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Brad Wright is the CEO of Chunker, a marketplace for short-term, on-demand warehouse space. As CEO, Wright is responsible for overseeing the vision and operations of Chunker along with driving sales and company growth.
Prior to Chunker, Wright founded and ran two successful companies, including MasterControl and Computer Science Corp. While Wright was at MasterControl, the company was recognized as one of Utah’s 100 fastest-growing companies for seven straight years. Wright also spent eight years running five of the national consulting practices at Computer Science Corporation, a Fortune 500 global systems integrator. Wright has a degree in physics from the University of Utah.
David Maloney, Editorial Director, DC Velocity 00:01
Are smaller businesses being squeezed out of available warehouse space? Ports move to digitize their operations. And a new report details the tight commercial real estate market.
Pull up a chair and join us as the editors of DC Velocity discuss these stories, as well as news and supply chain trends, on this week's Logistics Matters podcast.
Hi, I'm Dave Maloney. I'm the group editorial director at DC Velocity. Welcome.
Logistics Matters is sponsored by Honeywell intelligrated. From system design and simulation to integrated warehouse automation software and technologies to ASRS shuttles and robotics. Honeywell intelligrated end to end solutions address the most pressing ecommerce and labor challenges facing our industry visit sps.honeywell.com for more information.
As usual, our DC Velocity senior editors Ben Ames and Victoria Kickham will be along to provide their insight into the top stories of this week. But to begin today, the limited availability of warehouse space is beginning to make it very difficult for small and medium-sized businesses. Many feel that they're being squeezed out of the distribution market. Are there alternatives available to them? To answer some of those questions? Here is Ben with today's guest.
Ben.
Ben Ames, Senior News Editor, DC Velocity 01:24
Thanks, Dave. Our guest today is Brad Wright. He's the CEO of Chunker. It's a Utah-based company founded in 2017 that provides on-demand warehousing capacity through its marketplace for short-term logistics space. Brad, thank you for being with us today.
Brad Wright, CEO, Chunker 01:41
Thank you, and I'm happy to be here and pleased you could have me today.
Ben Ames, Senior News Editor, DC Velocity 01:45
Great. Looking at the logistics marketplace, our readers, and all consumers in the U.S. really know that Amazon.com is huge, and getting huger. Amazon's distribution center construction in 2021, by some accounts, will account for eight of the 10 largest industrial projects in the U.S. for the year. So, compared to that kind of enormous footprint, many people are wondering whether smaller retailers and other direct-to-consumer brands can remain competitive in that kind of situation. Brad, you talk every day to many e-commerce retailers who are trying to sell their goods in that environment. Can you give us a feeling for what it's like for them to compete against Amazon in terms of logistics?
Brad Wright, CEO, Chunker 02:30
Yeah, I mean, as you know, I mean, for small businesses, it's always hard to compete against larger businesses anyway, but in today's world, there's so many different services that people can avail themselves of that it definitely is getting easier. You know, obviously, Amazon has a huge footprint, and they have a lot of things dialed in, but it's definitely possible, and especially if these e-tailers can keep their costs down. I think that's probably the name of the game, honestly.
Ben Ames, Senior News Editor, DC Velocity 03:02
Yeah, it's, uh, when people talk about staying agile or nimble, some of those words we hear a lot, it really comes to cost, doesn't it?
Brad Wright, CEO, Chunker 03:10
You know, the great thing about it is that today there's so many services available, too, is that they can take advantage of those services without having to invest large amounts of capital, and lots of services exist just for that reason now, is to help these small brands and up-and-coming brands compete against Amazon.
Ben Ames, Senior News Editor, DC Velocity 03:32
Yeah, that's a critical tool for sure, and it anticipates my next question — was that looking at at you know, exactly how you keep those costs down? Of course, DC Velocity is all about the warehousing, transportation, and logistics. Are there certain tasks in that area, where it's harder for small retailers to make those economies of scale? You know, in terms of logistics, its fulfillment, it's keeping items in stock, it's supporting two-day delivery, those kind of things?
Brad Wright, CEO, Chunker 04:02
It's a good question, and, you know, obviously, you're focused on warehousing, but that's a huge issue for these brands, because, you know, most warehouses and landlords require long-term leases, and — which are very capital intensive, you know, big security deposits, you know, credit checks, lots of capital tied up. So, it makes it super hard for them without having a more agile way. And so — and that's a big part of their costs, warehouses, huge part of their costs. So, if they can kind of get that worked out, then there's ways for them to take care of the other things.
Ben Ames, Senior News Editor, DC Velocity 04:41
And of course, you know, some of those other things are also not so easy. All you have to do is look at newspaper headlines. It's been a heck of a week already with, there was Hurricane Henri. There was Hurricane Ida, of course. There are enormous delays in ports. There's tight capacity in trucking. It goes on and on. Do these sort of greater supply chain delays hit the smaller guys equal or harder than the Amazons of the world?
Brad Wright, CEO, Chunker 05:10
Oh, those macro things that really nobody has control of hit them a lot harder. I mean, think of a typical e-commerce brand, maybe they sell 10, 20, 30 things, and then compare that to Amazon's 12 million things. So, even if Amazon doesn't have one thing in stock, they still have, you know, 100,999,000 other things they can sell. So, it definitely impacts the smaller guys a lot harder, and makes their lives a lot more difficult.
Ben Ames, Senior News Editor, DC Velocity 05:41
Got it. And of course, it's so easy for consumers who are shopping online, you know, to find an alternative source, so it's really — the smaller guys have kind of one chance to get the attention of the buyers there.
Brad Wright, CEO, Chunker 05:54
Yeah, exactly, and when you have one chance, you have to maximize everything you can get. So, I mean, they have to be scrappier they have to plan more, they have to, you know, be a lot more agile and nimble to compete with Amazon.
Ben Ames, Senior News Editor, DC Velocity 06:09
So, Brad, you run a company that might provide some solutions to those challenges, but without focusing just on Chunker itself, could you explain sort of how the process works, in terms of on-demand warehousing, for our listeners who might not have experience with that kind of approach?
Brad Wright, CEO, Chunker 06:27
Sure. I mean, the idea generally is that it's the sharing economy brought to warehouses, and it's intended to make small businesses more agile, and to help them use their capital more effectively, because they can get warehouses in smaller chunks of time, basically, without having to commit large amounts of capital. And so, generally speaking, you know, I mean, there's marketplaces that have warehouses available that will do short-term deals — which, by the way, in and of itself is a challenge, because most landlords are not interested in short-term deals, and so you know, you have to kind of curate that list and find the right mix, because they really just don't want to do it. They want the five-year tenant, or the 10-year tenant, or in the case of Amazon, the 20-year tenant, and they'll, they're willing to pass over shorter-term deals just waiting for those people to show up. So, anyway, I mean, you have to find landlords who are willing to do shorter term, shorter terms, with less capital up front, that allow you to set up your operations and work out of them.
Ben Ames, Senior News Editor, DC Velocity 07:41
Got it. And sort of looking at how any particular company might interface with that chance, I mean we were talking about, you know, five-year, 10-year terms as being more typical. For these shorter ones, how short can it be? And how does that sort of naturally flow?
Brad Wright, CEO, Chunker 08:02
Well, I mean, it can be as short as really, the landlord are allowed — allows. From our perspective, we've done one week, and then we've done month to month. I mean, month to month is kind of preferred, if the brand's very small and just getting going, because then at any moment of time, if things don't go well, things move out. But if they're — if they want to actually set up operations — you mentioned like, automation and warehouse management systems, and those types of things — if they're, if they intend to use the short-term warehouse for that type of activity, then they're going to have to go a little bit longer term, meaning that, you know, from our perspective, short-term means anything less than a year. So, you kind of need to go at the end of the spectrum to towards a year, if you're gonna really set operations up. It's really super hard to set up a really efficient warehouse in two or three months.
Ben Ames, Senior News Editor, DC Velocity 09:02
Got it. Got it. Yeah, and again, you're anticipating my next question, which was, of course, having a building, having a DC is, of course, the foundational first step, but making it work is really where it, you know, the rubber hits the road, because any warehouse has both inbound and outbound deliveries; you have to fill it with employees, or automation, to do all that fulfillment; and labor itself can be hard to come by, so, you know, getting the space is just the first step, right?
Brad Wright, CEO, Chunker 09:34
Yeah. It's an important step, but it is the first step. I'll just say one thing, you know, in our case, you know, a lot of times what we enable is that, because you do need to set that up, and you do need to have a steady place for employers to come to, and you do need all these other components, is that we enable companies to do a long-term lease, so that they can have a stable base of operations, and then as they need it they can expand a month at a time, you know, into other, into another warehouse, or two months at a time. So, that allows them to, you know, it's, you know, super hard to hire employees anyway, but if you if they're bouncing around all the time and don't have a stable place to go work, it makes it even harder. So, you know, there's certain things that you have to have that kind of long-term base of operations, but, you know, with short-term warehousing, you can augment that and you can have a stable base and then expand as needed.
Ben Ames, Senior News Editor, DC Velocity 10:32
Got it. That makes great sense. Brad, this has been really interesting. I appreciate your taking the time to come on the show today.
Brad Wright, CEO, Chunker 10:39
Yeah, thanks again for having me. I really appreciate it.
Ben Ames, Senior News Editor, DC Velocity 10:42
Our guest today was Brad Wright, the CEO of Chunker. Appreciate his being here. Back to you, Dave.
David Maloney, Editorial Director, DC Velocity 10:48
Thank you, Brad and Ben. Now let's take a look at some of the other supply chain news from the week. And keeping with the real estate theme, Victoria, you wrote this week about how commercial real estate values are starting a return to prepandemic levels. Can you explain what more is going on in that sector?
Victoria Kickham, Senior Editor, DC Velocity 11:07
Absolutely, Dave, yeah, and you're right, this certainly ties into Ben and Brad's discussion about the need for space. Commercial real estate values have returned to prepandemic levels in many U.S. markets, and that continues a 2021 recovery that began late last year. That's according to information from a report from commercial real estate giant CBRE, which was released earlier this week. The firm's newest U.S. Cap Rate Survey found that two-thirds of investors showed an increased appetite for risk during the first half of this year, and that most expect capitalization rates, or "cap rates," which are a measure of a property's value, to remain stable or compress across most property types through the end of this year. CBRE also pointed out that a lower cap rate generally indicates a higher value, so when we see them stabilizing or compressing, that's a good thing for the market and for investors and property owners, of course. The survey compared U.S. cap rates for the first half of 2019 to the first half of 2021, so it really gauges how well the real estate sector is bouncing back from the lows experienced in mid-2020, at the height of the pandemic. I should also note that this survey examines all types of commercial real estate, and that includes office and retail, multifamily housing, as well as industrial space, which is, you know, what we are, we follow more closely here at DC Velocity, and what Ben and Brad were talking about. Essentially, the economic recovery we've been experiencing is benefiting property fundamentals, investment, volume, and values, so it's a really good time for property owners and investors. Industrial space is in high — a very high — demand, as we talked about many times here, and it continues a theme.
David Maloney, Editorial Director, DC Velocity 12:50
So, it's good to see that the demand Victoria, but did the analysis include any specific insight into the industrial side of the market?
Victoria Kickham, Senior Editor, DC Velocity 12:58
Yes, absolutely. So, industrial markets have fared particularly well since the economic downturn in May 2020 as compared to other categories. The survey showed that investors expect cap rates to continue to compress for industrial properties, and that's really driven by the strong demand for warehouses, distribution centers, and familiar facilities — I'm sorry — and similar facilities that we've reported on quite a bit. According to the report, every industrial market reported lower cap rates than in the first half of 2019, reflecting what researchers termed, you know, the strong investor appetite for these types of facilities, and that's due mainly to increased e-commerce demand during the pandemic, which of course increases the need for warehouse and DC space. The survey also found that investors were willing to purchase industrial assets at a premium during the first half of the year. So, what we've been seeing is likely to continue given this report and the outlook.
David Maloney, Editorial Director, DC Velocity 13:55
Yeah, that premium price, I guess, is similar to what we're seeing in the residential real estate market as well, and hopefully those investments will remain strong over time to help make up for that additional cost many people are paying. Thanks, Victoria.
Victoria Kickham, Senior Editor, DC Velocity 14:08
You're welcome.
David Maloney, Editorial Director, DC Velocity 14:09
And Ben, you wrote this week about how ports are digitalising their operations. What more can you tell us?
Ben Ames, Senior News Editor, DC Velocity 14:17
Right. If you read DC Velocity, or frankly, almost any supply chain publication in the space, you've probably heard a lot about a trend called digitalization. People talk about the term in reference to warehouse operations, trucking routes, cargo tracking, everything, every step of the process. But this week, we heard about how the term is increasingly used also at maritime ports. So, in Sweden, the Port of Gothenburg said it had launched a software platform called Allberth, and it was developed in a collaboration between the port itself and a Finnish software company called Awake.ai. So, what it does is, it lets users quickly identify berths that are vacant and then act on that information so they can improve their resource utilization, reduce waiting times. According to the port, those things will help to increase transparency and visualization of its call system — calling, of course [is] when a cargo ship visits a port — and, of course, to boost its digitalization of the port as a freight hub. So, right now it's just being used by the port's, the port control division, which receives all the new calls, and also its safety and security coordinators at the energy terminal of the port, but in the future, it will also be open to external users, which means mooring personnel, a ship's agent, the different terminals. So, it's this is the beginning, but it's being set for a wider rollout.
David Maloney, Editorial Director, DC Velocity 15:40
Yeah, well, that sounds very helpful to their operations. But with pandemic closures and the start of the peak holiday season coming soon, did they say why they decided to launch it now?
Ben Ames, Senior News Editor, DC Velocity 15:51
Right. It seems they would have bigger fires to be fighting. But, they didn't say it explicitly, but I think you just pointed out a couple of the reasons. Thanks to a handful of supply chain disruptions that seem to have hit in a flurry, maritime ports around the world are really stalled and congested right now. That's from Covid, of course, but also hurricanes, as we mentioned before. There are continuing ripples from the Suez Canal blockage; the flood of imports from China to the U.S. for winter holiday peak; shortages of shipping containers; it goes on and on. So, in fact, Sweden's not the only place applying digitalization to their maritime ports. Two other major projects that we've covered in the magazine include Maersk Line and IBM created a blockchain-enabled digital shipping platform called Tradelens, and also, GE Transportation made something called Port Optimizer. That's a maritime freight information portal now being used at the Port of Los Angeles and Port of Long Beach. There's some differences in what those different products do. For example, Tradelens as a particular strength in track and trace; Port Optimizer is designed to give companies advanced warning of exactly when their shipment will arrive in port. I know Victoria covered that recently, because they're extending it to trucks visiting the port, as well, to pick up the cargo. But in general, they're all about digitalization at the waterfront, and all these tools have come online just in the last two or three years, so, according to their supporters, they could really start getting some traction and making ports much more efficient in speeding the flow of goods from the water onto land.
David Maloney, Editorial Director, DC Velocity 17:28
Well, it's exciting to watch it, and hopefully it will help to relieve some of the ongoing congestion we've been seeing lately. Thank you, Ben.
Ben Ames, Senior News Editor, DC Velocity 17:34
Yep, glad. Glad to be here.
David Maloney, Editorial Director, DC Velocity 17:35
We encourage listeners to go to DC Velocity.com for more on these and other supply chain stories. And check out the podcast Notes section for some direct links on the topics that we discussed today. Thanks, Ben and Victoria, for sharing highlights from the news this week.
Victoria Kickham, Senior Editor, DC Velocity 17:53
Yes, my pleasure, Dave.
David Maloney, Editorial Director, DC Velocity 17:55
And again, our thanks to Brad Wright of Chunker for being our guest today. We encourage your comments on this topic and our other stories. You can email us at podcast@dcvelocity com.
We also encourage you to subscribe to Logistics Matters at your favorite podcast platform. The new episodes of Logistics Matters are uploaded each Friday.
And a reminder that Logistics Matters is sponsored by Honeywell Intelligrated Be sure to check out all of the Honeywell Intelligrated On the Move podcasts posted at sps.honeywell.com/onthemovepodcasts. You can also find Honeywell Intelligrated on LinkedIn and Twitter using the hashtag @Intelligrated.
We will be back again next week with another edition of Logistics Matters, when we will look at the effects that rising freight costs are having on businesses, so be sure to join us. Until then, please stay safe and have a great holiday weekend.
