By Paul Page
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The coal business that dragged down U.S. railroads is lifting up CSX Corp. The carrier reported an uptick in first-quarter net profit, the WSJ's Ezequiel Minaya reports, beating expectations and flexing its pricing power in a changing North American freight market. Revenue rose 9.5% from a year before to $2.87 billion, fueled in part by a 3% rise in coalshipments, much of which was primed for export. Revenue for the coal business soared 31%, a sign of more urgent demand that helped CSX generate a 28% gain in revenue per unit. That strong yield is the result of pricing discipline and restrained capacity that CSX and other railroads imposed during a steep downturn in coal demand. CSX is also getting more competitive with trucks under new chief Hunter Harrison. The carrier's intermodal volume edged up just 1%, but revenue for that truck-rail business rose 7%, another signal that the railroad is gaining pricing leverage.
Australia is trying to solve an unusual trade-balance problem in liquefied-natural-gas. The country's LNG exports are booming, the WSJ's Rob Taylor reports, as plants in the northeast tap deep reserves and push shipments to regional markets such as China and Japan. But the export rush has led to a shortage of gas for domestic consumers and left the heavily-populated eastern seaboard facing blackouts. The country is considering new infrastructure to get LNG moving domestically, including a pipeline that would run almost 1,000 miles from one resource-rich area to an energy-starved western region. The government is talking to energy companies about other fixes, including shipping LNG by ocean from one side of the country to the other. For now, Australia is facing a fundamental trade riddle, with producers finding it more lucrative to sell goods abroad than at home.
The labor market is tightening and transportation companies are feeling the pressure. A Federal Reserve report on U.S. economic activity took a downbeat view of industrial business, the WSJ's Ben Leubsdorf and Sarah Chaney report, writing that "worker shortages and increased labor costs" were restraining growth in sectors including transport, manufacturing and construction. That fits with a report from J.B. Hunt Transport Inc. this week that its laborcosts rose in the first quarter even as freight demand remained tepid. The Fed sees competition for labor growing across the country, particularly for low-skilled jobs, and that wages are rising. That's a troubling trend for shipping providers that may now find themselves vying for workers even as business remains relatively flat. The Fed cited one unnamed nationwide freight hauler that says demand is "ho-hum" and that recent improvements in manufacturing indicators weren't pushing freight toward trucks.
ECONOMY & TRADE
New trade tensions are drawing sharp attention to Canada's controversial supply-management system for dairy products. President Donald Trump's warning to Canada to stop protecting its dairy farmers from competition revives U.S. objections that the system that manages dairy prices unfairly restricts imports and harms American producers, the WSJ's Paul Vieira reports. Under the Canadian scheme, prices for dairy productsare set based on the average costs of production, while production is controlled through a regulated quota system and competition is blocked by tariffs. The system was a stumbling block in the negotiations toward the 12-nation Trans-Pacific Partnership trade deal. Canada insists it is not harming U.S. farmers, and notes American dairy exports to the country are rising. Dairy-producing states remain angry, however, and even a Canadian think tank says the system raises costs for consumers.
IN OTHER NEWS
Canadian Pacific Railway reported a slight decline in first-quarter profit despite an uptick in shipping volumes. (WSJ)
A new report showing an unexpected increase in U.S. gasoline supplies revived fears of a glut. (WSJ)
Eurozone exports rose 0.4% in February, restoring Europe to a trade surplus. (WSJ)
Exxon Mobil Corp. is seeking a waiver from U.S. sanctions on Russia to resume its joint venture with state oil giant PAO Rosneft. (WSJ)
Emirates Airline is cutting flights to five U.S. cities after actions by the Trump administration slowed bookings from Middle Eastern countries. (WSJ)
Hyperloop One Inc. is delaying and scaling back the first full test of its trainlike pods that whisk through low-pressure tubes. (WSJ)
Chevrolet, General Motors Co.'s biggest brand, plans to introduce 20 new or revamped models in China in a bid to restore sales growth. (WSJ)
German retailer Otto is using artificial intelligence to closely forecast sales and align distribution to the projected demand. (The Economist)
Chinese auto maker SAIC Motor Corp. halted plans to export vehicles to the U.S. amid uncertainty over U.S.-China trade policies. (Bloomberg)
Japan and the European Union filed a complaint that South Korea's bailout of Daewoo Shipbuilding and Marine Engineering violates trade law. (Splash 24/7)
China's steel andiron ore prices are slipping as auto industry demand wanes and concerns grow over a glut. (Nikkei Asian Review)
Shares in Diana Shipping Inc. plummeted after the dry bulk vessel owner launched a public offering of $70 million of common shares. (American Shipper)
Tiger Cool Express LLC will use $15 million in new equity funding to help double its fleet of temperature-controlled containers. (DC Velocity)
Europe-based automotive logistics specialist Evolution Time Critical opened its first North America office in Atlanta. (Lloyd's Loading List)
Indian online retailer Myntra acquired logistics technology platform InLogg. (Business Standard)
Cargo traffic at Cathay Pacific soared 15.4% in March, outstripping a 3.3% gain in capacity. (Aviation Daily)
Flight dispatchers at Atlas Air Worldwide Holdings Inc. approved a four-year contract extension. (Air Cargo News)
U.S. truck-trailer orders slipped from Februaryto March. (Fleet Owner)
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.
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(END) Dow Jones Newswires
April 20, 2017 06:55 ET (10:55 GMT)
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