Amazon.com Inc. wants to get even deeper into the homes of consumers. The online giant is making a major push into furniture and appliances, adding heavyweight competition to territory held by Wayfair Inc and Pottery Barn owner Williams-Sonoma Inc. The WSJ’s Brian Baskin and Laura Stevens report Amazon plans to build at least four massive warehouses focused on handling the bulky items that trucking companies sometimes call ugly freight and parcel carriers see gumming up their operations. Amazon sees beauty in the business, though: Furniture is one of the fastest-growing segments of U.S. online retail, growing 18% in 2015, second only to groceries, and some 15% of the $70 billion U.S. furniture market has moved online. Players are struggling to get the market right, however. Delivering couches and dining sets is more complicated and expensive than handling conventional parcels, and that may provide a fresh challenge to Amazon’s budding self-controlled logistics network.
Trucking companies have a new worry beyond the tepid demand that’s bogged down their business. Operators trying to trade in their vehicles are taking financial hits following one of the steepest plunges in used-truck prices since the recession. WSJ Logistics Report’s Jennifer Smith writes the truckers are being sideswiped from two directions: Many are trying to downsize their fleets to combat the excess capacity that’s kept freight rates low, but that’s flooded the used-truck market. Many carriers are “upside down” on their trucks, says one expert, owing more on vehicles than the rigs are worth. That’s dented the bottom lines at Swift Transportation Co. , Knight Transportation Inc. and Werner Enterprises Inc. Prices for the average used Class 8 sleeper have fallen 22% in two years. Although prices seemed to have bottomed out, analysts expect excess supply of used rigs to loom over the industry into 2020.
ECONOMY & TRADE
Western companies are trying to get onto China’s new “Silk Road.” Multinationals including Honeywell International Inc., General Electric Co. and Caterpillar Inc. are moving forward with plans to participate in the country’s “One Belt, One Road” initiative, the WSJ’s Nina Trentmann reports, looking for opportunities in a $900 billion infrastructure project aimed at creating new pathways for trade. The plan that China displayed in a splashy promotional summit starting Sunday involves massive investment in roads, ports, rail lines and other infrastructure spanning Asia, Africa and Europe. There’s already some opposition in various countries to China’s heavy-handed approach to choosing contractors and suppliers, and companies moving forward with plans to provide materials, expertise and project management already have well-established relationships in Beijing. While Chinese firms may be the main contractors for projects such as port installations or bridges, Western firms say they will end up subcontracting to companies with experience integrating technology across borders.
Not everyone is turning their back on the market for brick-and-mortar stores in the U.S. European retailers hungry for growth are pushing deeper into the U.S., the WSJ’s Saabira Chaudhuri reports, with some using the problems at American retailers to pick up customers and prime locations. While U.S. retailers are shuttering shops at a record pace, Sweden’s Hennes & Mauritz AB, Inditex SA -owned Zara and discount retailer Primark are among companies that have been adding storefronts in U.S. cities. U.S. operators, by contrast, will close more than 8,600 locations around the U.S. this year, and 19 retailers have filed for bankruptcy protection since Jan. 1. The European retailers’ expansion won’t come close to replacing the lost sites, but they’ll bring some relief to the real-estate industry and help fill in some distribution channels that have been thinned out by the faltering retail trade.