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.
Water, water everywhere, but no place to put it all.
With apologies to Samuel Taylor Coleridge, that was the situation Hassia found itself in.
Hassia, the fourth-largest beverage manufacturer in Germany, was experiencing some of the symptoms common to fast-growing businesses. As a result of an increase in both its stock-keeping unit (SKU) base and its sales volume, the company, which distributes premium bottled water as well as juice and soft drinks, found itself dealing with a serious space crunch at its Bad Vilbel distribution center, a 323,000-square-foot facility near Frankfurt.
Adding to the problem was a surge in consumer demand for one-way bottles, which require more storage space than returnables. "One-way bottles are made from thinner plastic and do not stack well compared to the crates that are used for returnable bottles," explains Stefan Marhold, warehouse manager at the Bad Vilbel site. "That requires us to move to racking instead of floor stacking." One of the company's chief concerns was that conventional racking wouldn't allow for the same storage density that could be achieved with floor stacking, he adds.
At the same time, the company was feeling pressure on another front—rising transportation costs. In addition to the Bad Vilbel facility, Hassia was operating a second warehouse and production facility about 12 miles away in Rosbach, where it has a spring water source. Because neither warehouse was big enough to accommodate output from both production plants, the company was constantly shuttling products from one building to the other—a practice that was growing increasingly expensive.
With the pressure mounting, Hassia had limited options for addressing its capacity crunch. The company wanted to remain in its current distribution facility in Bad Vilbel, which is located just half a block from one of its bottling sites. Though separate, the two buildings are ingeniously connected via an underground tunnel that runs beneath an adjacent apartment building. Inside the tunnel is a 360-foot-long monorail that carries goods from the plant to the DC.
While expansion might seem the logical solution, that wasn't workable in this case. The facility is surrounded by other properties, making outward expansion impractical. Options for expanding upward were pretty limited as well. Because the facility is located in a residential area, the height of the building could not exceed 20 meters (about 66 feet).
In short, Hassia's only alternative was to find a way to make the most of the space it did have—that is, by creating denser storage. Knowing the solution would likely involve automated equipment, Hassia turned to Krones, a Neutraubling, Germany-based systems designer and integrator that specializes in the unique demands of beverage and food distribution. Krones had supplied much of the company's bottle filling equipment, so Hassia felt confident in contracting with the company for the new project.
System overhaul
The solution Krones came up with went far beyond just a retool of the storage area. It also involved a complete redesign of the facility's work flow and included a new high-bay warehouse, a new case-picking area, and software that runs in tandem with the company's existing ERP system to coordinate the activity. It also incorporated a new truck loading area, with docks that would allow trucks to back in for rear loading. The latter move was a response to increasing requests from Hassia's customers to load trucks from the rear rather than the side, as is more commonly done in Europe.
Designed to maximize storage density, the high-bay automated warehouse features storage lanes capable of holding 39,000 pallets in a footprint of only 8,600 square meters (92,500 square feet). The system is eight levels high and consists of four aisles. But unlike traditional automated storage and retrieval systems (AS/RS), where cranes operate the entire height of the aisles, the system designed by Krones stacks four cranes within the eight levels of each aisle. Each crane serves just two levels and runs the length of the aisle, for a total of 16 cranes overall. The use of the additional cranes allows for faster input and retrieval from the system than could be achieved in a traditional AS/RS.
To minimize disruption to operations—several sections of the warehouse had to be demolished to make way for the high-bay addition—the project was conducted in four phases, beginning in the fall of 2008 and completed in April 2009. About 80 percent of product was diverted temporarily to Rosbach during construction, while the remaining 20 percent was processed within the sections of the warehouse that were still intact.
"The [project required] a lot of coordination between everyone involved, as we could not shut down the warehouse operations completely," says Marhold.
Smooth flow
Today, beverages bottled at the nearby plant are placed on pallets and transported via monorail to the warehouse. Once they arrive, a lift raises them to a pallet conveyor for transport to the AS/RS. Additional lifts hoist the pallets to transfer stations served by one of the cranes. The crane then moves front to back down the aisle until it comes to a channel. Unlike conventional AS/RS racks, which are one pallet deep, these channels hold 10 pallets apiece.
A transfer shuttle attached to the crane next moves beneath the load and lifts it off the crane carrier. It then travels down the desired channel perpendicular to the aisle until it reaches the last available space, where it deposits the pallet. The transfer shuttle then returns to the crane. Typically, only one SKU resides in each lane to avoid the need to move pallets to get to a trapped SKU.
The crane then either collects another inbound load or gathers a pallet needed to fill orders. In total, the system handles 350 pallets an hour—typically, 250 an hour from the nearby production plant and another 100 or so that arrive by truck from other production facilities.
Products that will ship as full pallets are brought to the lifts and lowered to pallet conveyors for transport to outbound dispatch areas. Pallets needed to replenish case picking are sent to the new picking area designed by Krones. The picking area consists of three lanes, each serviced by a shuttle crane. Each crane can serve two levels of racking, running between the two rows of racks.
Most products are placed into the pick faces on the bottom levels of the lanes (there are six pick faces in total). Each lane has gravity conveyor to move items to the front of the rack for easy picking. Fast-moving products designated for reserve storage are deposited in the top layer of the rack by the shuttle crane. When a pick slot below empties out, the crane moves a pallet from the top level to the bottom level to replenish that slot.
At any given time, five to 10 associates are working in the picking area, selecting cases according to preprinted labels. They place the cases onto mixed-SKU pallets maneuvered with pallet jacks. As each pallet is completed, it is taken to a drop-off point for the conveyor system.
The pallet is next transported to either the side-loading dispatch area or the newly built rear loading area, although on occasion, goods slated for later transport may be returned to the AS/RS for temporary storage. In the side loading area, pallets are diverted to pickup lanes, where they await loading onto a truck. Pallets are retrieved as needed by lift truck drivers, who load them into trucks according to instructions displayed on a diagram on their vehicle-mounted computers.
Clear direction
As for the results of the project, the retrofit has allowed Hassia to achieve its objective of consolidating products from both Bad Vilbel and Rosbach into the new AS/RS. Coincidentally, the company was also able to close the production facility in Rosbach and instead pipe the water from the Rosbach spring to the Bad Vilbel production plant.
Labor has also been reduced, and productivity is up. Customer service has also improved. A truck can pull into the dock, drop off its load of returnable bottles, pick up a new load, and be on its way within 45 minutes.
"We achieved our goals, including the speed of loading and reliability to [meet] our customers' needs," says Marhold. "It was a very tight relationship working together. Krones had very smart ideas that they brought in, and we also had ideas. It was a very interactive approach. We would never have met the timeline we had without that coordination."
Congestion on U.S. highways is costing the trucking industry big, according to research from the American Transportation Research Institute (ATRI), released today.
The group found that traffic congestion on U.S. highways added $108.8 billion in costs to the trucking industry in 2022, a record high. The information comes from ATRI’s Cost of Congestion study, which is part of the organization’s ongoing highway performance measurement research.
Total hours of congestion fell slightly compared to 2021 due to softening freight market conditions, but the cost of operating a truck increased at a much higher rate, according to the research. As a result, the overall cost of congestion increased by 15% year-over-year—a level equivalent to more than 430,000 commercial truck drivers sitting idle for one work year and an average cost of $7,588 for every registered combination truck.
The analysis also identified metropolitan delays and related impacts, showing that the top 10 most-congested states each experienced added costs of more than $8 billion. That list was led by Texas, at $9.17 billion in added costs; California, at $8.77 billion; and Florida, $8.44 billion. Rounding out the top 10 list were New York, Georgia, New Jersey, Illinois, Pennsylvania, Louisiana, and Tennessee. Combined, the top 10 states account for more than half of the trucking industry’s congestion costs nationwide—52%, according to the research.
The metro areas with the highest congestion costs include New York City, $6.68 billion; Miami, $3.2 billion; and Chicago, $3.14 billion.
ATRI’s analysis also found that the trucking industry wasted more than 6.4 billion gallons of diesel fuel in 2022 due to congestion, resulting in additional fuel costs of $32.1 billion.
ATRI used a combination of data sources, including its truck GPS database and Operational Costs study benchmarks, to calculate the impacts of trucking delays on major U.S. roadways.
There’s a photo from 1971 that John Kent, professor of supply chain management at the University of Arkansas, likes to show. It’s of a shaggy-haired 18-year-old named Glenn Cowan grinning at three-time world table tennis champion Zhuang Zedong, while holding a silk tapestry Zhuang had just given him. Cowan was a member of the U.S. table tennis team who participated in the 1971 World Table Tennis Championships in Nagoya, Japan. Story has it that one morning, he overslept and missed his bus to the tournament and had to hitch a ride with the Chinese national team and met and connected with Zhuang.
Cowan and Zhuang’s interaction led to an invitation for the U.S. team to visit China. At the time, the two countries were just beginning to emerge from a 20-year period of decidedly frosty relations, strict travel bans, and trade restrictions. The highly publicized trip signaled a willingness on both sides to renew relations and launched the term “pingpong diplomacy.”
Kent, who is a senior fellow at the George H. W. Bush Foundation for U.S.-China Relations, believes the photograph is a good reminder that some 50-odd years ago, the economies of the United States and China were not as tightly interwoven as they are today. At the time, the Nixon administration was looking to form closer political and economic ties between the two countries in hopes of reducing chances of future conflict (and to weaken alliances among Communist countries).
The signals coming out of Washington and Beijing are now, of course, much different than they were in the early 1970s. Instead of advocating for better relations, political rhetoric focuses on the need for the U.S. to “decouple” from China. Both Republicans and Democrats have warned that the U.S. economy is too dependent on goods manufactured in China. They see this dependency as a threat to economic strength, American jobs, supply chain resiliency, and national security.
Supply chain professionals, however, know that extricating ourselves from our reliance on Chinese manufacturing is easier said than done. Many pundits push for a “China + 1” strategy, where companies diversify their manufacturing and sourcing options beyond China. But in reality, that “plus one” is often a Chinese company operating in a different country or a non-Chinese manufacturer that is still heavily dependent on material or subcomponents made in China.
This is the problem when supply chain decisions are made on a global scale without input from supply chain professionals. In an article in the Arkansas Democrat-Gazette, Kent argues that, “The discussions on supply chains mainly take place between government officials who typically bring many other competing issues and agendas to the table. Corporate entities—the individuals and companies directly impacted by supply chains—tend to be under-represented in the conversation.”
Kent is a proponent of what he calls “supply chain diplomacy,” where experts from academia and industry from the U.S. and China work collaboratively to create better, more efficient global supply chains. Take, for example, the “Peace Beans” project that Kent is involved with. This project, jointly formed by Zhejiang University and the Bush China Foundation, proposes balancing supply chains by exporting soybeans from Arkansas to tofu producers in China’s Yunnan province, and, in return, importing coffee beans grown in Yunnan to coffee roasters in Arkansas. Kent believes the operation could even use the same transportation equipment.
The benefits of working collaboratively—instead of continuing to build friction in the supply chain through tariffs and adversarial relationships—are numerous, according to Kent and his colleagues. They believe it would be much better if the two major world economies worked together on issues like global inflation, climate change, and artificial intelligence.
And such relations could play a significant role in strengthening world peace, particularly in light of ongoing tensions over Taiwan. Because, as Kent writes, “The 19th-century idea that ‘When goods don’t cross borders, soldiers will’ is as true today as ever. Perhaps more so.”
Hyster-Yale Materials Handling today announced its plans to fulfill the domestic manufacturing requirements of the Build America, Buy America (BABA) Act for certain portions of its lineup of forklift trucks and container handling equipment.
That means the Greenville, North Carolina-based company now plans to expand its existing American manufacturing with a targeted set of high-capacity models, including electric options, that align with the needs of infrastructure projects subject to BABA requirements. The company’s plans include determining the optimal production location in the United States, strategically expanding sourcing agreements to meet local material requirements, and further developing electric power options for high-capacity equipment.
As a part of the 2021 Infrastructure Investment and Jobs Act, the BABA Act aims to increase the use of American-made materials in federally funded infrastructure projects across the U.S., Hyster-Yale says. It was enacted as part of a broader effort to boost domestic manufacturing and economic growth, and mandates that federal dollars allocated to infrastructure – such as roads, bridges, ports and public transit systems – must prioritize materials produced in the USA, including critical items like steel, iron and various construction materials.
Hyster-Yale’s footprint in the U.S. is spread across 10 locations, including three manufacturing facilities.
“Our leadership is fully invested in meeting the needs of businesses that require BABA-compliant material handling solutions,” Tony Salgado, Hyster-Yale’s chief operating officer, said in a release. “We are working to partner with our key domestic suppliers, as well as identifying how best to leverage our own American manufacturing footprint to deliver a competitive solution for our customers and stakeholders. But beyond mere compliance, and in line with the many areas of our business where we are evolving to better support our customers, our commitment remains steadfast. We are dedicated to delivering industry-leading standards in design, durability and performance — qualities that have become synonymous with our brands worldwide and that our customers have come to rely on and expect.”
In a separate move, the U.S. Environmental Protection Agency (EPA) also gave its approval for the state to advance its Heavy-Duty Omnibus Rule, which is crafted to significantly reduce smog-forming nitrogen oxide (NOx) emissions from new heavy-duty, diesel-powered trucks.
Both rules are intended to deliver health benefits to California citizens affected by vehicle pollution, according to the environmental group Earthjustice. If the state gets federal approval for the final steps to become law, the rules mean that cars on the road in California will largely be zero-emissions a generation from now in the 2050s, accounting for the average vehicle lifespan of vehicles with internal combustion engine (ICE) power sold before that 2035 date.
“This might read like checking a bureaucratic box, but EPA’s approval is a critical step forward in protecting our lungs from pollution and our wallets from the expenses of combustion fuels,” Paul Cort, director of Earthjustice’s Right To Zero campaign, said in a release. “The gradual shift in car sales to zero-emissions models will cut smog and household costs while growing California’s clean energy workforce. Cutting truck pollution will help clear our skies of smog. EPA should now approve the remaining authorization requests from California to allow the state to clean its air and protect its residents.”
However, the truck drivers' industry group Owner-Operator Independent Drivers Association (OOIDA) pushed back against the federal decision allowing the Omnibus Low-NOx rule to advance. "The Omnibus Low-NOx waiver for California calls into question the policymaking process under the Biden administration's EPA. Purposefully injecting uncertainty into a $588 billion American industry is bad for our economy and makes no meaningful progress towards purported environmental goals," (OOIDA) President Todd Spencer said in a release. "EPA's credibility outside of radical environmental circles would have been better served by working with regulated industries rather than ramming through last-minute special interest favors. We look forward to working with the Trump administration's EPA in good faith towards achievable environmental outcomes.”
Editor's note:This article was revised on December 18 to add reaction from OOIDA.
A Canadian startup that provides AI-powered logistics solutions has gained $5.5 million in seed funding to support its concept of creating a digital platform for global trade, according to Toronto-based Starboard.
The round was led by Eclipse, with participation from previous backers Garuda Ventures and Everywhere Ventures. The firm says it will use its new backing to expand its engineering team in Toronto and accelerate its AI-driven product development to simplify supply chain complexities.
According to Starboard, the logistics industry is under immense pressure to adapt to the growing complexity of global trade, which has hit recent hurdles such as the strike at U.S. east and gulf coast ports. That situation calls for innovative solutions to streamline operations and reduce costs for operators.
As a potential solution, Starboard offers its flagship product, which it defines as an AI-based transportation management system (TMS) and rate management system that helps mid-sized freight forwarders operate more efficiently and win more business. More broadly, Starboard says it is building the virtual infrastructure for global trade, allowing freight companies to leverage AI and machine learning to optimize operations such as processing shipments in real time, reconciling invoices, and following up on payments.
"This investment is a pivotal step in our mission to unlock the power of AI for our customers," said Sumeet Trehan, Co-Founder and CEO of Starboard. "Global trade has long been plagued by inefficiencies that drive up costs and reduce competitiveness. Our platform is designed to empower SMB freight forwarders—the backbone of more than $20 trillion in global trade and $1 trillion in logistics spend—with the tools they need to thrive in this complex ecosystem."