It’s the end of the work week and we continue with our news update series related to previous Supply Chain Matters posted commentaries or news developments.

Greenbrier and Watco U.S. Railcar Alliance

Incidents of increasing rail derailment accidents and subsequent exploding tank cars involving shipment of bulk crude oil across the U.S. and Canada have precipitated a shortfall of bulk railcars that can meet required new fire and accident safety standards, railcar producer Greenbrier and railine services operator Watco have formed a 50-50 joint venture to be named GBW Railcar Services. The move is being reported as the first significant railroad industry to retrofit thousands of tank cars that require upgrading to more stringent safety standards being formulated by both Canadian and U.S. regulators. According to published reports, the new venture is expected to begin operations sometime in the third quarter consisting of 38 service repair shops across North America. According to a Wall Street Journal report, estimates are that upgrading tank cars to DOT-111 standards with cost an estimated $15,000-$80,000 per railcar.

The open question remains who pays for the required retrofits: oil company shippers, railcar lessors, railroads or combinations of each.

Tesla Electric Battery Gigafactory

We along with general business media has made note of Tesla Motors CEO Elon Musk’s bold plans to build a massive electric battery manufacturing supply facility with the United States. This week, at Tesla’s annual stockholders meeting, Musk indicated that he was “quite optimistic” that Tesla can achieve a greater than 30 percent cost savings in battery packs to power Tesla and other electric vehicles. Musk further indicated that major supplier Panasonic, whom was at first undecided on the potential cost savings, is now in agreement, although the supplier’s ultimate joint-investment in the factory is still to be determined.  Also disclosed is that Tesla is considering designing and building an electric truck model.

Regulatory Approval of P3 Network Nearing Approval

The proposed network alliance among the top three ocean container shipping lines, A.P. Moeller Maersk, CMA CGM and Mediterranean Shipping passed another milestone this week. Business and industry media are reporting that this week, European maritime regulators indicated that they would not raise anti-trust objections with the proposed P3 network, leaving Chinese approval as the final regulatory hurdle remaining.  A few months ago, U.S. maritime regulators also voiced no-objections.

Kinaxis Initial Public Offering Scheduled

A few weeks ago, Supply Chain Matters picked-up on a Canadian Wall Street Journal published report indicating that supply chain planning and response management technology provider Kinaxis was in the midst of preparing for an IPO. Subsequent reports have confirmed the existence of an IPO prospectus and offering that is being planned within Canada only.

This week, Kinaxis issued a press release, restricted to Canada only, which indicates that closing of the public offering is scheduled to take place on or about June 10th.  Earlier in the week, a published Canadian Wall Street Journal report indicated that the target offering price was being lowered to generate sufficient demand, according to people familiar with the matter. According to the Kinaxis release, the initial public offering and secondary offering will result in aggregate gross proceeds of Cdn$65.0 million to Kinaxis and Cdn$35.6 million to the selling shareholders, based on a Canadian $13 per share target price. According to the latest Canada WSJ report, the target number was lowered from a previous target of C$14-C$16 per share.