UTi readies launch of Wal-Mart’s Houston import hub
UTi Worldwide Inc., the Rancho Dominguez third-party logistics provider, has been receiving goods and stocking inventory since April at Wal-Mart’s enormous new distribution center near Houston and will begin shipping product to regional distribution centers in June, said Roger MacFarlane, UTi’s chief executive officer.
UTi announced in February that it’s Standard Corp. subsidiary won the contract to manage Wal-Mart’s new import storage facility, which the world’s largest retailer is building to supplement its East and West coasts warehouses and make its supply chain more predictable.
MacFarlane, speaking last week at a Bear Stearns investor conference in New York, said UTi is receiving new ocean shipments as well as repositioning merchandise from the East and West coast facilities in preparation for full service.
Wal-Mart has accelerated the development of its import complex to 4 million square feet from its planned original size of 2 million square feet. To manage all the logistics at the enormous facility UTi has hired 1,200 full time workers and will flex to 1,500 workers with temporary workers during the busy August-through-September period, MacFarlane said. Wal-Mart is helping UTi absorb the ramp up costs, he said.
UTi is one of the top freight forwarders in the world and is making a hard charge into the contract logistics business through a series of acquisitions in recent years. The company has 110 logistics centers around the world, half of them in the United States, where it now manages 20 million square feet of warehouse space.
MacFarlane said the company still has a lot of gaps in its logistics capability in Asia and Europe and plans to expand this side of the business through more acquisitions. Logistics currently accounts for 33 percent of total revenues and the company has set an ambitious goal of achieving a 50-50 balance between its freight forwarding and contract logistics businesses within a couple of years.
“That’s why the Wal-Mart contract is particularly important to us because it lends credibility to our capability in contract logistics,” MacFarlane said.
UTi plans to increasingly market logistics services to its freight forwarding customers and vice versa in an effort to handle their end-to-end supply chain needs, he added. The Wal-Mart job is a straight-forward cross-dock task in which UTi will organize distribution through Houston, while Wal-Mart continues to handle its own negotiations with ocean carriers and manage trucking operations.
“We are also targeting more specialized logistics solutions where we can add more value and command a higher margin,” UTi’s chief executive said.
