Borderlands is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week: Rural areas are the next e-commerce frontier; Texas FedEx distribution center acquired; Authentic Logistics opens Phoenix office; and CBP seizes counterfeit N95 masks in Houston.
Rural areas the next e-commerce frontier?
The pandemic accelerated e-commerce growth across most countries during 2020, when lockdown policies restricted much in-store retail shopping.
Cities around the world saw a huge increase in online shopping, with companies like Amazon and Walmart reporting gains in users and revenue by as much as 79%.
The next frontier for e-commerce is regional cities and rural areas, according to Mark Stanton, general manager at PowerFleet for supply chain.
“COVID accelerated what was going to happen in e-commerce; some people say it accelerated by five years or 10 years what was already going to happen,” Stanton told FreightWaves. “Mixed into that is the migration of a lot of people out of the largest cities, whether it’s New York or Los Angeles, Detroit, moving to smaller or more rural areas, whether that’s in Texas, Florida or elsewhere around the country.”
Woodcliff Lake, New Jersey-based PowerFleet provides telematics and fleet management software.
Stanton said the e-commerce shift to smaller, regional areas could disrupt supply chains that are not prepared.
“If the population is moving around in a slightly different way or even a significantly different way than it was expected to, then businesses need to somehow respond to that,” Stanton said. “If last-mile deliveries have to drive another 10 or 50 or 100 miles to deliver that product to dozens of consumers, there is an additional cost to that. The more spread out delivery areas are, the more it adds costs to supply chains.”
In the past several months, e-commerce giant Amazon has announced fulfillment and sorting centers in regional cities such as El Paso and Amarillo, Texas, as well as even smaller cities such as Orland, California, and Seaford, Delaware.
Amazon has also announced plans to open facilities in regional cities across Mexico, including Hermosillo, Apodaca and Mérida.
Other online retailers such as WalMart and MercadoLibre have announced major expansion plans across the U.S. and Mexico as well.
“Supply chains just can’t just suddenly grow a new warehouse or fulfillment center in a month; these things take potentially years to build,” Stanton said. “One of the things that organizations are doing is looking at their existing real estate portfolio to repurpose existing facilities to be used in different ways. That’s a very innovative and interesting response, not just to COVID-19, but also to the shifting in the supply chains.”
The move to repurpose malls and underperforming stores is not new. Walmart began converting Sam’s Club locations into e-commerce fulfillment centers in 2019. Amazon has been purchasing disused malls to turn them into fulfillment centers since as far back as 2016.
In recent months, Amazon has purchased malls in Baton Rouge, Louisiana, Knoxville, Tennessee and Worcester, Massachusetts, in order to transform them into distribution facilities, according to a recent report by NBC News.
American International Group’s investment arm bought an 88-property portfolio of industrial properties across the U.S. for $1 billion on Tuesday from Partners Group and Equus Capital Partners.
The transaction was fueled in part by the rise of e-commerce, according to Ron Lamontagne, Partners Group’s managing director and co-head of private real estate Americas.
“Partners Group built this portfolio of assets across attractive industrial markets, gaining exposure to key transformative trends, such as the rise of e-commerce and relatively outsized expansion of regional growth cities,” Lamontagne said in a release. “We have conviction in last-mile distribution facilities, smaller urban logistics warehouses and cold storage facilities, which are supported by resilient structural market trends.”
The properties are located across the Mid-Atlantic and Southeast regions of the U.S., including Georgia, Tennessee and Virginia.
Stanton said as e-commerce spreads to more rural areas, the challenge for telematics firms like PowerFleet will be to gather timely data for clients that can be used to create solutions.
“Whether the data is location, time, who’s doing it, are they doing it safely? Really bring that information back, whether it’s artificial intelligence or machine learning,” Stanton said.
“Working with customers, such as the big e-commerce sellers, plus FedEx, UPS and the USPS, you have to have huge networks of vehicles and people bringing that information back and being much more intelligent about how we analyze that information, how we utilize that data, so that it can be used to answer some of these challenges. I think that’s our biggest challenge over the next four years, five years,” Stanton said.
Texas FedEx distribution center acquired by Arcapita
Arcapita Group Holdings has acquired the Cedardale Distribution Centre in Dallas.
The property is currently leased to FedEx Ground, a subsidiary of FedEx Corp., and is part of FedEx’s distribution network. The price of the transaction was not disclosed.
The Cedardale Distribution Center development totals more than 1.07 million square feet and includes two cross-dock distribution/warehouse centers.
“With the accelerated growth of e-commerce and increasing supply chain sophistication, the demand for modern logistics and warehousing space will grow exponentially,” Martin Tan, Arcapita’s chief investment officer, said in a statement.
Arcapita is based in Manama, Bahrain. The global investment manager also has offices in Atlanta, London and Singapore.
Authentic Logistics opens Phoenix office
Authentic Logistics recently added an office in the Phoenix area, aiming to grow its customer base in the western United States.
The Evanston, Illinois-based logistics brokerage works in the metal, paper and plastic recycling industries. The company also facilitates shipments of garden and gravel items, lumber, personal protective equipment, and rock salt, among other materials.
Authentic Logistics’ services include container drayage, end dump, flatbed, hazmat, intermodal and cross-border shipping with Mexico and Canada.
CBP seizes $350K worth of counterfeit N95 masks in Houston
U.S. Customs and Border Protection (CBP) officers working at Port Houston recently intercepted a shipment of counterfeit N95 masks from China.
On April 7, officers found 171,460 fake masks with the National Institute for Occupational Safety and Health (NIOSH) logo in boxes. CBP determined the shipment was not licensed through NIOSH.
The masks, which were bound for White Plains, New York, were valued at $350,000 and were turned over to CBP’s penalties program.
Borderlands is sponsored by Forager. More information on Forager’s offerings can be found at: https://www.foragerscs.com/.
Click for more FreightWaves articles by Noi Mahoney.
More articles by Noi Mahoney
10 countries where truckers make the most money
Mexico regains status as No. 1 US trade partner
Misuse of B-1 visa drivers undercutting trucking industry
El Paso border crossing aims to recover from huge 2020 trade drop