Who knew warehousing was such a promising deal?
Ed and Steve Harmon did.
I met with the Harmons, who run Spartan Logistics of Columbus, Ohio, when they came to Fort Smith in late February. They agreed to talk about their recent investments in Fort Smith warehouses.
Spartan Logistics, said Steve, the son, is a trucking-warehouse company, but the Harmons have vertically integrated their entire enterprise. Steve Harmon, the company’s managing director, said Spartan Logistics operates 3.6 million SF of warehouse space in 16 locations across four states.
In Fort Smith, Spartan Logistics has approximately 1 million SF of space after buying an old Whirlpool distribution center and the Riverside Furniture building, both on Jenny Lind Road, in the past 18 months. The Harmons said their total investment, both from purchasing and renovating the properties, was about $20 million.
Because the Harmons also have subsidiaries for development, construction and property management, Spartan Logistics controls all aspects of the warehouse operations. Ed Harmon, Steve’s father and the chairman of the company, said they save 15-20 percent on each project, which is significant when you’re spending $20 million.
Steve Harmon said Spartan Logistics decided about 25 years ago to own whatever the company operated. Many trucking companies are focusing on asset-light businesses, but Steve Harmon said at some point someone has to own something.
“Everyone is trying to be the next Uber of trucking and warehousing,” Steve Harmon said. “But at some point somebody actually has to own a truck, own the warehouse, own the forklift and employ the people. Where everyone else is trying to be this asset-light network broker, we’re saying we will be the last guy who actually works. We will own stuff and do stuff.”
Ed Harmon said the company came to Fort Smith because a customer, Owens Corning, wanted Spartan to operate its distribution center in the area. The Harmons found a promising market and decided to buy two major warehouse spaces, controlling the process from start to finish.
“A company can come to us that needs a new distribution center, warehouse, whatever you want to call it these days,” Ed Harmon said. “We can build it, do all the design, buy the land, and even end up doing the warehousing services inside. Their investment is zero as long as they sign a long-term lease.”
Warehousing as a subject brought to mind an interview I had with Tom Glaser of USA Truck Inc. of Van Buren a few months ago. Glaser was the CEO of the company of the time, although the company would announce the hiring of Randy Rogers as his replacement a few days later.
During the course of a long phone interview, Glaser spoke of USA Truck’s interest in the warehouse and distribution market.
USA Truck is one of many trucking companies that were expanding their logistics and brokerage services — asset-light businesses in the industry vernacular. Part of that is the idea of multiple companies combining to use one space for their warehousing and distribution needs.
A driver could pick up merchandise from the warehoused companies, fill up one truck and then make multiple deliveries from that distribution point. It certainly would be more efficient from a logistical standpoint, letting companies have a hybrid truckload and less-than-truckload operation.
“It’s a new trend,” said Glaser, who is now vice chairman of the board of trustees of USA Truck. “The logistics companies of the future are not just going to have trucks and brokerage operations, they’re going to have a warehouse service. They’ve contracted with multiple customers to take up space in a warehouse and start combining multiple customers into a single truck.”
It makes sense from the nontrucking standpoint, as well. If you produce big balls of yarn, you would need somewhere to ship them from; you might not necessarily need a massive amount of SF to store the product before shipping.
“Think about a warehouse operations that has three customers in it that service the same geography: a combined loading dock and one trailer load,” Glaser said. “The customers in the warehouse don’t want to invest in the warehouse because they don’t need an 8 million SF facility. They can benefit from a facility they can share space in.”