John Johnson joined the DC Velocity team in March 2004. A veteran business journalist, John has over a dozen years of experience covering the supply chain field, including time as chief editor of Warehousing Management. In addition, he has covered the venture capital community and previously was a sports reporter covering professional and collegiate sports in the Boston area. John served as senior editor and chief editor of DC Velocity until April 2008.
More than two years after the dot-com crash, equipment worth millions sits abandoned in closed warehouses. That may be a nightmare for creditors, but it's proving to be a bonanza for bargain hunters. Among those beneficiaries of the dot-com boom—or more precisely, the dot-com bust—is Henry Schein Inc., a $3 billion distributor of dental, medical and veterinary products. When the company built its new distribution center in Jacksonville, Fla., it was able to scoop up used conveyor equipment from a defunct online grocer for pennies on the dollar.
The conveyors and components came from a facility in Atlanta formerly operated by the grocery dot-com Webvan. And although the equipment is technically second-hand, it's barely used. In 1999,Webvan signed a $1 billion deal with Bechtel to build at least 25 highly automated warehouses around the country, including the Atlanta facility. But shortly after the construction was finished, Webvan shuttered that warehouse, and by July 2001, the company had declared bankruptcy.
Webvan's loss was Henry Schein's gain: "Buying used equipment allowed us to put in better systems for less money," says Dave Kagey, the company's vice president of distribution. In fact, Kagey estimates he paid about 50 cents on the dollar for 15,000 feet of conveyor equipment and related components for the 210,000-square-foot DC—including integration and installation.
"Our budget was built on the assumption that we would use all new equipment," says Kagey. "And though the racking and our high-speed shoe sorter are new, we got very good used mechanized conveyor at a reasonable price. We consumed that budget, but ended up with excess conveyor, which is now being put to use in our other distribution centers." (The leftover conveyor equipment has already been installed in a facility in Reno, Nev., and in an expansion project in Jacksonville.)
Something old, something new
Though installing used equipment may have been cheaper than buying new, it most certainly wasn't easier. To accommodate its client's request to incorporate used material handling equipment into its order fulfillment system, systems integrator Peach State Integrated Technologies first had to locate pre-owned conveyors, sorters, controls, storage racks and shelving, and miscellaneous components. Then it had to evaluate each lot to determine its condition and valuation as well as its suitability for this particular application. And once the two companies had agreed on the Webvan equipment, Peach State had to mobilize a team of project managers, engineers and technicians at the Webvan facility to identify, tag, inventory and stage the equipment for packing and shipping to its new home in Jacksonville.
Time was very definitely of the essence with this job. "We were under the gun to remove all the used equipment from its warehouse location in roughly three days," reports Peach State director of operations Joe Phillips, who spearheaded the project. "This was a monumental task considering that Peach State was not involved in the tear-down of the system, which created an additional challenge in locating, organizing and categorizing all the components." In the end approximately 72 full trailer loads of equipment and materials were removed from the site and placed in temporary storage for its future shipment to the Jacksonville facility.
Included in those 72 trailer loads were critical parts (electronics, scanners, field electrical devices and 15 conveyor control panels) that required special handling. Field devices were placed into totes by type, along with mounting hardware and brackets. Bar-code scanners, cabling and mounting brackets were catalogued and placed in containers for shipment. Control panels were packed for transit, with special packing materials to protect delicate electronics and sensors. Specialty conveyor equipment like sorters and large-radius flat-belt curves were also specially crated for shipment. The remaining conveyor equipment had to be palletized, banded, stretch-wrapped and inventoried prior to shipment.
During the packing and shipping process, a project engineer carefully tagged all of the conveyor units-drive sections, inclines/declines and sorters, for example-with information indicating exactly where they fit into the new DC design. Concurrent with the move, the Peach State team began the detailed engineering work required for integrating the used equipment into the DC's layout. Once that task was out of the way, the project team then had to identify, stage and ship specific pieces of used equipment to the job site for implementation.
Moving day
Back at the job site, assembly was getting under way. And true to predictions, reconfiguring used equipment for a new application was proving to be very different from installing new machinery. "In a typical project, each bed section is shipped from the conveyor manufacturer pre-assembled with new components,"explains Pat Minnucci, a project manager with Peach State. "In this project, every piece of equipment needed to be fully inspected and retrofitted as required on site."
Retrofitting equipment intended for one operation for use in another meant some new components and accessories would be needed. Team members drew up lengthy lists of pieces to order-gear reducers, motors, support legs, odd-length intermediate sections, sorters and guardrails - all of which had to arrive on time to meet the project schedule. Then there were the controls, which also needed reworking to meet the new application's requirements. Peach State worked with Pyramid Controls Inc. of Cincinnati, Ohio, to integrate the used controls and programmable logic control (PLC) panels into the final system, rebuilding them where necessary.
Meanwhile, back in Jacksonville, the installation team coordinated the delivery of equipment from the remote storage facility. New drives, chains, sprockets and other miscellaneous parts were installed. Special support legs and ceiling support systems were fabricated onsite and integrated into the system. Not long afterwards, the facility was up and running.
All that was left was the cleanup. Team members sorted through the leftover pieces of equipment,putting some aside for use as spare parts. After that,Henry Schein and Peach State performed a complete audit and repack of the extra equipment on site at the Jacksonville DC and shipped the product back to a remote storage facility for future use or disposition.
Expandable belts
"It's just a beautiful installation," says Kagey. "If you looked at it, you'd never know the equipment was used. And if you consider the economics of it, we bought the entire batch of conveyor for what we would have paid for new conveyor just to equip Jacksonville. We've still got some left over for later use.
Already expanded once (the 210,000-square-foot operation started out as a 135,000-square- foot operation), the Jacksonville DC has been designed with scalability in mind, capable of handling Henry Schein's distribution needs well into the future. According to the company's projections, volume will increase from the current 10,000 cartons a day (at peak demand) to 12,000 cartons in 2005. The DC handles approximately 18,000 lines, a number that will increase to 22,000 in two years. And picking rates are expected to climb to 121 lines per hour in 2005, up 20 percent from current levels.
How are those conveyors working out? As the pharmaceutical company sees it, they've been put to a better use than just gathering dust. "The successful implementation of the conveyor system has helped us provide next-day service to over 99 percent of our customers in the Southeast," says Jay Fisher, the site's DC manager. "It's been a real victory for everyone involved, including our customers."
some (dis)assembly required
For Henry Schein Inc., the gamble paid off. Dismantling Webvan's Atlanta distribution center gave the company access to yards of conveyor equipment and components in excellent condition at bargain basement prices. But not every company prowling the dot-com graveyard is so lucky. There are plenty of horror stories out there about buyers of cheap used equipment who found that it wasn't such a bargain after all. Here's some advice from the team that made it work.
Check the fit. No matter how cheap it is, a conveyor that's not the right size is no bargain. The conveyor Henry Schein purchased was actually built to move grocery items, not medical products. However, the conveyor width was the same, making it usable.
That's used, not abused. Bob Frye, solution development manager at Peach State Integrated Technologies, recommends supervising the equipment takedown process if at all possible. "It would behoove [the buyer] to control actual demolition of product if it's still installed," says Frye. "With Webvan, we came in on the tail end of the de-installation. It was taken down by a group that didn't care what it was used for in the future, and there was a considerable amount of unnecessary damage during the takedown process. That results in more costs on the back end when you go to re-install the conveyor."
Look at total costs. Dave Kagey, vice president of distribution for Henry Schein, warns that it's easy to overpay for used equipment if you can't see the big picture. Integration and installation costs for second-hand equipment can mount up quickly, he says, potentially offsetting the savings. In this regard, his company was lucky. Henry Schein got such a good price on its conveyors, Kagey says, "that we knew that even if we had to throw the leftover stuff into a Dumpster, we'd still be way ahead of the game." But with a less favorable deal, he warns, a company could easily end up taking a big financial hit.
Get the history. Frye says it's critical to inspect the used equipment thoroughly to make sure it's in good working condition. That requires more than a visual examination. "Be sure that it's been applied properly and maintained properly so it will work when put into your facility," he says. The former Webvan equipment installed in Henry Schein's DC was so new that its condition was not an issue, but there's always the danger of being taken in by machinery that looks better than it run.
Here's our monthly roundup of some of the charitable works and donations by companies in the material handling and logistics space.
For the sixth consecutive year, dedicated contract carriage and freight management services provider Transervice Logistics Inc. collected books, CDs, DVDs, and magazines for Book Fairies, a nonprofit book donation organization in the New York Tri-State area. Transervice employees broke their own in-house record last year by donating 13 boxes of print and video assets to children in under-resourced communities on Long Island and the five boroughs of New York City.
Logistics real estate investment and development firm Dermody Properties has recognized eight community organizations in markets where it operates with its 2024 Annual Thanksgiving Capstone awards. The organizations, which included food banks and disaster relief agencies, received a combined $85,000 in awards ranging from $5,000 to $25,000.
Prime Inc. truck driver Dee Sova has donated $5,000 to Harmony House, an organization that provides shelter and support services to domestic violence survivors in Springfield, Missouri. The donation follows Sova's selection as the 2024 recipient of the Trucking Cares Foundation's John Lex Premier Achievement Award, which was accompanied by a $5,000 check to be given in her name to a charity of her choice.
Employees of dedicated contract carrier Lily Transportation donated dog food and supplies to a local animal shelter at a holiday event held at the company's Fort Worth, Texas, location. The event, which benefited City of Saginaw (Texas) Animal Services, was coordinated by "Lily Paws," a dedicated committee within Lily Transportation that focuses on improving the lives of shelter dogs nationwide.
Freight transportation conglomerate Averitt has continued its support of military service members by participating in the "10,000 for the Troops" card collection program organized by radio station New Country 96.3 KSCS in Dallas/Fort Worth. In 2024, Averitt associates collected and shipped more than 18,000 holiday cards to troops overseas. Contributions included cards from 17 different Averitt facilities, primarily in Texas, along with 4,000 cards from the company's corporate office in Cookeville, Tennessee.
Electric vehicle (EV) sales have seen slow and steady growth, as the vehicles continue to gain converts among consumers and delivery fleet operators alike. But a consistent frustration for drivers has been pulling up to a charging station only to find that the charger has been intentionally broken or disabled.
To address that threat, the EV charging solution provider ChargePoint has launched two products to combat charger vandalism.
The first is a cut-resistant charging cable that's designed to deter theft. The cable, which incorporates what the manufacturer calls "novel cut-resistant materials," is substantially more difficult for would-be vandals to cut but is still flexible enough for drivers to maneuver comfortably, the California firm said. ChargePoint intends to make its cut-resistant cables available for all of its commercial and fleet charging stations, and, starting in the middle of the year, will license the cable design to other charging station manufacturers as part of an industrywide effort to combat cable theft and vandalism.
The second product, ChargePoint Protect, is an alarm system that detects charging cable tampering in real time and literally sounds the alarm using the charger's existing speakers, screens, and lighting system. It also sends SMS or email messages to ChargePoint customers notifying them that the system's alarm has been triggered.
ChargePoint says it expects these two new solutions, when combined, will benefit charging station owners by reducing station repair costs associated with vandalism and EV drivers by ensuring they can trust charging stations to work when and where they need them.
New Jersey is home to the most congested freight bottleneck in the country for the seventh straight year, according to research from the American Transportation Research Institute (ATRI), released today.
ATRI’s annual list of the Top 100 Truck Bottlenecks aims to highlight the nation’s most congested highways and help local, state, and federal governments target funding to areas most in need of relief. The data show ways to reduce chokepoints, lower emissions, and drive economic growth, according to the researchers.
The 2025 Top Truck Bottleneck List measures the level of truck-involved congestion at more than 325 locations on the national highway system. The analysis is based on an extensive database of freight truck GPS data and uses several customized software applications and analysis methods, along with terabytes of data from trucking operations, to produce a congestion impact ranking for each location. The bottleneck locations detailed in the latest ATRI list represent the top 100 congested locations, although ATRI continuously monitors more than 325 freight-critical locations, the group said.
For the seventh straight year, the intersection of I-95 and State Route 4 near the George Washington Bridge in Fort Lee, New Jersey, is the top freight bottleneck in the country. The remaining top 10 bottlenecks include: Chicago, I-294 at I-290/I-88; Houston, I-45 at I-69/US 59; Atlanta, I-285 at I-85 (North); Nashville: I-24/I-40 at I-440 (East); Atlanta: I-75 at I-285 (North); Los Angeles, SR 60 at SR 57; Cincinnati, I-71 at I-75; Houston, I-10 at I-45; and Atlanta, I-20 at I-285 (West).
ATRI’s analysis, which utilized data from 2024, found that traffic conditions continue to deteriorate from recent years, partly due to work zones resulting from increased infrastructure investment. Average rush hour truck speeds were 34.2 miles per hour (MPH), down 3% from the previous year. Among the top 10 locations, average rush hour truck speeds were 29.7 MPH.
In addition to squandering time and money, these delays also waste fuel—with trucks burning an estimated 6.4 billion gallons of diesel fuel and producing more than 65 million metric tons of additional carbon emissions while stuck in traffic jams, according to ATRI.
On a positive note, ATRI said its analysis helps quantify the value of infrastructure investment, pointing to improvements at Chicago’s Jane Byrne Interchange as an example. Once the number one truck bottleneck in the country for three years in a row, the recently constructed interchange saw rush hour truck speeds improve by nearly 25% after construction was completed, according to the report.
“Delays inflicted on truckers by congestion are the equivalent of 436,000 drivers sitting idle for an entire year,” ATRI President and COO Rebecca Brewster said in a statement announcing the findings. “These metrics are getting worse, but the good news is that states do not need to accept the status quo. Illinois was once home to the top bottleneck in the country, but following a sustained effort to expand capacity, the Jane Byrne Interchange in Chicago no longer ranks in the top 10. This data gives policymakers a road map to reduce chokepoints, lower emissions, and drive economic growth.”
"Shrink" is the retail industry term for the loss of inventory before it can be sold, whether through theft, damage, fraud, or simple book-keeping errors. In the ongoing effort to reduce those losses, Switzerland-based retail tech company Sensormatic Solutions has expanded the scope of its Shrink Analyzer application to shine a light into previously unmonitored parts of brick-and-mortar stores where goods tend to go missing.
The newly enhanced, cloud-based application can now integrate radio-frequency identification (RFID) and electronic product code (EPC) data from overlooked parts of the building, like employee entrances, receiving doors, "buy online, pick up in store" (BOPIS) doors, or other high-risk areas selected by a store. It then integrates that data into Sensormatic's analytics engine to provide insights into when, where, and how shrink occurs to help users strengthen their loss-prevention strategies, the company says.
Those expanded capabilities allow the platform to provide enhanced "shrink insight" at locations beyond the store's main exit, Sensormatic says. For example, strategically placed RFID scanners at employee exits can reduce internal theft while providing item-level evidence for theft investigation efforts. Likewise, monitoring online-order pickup doors can help retailers both improve in-store e-commerce fulfillment accuracy and identify employee theft events, according to Sensormatic.
A few days before Christmas as I was busy preparing for the holiday, I received a text message from my bank asking if I had attempted to purchase a $244 Amtrak ticket in Orange County, California. Considering that I had the card in my possession and that I lived thousands of miles away from the attempted purchase location, I promptly replied "No." Almost immediately, a second message informed me that my card was locked and to contact my bank.
I'd like to say this was an isolated incident, but in 2024, I had to replace the same card four times. Luckily, it just took a quick trip to my local bank to replace the compromised card, but it was still an unwanted hassle.
Fraud is a never-ending issue facing not just consumers but businesses as well—no one is immune, it seems. In its latest industry report, "Occupational Fraud 2024: A Report to the Nations," the Association of Certified Fraud Examiners (ACFE) estimated that businesses lose 5% of their revenues to fraud each year. This report focused specifically on three basic types of occupational fraud: asset misappropriation, corruption, and financial misstatement. But what about other types of fraud?
The media often report on big organized theft rings stealing goods from trailers, trains, or containerships, or on bands of thieves breaking into warehouses or retail stores—but there are so many other ways in which fraudsters wreak havoc.
For instance, another area where fraud is rampant is consumer returns in the retail industry. Software company Appriss Retail, in collaboration with business management consultancy Deloitte, recently published its "2024 Consumer Returns in the Retail Industry" report. It states that "total returns for the retail industry amounted to $685 billion in merchandise in 2024." That might seem like a drop in the bucket compared to the $5 trillion in sales U.S. retailers racked up last year, but as the report's authors note in the executive summary, "the amount of fraud and abuse remains a significant issue that should be addressed. Fraudsters and abusers are often becoming adept at circumventing retailers' controls across all channels."
So what can businesses do? According to the ACFE study, internal controls (i.e., surprise audits, management reviews, hotlines or other reporting mechanisms, fraud training, and formal fraud risk assessments) are the best defense against occupational fraud.
When it comes to consumer returns fraud, Appriss Retail's report concludes that while retailers continue to adapt and refine their fraud prevention strategies, it's a delicate balancing act. The trick is for "retailers to implement solutions that have [a] minimal impact on the consumer experience," the report noted. "Brand loyalty can be fragile and competition continues to grow, so holding onto consumers is often a key to long-term success."
Then there's security and asset protection. Last October, I attended a session at the Council of Supply Chain Management Professionals' EDGE 2024 conference that focused on security and safety. In that session, Lee Ambrose, vice president of business development for Remote Security Solutions (RSS), discussed advanced strategies and technologies for violence prevention. But he also touched on asset/transit protection and specific solutions that can help companies discourage theft.
As an example, Ambrose cited his company's transit surveillance unit (TSU)—a portable monitoring device that can be installed on trailers to protect in-transit freight. According to the company's website, the TSU uses AI (artificial intelligence) detection, security cameras, and two-way communication to deter criminal activity, providing real-time detection and notification when unauthorized persons attempt to enter the trailer. It claims the device has a deterrence rate of 98%.
In the end, sometimes there is only so much a company can do to mitigate fraud/theft. But we are fortunate to have resources we can turn to if we need help. It's an uphill battle, but one that we will keep on fighting.