Moving on distribution

By Timothy J. Gibbons
Published by Florida Times-Union on November 19, 2006.

Brown and blue. Blue and brown. No rhyme. No reason. Or, at least, not an obvious one; not to a human.

To the computer brains inside Coach Inc.'s worldwide distribution center in Jacksonville's Tradeport industrial park, though, each blue bin and brown cardboard box has a place to go, an employee waiting to fill or empty it.

Rattling over the 2.5 miles of conveyor belt filling the 540,000-square-foot distribution center, the leather goods in those containers were on their way to fulfill holiday orders, to be handed out by Comedy Central and other commercial clients, to be stacked on store shelves around the world.

Other than some shipments that go directly from the factory to Japan - most Coach goods are manufactured in China - all of the company's products pass through the center, which was redesigned this year, more than a decade after it opened and seven years since doubling in size.

The facility was one of the first major company-owned distribution centers on the First Coast, paving the way for growth in that sector of the economy that has been going on behind the scenes for the past few years - growth that city economic leaders hope will explode in coming months.

The importance of distribution centers to Jacksonville ties in with two of the major events of the past year: The announcement that Japanese shipping company Mitsui O.S.K. Lines will be setting up a terminal in Jacksonville and the fight over the fate of Cecil Field, the former Westside military base that the city wants to use as a transportation hub. With the Navy's return no longer on the table and Mitsui bringing new business to the First Coast, economic developers foresee a rise in the number and quality of distribution centers in the area, and are pushing Cecil as the place to locate them.

"Manufacturing is in decline in our country. That is just a fact of the corporate environment in our country and throughout the world," said Declan Reiley, business development chief for the Jacksonville Economic Development Commission. "Distribution as an industry is seen by some as the new manufacturing, the new heart and soul of a further diversified economy on the First Coast. We think it would be in a our best interest to embrace distribution, in fact, the whole logistics industry."

As the Westside develops, truckloads of goods are already rumbling in and out of the Tradeport, on the Northside, where Coach established its presence years ago. Coach's presence here is due more to a historic quirk (the company used to manufacture in New Jersey, not Asia) than planning for the area's modern growth as a transportation hub. The growth of the center and Coach's commitment to it - including the $10 million redesign - though, is purposeful: "We have a great facility," said Andrea Laliberte, director of distribution for the company. "We have great people."

Among the reasons keeping Coach here: Good infrastructure. Access to rail. Access to highways. Low cost of doing business.

The reasons given by city officials, economic development types and others as they try to attract more facilities like Coach's: Good infrastructure. Access to rail. Access to highways. Low cost of doing business.

Warehouses and distribution centers occupy key spots on the supply chain, the path that products take as they wind their way from the manufacturer to a store shelf and, ultimately, the hands of a consumer.

But don't let the word "warehouse" conjure up an image of a barn-like structure filled with pallets of goods just sitting around the place. With the rise of imports - $1.4 billion worth as of September of this year, almost as much as the total amount of imports in 2004 - and the continuing embrace of just-in-time stocking methods, constantly bustling distribution centers have become vital to the economy. Such businesses are good for the economy not just because they bring jobs, economic developers said, but because their typical $20 million to $60 million infrastructure investments generate sizable property tax revenue. When Bridgestone Firestone North American Tire LLC, for example, builds its warehouse at Cecil - the first non-aviation side tenant at the park - it will not only pay $3.2 million for the 63.3 acres of land, but spend $44 million to build the center.

Now, the First Coast is making a concentrated push to attract more of those type businesses to the region, betting that they will not only create jobs in the area, but kick-start a virtuous cycle in which more shipping companies, a range of logistics firms and even corporate headquarters are lured to Jacksonville.

Attracting those businesses would build upon a base of logistics companies that have long called Jacksonville home, from the North American arm of TNT Logistics, to trucking companies like Landstar System and warehouse firms like The Grimes Co.

"I think anytime you bring together some modes of transportation - you take the opportunities to move products in and out of the port and opportunities to open new modes of distribution - logistics activities just start to occur," said Jeff Hurley, chief operating officer of TNT Logistics North America. "When people bring stuff into the port, they want to stage, store and distribute it."

Many of those companies have seen their own growth in recent months, from Grimes' purchase of a 280,000-square-foot facility on Hyatt Road in August to Crowley Maritime Corp.'s announcement last week that the company's logistics group has expanded its Jacksonville distribution center for the third time in five years.

The need for space to accommodate such businesses is one of the things that led Mayor John Peyton to push voters to reject the referendum earlier this month that would have paved the way for the Navy to return to Cecil Field, the Westside industrial park the Jacksonville Economic Development Commission is touting as a natural distribution center hub.

Many of the tenants the city is hoping to attract to the site are companies drawn to the area by the terminal being built to handle cargo brought here by Mitsui O.S.K. Lines, the shipping company that will provide the first direct connection between the First Coast and Asia.

"The outlook is very good for Cecil Field for distribution centers," said Roy Schleicher, senior director of marketing and trade development for the Jacksonville Port Authority. "We're being visited by all the major distribution centers, both the chamber and the port together. We definitely have a lot of interest from a lot of people."

Already, the pending arrival of Mitsui has led arts and crafts store Michaels to consolidate its warehouse operations in Jacksonville and attracted Bridgestone.

Distribution centers and shipping lines have long presented a chicken-and-the-egg problem for the Port Authority: Some ports, like the one in Savannah, Ga., were successful in attracting a variety of shipping lines by first bringing in distribution centers; the customers who want to use those centers then pressure shipping lines to deliver cargo there.

"With Cecil giving us the opportunity to build even bigger distribution centers," Schleicher said, "all the steamship lines have taken notice. All the big DCs are saying, 'If I open in Jacksonville, will your ships call there?'"

The area is also benefitting from the growth in East Coast shipping in general, which is leading more customers to look at Jacksonville, rather than north to Georgia or south to Miami. That's the sort of growth that led to Crowley's expansion.

"We started out a small warehouse operation and started building a bigger customer base," said Ron Stalvey, general manager of the U.S. transportation and distribution group for Crowley Logistics Division. "Now we find that Jacksonville is getting on the map. In the past, a lot of people didn't consider Jacksonville much of a port or an export city. People are recognizing now that there is capacity in Jacksonville."


This is a showcase of the work done by Timothy J. Gibbons during a journalism career now stretching back more than a decade.

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