Two years ago, growth in its bath and plumbing products business threatened to clog operations in Liberty Hardware's California DC. But since the company moved to a high-speed automated facility, orders now flow freely.
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.
Liberty Hardware's business model may be built around getting the right tools and hardware into the hands of customers, but a few years back, it nonetheless faced a hardware issue of its own. Sales of the company's products—cabinet pulls and hinges, builder's and bath hardware, and hooks and wall plates—were taking off. But Liberty's West Coast distribution center lacked the automated material handling equipment it would need to keep up with growing order volume.
At the time, the Winston-Salem, N.C.-based company was serving West Coast customers out of a cramped 60,000-square-foot facility in Southern California. The DC relied strictly on manual processes, which meant its labor requirements were high and it suffered from the usual inefficiencies associated with manual distribution.
As the building's lease expiration date drew near, Liberty Hardware had to decide whether to move to a much larger manual facility or take the plunge and invest in an automated operation. Automation made more sense over the long term, but it wouldn't be an easy road. At the very least, Liberty would have to design a material handling system, choose the equipment, and, perhaps most daunting of all, justify the project to its parent corporation, the giant home improvement and building products conglomerate Masco Corp.
As it turned out, however, Liberty had no difficulty getting corporate sign-off on the initiative. In fact, Liberty's status as a Masco subsidiary proved to be an advantage. Like Liberty, a number of other Masco subsidiaries were operating their own DCs in Southern California or hiring third-party service providers to handle their distribution. When it looked at Liberty's proposed facility, Masco saw an opportunity to consolidate the operations of several of its subsidiaries at a single site.
In 2006, the company opened a new 460,000-square-foot facility in Ontario, Calif. The DC handles distribution not just for Liberty but also for three other Masco companies: BrassCraft, which distributes plumbing supplies like brass fittings, valves, and water connectors; Delta Faucets, which makes faucets for residential and commercial use; and Alsons, which makes shower heads and other bath and kitchen fixtures for the do-ityourself retail market. Liberty's products account for about 60 percent of the facility's total order volume, BrassCraft's for another 30 percent, while the remainder consists of Delta's and Alsons' goods.
A model for success
When Liberty and its sister companies began planning for the new joint facility, they didn't have to start from scratch. In 2001, Masco had built a 600,000-square-foot automated distribution facility in Winston-Salem, N.C., to serve customers in the eastern part of the country. The design had worked out well, and Masco decided to duplicate its basic plan for the new West Coast DC.
"We wanted to better serve our customer base on the West Coast and felt we had experience and a good model from our East Coast facility to create a bigger, better facility there," says Tom Turner, Liberty's vice president of global logistics. "We knew that the automation would help us keep our costs down."
Not only did Liberty model its new DC on the Winston-Salem building, but it also used most of the same vendors and suppliers. They included Tom Zosel Associates, which designed the material handling system, and Dematic, which supplied the majority of the systems and provided integration services. (The equipment supplied by Dematic includes some 10,000 linear feet of roller conveyors, a sliding shoe sorter, and a warehouse control system that interfaces with Liberty's Manhattan warehouse management software.) By using the same suppliers, Liberty was able to get the new facility up and running quickly.
A quick startup was important to Liberty. The leases on several of the previous buildings would run out before the new DC's material handling systems would be ready for operation. That meant the tenant companies would have to start shipping orders from the unfinished facility, which would require careful planning and coordination. As an interim solution, Liberty and its sister companies ended up using a portion of the building to distribute products via manual procedures, while the automated systems were installed alongside. Once those systems were completed, distribution was switched over to the automated system. Almost immediately, Liberty saw a marked increase in the volume handled and speed of processing. It also noticed a reduction in product damage.
Turning on the faucet
The new building features three pick modules, where the majority of customer orders are filled as full case picks. More than 85 percent of the products shipped from Ontario are picked within the modules, with the remainder picked directly from the reserve storage pallet racks. Each of the three-level modules is equipped with a conveyor that starts on the bottom level and winds its way up to the second level and then on to the third. This design allows products to be picked directly to the belt.
Two of the modules contain carton flow racks on the bottom level and pallet flow racks on the upper two levels, while the third module is completely outfitted with carton flow racks. Products from the various brands are intermingled within the modules but are picked in waves and shipped separately by brand. The system has the flexibility to wave orders by customer, but typically waves are built according to ship date.
Processing begins when products arrive in import containers or domestic trailer loads. Once palletized, most of these receipts first go into reserve storage (the reserve storage area has 35,000 pallet positions). When needed to fill orders, the products are transferred to the modules' flow racks. The warehouse management system and warehouse control system work in tandem to direct the flow of products throughout the building.
Workers pick individual cases from the flow racks using bar-coded shipping labels, which are produced by printers located within each of the modules. As they select items, the workers apply the labels to the cases and then deposit the cases directly onto the conveyor belt. The conveyors carry the cases through a merge point and then past five-sided fixed scanners that read the labels' bar codes and feed the information to the warehouse control system. The WCS then works with the warehouse management software to update inventory and determine where to send the product once it enters the next system, a Dematic RS-200 sliding shoe sorter that can perform up to 150 sorts per minute.
Based on the cases' destination information, the block-shaped "shoes" slide across the conveying surface to gently push cases to one of 22 diverts, where automatic pressure accumulation conveyors hold the products until they are ready to be released to shipping docks. The cases in each accumulation area are then palletized, stretch wrapped, and loaded onto outbound trucks.
About 350,000 cases are shipped from the facility each month, although during peak periods, monthly volume can run as high as 440,000 cases. About 80 percent of the orders go out to big box retailers and mom-and-pop hardware stores; the rest go to wholesalers that supply building contractors.
Engineering in flexibility
Although it used the Winston-Salem facility as a model when designing the Ontario DC, Liberty did make a few changes. Many of those modifications were aimed at accommodating products of a wide range of shapes and sizes. Items flowing through the facility weigh anywhere from less than a pound all the way up to 60 pounds.
For example, when it came to the DC's conveyor systems, Liberty chose rollers that are based on two-inch centers rather than the usual three-inch centers. The closer spacing of the rollers allows smaller, lighter-weight packages to travel on the conveyors more easily.
In addition, the sorter shoes in Ontario glide on interleaving extruded aluminum slats instead of tubes. This virtually eliminates the chance that a small carton will jam the system.
The Ontario facility also boasts some energy-saving features that are not found at its East Coast counterpart. Its roller conveyors are equipped with photo-eye accumulation and designed to operate quietly while conserving energy. About 300 feet of conveyor can be powered with only a three-horsepower drive. If there is no activity for 15 seconds, the conveyor shuts down to further reduce energy consumption.
The Ontario facility was also designed with growth in mind. Two additional picking modules can be added as needs dictate.
Right tools, right outcome
As for how it's all working out, Liberty says the new facility is everything it hoped for. Since the company moved into the building in 2006, its overall distribution costs have dropped and its labor requirements have been reduced by 40 percent.
Efficiency is up as well. "Our turnaround time on orders is excellent now, less than 48 hours," says Turner. "Our accuracy is extremely good too—at 99.9 percent—and we have kept our labor and overtime in check as well. This facility has been very successful in terms of what we expected."
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."