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Suppliers Selling to Amazon; Bionic Warehouse Help; Picking Up the Tab

By Paul Page

 

Amazon jets at Tampa, Fla., International Airport. PHOTO: JAMES BORCHUCK/ZUMA PRESS

Amazon is taking purchasing agreements to a new level that raises critical questions for suppliers. The e-commerce giant has struck deals with options to buy big stakes in potential suppliers at potentially steep discounts to market value, the WSJ’s Dana Mattioli writes, even while negotiating agreements to buy goods and services. The unusual arrangements offer another window into how Amazon uses its market heft to increase its wealth and clout. The pacts with publicly-traded companies can bring Amazon rights known as warrants to buy the vendors’ stock in the future at what could be below-market prices. Targets for the strategy include grocery distributor SpartanNash and freighter operators Air Transport Services Group and Atlas Air. Those airlines have been central to Amazon’s logistics expansion and have gotten boosts from Amazon contracts. One person familiar with the matter said Atlas executives viewed giving up the warrants as the price of doing business with Amazon.

 
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Logistics Technology

PHOTO: ADUSA SUPPLY CHAIN

Some companies are turning to technology to address concerns over working conditions in warehouses. The U.S. supply-chain arm of supermarket-owner Ahold Delhaize is rolling out new wearable robotic technology, the WSJ Logistics Report’s Jennifer Smith writes, that workers strap on to help ease the physical strain of lifting heavy items. The devices known as exosuits are the latest tool that retailers and logistics companies are deploying in distribution centers where demand is off the charts and hiring workers is harder than ever. The warehousing sector has been coping with worker safety and health questions in operations that have boomed during the pandemic. Designer Verve Motion says its battery-powered exosuits are a step beyond the back belts workers often wear, with sensors and algorithms helping them perform often-grueling jobs.  The grocer says making its operations a “more compelling” place to work was critical in its move to the technology.

 
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Number of the Day

51%

Increase in U.S. imports of fireworks in the three months ending April 30 compared to 2020, which were up 41.5% from the same period in 2019, according to Panjiva.

 

Supply Chain Strategies

A Constellation Brands warehouse in Peru, Ill. PHOTO: DANIEL aCKER/BLOOMBERG NEWS

You should think twice before trying to drown your sorrows over rising raw materials costs. The costs of ingredients used to make wine, beer and spirits are rising, the WSJ’s Alistair MacDonald reports, and that is raising pressure on distillers, brewers and vineyards to increase their charges in a notoriously price-sensitive alcohol sector. The suppliers see inflation in all directions, from cardboard packaging and aluminum to transportation rates for the dense, heavy products that can be costly to ship even in good times. So far, the price pressures haven’t caught up with consumers. The industry’s giants have been somewhat protected because many lock in prices with some suppliers and often hedge commodity costs. Smaller operators like Nik Weis’s winery in Germany and Atlanta’s New Realm Brewing don’t carry the same clout with suppliers, but so far they are loath to raise prices and risk losing market share.

 
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Quotable

“In the beer industry, you don’t raise prices unless somebody else raises prices.”

— Mitch Steele, cofounder of New Realm Brewing
 

In Other News

Expansion in China’s factory sector slowed in June, as export demand weakened while supply bottlenecks held back production. (WSJ)

Growth in U.S. home prices jumped 14.6% in April to the highest level in records dating back 30 years. (WSJ)

U.S. hog prices are tumbling after China said the country’s herds have recovered from the African swine fever. (WSJ)

The Supreme Court removed a hurdle to the construction of a natural-gas pipeline through Pennsylvania and New Jersey. (WSJ)

Chinese ride-hailing giant Didi Global priced its initial public offering at $14, potentially giving the company a market capitalization of more than $67 billion. (WSJ)

Suppliers to major Western retailers are placing holiday orders for Chinese-made goods weeks earlier this year to get around shipping backlogs. (Reuters)

American manufacturers say they have millions of medical masks they can’t sell because of cheaper Chinese-made masks that cost as little 1 cent each. (Nikkei Asia)

S&P Global Market Intelligence says a looming Covid lockdown in Bangladesh may threaten apparel supplies for some retailers. (CNBC)

Amtrak is opposing Canadian National’s request for a voting trust in its proposed acquisition of Kansas City Southern. (Railway Age)

South Korean President Moon Jae-in says he is committed to making the country a “global shipping leader.” (Korea Herald)

South Korea’s HMM is buying 12 mid-sized container ships from Daewoo Shipbuilding & Marine Engineering and Hyundai Heavy Industries. (Port Technology)

Taiwan’s Wan Hai Lines added 12 smaller container ships to its growing orders for new vessels. (The Loadstar)

Danish dry-bulk and tanker operator Norden raised its guidance for the fourth time this year. (Lloyd’s List)

Cargo throughput at Netherlands seaports fell last year at the steepest pace since 2009, with tumbling bulk tonnage offsetting slight growth in container volume. (Maritime Executive)

Grimaldi Group executive Emanuele Grimaldi will become chairman of the International Chamber of Shipping next year. (Splash 247)

Top industrial distributors say flexibility with sourcing has been a big benefit to their operations during the pandemic. (Modern Distribution)

The Intermodal Association of North America says U.S. intermodal volumes rose 16.1% in the first five months of the year. (Logistics Management)

Digital freight providers Flexport and Convoy are cooperating on an integrated​ ocean-trucking service. (Journal of Commerce)

Amazon is opening a 600,000-square-foot​ fulfillment center near Edmonton, Alberta. (BNN Bloomberg)

Surging shipping prices are pushing some publishers to raise their prices for board games. (Kotaku)

 

About Us

Paul Page is editor of WSJ Logistics Report. Write to him at paul.page@wsj.com.

Follow the WSJ Logistics Report team: @PaulPage, @jensmithWSJ, @CostasParis. Follow the WSJ Logistics Report on Twitter at @WSJLogistics.

 
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