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Logistics and Warehousing Adjusts to a Shifting Economy

While the global recession has dampened business for many industries, logistics and warehousing has found growth in adaptation.

Apr/May 10
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But what will happen if companies downsize their core facilities with the notion that warehousing companies can continue to accept the inventory surplus, but a declining economy forces some of those warehouses to close? The challenges of the past few years have helped prepare warehousing companies for future economic turbulence.

"The last few years have created the ability for warehousing companies to go up and down," Ward said.

Cross-Docking's Appeal
One example is Brampton, Ontario-based Crownhill Packaging Ltd., a warehousing and fulfillment company handling more than 15,000 products. Crownhill has recently seen growth in utilization as customers seek to maintain inventory space only for their most profitable products. As a result, Crownhill opened a new facility in Waukegan, Illinois. The 50,000-square-foot center includes four loading docks and two drive-through loading docks. The company is seeking to expand over the next five years as demand for such services grows, according to Gary Fox, Crownhill's managing director for the Waukegan facility.

"Our general philosophy is that we'll be our customers' warehouse per se, so in a given scenario, we might have a customer who has 15 to 30 SKUs [stock-keeping units] that they need on a daily or weekly basis," Fox said. "Our customer can send to our system what their usage is for the day, and what it will be for the following day, and our usage teams will pull those items and will call them or have them available the following morning."

Lakeland, Florida-based Saddle Creek Corporation is a full-service warehousing and transportation company that emphasizes cross-docking, the practice of a facility receiving goods and shipping them to customers that day or overnight, sometimes as a combined load with other shippers' items. Cross-docked products typically remain at the facility for less than a day.

According to Tom Patterson, a Saddle Creek vice president, tightening lead times are prompting companies to cross-dock as an alternative to expensive warehouse space and economically inefficient less-than-truckload (LTL) shipping.

"We're seeing a lot of attempts these days to bypass the LTL market in total," Patterson said. "Being an LTL carrier is becoming kind of a dangerous place to play. So you're seeing solutions to try to build truckloads at the point of origins at the stop-off as opposed to running any LTL freight."

For executives choosing or designing a facility site, that means the warehousing and distribution market understands a company's desire to streamline operations - and is trying to innovate to permit for paring down. As long as those outside providers can sustain their growth and fund their innovations, those lean facilities that hold such appeal for your company might just do the trick over the long term.

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