DHL eCommerce has opened a $20 million, automated distribution center in New Jersey, saying Thursday that the facility will support improved productivity, speed, and throughput in parcel sorting as retailers struggle to staff their DCs in an era of low unemployment and high customer expectations.
DHL says the 200,000-square foot site will provide consolidation, not fulfillment. As the newest—and now the largest—of DHL's 19 U.S. consolidation centers, the site serves to save time and money by pre-sorting small parcels before inducting them into a nearby U.S. Postal Service (USPS) facility for last-mile delivery, the company said.
Its high-speed automation will process small e-commerce orders that typically weigh three pounds or less, although it can accept parcels up to five pounds each. Its automated systems are designed to handle the flexible, shoe box-sized Tyvek (or "poly-bag") sacks increasingly used instead of rigid cardboard boxes to ship apparel and other soft items.
DHL will use this New Jersey facility as a test bed for that approach, and plans to roll out similar designs in Los Angeles and Chicago if it meets expectations, Lee Spratt, CEO of DHL eCommerce Americas, said in an interview at a DHL press event in New York City.
The investment is needed to support its customers' growing e-commerce volumes by delivering increased reliability and faster shipment delivery, the firm says. Retailers are facing increased pressure to deliver fast, reliable shipping as e-commerce expands from a monolithic, eight-week holiday peak into a variety of smaller peaks throughout the year, he said.
"Cyber Monday lasted into Cyber Thursday this year, and it is really becoming Cyber Week," Spratt said in an interview. In addition to the traditional Black Friday holiday sales season, other online shopping surges now include Amazon.com Inc.'s Prime Day, Alibaba Group's Singles Day (also known as 11/11), and repeating events such as monthly and end-of-quarter mailings by subscription services, DHL says.
"By late summer, we start forecasting peak season volume with our customers, then we handle that work with a combination of DHL associates and temporary employees. This automation allows us to be less reliant on those temporary jobs," Spratt said.
DHL says its new facility can relieve the pressure of hiring surges by offering the ability to process up to 40,000 shipments per hour, 60 percent more than an equivalent, non-automated facility. The 66-dock DC will employ 200 people and incorporate a range of sorting and scanning technologies that enable increased throughput and less manual processing of shipments compared to a traditional DC, the company said.
In a walking tour of the Avenel, N.J., facility, DHL said the site uses a crossbelt conveyer sorting system and automated bar-code scanning functionality, both provided by material handling vendor Beumer. Slow moving packages move through the entire facility within a 36-hour maximum, while fast products enter and exit the facility within a single, five-hour overnight shift from 9pm to 2am, DHL said.
"In this challenging market environment, with e-commerce merchants enjoying record shipment levels and the economy close to full employment, we are investing in more automation as the most effective way of enabling growth and improving service levels while ensuring our costs remain competitive," Spratt said in a release. "Our new distribution center in New Jersey is the most modern and efficient facility in the DHL eCommerce Americas network to date. It will help us to further support merchants grow their e-commerce businesses domestically as well as internationally, ensuring a high quality experience for their customers."
Gartner, Inc.