Expanding its own shipping services is taking a toll on
Amazon.com Inc.
’s bottom line. The e-commerce market leader’s profit fell 26% in the third quarter even as revenue grew 24%, the WSJ’s Dana Mattioli reports, as world-wide shipping costs soared 46%. The $9.6 billion in shipping expenses was even more than Amazon spent in last year’s busy fourth quarter and a sign of the tumultuous changes underway in the company’s logistics operations as it handles more of its own packages. Amazon is taking on those costs as it rolls out one-day shipping for Prime subscribers, promising to bring its best customers faster and cheaper delivery. The results suggest Amazon is struggling like other retailers and parcel carriers to cope with the costs of e-commerce delivery, but it’s not slowing the company down. Amazon expects to spend another $1.5 billion in the fourth quarter to expand one-day shipping.
SUPPLY CHAIN STRATEGIES
Tapestry Inc.
is putting the finishing touches on a technology makeover that will overhaul the luxury-goods company’s supply-chain management. The owner of the Coach and Kate Spade brands is centralizing operations under a common technological backbone that includes inventory management, distribution and sales in a bid to cut costs and make the business more nimble. The WSJ’s Agam Shah writes the centerpiece of the effort is an
enterprise resource planning system that bridges back-office, sales, logistics and other systems. The software replaces seven ERP systems Tapestry had used to integrate systems across brands and geographies. The company is among many consumer-focused businesses turning to technology to get more nimble and handle the growing competitive stresses in retail trade. Tapestry’s ERP system provides a foundation for real-time features including inventory checks and in-store pickup for online purchases.
ECONOMY & TRADE
The window for passing the Trump administration’s renegotiated trade deal with Mexico and Canada may be closing. U.S. lawmakers worry that progress on the U.S.-Mexico-Canada Agreement, or USMCA, could fade against political priorities in the coming election year if negotiations in Washington over the pact don’t conclude soon. The WSJ’s Natalie Andrews reports that Democrats and the administration are at odds over how to ensure that new labor rules in USMCA are enforced, a priority for U.S. unions aiming to deter companies from moving production. There’s little progress so far, although U.S. Trade Representative
Robert Lighthizer
= met with lawmakers on Wednesday. Trade at North American borders appears to be showing some impact from a wavering industrial economy, meantime. Transborder freight by value fell 1.7% in August, according to the U.S. Bureau of Transportation Statistics, and U.S.-Canada truck trade fell 3.1% in the second straight monthly decline.
QUOTABLE
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“We put our future in the hands of Boeing and the MAX, and we’re grounded.”
”
Number of the Day
6%
Annual increase in loaded container imports into major U.S. East Coast ports in the first eight months of 2019, compared to a 1.3% decline at West Coast ports, according to the Pacific Merchant Shipping Association.
IN OTHER NEWS
Business activity around the world is slowing, with durable goods orders in the U.S. falling and eurozone activity near stagnation. (WSJ)
British police believe the 39 people found dead in a refrigerated trailer near London were Chinese nationals. (WSJ)
Granite Creek Capital Partners Red Arts Capital are investing in California shipping company Sunset Pacific Transportation. (WSJ)
and
face rising costs and lost revenue from the grounding of the
Boeing Co.
737 MAX jets. (WSJ)
Intel Corp.
raised its full-year outlook despite declining third-quarter earnings. (WSJ)
Ford Motor Co.
‘s operating profit rose 7.5% in the third quarter but the auto maker lowered its target for the full year. (WSJ)
Candy maker
Hershey Co.
bolstered third-quarter results by raising prices. (WSJ)
3M Co.
’s quarterly sales declined and the manufacturer cut its earnings forecast for the year. (WSJ)
Nokia Corp.
cut its outlook for this year, citing the growing costs of rolling out gear for 5G mobile networks. (WSJ)
A series of startups are challenging established players in China’s fiercely competitive parcel-delivery market. (Nikkei Asian Review)
Norfolk Southern Corp.
’s third-quarter net profit fell 6% as freight rail volume also fell 6%. (Virginian-Pilot)
Third-quarter profit at trucker
Old Dominion Freight Line Inc.
fell 4% as declining tonnage offset improved pricing measures. (Winston-Salem Journal)
Japan’s Ocean Network Express is considering an order for 10 mega-size container ships. (TradeWinds)
Danish authorities are investigating maritime fuel provider Dan-Bunkering for suspected ties to Syria. (Splash 247)
Cargo traffic for Asia-Pacific airlines fell 6.5% in September. (Air Cargo News)
Texas-based Shipwell raised $35 million in a funding round to back expansion of its transportation management software to broader logistics management. (TechCrunch)
Boston-based Fairmarkit raised $11 million to advance its machine learning technology for procurement. (VentureBeat)
Amazon broke ground on a 1 million-square-foot fulfillment center near the Pittsburgh International Airport. (KDKA)
Toronto-based Manitoulin Global Forwarding acquired Montreal-based Associated Cargo Specialists. (Logistics Management)
ABOUT US
Paul Page is editor of WSJ Logistics Report. Follow the WSJ Logistics Report team: @PaulPage, @jensmithWSJ and @CostasParis. Follow the WSJ Logistics Report on Twitter at @WSJLogistics
Write to Paul Page at [email protected]
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