Employment patterns show a steady, certain change in the logistics sector. Trucking companies and railroads were among those cutting jobs in May, part of a dismal national report that raised alarms about the direction of the U.S. economy, WSJ Logistics Report’s Loretta Chao reports. That didn’t slow the momentum at warehousing and storage companies, however, where businesses added 3,000 jobs last month. Warehouse operators have added 15,600 jobs this year, remaining resilient as retailers get more inventories in position for e-commerce deliveries. The overall transportation and warehouse sector has added 52,000 jobs in the last 12 months, with just about all of that coming in warehouses: railroads have slashed 30,000 jobs and trucking is up less than 5,000 from a year ago. Perhaps more significant is the cloud coming from the supply side, with goods-producing companies cutting 36,000 jobs last month.
Trucking companies are scaling back future fleet growth, though it’s the capacity on the roads now that is hurting them. Truckers ordered 14,300 Class 8 trucks in April, according to ACT Research, a 31% dive that extended a sharp pullback in ordering that began last fall, WSJ Logistics Report’s Brian Baskin writes. The ordering remains well below the 18,000 to 19,000 new vehicles per month needed for basic fleet replacement, and experts don’t expect to see an upturn until retailers start pushing more goods through their supply chains. Less-than-truckload operators Old Dominion Freight Line Inc. and Saia Inc., who count retailers as major customers, say their volume has been weakening. There were signs of stronger demand last month in spot truckload measures from DAT Solutions and Truckstop.com, but shipping will have to strengthen for several months before carriers are likely to put their own buying in higher gear.
A planned BNSF Railway Co. terminal that is supposed to relieve congestion in Southern California instead is highlighting the growing tensions around the U.S. between freight business and local communities. Railroad expansion plans nationwide are running afoul of communities and environmental activists with increasing frequency , the WSJ’s Erica E. Phillips and Laura Stevens report. Permitting disputes at sites including Long Beach, Oakland, Baltimore and South Florida carry high stakes at ports as industrial changes boost the need for more rail capacity. Some $155 billion in spending is coming up at U.S. seaports, including work on on-dock rail infrastructure, to accommodate large ships. BNSF has already spent $50 million and 10 years on the site near the Long Beach and Los Angeles ports and the railroad now is considering whether to drop the plan entirely.
A battle is taking shape over home-delivery of groceries that could have an impact on “last-mile” logistics. Wal-Mart Stores Inc. will work with Uber Technologies Inc. and Lyft Inc. to test a grocery-delivery service to compete more directly with Amazon.com Inc., the WSJ’s Sarah Nussauer reports. Last-mile delivery is proving a hot battleground, with startups like Instacart Inc. and DoorDash Inc. vying for a piece of the market and big players like the U.S. Postal Service, Uber and Amazon looking for ways to operate the business profitably. The competition has created a kind of broad national laboratory for live testing of how to connect the various parts of the distribution chain once a consumer completes an order to get the goods delivered seamlessly. It also gives Uber and Lyft a bigger chance to see how their app-driven passenger businesses can be adjusted for parcel delivery.
Supply-chain woes at Airbus Group SE are starting to bite into the aircraft maker’s business. Qatar Airways just canceled the order for its first A320neo jetliner, saying severe delivery delays brought about by supplier bottlenecks leave the airline “screaming,” the WSJ’s Robert Wall reports. It’s a stark and, for Airbus, costly lesson in how supplier actions can echo across production and hit the bottom line. In this case, Airbus and United Technologies Corp. unit Pratt & Whitney, have struggled to get engines up to performance standards. Both Airbus and Boeing Co. are trying to boost production to meet higher airline demand. But speeding up the supply chain for complicated aircraft components has been challenging, and similar questions are looming for Airbus over its A350 long-range jet-liner.
