Logistics Specialists Developing Programs for Smaller Retailers

Furniture retailers big enough — and solvent enough — to order entire containers full of furniture from Southeast Asia, truck it from the port to their warehouses and from there to their stores have weathered the change from domestic production to importation well.

For many others, especially

smaller operators, it's a different story. Many have had to forego direct importing, paying a higher price to work with U.S. importers that bring the product stateside to their own warehouses and then distribute it locally. Others have worked hard to forge partnerships with non-competing stores in neighboring states. These retailers combine their buying power to order a container and then split it up once it gets to the United States.

But as the industry has evolved, global logistics companies have taken the lead to come up with new ways to help smaller retailers get imported product onto ships and then ultimately onto sales floors.

Providing a flexible approach

Ed Feitzinger, senior vice president of Golden Gate Logistics, parent company of Global Link Logistics in Tucker, Ga., said the import equation typically begins with the idea that the most economic way to get a product to the store is a direct container from the factory. But that approach often leaves the smaller retailer at a disadvantage because of the high cost of transportation and warehousing.

What's needed is a way for smaller retailers to order, ship and store imported goods that's much closer to the direct container cost. To achieve this, Global Link has come up with two programs — FLEX and Pure FLEX.

FLEX, which stands for Furniture Less Than Container Express, offers small and mid-sized retailers the ability to obtain mixed containers of product from multiple factories delivered directly to their door.

The products come out of factories in South China and Vietnam as multiple shipments. They are then consolidated into a single direct container at a port in Asia and shipped to directly to the retail destination in the United States.

In the Pure FLEX program, Global Link takes an import shipment that is less than a full container and combines it with other importers' products from the same region to create a complete load. In this case, the product being ordered by a furniture dealer typically comes from one factory.

Once in American ports, the loads are picked up by less-than-truckload (LTL) carriers that specialize in furniture. Then, instead of being taken to the importer's warehouse in the United States, the furniture is taken to warehouses belonging to the LTL carriers, where it is unloaded and repacked into trucks for delivery to retailers.

"The manufacturers have tried this but it hasn't worked because they don't have enough volume to build their own containers," said Feitzinger. "A third party like us has the advantage because we can consolidate all our customers together and get a container into a city like Dallas two times a week, for example."

The numbers are attractive. For a large Seattle-area retailer, the cost for bringing in a direct container from South China would be $1 per cubic foot, according to Feitzinger. For an importer with a Los Angeles warehouse, the price to the Seattle retailer would be $3.75 a cubic foot, once all expenses are added in.

By comparison, goods shipped through the FLEX Mixed Direct program would be $1.45 a cubic foot, while Pure FLEX would be $2.25 a cubic foot.

Across the country, a retailer in Newark, N.J., would pay $1.80 per cubic foot for a direct container from South China. From an importer's North Carolina warehouse, the cost would be $4.25. FLEX Mixed Direct would be $2.25 a cubic foot, while Pure FLEX would be $2.95.

Ray Kuntz, CEO of Watkins & Shepard Trucking of Helena, Mt., which partners with Global Link Logistics, said the system works well, because it cuts both cost and time.

"You can either get a full container or you can make a full container," said Kuntz. "Instead of five trucks coming to your store on Monday, we can show up at your store with all that freight on one truck."

Freight-forwarding to an LTL carrier also carries advantages for both buyer and seller.

"We are giving the mom-and-pop stores a way to compete, and we are giving the manufacturers a way to sell to the mom-and-pop stores," said Kuntz.

Enabling retailers to do what they do best

Clayton Brinkley, president of third-party logistics for Chino, Calif.-based Furnigistix, said that his company also has aligned itself with a firm that imports containers. Furnigistix not only distributes product to retailers on the West Coast, it also can deliver product directly to customers' homes in California, or can hand it off to another firm that can deliver to homes virtually anywhere in the United States.

Brinkley said his goal within the next year is to build Furnigistix's presence in Asia so that less-than-container loads can be built in China, then distributed from the company's base in California.

"We are trying to provide that supply chain solution for the merchant and for the importer, too," said Brinkley. "If the importer is using a warehouse in China and can't do less-than-container consolidation, we can hook them up with a facility that can and get the freight in the process. Everybody wins."

Brinkley said it makes sense for retailers to concentrate their efforts on selling — and let somebody with the right expertise deal with the supply chain.

"My opinion is that people should play to their strengths," he said. "Let the retailers sell and let people like us provide the logistics. Retailers who are not buying container direct are spending their savings running a warehouse. There is a time value with money — an importer can invoice for the product 15 to 30 days sooner and they don't have to pay the float on all that money."

A powerful combination

For the Furniture Transport Group, its newly expanded size and reach enable it carry through on requests for service from smaller retailers and importers, said David Brenner, president and CEO of CF Holding, the group's parent company.

Furniture Transport Group was formed with the recent consolidation of MGM Transport Corp., Foothills Trucking Co. and Caldwell Freight Lines. Backed by Harvard Private Equity, FTG leverages each of its companies' strengths with regard to information technology, logistics support and other business functions.

The firm has spread from its East Coast base across much of the country and is looking to expand further.

"The smaller retailer — if he wants to do business with certain importers or manufacturers and wants to split containers or wants to tell a manufacturer's rep that he can only take a 'third or a quarter but can you marry me up with three or four other guys' — we can help that person out," said Brenner. "We can also help the importer who is trying to get started by holding stock in our warehouse."

Competing against the majors

At Hildrebran, N.C.-based Lance Transport, CEO Greg Skoog said that his company is actively pursuing business with smaller retailers. The company recently added a terminal in Mississippi to enhance its reach in the Southeast and Midwest. And it is working more closely with manufacturers' sales representatives to help identify opportunities where mom-and-pop stores can team up with retailers in other states to fill containers and qualify for better pricing.

The product, once received by Lance, is segregated and repacked into trucks bound for different cities, with contents from the same container going to smaller furniture stores in Nashville and New Orleans, for example.

"We love it," said Skoog. "We don't have any pickup cost and we can give them better freight rates. They are getting better pricing on the furniture and they can make a better go of it against big boxes."

Dave Riley, vice president of operations with Salem Logistics in Winston-Salem, N.C., said his company's strategy has been to offer trucking and warehousing programs designed for smaller customers. Salem also has formed an alliance with a shipper's association that negotiates with steamship lines for discounts and volume to get competitive pricing.

"The larger players in the market — the Wal-Marts and the Best Buys — are importing thousands of containers a month and driving up a lot of the shipping cost," said Riley. "When they are buying up the ships, the smaller shippers have problems getting space and many times, space is at a premium price."

Riley said the imported product his company handles is landed at a warehouse on either coast and distributed out of his facility on a "just-in-time" basis.

"In our warehouse in Pilot Mountain, N.C., we have customers (importers and retailers) who have their product in our warehouse and as they sell it, we can distribute it, piece by piece or truckload by truckload. Or we can take it their home, to a store or to another distribution center. We are very flexible in our shipping arrangements."

Acting as a partner

David Bennett, vice president of sales for Globe Express Services in Charlotte, N.C., said that his firm has set itself up not only to transport the furniture and store it, but also to act as a full partner with the retailer in tracking the inventory as it is sold.

"The supplier can use my warehouse to fill out a full container of multiple items," said Bennett. "Instead of six bedroom suites, you can buy six different items to put in the container to lessen your burden in terms of holding your inventory."

Bennett said that in addition to inventory management, Globe has developed a specialty in multi-vendor consolidation, to ensure that product is moved in the most cost-efficient means way possible.

"Cost savings is always the driving component, because that is the primary function of the freight-holder — to eliminate waste," said Bennett.

"My function is to maximize the load in the container so the load cost is held down. The last thing I want to see for a customer is a container that is partially loaded."