Keith Stauber, regional managing director, Chicago market for Jones Lang LaSalle, says transporting food products via rail can lower supply chain costs.
What kinds of properties and services does Jones Lang LaSalle (JLL) focus on?
Keith Stauber: JLL provides commercial real estate advisory, brokerage and consulting services to corporate and investor/developer clients across the globe for all property types. Within the industrial, distribution and manufacturing sector a differentiator for JLL is our Supply Chain and Logistics Consulting Group (SCLC). Real estate typically only accounts for 5% to 7% of a company’s overall cost structure. Because of that fact the SCLC team works in partnership with our industrial brokerage teams to help us understand the unique dynamics of a client’s supply chain. Once we understand a client’s supply chain then we can identify the optimal location for a new facility.
As the economy bounces back, what trends are you seeing in terms of the building attributes or locations that grocery and food related companies are seeking for warehouses or distribution centers?
The economic downturn forced all companies, including grocery and food businesses, to seek ways to drive costs out of their systems. Additional influences on facility and supply chain decisions include consumers’ growing appetite for more locally sourced food, e-commerce/same day delivery and continued urbanization trends.
In Chicago, we have seen a large number of firms make the decision to invest in the construction of new facilities, betting that the efficiencies gained through better design and more modern refrigeration equipment will be rewarded. The new facilities feature taller ceilings, cross-dock configuration and more trailer parking/staging among other items. Cross-dock configuration provides for dock doors on both sides of the building, making for more efficient inbound and outbound of products. This is ideal, especially for pooling and mixing products and makes more sense for the flow of products.
Another trend is a supply chain play on a macro/national level. The macro question is “how can I more economically and efficiently bring fresh and frozen perishables to the major metro areas” like Chicago—which has over 9 million hungry citizens. The answer to the macro question is surprisingly, via rail. It is estimated that only 5% of U.S. food product is transported on rail. When traveling via refrigerated boxcar, four truckloads fit in one railcar thus offering tremendous economies of scale and a great opportunity to drive significant costs out of the supply chain.
Do you have any projects you are currently working on that will have an impact on the retail grocery market?
We are currently representing the RidgePort Logistics Center (RPLC) (www.RidgePortLogisticsCenter.com), a 1,500-acre BNSF Railway served business park located in Wilmington, Ill., southwest of Chicago, allowing companies easy reach to the greater Midwest as well as Chicago. RPLC has huge potential to change how retail grocers look at their supply chain.
What sets this apart from other developments is that the anchor company, McKay TransCold, is a logistics company that will be operating a dedicated refrigerated boxcar unit train service bi-directionally between RPLC and California. The “TransCold Express” service will begin this May and each train will carry 200 truckloads of products between the Midwest and California. They will be bringing produce and other perishables grown in California to RidgePort in a similar time as truck delivery but at substantial savings due to the economies of rail service. The outbound leg from RPLC will target food grown and/or processed (both refrigerated and frozen) in the Midwest for delivery to the West Coast.
We anticipate that grocery related companies, food processors and food distributors will be attracted to the TransCold Express service and find the locational advantages of RPLC compelling enough to locate a facility within the Center.