This week in Atlanta, MHI is hosting MODEX 2014, billed as one of the largest expositions for supply-chain manufacturing and distribution industry. Leadership keynotes at the conference include notable figures in the industry: Gil West, EVP and COO of Delta Air Lines, former Walmart CEO Lee Scott and Scott Sopher, principal with Deloitte Consulting. In case you’re not familiar with MHI, you may recognize them by their former name: The Material Handling Institute.
Their membership includes over 800 companies representing material handling and logistics including manufacturers, distributors, software systems consultants and system integrators, logistics providers and publishers. MHI is also the sponsoring organization for the ProMat exposition, which alternates with MODEX. ProMat will return on March 23-26, 2015 at McCormick Place in Chicago.
Formaspace is Your Partner for Material Handling in Distribution Centers
With a focus on material handling at MODEX this week in Atlanta, this is a great time to mention Formaspace’s capabilities. We’ve been seeing increased demand for our technical furniture used in material handling, including industrial workbenches, sorting stations, packing tables and variable height workbenches with hydraulics. If you’re not familiar with variable height workbenches with hydraulics, they can be set to the correct industrial packing table height for individual workers in order to achieve ideal ergonomic worktable heights. This is especially effective for multi-shift or quick change environments.
Why Do Customers Choose Formaspace for Material Handling?
Our customers trust us to build the highest quality, longest-lasting furniture on the market, backed by the best guarantee in the industry. We guarantee our furniture for 12 years, for continuous use by three shifts. If something goes wrong with the frames, surfaces, bin rails, adjustable leg kits, levelers or Formaspace-manufactured shelving and drawers, we’ll fix it or replace it. How can we offer the best guarantee in the furniture industry?
1. We start with the right team of people to build superior quality in from the start.
2. All our furniture is manufactured in the USA at our facility in Austin, Texas, so we can maintain quality control throughout the manufacturing process.
3. We work with the right partners: we source raw material from local suppliers that we know and trust.
4. Every order that you place with Formaspace is assembled on our factory floor to check the fit and finish before it’s disassembled and shipped to you.
5. We follow up and make sure that you are completely satisfied with your order and that it is performing as expected, and we actively listen to our customers and use their suggestions to improve our products.
New Orders for Material Handling Equipment Grew by 7% in 2013
According to MHI’s Material Handling Equipment Manufacturing (MHEM) forecast released on January 13, we saw significant growth in new orders for material handling equipment throughout 2013: new orders grew by 7%. According to the MHEM forecast, this growth will continue with a 8.5% jump in new orders for 2014 and this rate will accelerate to 12% in 2015. Among the reasons for this robust growth in demand for material handling equipment is an improved US economy, a rosier outlook for international economies as well as a trend by manufacturers to introduce more automation in their warehousing and distribution points in an effort to reduce costs and improve efficiency.
Another important economic bellwether in this industry sector is the Purchasing Managers Index (PMI), which is issued by the Institute for Supply Management (ISM). In the most recent PMI report, Bradley J Holcomb, chair of the Institute for Supply Management Manufacturing Business Survey Committee, stated that “the February PMI® registered 53.2 percent, an increase of 1.9 percentage points from January’s reading of 51.3 percent indicating expansion in manufacturing for the ninth consecutive month.”
Online Retailers are Driving Growth of Material Handling Equipment Sales
One segment of the economy driving material handling equipment sales is online retailers. In a recent report, Forrester Research predicted that e-commerce will grow at a compound annual growth rate of 9% in the five years between 2012 and 2017. According to Forrester, online sales totaled $231 billion in 2012 and they expect that when the final numbers for 2013 come in the growth will have jumped 13% to $262 billion. Leading the growth are three categories which capture over one-third of total sales. They are online apparel and accessories sales, followed by online consumer electronics sales and then by online computer hardware sales. Incredibly online apparel and accessories sales alone represent a $40+ billion dollar sector.
How Big is Online Retail Compared to the Overall Retail Market?
According to CNBC, the U.S. government reported overall retail sales for 2013 totaled $5.087 trillion (up 4.2 percent over 2012). Non-store retailers (representing Internet sales) came in at $450 billion (up 10.3% over 2014). That means that Internet sales in 2013 only represented 8.8% of overall retail sales, which means there is plenty of room for growth.
Jones Lang LaSalle (JLL) Declares 2014 “The Year of the Distribution Center”
With all this growth in online sales, it’s imperative for the retail industry to develop and expand a robust network of distribution fulfillment centers in order to speed up customer deliveries. Jones Lang LaSalle (JLL), the giant real estate professional services and investment management company headquartered in Chicago, declares that 2014 will be the “Year of the Distribution Center.” They note that as industrial markets nationwide have recovered over the past four years, there have been 15 consecutive quarters of positive “absorption” in the commercial real estate market, e.g. companies acquiring commercial space through lease, construction or purchase.
For 2014, JLL forecasts that it’s conceivable that over 180,000,000 ft.² of additional commercial space will be absorbed by the market. JLL finds that distribution center demand is red-hot in what they called the “Big Logistics Corridors” of Central Pennsylvania, Dallas and Southern California’s Inland Empire. These areas have developments sites to accommodate growth and they are connected with existing infrastructure for transshipment and have large adjacent population centers.
What Does JLL See as the Primary Driver for Distribution Center Growth?
The answer is pretty clear. According to JLL, “staggeringly, 40 percent of ‘big-box’ industrial requirements are correlated to e-commerce; a sector growing globally by 20 percent each year.” DLL breaks down the requirements into six primary types of warehouse space, including mega distribution centers at the high-end down to smaller delivery centers in urban areas. This latter category is being driven by demand for same-day package delivery, which JLL calls “urban logistics.” In our next article in this series, we will look at how individual e-commerce retailers are taking up the challenge of establishing efficient distribution centers — and how they are responding to the 800-pound-gorilla-in-the-room, Amazon.com.
Remember that if you are in the supply-chain retail distribution market, Formaspace is your partner for building distribution center infrastructure.
Our line of industrial packing tables, sorting tables, and industrial workbenches are second to none. Contact one of our friendly technical furniture consultants today, and we can help you expand your business. Whether you are building out new mega distribution centers or remodeling existing facilities, we can help you make them all more efficient with our technical furniture solutions.