Today's Top Supply Chain and Logistics News From WSJ
January 19 2017 - 7:12AM
Dow Jones News
By Paul Page
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The next wave of container shipping consolidation may go through
China. Chinese conglomerate Cosco Group is in talks to acquire
smaller rival Hong Kong-based Orient Overseas Container Line Co.,
the WSJ's Costas Paris reports. The carriers already are lined up
under the Ocean Alliance grouping that will start operations this
spring, but the purchase would add new weight to the Chinese
operator in a business where scale is becoming an overriding
business imperative. With a 2.8% share of the global shipping
market, OOCL is the ninth-biggest carrier in the world but sits
outside the ring of dominant carriers that seem to be setting the
pricing and capacity agenda for container shipping. Cosco is
looking to move up the rankings to challenge the world's top three
shipping lines, a move that will carry a heavy cost. The
state-owned company is preparing a bid valued at more than $4
billion. But analysts at Alphaliner say market value would push the
purchase price closer to $4.7 billion if the two sides can strike a
deal.
Hunter Harrison is leaving Canadian Pacific Railway Ltd. but he
isn't done trying to reshape North American freight rail business.
Mr. Harrison is teaming up with an activist investor in a bid to
shake up management at U.S. carrier CSX Corp., just as he did at
the Canadian railroad, the WSJ's David Benoit and Jacquie McNish
report. Mr. Harrison is working with Paul Hilal, who left Bill
Ackman's Pershing Square Capital Management LP to launch his own
fund last year, and has raised more than $1 billion for a single
investment. Mr. Harrison came on board at CP in June 2012 after a
proxy battle waged by Mr. Ackman, and the two fought an
unsuccessful battle to revive rail consolidation with a takeover of
Norfolk Southern Corp. He's also led a turnaround at what was
viewed as one of the worst-performing railroad companies in North
America. The company's fourth-quarter results highlighted that
efficiency, with profits jumping sharply to $289 million despite a
slip in revenue to close out a tough year for freight rail
operators.
The breaking apart of Hanjin Shipping Co. is picking up steam. A
bankruptcy judge's approval of the hotly-contested sale of the
carrier's stake in a Long Beach, Calif., container terminal
operator removes the most visible part of Hanjin's U.S. operations,
the WSJ's Tom Corrigan and Erica E. Phillips report. The ruling
follows attempts by U.S. creditors to halt the sale in hopes of a
more lucrative deal and what the judge says were assurances that
the creditors will be treated fairly in South Korea's bankruptcy
court. The sale, for $78 million in cash and relief of $54 million
in debt and other obligations, gives Mediterranean Shipping Co.
full control of Total Terminals International LLC. MSC is following
up by selling a 20% stake in the terminal business to South Korea's
Hyundai Merchant Marine Co., stepping up the cooperation between
the two carriers. Meantime, Hanjin's retreat from the shipping
business now returns to Asia, where it looks like a full
liquidation is underway.
SUPPLY CHAIN STRATEGIES
The logistics field's quiet period in mergers-and-acquisitions
activity may be ending. Ridgemont Equity Partners is buying
Worldwide Express from another private-equity firm and blending the
business with the Unishippers Global Logistics operation it already
owns, WSJ Logistics Report's Erica E. Phillips writes. The
combination will create a business with more than $1 billion in
revenue, making the new Worldwide Express Global Logistics a top-30
freight broker in the U.S. The company will hold a significant
share of the less-than-truckload market, and has plans to expand
its truckload business. The deal will also pull together the only
two authorized resellers of United Parcel Service Inc. services to
small businesses. The deal is one of the biggest in several months
in the U.S. logistics arena, a sharp contrast with 2015 and the
first part of last year, when a series of splashy purchases
consolidated logistics operators.
QUOTABLE
IN OTHER NEWS
Rising global temperatures in 2016 set a record for the third
year in a row, as federal climate watchers rated it the warmest
year worldwide since modern record keeping began. (WSJ)
Overall U.S. industrial production rose at the fastest pace in
more than two years in December but factory output increased at a
more modest 0.2% pace. (WSJ)
A broad measure of inflation poked above 2% for the first time
in two-and-a-half years in December. (WSJ)
United Continental Holdings Inc.'s fourth-quarter net profit
declined sharply as cargo revenue increased 8.2% on a 16.1% gain in
cargo traffic. (WSJ)
Aircraft leasing companies are holding back plans to enter Iran
because of potential policy changes under the incoming Trump
administration. (WSJ)
Toshiba Corp. is weighing a spinoff of its profitable
semiconductor unit. (WSJ)
The Federal Trade Commission is suing Qualcomm Inc., alleging
the company unlawfully maintained a monopoly on a type of
semiconductor used in cellphones. (WSJ)
The U.S. launched a trade challenge against Canada's treatment
of U.S. wines in the British Columbia province. (WSJ)
The U.S. Merchant Marine Academy at Kings Point, N.Y., has
failed to correct persistent sexual harassment, assault and
pervasive sexism, according to reports on the maritime educational
institution. (Newsday)
Two-thirds of Americans surveyed in a poll oppose using tolls to
draw private investment for infrastructure. (Washington Post)
A.P. Moller-Maersk A/S Chief Executive Soren Skou says capacity
reduction by container lines is helping drive up shipping prices.
(CNBC)
Cargo ship owners are seeing charter rates fall to historic lows
as container shipping lines dispose of excess tonnage. (IHS
Fairplay)
Amazon.com Inc. plans to open a 1.2 million-square-foot
distribution center northeast of Baltimore. (Baltimore Sun)
Japan will subsidize installation of pickup lockers at various
sites to cut down on delivery of e-commerce purchases. (Nikkei
Asian Review)
Utah businesses want the state to back construction of a
container handling station, or inland port, in the northern part of
the state. (Salt Lake Tribune)
The owner of New Jersey trucking company was arrested while
boarding a flight to Aruba after racking up more than $1 million in
unpaid tolls for company trucks. (Philadelphia Inquirer)
ABOUT US
Paul Page is deputy editor of WSJ Logistics Report. Follow him
at @PaulPage, and follow the entire WSJ Logistics Report team:
@brianjbaskin, @jensmithWSJ and @EEPhillips_WSJ and follow the WSJ
Logistics Report on Twitter at @WSJLogistics.
Subscribe to this email newsletter by clicking here:
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Write to Paul Page at paul.page@wsj.com
(END) Dow Jones Newswires
January 19, 2017 06:57 ET (11:57 GMT)
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