This month marks the first shipments going out from our new Louisville, Kentucky warehouse. It’s DCL’s fifth owned and operated site, and we’ve spent the last three years on the planning, design, and build out of the new warehouse. This 163,000 square foot facility has 25 dock doors, a 375 kWh solar system, a temperature control room, and a dedicated production space. We’re particularly excited that it is equipped with conveyance and automation for faster picking and parcel shipments, and narrow aisles to accommodate greater inventory levels. A few existing customers have begun the process of shipping out of Louisville this month—we imagine more will follow (as it fits their business growth goals) and we hope to build partnerships with new customers from the surrounding areas as well as other parts of the country.
Since 2013, the DCL board and leadership team have been strategizing ways to create a hub closer to the East Coast for our customer base. As President of DCL Logistics, I was tasked with venturing out and researching. I headed eastward to locations in the South, Midwest, and Northeast and evaluated cities such as Atlanta, Memphis, Nashville, Columbus, Allentown, Harrisburg, Edison, Charlestown, Indianapolis and Louisville. When I began my research I didn’t realize how difficult the decision would be or how many variables we needed to weigh. Cities in New Jersey and Pennsylvania were in closer proximity to New York City and Boston. Charlestown is a major port and gateway to the US from Europe and the Panama Canal. Indianapolis has direct flights from California. It seemed every city had unique advantages as well as disadvantages. We settled on Louisville, it had a lot to offer and felt like a right fit. We leased a facility to test it out, and after three years of operations, in 2017, we ultimately decided to put a stake in the ground for good—we proudly purchased fourteen acres near the airport to invest in our future facility.
So Why Did we Finally Commit to Louisville?
Quicker Transit Times
It’s no secret that approximately 70% of the US population is east of the Mississippi. During our evaluation, we studied the distribution patterns of our customers. We found that approximately two thirds of our clients have customers who align closely with the US population distribution, while the other third have customers and retail distribution hubs that are weighted more towards specific regions of the country. What that means is while Louisville is not close to any one concentrated location, it’s central to many regions of the country. Our objective is to lower the average zone (or miles traveled) per shipment resulting in faster delivery times and transportation costs for our customers. Our data shows that our customers are receiving faster transit times and a lower average zone from Louisville. In addition, customers that have consistent and predictable volume are utilizing a distributed inventory model — stocking and shipping product out of two DCL distribution centers, California and Kentucky — driving down their transit times even further. Balancing these factors, Louisville as a centralized location, is a proven and ideal location as a shipping origin point.
Operational costs continue to rise in the US, especially in California, and businesses are looking for lower costs. Louisville provides us a beachhead since many factors are more advantageous compared to California – land, construction, utilities, and labor supply. We had the luxury of building the facility from the ground up so we could really design the physical footprint and layout of our conveyance systems to optimize our throughput. Coupled with lower transportation costs, this will help mitigate rising costs for both DCL and our customers.
People Who Know Logistics
I was drawn to Louisville as a shipping hub, after reading Delivering Happiness, in which CEO Tony Hsieh’s talks about the rapid and successful rise of his online shoe company, Zappos. One major decision that directly points to Zappos’ success was moving to Louisville, close in proximity to UPS Worldport, to get orders to their customers quicker. After the book was published, a surge of emerging ecommerce companies established a distribution presence in Louisville alongside the already-established product companies there. The industry boom there has created a large and experienced workforce with expertise in logistics and distribution. By being in Louisville, DCL has benefited from good and plentiful talent, ranging from warehouse operators to management professionals, enabling us to quickly scale our fulfillment operations with less training than has been typically needed in our other locations. However, with growth in ecommerce, the Louisville labor market has proven to be tight and much of the workforce is transient in nature, moving swiftly for higher rates and seasonal work. In order to foster an environment of unity and togetherness, we’ve worked tirelessly to match the Louisville culture to the core values etched in the DNA of our other locations. We’ve moved some of our key employees from California to Louisville, to bolster our “People First” motto. Our deep-rooted culture combined with the skillset of the Louisville personnel will be a competitive advantage for DCL.
Last week’s first shipment was a momentous occasion, a culmination of years of planning and hard work. We have an incredible and dedicated team in place to scale operations, service our customers, and ensure we adhere to the high quality standards our customers have been accustomed to since our inception 37 years ago.
I look forward to our new home in Louisville, both for DCL and our customers.