By Paul Page
Sign up:With one click, get this newsletter delivered to your inbox.
Taiwan is putting big money behind an effort to keep its big ocean lines from following South Korea's Hanjin Shipping Co. into collapse. The government will provide a $17.6 billion relief package that will include a heavily-discounted credit line aimed mainly at shoring up Evergreen Marine Corp. and Yang Ming Marine Transport Corp., the WSJ's Costas Paris reports. The companies are among the world's biggest container lines, but they are losing money and under heavy competitive pressure as rival carriers consolidate in the face of a deep shipping downturn. Hanjin's collapse has set off alarm bells across Asia, and likely helped pushed the recent decision by Japan's big three shipping lines to merge their operations. Taiwan sees shipping as critical to its trade-centered economy, and fear of the impact of a carrier failure was evident in the support package. A top Taiwanese official pointed to the big supply chain disruption triggered by Hanjin's abrupt bankruptcy filing in August, saying it shows the government must "provide support to the industry before the damage becomes uncontrollable."
The post-election rally in drybulk shipping companies is just about out of control. The Nasdaq Stock Market halted trading in DryShips Inc. after a buying frenzy that pushed its shares up 1,500% over the past week, the WSJ's Chris Dieterich reports. It was the biggest in a series of sharp gains in a bulk shipping business that one analyst says had been "left to die" under the double-barreled impact of a trade downturn and a collapse in commodities demand. Shares of carriers including Diana Containerships Inc. Globus Maritime Ltd. and Sino-Global Shipping America have also soared, and Eagle Bulk Shipping's stock has more than doubled since last week. Those carriers haul the raw materials needed for construction and infrastructure, and that's likely why the upturn in the Baltic Dry Index accelerated after the election. So far, the interest has only bulked up share prices, but the carriers hope confidence eventually will bring new loads and revenue.
A cash crunch in India is providing a stark lesson in supply-chain finance. Manysmall businesses across the country have been unable to move goods or are operating under a shaky system of IOUs in the week since the government abruptly barred the use of 500- and 1,000-rupee notes, the WSJ's Raymond Zhong and Krishna Pokharel report. The action is aimed at cracking down on corruption, but it's triggered chaos at banks as citizens try to trade in notes and triggered turmoil in business dealings that are widely conducted with cash. With an economy built up mostly out of countless small markets, vendors and middlemen, India lacks the sort of financing mechanisms that can smooth the flow of goods. Wholesalers say they are losing sales, and those who extending credit say there's nothing but goodwill to back up their new makeshift lending system.
SUPPLY CHAIN STRATEGIES
A Koch Industries Inc. $2.5 billion investment in business software provider Infor Inc. could have a far-reaching impact across consumer and industrialsupply chains. The funding will give Infor a role in helping one of the largest private companies in the world digitize its supply chains, the WSJ's Anne Steele reports. The Koch portfolio includes consumer goods like Brawny paper towels as well as pipelines and other heavy-industry operations. The transaction will bring the Koch business a big supplier of cloud-based enterprise resource planning software -- and a company that's been on something of a buying binge. Infor bought the GT Nexus supply-chain management business last year, and this year added consumer-demand forecasting specialist Predictix LLC. Koch officials say they wanted a company that was growing, and the big investment may help Infor expand its business and extend its buying strategy.
President-elect Donald Trump's pledge to make manufacturing American again will run up against a big barrier created by Asia's sophisticated electronics supply chain. Suppliers in the U.S. and Asia say decades-old distribution channels and China's armies of migrant workers are powerful forces in global electronics production, the WSJ's Kathy Chu and Juro Osawa report. Mr. Trump says he wants Apple Inc. to make iPhones in the U.S., and has threatened a big tariff on Chinese imports into the U.S. Apple sources memory chips from Korean suppliers and displays from Japan, however, and shipping those goods separately from Asia would add new costs on top of higher labor expenses, driving up the cost of finished goods. And tariffs could have another, unintended effect by accelerating the shift already underway of outsourced manufacturing to other points, including Vietnam.
IN OTHER NEWS
A second Chinese logistics company is planning a U.S. initial public offering, for next year. (WSJ)
Industrial output was flat in October, as unusually warm weather depressed heating demand while factory production edged upslightly. (WSJ)
U.S. home-builder confidence in the market for single-family homes remained steady this month. (WSJ)
Target Corp.'s same-store sales slipped 0.2% in the third quarter but online sales growth accelerated to 26%. (WSJ)
Lowe's Cos. cut its outlook for the year as U.S. same-store sales grew 2.6% in the third quarter, below expectations. (WSJ)
U.S. oil refiners have exported record amounts of motor fuel in recent weeks. (Bloomberg)
Japanese online fashion retailer Locondo plans an initial public offering on the Tokyo Stock Exchange as soon as March. (Nikkei Asian Review)
Hyundai Heavy Industries Co. will split its non-shipbuilding units into separate companies as South Korea's shipyards undergo massive restructuring. (Channel News Asia)
Gap Inc. opened a "pop-up" distribution center in upstate New York to temporarily replace a warehouse destroyed by fire in August. (The Auburn Citizen)
Volvo Group said its truck production in Sweden could be disrupted if a dockworker walkout at the Port of Gothenburg was not resolved quickly. (The Local)
The Virginia Port Authority approved plans to sharply expand the port's container handling and rail access. (Virginian-Pilot)
Etihad Airways added 777 freighter flights between the United Arab Emirates and three European airports. (The National)
The largest U.S. independent truck driver group sued over a federal rule on truck driver medical examinations that calls for sleep apnea screening. (Commercial Carrier Journal)
Four Sikh truckers settled a discrimination case against J.B. Hunt Transport Services Inc. over treatment of their religion. (Seattle Times)
A five-year Shanghai's city government plan calls for wide-ranging improvements in logistics, including handling of perishables and pharmaceuticals. (Break Bulk)
Shipping industry consolidation will likely reduce the demand for the bunker fuel used by cargo vessels. (Ship & Bunker)
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.
Subscribe to this email newsletter by clicking here: http://on.wsj.com/Logisticsnewsletter .
Write to Paul Page at firstname.lastname@example.org
(END) Dow Jones Newswires
November 17, 2016 06:57 ET (11:57 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.