There's high-density storage and there's narrow-aisle storage, but Schenker's gone one better: no-aisle storage. Its ultra-dense system stores pallets 24 deep and requires no human intervention.
David Maloney has been a journalist for more than 35 years and is currently the group editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.
There's no standing in the aisles at Schenker's two Toronto-area DCs. There's no stacking pallets of detergent or cases of tea in the aisles either. In fact, there are no aisles in the storage areas of either of these facilities. The two DCs, through which Schenker distributes Unilever's packaged foods and personal care products across Canada, boast ultra-dense storage systems that store pallets 24 positions deep using sophisticated mechanical devices. And because their operations require no assistance from humans, the systems require no aisles.
These distribution systems—designed jointly by Schenker of Canada and its client, Unilever Canada—were chosen for their ability to accommodate Unilever's need for high-volume order fulfillment while preserving the flexibility required by a third-party logistics service provider (3PL) like Schenker. They incorporate several innovative material handling technologies new to the North American market, which required a substantial investment on Schenker's part. But the 3PL didn't let that stand in its way. "They wanted to take their distribution to the next level," says Jason Cunneyworth, senior director of logistics and general manager of Schenker Distribution in Canada, "so we were willing to spend the money to provide the service levels they desired."
As may have become evident, this is no ordinary third-party partnership. For one thing, its roots run deep. The relationship between the two companies dates back to the early 1990s when Schenker began distributing powdered laundry detergent for one of Unilever's divisions. That wasn't an exclusive arrangement, however. At the time, each of Unilever's divisions made its own deals, which meant the company ended up using an array of vendors. That made it tough for Unilever to optimize its processes and manage its inventory levels.
And it prevented the conglomerate from leveraging its size to reduce distribution and transportation costs.
When it acquired Best Foods brands in 2000, Unilever seized the opportunity to centralize its business. It would contract with just one third party, Schenker, consolidating its Lipton and Best Foods brands in a DC Schenker would build in Brampton, Ontario, and consolidating its consumer goods in an older Schenker facility in Mississauga. This deal, through which Schenker became Unilever Canada's largest logistics service provider, would be a long-term agreement. In contrast to the standard five-year 3PL contract, this arrangement would run for double that term, 10 years.
Cool runnings
Once the contract was signed, the planning could begin. The DCs would require some retrofitting, which would be carried out over several years while the facilities continued to operate.
It's important to note that the goal was not a completely mechanical operation."We did not go with full automation in the facilities," says Leonard Bayard, manager for third-party warehousing at Unilever. "It was more of a 'strategic' automation approach." That strategic automation would include major upgrades to storage systems to create semi-automated storage, installation of a layer picking system capable of selecting layers of products for building mixed pallets, and upgrades to warehouse management software and IT systems.
Today, Schenker distributes everything from Lipton's soups and Red Rose Tea to Ragu sauces through the Brampton DC. The 288,000-square-foot center processes 100 orders per day, amounting to some 17 million cases each year. Though the center has only been open a few years, Schenker has already made some modifications. For example, this past April, it dismantled one of the two-level pick towers used for selecting full cases and replaced it with a more efficient layer picker. This unit, which is basically a rail-guided counter-balanced vehicle, uses four-sided clamps to select layers of cases from product pallets and place those full layers onto an order pallet to create rainbow loads of mixed SKUs. The system, which can pick up to 1,400 cases per man-hour, has cut labor needs and reduced damages and is well on its way to achieving its projected return on investment of two years.
The other facility, the 480,000-square-foot Mississauga DC, handles all of Unilever's personal care consumer products, including the Vaseline, Dove, Sunlight, Pond's, Degree deodorant, Suave, Lever 2000, Q-Tips and Salon Selectives brands. This facility processes 50 orders daily, which translates to 13 million cases annually. Like the Brampton site, the Mississauga DC ships about 45 percent of its items as full pallets and 55 percent as case picks.
Although the facility itself is 30 years old, it houses some of the most up-to-date technology on the continent. When it underwent renovations in the late '90s, Mississauga became the first site in North America to feature a semi-automated storage system known as a Pallet Runner system. This technology, which has been used for several years in Europe, was later replicated in Brampton.
The Pallet Runner system, supplied by Pacific Westeel, provides high-density storage of pallets 10 to 24 positions deep and requires a very small footprint. The system, which offers the density of drive-in racking without the need to drive a vehicle into it, could basically be described as a storage area without aisles—you can't get any denser than that. The system operates using small shuttle carts, known as pallet runners, which carry pallet loads deep into the racking.
In operation, lift trucks carry pallets of incoming products to the end of the storage racks. The driver scans a pallet and receives instructions via an RF device telling him which end row the pallet should enter. He then uses the lift truck to place a pallet runner shuttle (there are six of these shuttles in the Mississauga facility) into the slot at the end of the rack where that SKU will be stored. He next deposits the pallet load on parallel rails just above the pallet runner. The driver then presses the "In" button on a remote control that directs the hydraulic lifts on the pallet runner to lift the load a few inches above the rails. The battery-operated pallet runner then shuttles the load down its row to the next available position and hydraulically lowers the pallet onto the rack rails for storage. Once the load is deposited, the pallet runner returns to the beginning of the row to repeat the process until all positions are filled.
When it comes time to retrieve items to fill orders, the products are extracted from the opposite end of the racking. Once the first pallet of an SKU row is removed, a shuttle is inserted to bring the next pallet to the end position, where a lift truck can gather it as well. The system is also capable of performing a "shuffle." In this function, a shuttle is inserted into the racks to automatically index all pallets forward toward the end positions, keeping products ready to be quickly pulled from the storage area.
Saving space and time
The beauty of this system is that it promotes first in/first out processing while still providing very dense storage. The Mississauga Pallet Runner system is five levels high and stores 8,900 pallets that normally contain about 100 different SKUs (one SKU per storage row). That represents an enormous improvement in space utilization. "Within the same footprint, we can store 4,000 more pallets than we could with floor stacking," says Cunneyworth. That's a big plus in Schenker's eyes. "Real estate is an expensive commodity," he notes. "We have to use our space wisely."
The system has proved productive, too. "We're two pallets per man-hour more productive with this system than we were before," reports Cunneyworth. That's because lift truck drivers no longer spend time in the racks performing putaway and picking duties. The pallet runners now take care of those tasks. Plus the lift trucks don't have to wait around while the shuttles carry products to their storage positions deep within the racks; they can be off retrieving more loads from the docks.
Along with improving productivity, the new system has improved safety and reduced product damage. The pallet runner system is more accurate than lift trucks when it comes to placing pallets into their storage positions, which means products are less likely to bump into the racks' sides when entering and exiting. The system doesn't require the high ceilings typically found in dense storage systems. The clear ceiling height in Mississauga is only 28 feet.
Elsewhere in the building, full cases are selected in the pick towers from racks. These cases are placed directly onto a conveyor belt that feeds a shipping sorter. Using recirculation, the sorter can be programmed to route products down shipping spurs according to a particular sequence, such as delivering a single SKU to a pallet or sorted according to expiration dates. The sequence can also reflect the order in which cases are to be stacked, with heavier items, for instance, sorted first so that they can be manually placed on the bottom of a pallet load.
Only the beginning
Along with boosting productivity and improving both safety and handling, the new systems have increased accuracy. Schenker reports that accuracy has increased to better than 99.5 percent from the low 90s just a few years ago. As a result, returns have dropped to about half the former levels.
The efficiencies have also allowed better labor management. "Our labor force has been where the real reductions have occurred," says Unilever's Bayard. "I can't believe how few people work in our warehouses." Those labor savings have contributed to a reduction in overall costs of as much as 20 percent.
Cunneyworth credits communication for the success. "You have to be very involved with your client to understand their business and make sure the cultures fit," he says. Apparently, the cultures have been a good fit. Both companies hope their 10-year deal will be only the beginning of many years of successful collaboration.
Most of the apparel sold in North America is manufactured in Asia, meaning the finished goods travel long distances to reach end markets, with all the associated greenhouse gas emissions. On top of that, apparel manufacturing itself requires a significant amount of energy, water, and raw materials like cotton. Overall, the production of apparel is responsible for about 2% of the world’s total greenhouse gas emissions, according to a report titled
Taking Stock of Progress Against the Roadmap to Net Zeroby the Apparel Impact Institute. Founded in 2017, the Apparel Impact Institute is an organization dedicated to identifying, funding, and then scaling solutions aimed at reducing the carbon emissions and other environmental impacts of the apparel and textile industries.
The author of this annual study is researcher and consultant Michael Sadowski. He wrote the first report in 2021 as well as the latest edition, which was released earlier this year. Sadowski, who is also executive director of the environmental nonprofit
The Circulate Initiative, recently joined DC Velocity Group Editorial Director David Maloney on an episode of the “Logistics Matters” podcast to discuss the key findings of the research, what companies are doing to reduce emissions, and the progress they’ve made since the first report was issued.
A: While companies in the apparel industry can set their own sustainability targets, we realized there was a need to give them a blueprint for actually reducing emissions. And so, we produced the first report back in 2021, where we laid out the emissions from the sector, based on the best estimates [we could make using] data from various sources. It gives companies and the sector a blueprint for what we collectively need to do to drive toward the ambitious reduction [target] of staying within a 1.5 degrees Celsius pathway. That was the first report, and then we committed to refresh the analysis on an annual basis. The second report was published last year, and the third report came out in May of this year.
Q: What were some of the key findings of your research?
A: We found that about half of the emissions in the sector come from Tier Two, which is essentially textile production. That includes the knitting, weaving, dyeing, and finishing of fabric, which together account for over half of the total emissions. That was a really important finding, and it allows us to focus our attention on the interventions that can drive those emissions down.
Raw material production accounts for another quarter of emissions. That includes cotton farming, extracting gas and oil from the ground to make synthetics, and things like that. So we now have a really keen understanding of the source of our industry’s emissions.
Q: Your report mentions that the apparel industry is responsible for about 2% of global emissions. Is that an accurate statistic?
A: That’s our best estimate of the total emissions [generated by] the apparel sector. Some other reports on the industry have apparel at up to 8% of global emissions. And there is a commonly misquoted number in the media that it’s 10%. From my perspective, I think the best estimate is somewhere under 2%.
We know that globally, humankind needs to reduce emissions by roughly half by 2030 and reach net zero by 2050 to hit international goals. [Reaching that target will require the involvement of] every facet of the global economy and every aspect of the apparel sector—transportation, material production, manufacturing, cotton farming. Through our work and that of others, I think the apparel sector understands what has to happen. We have highlighted examples of how companies are taking action to reduce emissions in the roadmap reports.
Q: What are some of those actions the industry can take to reduce emissions?
A: I think one of the positive developments since we wrote the first report is that we’re seeing companies really focus on the most impactful areas. We see companies diving deep on thermal energy, for example. With respect to Tier Two, we [focus] a lot of attention on things like ocean freight versus air. There’s a rule of thumb I’ve heard that indicates air freight is about 10 times the cost [of ocean] and also produces 10 times more greenhouse gas emissions.
There is money available to invest in sustainability efforts. It’s really exciting to see the funding that’s coming through for AI [artificial intelligence] and to see that individual companies, such as H&M and Lululemon, are investing in real solutions in their supply chains. I think a lot of concrete actions are being taken.
And yet we know that reducing emissions by half on an absolute basis by 2030 is a monumental undertaking. So I don’t want to be overly optimistic, because I think we have a lot of work to do. But I do think we’ve got some amazing progress happening.
Q: You mentioned several companies that are starting to address their emissions. Is that a result of their being more aware of the emissions they generate? Have you seen progress made since the first report came out in 2021?
A: Yes. When we published the first roadmap back in 2021, our statistics showed that only about 12 companies had met the criteria [for setting] science-based targets. In 2024, the number of apparel, textile, and footwear companies that have set targets or have commitments to set targets is close to 500. It’s an enormous increase. I think they see the urgency more than other sectors do.
We have companies that have been working at sustainability for quite a long time. I think the apparel sector has developed a keen understanding of the impacts of climate change. You can see the impacts of flooding, drought, heat, and other things happening in places like Bangladesh and Pakistan and India. If you’re a brand or a manufacturer and you have operations and supply chains in these places, I think you understand what the future will look like if we don’t significantly reduce emissions.
Q: There are different categories of emission levels, depending on the role within the supply chain. Scope 1 are “direct” emissions under the reporting company’s control. For apparel, this might be the production of raw materials or the manufacturing of the finished product. Scope 2 covers “indirect” emissions from purchased energy, such as electricity used in these processes. Scope 3 emissions are harder to track, as they include emissions from supply chain partners both upstream and downstream.
Now companies are finding there are legislative efforts around the world that could soon require them to track and report on all these emissions, including emissions produced by their partners’ supply chains. Does this mean that companies now need to be more aware of not only what greenhouse gas emissions they produce, but also what their partners produce?
A: That’s right. Just to put this into context, if you’re a brand like an Adidas or a Gap, you still have to consider the Scope 3 emissions. In particular, there are the so-called “purchased goods and services,” which refers to all of the embedded emissions in your products, from farming cotton to knitting yarn to making fabric. Those “purchased goods and services” generally account for well above 80% of the total emissions associated with a product. It’s by far the most significant portion of your emissions.
Leading companies have begun measuring and taking action on Scope 3 emissions because of regulatory developments in Europe and, to some extent now, in California. I do think this is just a further tailwind for the work that the industry is doing.
I also think it will definitely ratchet up the quality requirements of Scope 3 data, which is not yet where we’d all like it to be. Companies are working to improve that data, but I think the regulatory push will make the quality side increasingly important.
Q: Overall, do you think the work being done by the Apparel Impact Institute will help reduce greenhouse gas emissions within the industry?
A: When we started this back in 2020, we were at a place where companies were setting targets and knew their intended destination, but what they needed was a blueprint for how to get there. And so, the roadmap [provided] this blueprint and identified six key things that the sector needed to do—from using more sustainable materials to deploying renewable electricity in the supply chain.
Decarbonizing any sector, whether it’s transportation, chemicals, or automotive, requires investment. The Apparel Impact Institute is bringing collective investment, which is so critical. I’m really optimistic about what they’re doing. They have taken a data-driven, evidence-based approach, so they know where the emissions are and they know what the needed interventions are. And they’ve got the industry behind them in doing that.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”
That result showed that driver wages across the industry continue to increase post-pandemic, despite a challenging freight market for motor carriers. The data comes from ATA’s “Driver Compensation Study,” which asked 120 fleets, more than 150,000 employee drivers, and 14,000 independent contractors about their wage and benefit information.
Drilling into specific categories, linehaul less-than-truckload (LTL) drivers earned a median annual amount of $94,525 in 2023, while local LTL drivers earned a median of $80,680. The median annual compensation for drivers at private carriers has risen 12% since 2021, reaching $95,114 in 2023. And leased-on independent contractors for truckload carriers were paid an annual median amount of $186,016 in 2023.
The results also showed how the demographics of the industry are changing, as carriers offered smaller referral and fewer sign-on bonuses for new drivers in 2023 compared to 2021 but more frequently offered tenure bonuses to their current drivers and with a greater median value.
"While our last study, conducted in 2021, illustrated how drivers benefitted from the strongest freight environment in a generation, this latest report shows professional drivers' earnings are still rising—even in a weaker freight economy," ATA Chief Economist Bob Costello said in a release. "By offering greater tenure bonuses to their current driver force, many fleets appear to be shifting their workforce priorities from recruitment to retention."