 Speech: Raymond Wisniewski to NY/NJ Port Industry Day 2007
Raymond Wisniewski
President
National Retail Systems, Inc.
Speech Title: The World's Largest Consumer Market Deserves The World's Best Port
Thank you Tom for that introduction. And I want to thank Dorothy and the New York-New Jersey Port Promotion Association for inviting me to speak today. On behalf of everyone at National Retail Systems, we're excited to share our viewpoints with such a large group of transportation professionals.
I guess it's a sign of the times when a Domestic Freight Consolidator is asked to address a Port Industry Day. It wasn't that long ago our business model had very little to do with ports.
But things have changed rapidly. The global economy has taken shape faster than any of us would have thought. For example, in 1990 our company - one of the largest logistics providers to retailers - handled about 400 containers on both coasts. This year, we will handle over 63,000 containers and we formed a joint venture with a Chinese logistics company.
I'd say that qualifies as a major shift.
We know the pressure facing retailers. We all want more choice, better quality and lower price. That will continue to drive offshore sourcing, causing all of us here to evolve so we serve retailers needs into the future. With consumers pressing the retailers and the retailers pressing their vendors, there's no room for inefficiency in the system.
The industry will face serious challenges maintaining the level of service retailers expect as inbound volumes grow. Higher fuel costs, driver shortages, the environment, capacity shortages - it's a difficult reality operating in this market.
I want to focus on what I think is the biggest challenge - especially for all of us operating in the New York area.
That challenge is developing distribution infrastructure where it matters most - near the port.
I can tell you first hand how hard it is to find suitable logistics infrastructure near gateway ports. It's not that much fun.
But before I get on my soapbox, I want to thank Mr. Lettiere for giving us a comprehensive report on transportation infrastructure around this major gateway - the Port of New York and New Jersey. It's a great honor for me to actually be on the same agenda with you. I agree whole-heartedly that we need an approach to transportation development that takes into account the needs of our industry in a holistic way.
We need the land near ports for port business. It's a simple fact. We need better inland port infrastructure so the entire Northeast region can remain the best place to live and do business. The benefit to retailers and logistics providers are clear. And so are the benefits to everyone living here.
We can grow the economy and improve the environment. That's the win-win we should all be striving for. The world's greatest consumer market deserves the world's best port. Inland infrastructure will be the key and New York and New Jersey should be the leader in developing a new model.
For those of you that don't know much about NRS, we're one of the largest providers of logistics services to retailers. We will handle more than 2 billion pounds of retail consolidation this year. We provide an integrated solution for our customers covering everything from vendor pick-up to store delivery.
That includes advance and LTL pick-up, truckload consolidation, container transload, pool distribution, dedicated fleets and store delivery. You probably see the Keystone trucks driving the Turnpike. That's our truckload division.
We also have National Retail Transportation as our LTL and store delivery unit, plus World Logistics offering truck brokerage and a new Pier Division we started a few years ago that has steadily grown. And by the looks of it will continue to expand.
The whole system is supported by technology we developed in-house over the past 15 years providing "glass house" visibility for our customers from point of origin to the shelf.
And that's the key - giving retailers visibility,
control and flexibility.
Retailers need control to manage supply chains with as little inventory as possible. They need flexibility to get hot merchandise to market and open new stores quickly. They need visibility to react to a changing market on a season-to-season basis. It's more competitive and the cycles are faster. What's hot today you can't give away tomorrow.
At the same time, logistics is more complex as sourcing has gone overseas. Logistics is definitely becoming an important competitive discriminator for retailers. One example is Moshi pillows. These little bean bags hit the market two years ago in a flash. Everyone had to have one. One of our customers implemented a DC bypass program on the West Coast and was able to seize the market when it was hot. Now its Tickle Me dolls and Webkinz. What will it be tomorrow? Who knows.
But you have to hit it when it's hot.
Where will retailers look to drive competitive advantage?.
The battle will take place inland near major ports both here and in China.
Retailers will look to build advantage by establishing factory pick-up, consolidation and value-added distribution capabilities in China matched with transload, distribution speed and store delivery here in the U.S.
Access to capacity will be crucial. Wall Street still claims the non-asset based logistics model reigns. At NRS, we disagree whole-heartedly. We believe that having control of assets - trucks, trailers, cross docks, automated systems and land - will be the key as capacity gets tighter.
That's why we set out on our Gateway Ports Strategy in 2006 to make sure we have facilities near ports to speed freight to stores. In addition to our large presence in the New York area, plus over 1 million square feet of distribution space in LA, we are completing a cross-dock 3 miles from the Port of Savannah this month, and a facility in the Pacific Northwest in the near future.
In China, technology and industry expertise will drive success. Value-added logistics services now performed in the U.S. will be provided in China. This includes packaging, ticketing and labeling inside advanced DC's near major Chinese ports. We saw this trend two years ago and began working to extend our retail distribution expertise overseas. Last month, we announced a partnership with Sinotrans, the largest domestic logistics company in China, creating an exclusive 50-50 joint venture called SinoNRS.
We are developing automated consolidation and distribution facilities in Southern China and our retail customers can't wait to get started.
Retailers are fully invested in the offshore model. They will continue to take advantage of low-cost labor across all of Asia. Container trade will grow.
We have seen the volume forecasts calling for a doubling of import traffic over the next decade, and the message is clear. There needs to be a place for this trade to go. Our customers are looking south on the East Coast and north on the West Coast. Infrastructure is driving these decisions and will continue to push supply chains where retailers can maintain control, speed and flexibility. The major gateways can fight back with inland development plans of their own.
Here in the world's greatest consumer market, we see the effects of growing trade. If the stacks of empty containers outside Newark aren't enough, look to the traffic on the roads. More than 21 million people live in the Greater New York area, with the highest average consumer spending rates in the world. The freight is destined for here. It wants to come through this port - if it can.
The Port Authority of New York and New Jersey knows this and I applaud their support for expanding port terminals and rail access. The port's $2 billion plan for terminal redevelopment, channel deepening and rail improvements should keep maritime infrastructure in good shape for growing business.
But inland infrastructure will make the difference. If you look down the coast to Virginia or Savannah, even farther down to Jacksonville, these ports have available land and resources to offer world-class distribution operations and intermodal connections.
The Port of New York can maintain its edge by creating a new intermodal port area model.
Senator Bob Menendez knows this. His Liberty Corridor concept offers an opportunity to build one of the most innovative logistics systems in the world, and an economic engine for the entire Northeast region. If planned correctly, Liberty Corridor projects can create a logistics model that is more efficient and environmentally sensitive. Economic growth while improving the environment. There's the win-win.
To achieve that goal, we need to approach infrastructure development in a way that takes into account the entire region. We need to recognize how supply chains work and build the right infrastructure to support transportation that is efficient, with less impact on the environment.
The first step is to keep logistics facilities near the port. In New Jersey, brown field projects and the Port-way Program were conceived to make near-port investment attractive.
But these programs have lost momentum. We need better incentives for companies to invest.
We need a closer partnership between public and private sectors.
We can do a better job together to set the right priorities.
We can create the right incentives to drive investment and growth. It will take courage and change from both the industry and the government, but it can be done.
The benefits are clear. Having logistics facilities near the port is more efficient, better for the environment and better for truck drivers. Why better for truck drivers?.
It allows them to make a living working at the piers. We can solve a major problem for pier drivers by keeping facilities near the port. That means more turns and more revenue for owner operators that literally drive their office to work every day.
Here is a quick and simple example. Compare a DC near Exit 8A on the Turnpike versus a facility within 10 miles of the port. Exit 8A is about 30 miles from Port Elizabeth. A truck going there travels 3 times farther to drop loads. It takes much more than 3 times as long to get there because of traffic. The truck uses more than 3 times the fuel and creates more than 3 times the impact on the environment. I think you can see where I'm going with this !
To prove our point, we're putting our money where our mouth is. Today we announced the acquisition of 100 acres in Jersey City across from our existing campus on Secaucus Rd.
We're going to develop the largest freight distribution complex in the New York area, just 8 miles from Port Elizabeth.
On the new site, we will build two 100,000 square-foot cross dock facilities for intermodal transload. There will be enough space to park more than 3,000 containers on the yard.
The site is adjacent to a main rail line traveling next to Tonnele Avenue and I expect to have a working intermodal rail yard there in the near future.
This is the kind of development I'm talking about. Building an Intermodal Hub close to the port, that is efficient and environmentally sensitive using both rail and truck infrastructure.
Marketing guys love naming stuff so we're calling our new campus NRS City. Whatever it's called, we're excited to launch this project.
As I said before, the world's largest, most affluent consumer market is right here in the U.S. Northeast. This is where retailers need efficient service and where we will deliver for our customers long into the future.
NRS City will be one of the most advanced distribution operations in the world. We need the port to be the best too.
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I love the New York area. Well, to be more accurate, I love Garfield, New Jersey. I grew up there. I have worked here most of my life. There's no better place in the world to live OR work.
At NRS, we are committed to keeping it that way. I look forward to working with everyone here, to make sure the Port of New York and New Jersey stays on top!
Thanks again for this opportunity to address Port Industry Day.
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