Refrigerated or traditional, warehousing market is hot

By: | at 11:14 AM | Channel(s): Logistics  

Nationwide, warehousing construction is up as distributors of all kinds search for badly needed space.

Warehousing across the nation is still going strong with several planned expansions and solid employment numbers across the board. Preliminary numbers from the U.S. Department of Labor’s Bureau of Labor Statistics for May show that there were almost 7.4 million people employed in warehousing and storage centers across the nation up from just over 7 million in May of 2013.

Warehouse Construction on the Rise

According to McGraw Hill Construction, nonresidential building in April was also on the rise, increasing 14% to $202.8 billion - “registering a double-digit gain for the second straight month.” While the majority of this gain was due to starts of manufacturing plants, the commercial group as a whole increased by 11% with stores and warehouses leading the way. Warehousing construction, according to the group, surged in April by 93% with the help of a $50 million speculative build in Fort Worth, Texas.

A report from Colliers International concurs that the numbers remain positive and that the industrial real estate sector will be the top U.S. performer in 2014. The company’s first quarter report titled 25 Predictions for 2014, states that “Industrial will remain the star performing real estate property type as U.S. distributors, manufacturers and retailers scramble to remake their supply chains just in time for the onset of the first post-Panamax decade.” The report continues stating that “East and Gulf Coast ports equipped to handle the increase in cargo flows such as Baltimore, Charleston and Norfolk, as well as inland ports and intermodal markets are well-positioned to benefit from this change.”

Retail Giants Continue Growth

Retail giants like Amazon and Walmart continue to hold a major presence in the general warehousing market. Bloomberg reported that Amazon spent $13.9 billion on fulfillment expenses between 2010 and 2013 including 50 new distribution centers. And to let the public in on its massive operation, Amazon has even started allowing tours of its gargantuan fulfillment centers in California, Indiana and Arizona. Tours for which 14,000 people have signed up for booking every available space until March of 2015, according to Amazon’s CEO Jeff Bezos during the company’s 2014 shareholder meeting.

Bezos also mentioned during the same meeting that the company is expected to have 10,000 warehouse robots from its Kiva Systems subsidiary deployed in its worldwide warehouse network by the end of the year – up from the 1,000 robots currently working within the network. While Kiva robots include mobile shelving systems that can automatically deliver items to employees, an Amazon spokeswoman said that the robot ramp-up won’t affect human employment levels, which is good for the continued trend in the aforementioned numbers as released monthly by the Department of Labor Statistics.

Likewise, Walmart has 158 distribution centers making their operation one of the largest in the world. Its 42 regional distribution centers can have up to 12 miles of conveyor belts moving hundreds of thousands of cases of merchandise each day. According to Wal-Mart, each distribution center is more than one million square feet in size and supports 90 to 100 stores within a 200-mile radius.

Chilling at the Port of Charleston

And while the big boys are racking up warehouse space for traditional consumer commodities, cold storage is also undergoing expansion. At the Port of Charleston alone, Lineage Logistics, Agro Merchants Group and New Orleans Cold Storage have each announced plans for expanding their cold-storage distribution center facilities which combined account for well over 500,000 additional square feet.

Lineage will break ground on a state-of-the-art, rail-served, 340,000 sq. ft. facility in July of 2014. The facility will have high capacity blast freezing among other solutions to give customers an efficient solution for exporting proteins to foreign markets while also integrating design features to allow expedited domestic consumer access to imported products.

“Specific customer needs and comprehensive infrastructure in the world-class Port of Charleston makes this key logistics hub an important addition to our other port-centric facilities on the East Coast. Our team has been working in partnership with state and local officials for over a year to bring a significant investment and new jobs to the Charleston community - the ease of doing business has been impressive and will accelerate completion of this facility,” said Bill Hendricksen, CEO of Lineage Logistics.

This latest expansion announcement from Lineage follows the May announcement that it had completed the acquisition of Loop Cold Storage, Oneida Cold Storage and Millard Refrigerated Services expanding its national cold storage footprint to over 544 million cubic feet and a facility network of 102 facilities in 21 states. The company also recently partnered with Baker Cold Storage to build a brand new 250,000 square foot cold storage facility within the Port District in Long Beach.

Likewise Agro Merchants completed a sub-lease on a 121,000- square foot, 14,000 frozen pallet position, temperature controlled facility also in Charleston. It will offer USDA meat import and export inspection services and eight, 24-hour blast freezing cells.

Chris Hughes, Partner and President of Agro Merchants U.S. said, “We are extremely excited to offer a new, state-of-the-art solution for our customers that will provide them excellent access to the Port of Charleston, and a cost-effective alternative to move product into and through the Southeastern U.S. We have an excellent relationship with the Port of Charleston and look forward to working together to optimize our customer’s import and export supply chain options in the market.”

And last but certainly not least, is New Orleans Cold Storage (NOCS), who has announced plans to more than double the size of its existing storage space at Port of Charleston. The oldest cold storage company in North America will invest more than $14 million to expand space, which will especially benefit the import meat trade which originally brought NOCS to Charleston in 1986.

“Not only will our storage space be increasing dramatically by over 150% but we will also be increasing our blast freezing capacity by 100 percent, giving us the ability to grow with the market well into the future,” said Mark Blanchard, president and CEO of New Orleans Cold Storage. “We are looking forward to offering even more services to our clients at the Port of Charleston, where we have been for almost 30 years.”

American Journal of Transportation