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Warehousing blasts off! 20 By Peter Buxbaum


In June, Amazon signed a lease on a 360,000 square- foot facility in the New Jersey Meadowlands, across the Hudson River from New York City, to be used as a last-mile delivery center beginning in early 2022. The company touted the proximity to highways, millions of nearby consumers, and convenient access to the Port of New York and New Jersey for its choice. Those attributes are emblematic of what


logistics


operators and investors in the United States are now seeking, amid a warehousing boom that has companies ramping up depleted inventories and consumers looking to e-commerce to buy household goods, especially perishables. E-commerce, and particularly groceries, requires small-scale fulfillment centers to be located within population centers to accommodate quick deliveries. They also require technology to optimize the operations and labor-utilization of these high- density facilities. E-commerce sales in the


United States are projected to increase by over $200 billion by 2025, according to a recent report from CenterPoint, a major real


investor estate. in Every


industrial increase


of $1 billion in e-commerce revenues generates demand for 1.25 million square feet of additional industrial space, the report said, translating into a requirement for a quarter- billion square feet of new e-commerce space in the U.S. over the next four years. Companies are also rushing


to replenish inventories depleted during the COVID-19 pandemic and increase safety


stocks to mitigate


the effects of supply-chain disruptions—pandemic-related and otherwise, like the recent Suez Canal debacle. “Supply chain volatility,” noted a recent report from CBRE Research, “heightens the need for additional warehouse space to stockpile goods and mitigate future disruptions. Many companies would prefer


to


store additional inventory near ports of entry.” CenterPoint has been


snapping up port-area properties since the beginning of 2020, acquiring dozens of buildings in southern California, Oakland, Seattle, New York, New Jersey, and


Miami. Link another major Logistics, investor, has


likewise acquired properties in California, New Jersey, Seattle, and southern Florida this year. “We are focused on infill locations in coastal cities and high-population growth areas,” said Nicholas Pell, Link’s president and chief investment officer. “Infill” refers to unused


added facilities in Texas and South Carolina. The Port of Charleston, South


Carolina, has been attracting other new warehousing development, with Walmart adding a regional import and distribution center in the region and with cold-storage capacity also on the rise. Walmart broke ground late in 2020 on a $220 million, three-million- square-foot import distribution center in Dorchester County, a facility expected to come online in early 2022. Once fully operational, the distribution center is expected to increase volumes at the Port of


Creek Logistics, a provider of last-mile order fulfillment for frozen and refrigerated goods. Lineage’s


Charleston


expansion, noted Micah Mallace, a senior vice president at the South Carolina Ports Authority, “provides enhanced capabilities to handle the rising imports of fresh produce, fruits, and other refrigerated goods.” The refrigerated cargo business at the Port of Charleston has more than doubled in the last ten years.


Hold the tomato!


The increase in perishables imports and the growth of e-commerce has contributed to accelerated online sales of fresh and frozen groceries nationally. Many experts expect that trend to continue, with one prediction indicating that 70% of U.S. consumers will be shopping for groceries online by 2024.


“Consumers


Kenco Logistics opened a new 397,000 sq. ft., multi-client facility near Los Angeles in May. (Kenco photo.)


or underused properties in


built-up urban and suburban locations.


Portfolio additions


Logistics operators are also adding to their portfolios in these and other hot markets. Kenco Logistics, a third-party logistics provider, opened a new 397,000 square-foot, multi-client facility near Los Angeles in May. “The new shared facility allows us to help organizations share labor in a tight market and navigate fluctuating demand,” said David Caines, the company’s chief operating officer. Saddle Creek Logistics


Services added three new retail distribution facilities last year, one, a half-million square-foot Cincinnati-area


distribution


center in Walton, Ky., designed for e-commerce fulfillment. “The rapid acceleration of e-commerce has intensified demand for centrally-located distribution facilities equipped to accommodate online orders,” said Duane Sizemore, a Saddle Creek senior vice president. The company also


Charleston by 5%, according to the South Carolina Ports Authority. The “shovel-ready site”


and the port’s “track record of handling high-demand supply-chain needs,” said Greg Smith, Walmart’s executive vice president of supply chain, accounts for Walmart’s confidence in the port’s ability “to meet our retail distribution and e-commerce needs.” Walmart is the first tenant at the Ridgeville Commerce Park, a 1,000-acre site purchased by the South Carolina Ports Authority in 2018 and the recipient of a recent $22-million infrastructure grant from the U.S. Department of Transportation. Lineage Logistics is in the


process of expanding its cold- storage facility in Charleston by over 66%, investing $34 million to add over 18,000 pallet positions to the building. It’s also meeting the demand for groceries e-commerce capacity nationally by building, expanding, and acquiring groceries fulfillment centers in other population centers and by recently acquiring Crystal


habits are ‘sticky’ once barriers to adoption are overcome,” noted a recent report from Prologis, an owner of logistics facilities. Distribution facilities for


groceries, sometimes called micro-fulfillment


centers,


are fundamentally compact and high-density, one reason why implementing the right technology is important. As the Prologis report put it, digitization “increases the revenue generation potential of logistics space.” Lineage launched Lineage Link last year, through a partnership with Turvo, a provider of collaborative logistics soſtware. The technology connects the entire Lineage network, providing visibility across locations, orders, inventories, transportation, and warehouse appointment


scheduling.


Lineage will deploy Turvo’s technology


at over 200


facilities by the end of this year and ultimately across most of


its global network of 330


facilities in 15 countries. “Part of Lineage’s purpose


is to transform the food supply chain,” said Sudarsan Thattai, the company’s chief information officer. “We’re able to do that by extending process automation into our network


Issue 6 2021 - FBJNA


///HIGHTECH DC


for deeper collaboration and visibility.”


Automation ahoy!


Groceries are largely responsible for Walmart’s e-commerce growth in the last two years, and the retailing giant has embarked on a strategy to establish what it calls market fulfillment centers (MFCs), first piloted in Salem, New Hampshire, in late 2019. “Automated bots retrieve items from within the fulfillment center,” explained Tom Ward, a Walmart senior vice president, and bring them to a picking workstation. Walmart will be building


MFCs “with various technology partners,” said Ward, including Dematic, which also automated centers for PepsiCo and Meijer. Dematic’s micro-fulfillment solution


accommodates


ambient, cold, and frozen temperature zones and uses a multi-shuttle system that stores and sequences products among bulk stock, picking, and order-assembly locations to increase speed, density, accuracy, and throughput. In March, the soſtware


and consulting company enVista partnered with Vanguard Soſtware to combine Vanguard’s inventory planning solutions and enVista’s order management system to optimize inventory levels and locations. This multi-echelon inventory optimization, as it is called by the Aberdeen Group, a market intelligence company, allows companies to increase inventory turns by 28% without compromising customer- service levels, according to an Aberdeen report. “Optimizing the end-to-end


inventory process,” said Gene Bornac, chief strategy officer at enVista, “has never been more essential for profitability in today’s environment.” Ryder System, Inc.,


transformed facilities in Miami, Dallas, and Chicago into “smart warehouses,” by deploying robotics, drones, sensors,


and wearable


technology. Ryder has found that implementing robotics produced 25% increases in productivity and 20% in operating savings. At one customer warehouse, drones scanned pallets and locations in 20 minutes, a process which would otherwise take


90 minutes. Identification tools provide real-time asset location, and were found to boost productivity and cost savings by over 25%. Deploying smart glasses at one Ryder customer warehouse improved efficiency by 33%. “We focus on technologies


that are mobile, flexible, and scalable,” said Steve Sensing, Ryder’s president of global supply chain solutions. With brands facing “rising consumer expectations and a nationwide warehouse labor shortage, we automate the parts of the process that make sense.” The warehousing labor


situation is worsening, according to Prologis, because e-commerce fulfillment uses three times the labor of traditional warehouse operations and turnover rates stand at four times other warehousing uses. That’s also why warehousing automation focusing on labor productivity is on the rise. In May, enVista made its


enCompass labor management system (LMS), which helps companies optimize workforce performance and lower costs, available on the Microsoft D365 platform. Companies using the LMS can “forecast, monitor, and control labor costs in real-time and improve distribution efficiencies,” said Tom Stretar, enVista’s vice president for technology, and realize distribution and manufacturing labor costs savings of up to 20% from increased


throughput and


reduced overtime. A recent survey by Kenco


Logistics showed that 43% of participants ranked supply-chain visibility as a high priority—likewise, 28% for predictive and adaptive analytics and 21% for robotics and automation. The logistics industry “is investing in digital technologies and innovation to meet the challenges of today’s customer demands,” said Kristi Montgomery, a Kenco vice president. “The pandemic has highlighted the need for innovation at every level of the supply chain and has accelerated many companies’ digital transformation initiatives by several years. We can expect [digital technologies]


to become


fixtures in the industry, and their application will only continue to expand.”


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