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By Paul Page
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Nearly five decades after pioneering the air express business with the launch of FedEx Corp., Fred Smith is trying to reset the delivery giant for a changed world. Global trade is slowing, tariff fights have companies rethinking supply chains and the rise of one-time customer Amazon.com Inc. as a competitor show FedEx is operating in a very different business environment than the one that Mr. Smith himself helped create. The WSJ's Paul Ziobro writes that the threats have sapped FedEx's finances at a time when the company is racing to adjust to modern delivery demands. Some investors say the company has hewed too closely to its Express operations even as the growth of e-commerce means shipments increasingly need to travel from warehouses to nearby homes, not long distances overnight. Mr. Smith is changing the operations, though some analysts question whether the changes are big enough or coming fast enough.
Tighter operations are helping CSX Corp. and Union Pacific Corp. run more efficiently but they're not helping lure many more customers. Both railroads are implementing precision railroading techniques and both used cost cutting to keep profit erosion in check in the third quarter despite sharply falling volumes. The WSJ's Paul Ziobro reports the shipment figures suggest the railroads still face a challenge in convincing shippers the operations are faster and dependable enough to shift more business from rail to truck. Union Pacific Chief Executive says plentiful, cheap trucking capacity has undercut the railroad's attempts to boost intermodal business. Intermodal trade gives the railroads their strongest exposure to the relatively strong consumer economy. But those volumes have been crumbling this year, falling 5.9% in September from a year ago, according to the Association of American Railroads, and then 6.6% in the second week of October.
ECONOMY & TRADE
A potential deal to avoid a messy break between the U.K. and European Union isn't likely to pull stalled corporate investment plans in Europe out of storage anytime soon. The agreement faces tough odds in the U.K. parliament, the WSJ's Alistair MacDonald and William Boston report, and business leaders say even an assent from lawmakers won't solve the big clouds looming over their decisions. The deal spells out the terms of Britain's departure from the bloc, but not the terms on which both sides will trade -- the most important factor for many companies. Business investment in Britain has fallen amid uncertainty and companies have been stockpiling goods. If lawmakers approve the deal, a 14-month transition would begin. Trade talks between the U.K. and EU would also start, offering businesses hope a pact for a pact before the end of that period. But negotiations to set new terms could take years.
IN OTHER NEWS
China's economic growth slowed to 6% in the third quarter. (WSJ)
U.S. manufacturing output fell 0.5% in September. (WSJ)
The United Auto Workers will extend the monthlong strike at General Motors Co.'s U.S. factories until workers have approved a new labor deal. (WSJ)
Walmart Inc. and Mattel Inc. are taking part in a virtual store called KidHQ that sells toys through interactive video. (WSJ)
Honeywell International Inc.'s third-quarter profit dropped 30% and the industrial conglomerate tempered its sales forecast over economic uncertainty. (WSJ)
Paint maker PPG Industries Inc.'s higher prices helped offset lower third-quarter sales volume and rising raw materials costs. (WSJ)
Nestle SA is overhauling its water business amid slowing growth and a backlash against single-use plastic. (WSJ)
Renault SA cut its guidance, citing slumping sales and higher costs associated with developing cleaner car models. (WSJ)
Singapore's exports shrank in September for the seventh month in a row. (Straits Times)
Amazon says brands are refusing to use anti-counterfeiting tools that guard against fakes being sold on its marketplace. (Sourcing Journal)
International Business Machines Inc. and LevaData will cooperate on analytics technology services that advance direct procurement sourcing. (Supply Chain Digital)
Tanker charter rates are retreating rapidly from recent 15-year highs. (Lloyd's List)
Mediterranean Shipping Co. joined carriers saying they won't use the Northern Sea Route over Arctic waters. (The Loadstar)
GlobalTranz Enterprises Inc. bought Chicago-based freight broker Global Freight Solutions. (DC Velocity)
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 firstname.lastname@example.org
(END) Dow Jones Newswires
October 18, 2019 09:51 ET (13:51 GMT)
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