Stacking and Packing Take Center Stage in Warehouse Games
September 30 2015 - 10:21AM
Dow Jones News
By Loretta Chao
SOUTH BRUNSWICK, N.J.--To understand the extent to which
e-commerce is transforming U.S. retail, look no further than the
warehouses up and down the New Jersey Turnpike, where packing boxes
and moving pallets stacked high with customer orders has become a
booming business.
New Jersey has seen a flurry of industrial leasing activity as
companies including Amazon.com Inc. have built new fulfillment
centers and converted old commercial space into warehouses. The
distribution hubs are a waypoint for packaging small parcels to be
shipped to consumers from Pennsylvania to Massachusetts. Areas
along New Jersey's main highway artery are prime warehouse real
estate because the state is close to a major port, where companies
can receive cargo from overseas, and New York City, a huge market
for online shopping. Vacancy rates are low, and the state's
warehouse market is among the most expensive in the country.
"Space is hard to come by as more and more demand is pouring
into the region," said Michael McGuinness, chief executive of the
New Jersey chapter of commercial real estate development
association Naiop. "Everyone wants to be in this New Jersey
corridor."
To commemorate the state's growing role in commerce, CBRE and
logistics services firm CORE Group LLC hosted New Jersey's second
annual LogistXGames event on Friday in South Brunswick, home to a
large cluster of warehouses. Teams from companies such as Lifetime
Brands Inc., maker of KitchenAid and Mikasa-branded household
products, and mattress retailer Sleepy's, raced to wrap wine
bottles in bubble packaging, assemble boxes and maneuver pallets
around an obstacle course and other warehouse-themed races. At
stake: the Golden Pallet, and bragging rights until next year's
games.
Jeweler Tiffany & Co., which has a warehouse in northern New
Jersey, unseated the defending champion, book publisher Simon &
Schuster.
Participants said the competition was an acknowledgement of a
less visible, but increasingly vital part of their companies'
operations.
"Sales goes out and gets the order, but we're the final step,"
said John McCranor, vice president of warehouse operations at
Lifetime Brands, which has a facility in Robbinsville, N.J. "We
have to get the merchandise out to the customers ... so I'd say
it's the most important [part of operations]. If we get orders and
we don't supply it and satisfy our customers, we're going to fail
as a company."
The concept for the LogistXGames came out of Louisville, Ky.,
where a major distribution hub has formed around package-sorting
facilities run by United Parcel Service Inc. The event comes to New
Jersey at a time when vacancy rates for industrial real estate in
the area are so low that real estate developers are starting to
convert other types of commercial buildings into warehouse space,
thanks to the growth of online shopping. The state's vacancy rate
for industrial real estate reached 7% in the third quarter, its
lowest point since the beginning of the recession, according to
real estate firm Jones Lang LaSalle.
"We are in the center of the most densely populated and the most
affluent consumer market in North America," said Anne
Strauss-Weider, a New Jersey-based logistics and economic strategy
consultant. "The New Jersey turnpike acts as a supply chain spine,
it serves the entire northeast and acts as a distribution
platform."
E-commerce warehouses are different from traditional wholesale
distribution centers principally because more workers are needed to
pick and pack small items for a high volume of consumer orders that
need to be fulfilled quickly. This requires more parking spaces to
accommodate an influx of employees, different machinery, and
warehouse management software.
"E-commerce is a lot more labor intensive because you're picking
onesies and twosies to go to the end consumer," said Allison
Clancy, president of CORE Group, adding that more employees also
require structural changes. An e-commerce fulfillment center often
requires five times as many parking spaces than other types of
warehouses, she said.
Write to Loretta Chao at loretta.chao@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
September 30, 2015 10:06 ET (14:06 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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