidated ownership in other countries.

Tougher emissions standards and volatile fuel prices are driving delivery companies to add cleaner trucks. FedEx Corp. is the latest carrier to move toward tamping down emissions in its delivery operations, the WSJ Logistics Report’s Jennifer Smith writes, under purchase and lease agreements that will add 1,000 electric vehicles to its Express business in California. The new trucks will make up a tiny share of FedEx Express’s fleet but the move comes as other carriers are making similar moves in the U.S. and in Europe. DHL Express is working in electric delivery vans in Germany and United Parcel Service Inc. is testing a variety of electric trucks. FedEx’s focus on California comes as state regulators are looking at tougher emissions, and signals that effort could have a longer-term impact on North American fleets.

Rising consumer spending may be bringing more profits to logistics providers than to retailers. U.S. retail chains including Target Corp. , Kohl’s Corp. and Walmart Inc. reported increased sales in the third quarter, the WSJ’s Khadeeja Safdar and Suzanna Kapner write, but those companies’ margins are under pressure from shipping and logistics costs, as well as online competition and tariffs on Chinese-made imports. Target’s profit margins declined in the latest quarter as the company’s supply chain costs and wages rose. Several retailers are offering free parcel delivery along with a variety of options for picking up orders, adding logistics costs to their “last mile.” With e-commerce volumes surging this holiday season, logistics companies could certainly augment their profits—as long as their delivery networks can handle the red-hot demand without melting down.

Lowe’s Co s. is joining a retail-industry drive to boost profits by trimming operations. The WSJ’s Kimberly Chin reports the home-improvement giant plans to shed its 13 retail-store operations in Mexico and exit its U.S.-based contracting service, Alacrity Renovation Services, and its Iris Smart Home business. The move follows similar strategies by Macy’s Inc. and other retailers to cull store space, cut back on the amount of merchandise for sale and reduce workforce. With more shoppers buying online, retailers are getting more focused with their physical operations and reducing wasted space. Sears Holdings Corp. closed hundreds of locations and carved out areas of its stores for supermarkets and health clubs. Best Buy Co. is leasing floor space to tech vendors. At Lowe’s, newly-minted Chief Executive Marvin Ellison wants to increase stocks of faster-selling items while slashing lower-performing inventory.

 

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