By Paul Page
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The top U.S. maritime regulator says the ongoing consolidation in the shipping industry isn't leading to collusion to fix freight rates. The comments from Federal Maritime Commission Chairman Mario Cordero to the WSJ's Costas Paris mark the most explicit acknowledgment yet that regulators are navigating an uncharted and changing landscape as the shipping business restructures amid unprecedented losses. Some shipper-customers and regulators worry that the big alliances that are forming to share costs and risks across the carriers' big new ships are leading to secret deals to reinvigorate depressed freight rates. Mr. Cordero says the FMC has seen "no major concerns with the alliances," and that the commission is able to "work it out" when they raise concerns with carriers. Regulators will almost certainly get to talk even more about alliances with the container lines. Mr. Cordero expects that by next year, 14 of the world's 16 largest shipping companies will line up in one of three alliances.
United Parcel Service Inc. is following broad spending and population trends with its latest acquisition . The parcel giant is buying medical-logistics specialist Marken Ltd., pushing deeper into the highly specialized and very profitable business of healthcare industry deliveries. The move is a play for high-yield business when many traditional industrial and retail customers are opting for slower, cheaper shipping, the WSJ's Mike Esterl reports. Closely-held Marken specializes in transporting clinical trial materials and medicine between 49,000 clinical trial locations around the world, work that is particularly sensitive in terms of time and temperature. For UPS, it also delivers a bigger entry into a growing market, particularly as aging populations in the developed world spend more on health care and clinical research expands. Healthcare operators in the U.S. added 30,100 jobs in October, and some 415,000 jobs over the past year, and the World Bank says the share of spending on healthcare for each person is growing sharply in the U.S. and around the world.
Investors are following online retailers into warehouses. Singapore's sovereign-wealth fund agreed to pay $2.7 billion for P3 Logistics Parks and its portfolio of European warehouses, the WSJ's Art Patnaude reports, inone of the biggest real-estate deals in Europe this year. The high returns on the industrial properties are a big draw, but the bigger attraction over the long term is the growing need for space to serve e-commerce customers in a European market with a limited number of high-quality warehouses. This is the second big buy in logistics for Singapore's GIC Pte. fund, which bought the Blackstone Group LP's IndCor Properties and its network of U.S. warehouses. The upheaval in the market likely isn't over -- another Blackstone property, Logicor, is exploring either an outright sale or an initial public offering of a business that owns 660 warehouses in 18 European countries.
Amazon.com Inc.'s expansion into Europe may get much more expensive . The online retailing giant could be in the crosshairs of Europe's taxman after the European Commission recently ordered Ireland to claw back more than $14 billion in tax benefits from Apple Inc., the WSJ's Sam Schechner and Stu Woo report. The EC is examining tax deals that multinationals such as Amazon and McDonald's Corp. have received to determine if they constitute illegal "state aid" that could give them an unfair advantage over rivals. Any new clawback order likely would pale in comparison to Apple's multibillion hit because few make nearly as much money as Apple, but Amazon may be an inviting target because of the more than $3 billion in proceeds the company has sent an untaxed subsidiary though its European base in Luxembourg. Amazon says it "pays all the taxes we are required to pay," and notes it has only meager profits to report in Europe because it is investing so heavily there.
IN OTHER NEWS
U.S. consumers' credit balances increased 6.3% in September, another sign that spending is picking up. (WSJ)
European Union antitrust regulators are quizzing the U.K. government over assurances given to Nissan Motor Co. to keep producing cars in the U.K. after Britain leaves the bloc. (WSJ)
Online jeweler Blue Nile Inc. reached an agreement to be bought by private-equity firms in a $500 million deal. (WSJ)
Tesla Motors Inc. will stop offering new owners of its electric vehicles unlimited access to free fast-charging stations at the beginning of 2017. (WSJ)
The U.S. Postal Service won't confirm ZTO Express Inc.'s claim that the operators have struck a partnership on handling cross-border transactions. (CNBC)
Alibaba Group Holding Ltd. and Amazon are steering clear of direct competition in each other's top markets, according to Alibaba. (Nikkei Asian Review)
Cargo owners are shifting business to carriers they believe are more financially stable after the collapse of Hanjin Shipping Co., says a Maersk Line executive. (Reuters)
Warehouse vacancy rates in Los Angeles and Orange County, Calif., were below 2% last quarter, according to JLL. (Logistics Management)
Pet supplies retailer PetSmart Inc. will use an agreement with Deliv to launch same-day delivery for online orders. (Internet Retailer)
UPS, breaking with other railroad customers, says it fears a requirement for railroads to allow so-called reciprocal switching of railcars would diminish rail service. (Material Handling & Logistics)
The BIMCO shipping association says ocean carriers are rapidly increasing the rate at which they are scrapping container ships. (MarineLink)
Baidu Inc. hopes to raise as much as $500 million for its Waimai food delivery unit. (Bloomberg)
Asia and Australia accounted for more than half the third quarter's $17.6 billion in transport and logistics mergers and-acquisitions. (The Loadstar)
A measure of supply-chain risk rose to its highest level since 2013. (Supply Chain Digital)
Daimler AG's Mercedes-Benz named three new logistics and transport providers for its Alabama plant. (Birmingham News)
DB Schenker opened a 183,000-square-foot distribution center north of Cologne to support Ford Motor Co. parts delivery in Europe. (Automotive Logistics)
Daily sales for industrial parts supplier Fastenal grew in October at the fastest rate of the year. (Industrial Distribution)
British lawmakers made an unannounced inspection of a big Sports Direct warehouse and say the company clandestinely recorded their meeting. (The Guardian)
Paul Page is deputy editor of WSJ Logistics Report. Follow him at @PaulPage, and follow the entire WSJ Logistics Report team: @brianjbaskin, @lorettachao and @EEPhillips_WSJ, and follow the WSJ Logistics Report on Twitter at @WSJLogistics.
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(END) Dow Jones Newswires
November 08, 2016 07:02 ET (12:02 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.