Sign up: With one click, get this newsletter delivered to your inbox. China’s factory floors are getting quieter. Companies from exporters on the coast to manufacturers in the interior took longer breaks for the Lunar New Year this year because of slack demand, the WSJ’s Mark Magnier reports, signaling they’ll likely push fewer goods reach distribution channels. Two gauges of February manufacturing activity came in weaker than January’s level, and averaged over the two months, the official manufacturing purchasing managers index sank to its lowest level for a start to the year since 2009. That was evident at sites such as cement maker Jiangxi Tianrun Industrial Ltd., where workers took the holiday break two weeks early and an executive says the company has “no plans” to invest in growth. There are signs the shipping business may get a boost from an unlikely source: U.S. factories are reporting more new orders, and that means the country’s resilient consumer demand may get assembly lines humming again.
Canadian Pacific Railway is fighting on two fronts in its bid to consolidate the railroad industry. The Canadian carrier, which is pressing a hostile takeover bid for Norfolk Southern Corp., revived a $20 billion-plus effort to combine with CSX Corp. in January, the WSJ reports. The approach was rebuffed, but it shows Canadian Pacific isn’t just sitting back waiting for Norfolk Southern shareholders to take up the CP buyout offer. Canadian Pacific remains committed to acquiring Norfolk Southern but the company is determined to build a transnational railway and is keeping its options open, says Chief Executive Hunter Harrison. CP made its first bid to buy CSX in 2014, and since then Mr. Harrison has been the most vocal advocate of mergers in an industry that hasn’t seen consolidation of major railroads in nearly two decades. A new move by a Chinese electronics manufacturer may fuel more shipping from Mexico to the U.S. Hisense Co., the world’s third-largest television maker by units shipped, is doubling its manufacturing capacity in Mexico, joining a wave of Chinese companies that are expanding globally.
WSJ Logistics Report’s Loretta Chao writes. With labor and land costs in China rising, manufacturers see advantages in moving closer to consumer markets, allowing them to get goods to customers more quickly and better compete with established electronics brands. Hisense says producing TVs in Mexico cuts up to a month off transit time to the U.S., allowing retailers to keep inventories lean. Trans-border operators can use the business: the U.S. Department of Transportation says U.S. imports from Mexico by value fell 2.9% in December. There’s plenty of conciliatory talk about labor relations at West Coast ports but shippers and carriers are skeptical. The main dockworkers’ union and the West Coast’s terminal management group say they’re willing to discuss extending their six-year contract to 10 years, WSJ Logistics Report’s Erica E. Phillips writes, providing unprecedented labor peace at ports that have been the scene of bitter struggles in recent years. The industry audience at the Trans-Pacific Maritime conference organized by The Journal of Commerce wasn’t impressed, voting overwhelmingly in an on-site poll that they expect to see more labor-related disruption in the coming years.
Even more telling is that groups representing retailers and other shippers are promising to press their calls for more forceful government intervention in port labor disputes. That effort won’t wave, they say, as long as memories of idled shipping containers and lost business are fresh. The appetite in North America for large-scale distribution centers is still growing. A report on warehouse construction says that building of “big box” high-ceiling sites of over 300,000 square feet increased almost six times in four years to 61 million square feet in 2015, WSJ Logistics Report’s Loretta Chao writes. What’s more, Colliers International Group Inc. estimates another 74 million square feet of warehouse space is on the books to be completed this year. And with almost 93% of the space occupied, the report says average rents grew 28% between 2011 and 2015. It’s the result of the explosive growth in e-commerce, which has retailers rushing to build out massive fulfillment centers set up to pack and ship parcels.
Smaller warehouses also are growing more popular as companies try to position goods closer to population centers, but Colliers says the big box remains a critical interim step in distribution. The Chinese online retailer reported a wider loss in its latest quarter even though a growing customer base drove stronger-than-expected sales growth, the WSJ’s Lisa Beilfuss reports. has faced special challenges: the rival to Alibaba Group Holding Ltd. shut down an ambitious consumer-to-consumer platform after finding it was swamped with fake goods. now will focus more on bulking up its expansive logistics network and expanding sales in a more conventional way, by connecting retailers to consumers. ‘This has a continuing impact. The Department of Commerce imposed preliminary duties on imports of cold-rolled steel from seven countries including China, whose steelmakers were slapped with a 266% tariff. Lego A/S said it will add manufacturing capacity after the company reported a 25% gain in revenue last year despite supply challenges.
Auto makers posted blockbuster gains in sales in the U.S. in February. The head of Glencore PLC, speaking after reporting a nearly $5 billion annual loss, says the mining commodities slump may have bottomed out. The European Union and Canada agreed to a key provision of a free-trade agreement, paving the way for the accord to come into force next year. Honeywell International Inc. dropped its $90 billion bid to take over rival United Technologies Corp. (WSJ) Economic growth in Canada slowed to 0.8% in the fourth quarter as a weak resource sector dampened business investment and exports. Some of America’s biggest shale producers are ratcheting back oil and gas production for the first time in years. Retailer Kate Spade projected double-digit growth this year in direct-to-consumer sales. Tech-savvy pirates breached the servers of a global shipping company to find the exact vessel and cargo containers they wanted to plunder, according to a Verizon cybersecurity report. Hundreds of union workers walked off the job at Tesla Motors Inc.’s Nevada battery factory to protest what they say is hiring of out-of-workers at lower play.
European online fashion retailer Zalando says it will invest more in logistics this year, including use of Uber-like drivers to speed up deliveries. Yusen Logistics acquired Australia-based Hitech Asia Pacific, which specializes in sensitive freight such as medical shipments. Malaysian Bulk Carriers posted a $282.1 million loss for 2015, including a $140 million operating loss for its dry bulk segment. Dry bulk operator Pacific Basic, Hong Kong’s largest carrier by number of vessels, says it is seeking acquisitions despite an $18.5 million loss last year. Packaging company Avery Dennison Inc. named Mitchell Butler chief executive and Dean Scarborough was elevated to executive chairman. Severe weather is cutting deeply into Spain’s export fruit harvest. U.S. cotton prices are down more than 11% over the first two months of 2016. Paul Page is deputy editor of WSJ Logistics Report. Follow him at @PaulPage, and follow the entire WSJ Logistics Report team: @brianjbaskin, @lorettachao, @RWhelanWSJ and @EEPhillips_WSJ, and follow the WSJ Logistics Report on Twitter at @WSJLogistics.