Chick-fil-A and Starbucks Distributor to Move California Headquarters to Texas

Distributor to Move California Headquarters to Texas

A distributor to move its corporate headquarters to Texas from California to centralize its operations. The organization is a distributor to major restaurant chains such as Chick-fil-A, Chipotle and Starbucks.

Quality Custom Distribution is a part of Golden State Foods, and a global supplier to the quick-service restaurant and retail industries. The organization is leasing 10,784 square feet of office space at 2801 Network Blvd. in Frisco, Texas. Frisco is 27 miles north of downtown Dallas, for its headquarters. It sets the new office to open in January 2020.

The company expects some employees to move from California to Texas with the corporate headquarters. Also, they have plans to "provide a variety of new jobs," at the Dallas-area office.

The company has already begun posting job openings in Frisco, which include finance, accounting, customer service and purchasing positions. Quality Custom Distribution has 17 active job postings on online job websites. Officials were not immediately available to comment beyond a statement.

The move from Irvine, California, helps centralize the company's corporate operations. It better aligns and supports its distribution center market and its customers, said Ryan Hammer, corporate vice president and president of Golden State Foods Logistics.

The distributor to move from California Headquarters to Texas will grow its distribution network and secure its position as a main player in the food industry. The Dallas-area's central location, large talent pool, and business-friendly community fed into the decision to move to the North Texas region said, Hammer.

The company's distribution network includes two centers in Texas, one in the Dallas area and another in San Antonio. The Dallas-area location sits in Lancaster at 3900 N. Dallas Ave., which is 14 miles south of downtown Dallas. According to CoStar data, Quality Custom Distribution leases about 55,000 square feet of industrial space in the building.

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Warehouse or store? Picking the wrong place to unpack can cost you

warehouse or store

Retailers can see "considerable savings" if they unpack case packs (packages shipped by the supplier) into the individual consumer units at a distribution center before shipping the product to the final store, according to a 2017 paper published in the European Journal of Operations Research that focused on grocery retailers in the Netherlands and Germany. The amount of savings will vary depending on the SKU, and they are even greater if a model is used to determine the "optimal solution" for a given retailer.

The paper examined two different scenarios for a given SKU:

  1. Stores are sent case packs of the SKU and unload them onsite.
  2. Store are sent a custom number of consumer-level packaging units based on their inventory needs.

The researchers developed a model to determine the best unpacking location for a given SKU. This was then tested in a "hypothetical environment" that used data from a European retailer (referred to as Delta in the study), information on its current operations practice and cost data from a second retailer. When the researchers tested their model in the hypothetical environment, they found a 5.3% drop in the overall cost when the retailer moved from its current operating model to what the paper referred to as the "optimal solution."

The optimal solution in this paper was a model in which all stores follow the same unpacking method for a given product (either delivering case packs to the store or unpacking it into consumer units at the distribution center) depending on what is the lowest cost for all stores. Retailers must determine the lowest cost option for each product.

Marginally more cost savings were seen if each store used the unpacking method that reduced its individual cost (as opposed to the cost to the entire retailer) but this can be especially hard to put in place at the distribution center level, Rob Broekmeulen, the paper's author and assistant professor at the Eindhoven University of Technology, told Supply Chain Dive in an interview.

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As fleets adopt technology, the public remains skeptical of safety focus

freight technology

Commercial drivers are among the safest drivers on the roadways, but based on general public perception, and anti-trucking safety groups that highlight the number of yearly incidents involving big rigs, it would be difficult to tell that.

According to data within the Federal Motor Carrier Safety Administration's Motor Carrier Management Information System (MCMIS), there were 164,529 large trucks involved in crashes in 2018, with 79,879 injuries and 4,708 deaths reported. Those numbers were comparable to 2017's figures, with 154,634 crashes, 75,985 injuries and 4,858 deaths.

In 2013, the American Trucking Associations released results of a research project conducted by the University of Michigan Transportation Research Institute. That study looked at 8,309 fatal car-truck crashes and found that in 81% of the incidents, the car driver was assigned fault, versus just 27% of truck drivers to which fault was assigned. Similarly, a 2003 study by the National Highway Traffic Safety Administration (NHTSA) identified 10,092 fatal car-truck accidents and assigned blame to the car driver 91% of the time in head-on crashes. It also found that 71% of the time the car driver was responsible for rear-end crashes.

The American Transportation Research Institute (ATRI) said that commercial trucks traveled over 9.4 billion miles in 2017. While the numbers can be significant, when putting them in context based on the number of miles traveled and compared to automotive-only numbers, a different story emerges.

According to the Insurance Institute for Highway Safety (IIHS), 0.94 passenger car occupants were killed in 2017 per 100 million truck miles traveled. Conversely, 1.16 people were killed per 100 million miles traveled overall in 2017. Statistically speaking, fewer people die in truck-car crashes than in car crashes alone.

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Mexican officials: wait times at Otay Mesa Port of Entry up to five hours

Delay Times at Port of Entry

Truck wait times on the Mexican side of the Otay Mesa port of entry have jumped as the inspection process lengthens, leaving trucks backed up for hours, said officials in Mexico.

"Both Mexican and American customs are spending more time reviewing the trucks – with wait times between four and four and one-half hours," said Salvador Díaz González, president of the Tijuana-based Industrial Association of Otay Mesa (AIMO).
The long lines for the commercial crossing checkpoint in Otay affects not only the companies and transporters, but also the people who [travel] through the area, since the [trucks] massing invade the surrounding roads, Díaz said in an August 14 report in elimparcial.com.

Carrier wait times in the whole Otay Mesa/Tijuana/San Diego market have been trending up since June 1 – up 30 percent to 133 minutes average per load/unload event per month.

The average wait time for commercial trucks in the market is 126 mins over the last year. This information comes from the FreightWaves SONAR platform.

While traffic may be affected in Tijuana, wait times are not affecting the U.S. side of the border. Wait times are hovering around 40 minutes, as of noon August 14, according to U.S. Customs and Border Protection.

With the FreightWaves SONAR Van Inbound Tender Rejection Index (VITRI.SAN) at 1.81 percent and dropping, carriers are still willing to accept loads into the Otay Mesa/San Diego market. SONAR's Van Outbound Tender Rejection Rate (VOTRI.SAN) is also around 1.81 percent, meaning there are no capacity issues in the market.

Díaz said he understands why officials have been stricter with inspections, but the negative effects are causing lower carrier productivity, more air pollution in the Tijuana area and traffic jams that affect others who drive in the area.

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Technology Trends You Can’t Ignore

Logistics Technology

Strategic technology trends have the potential to drive significant disruption and deliver significant opportunity. Enterprise architecture and technology innovation leaders must evaluate these trends to identify opportunities, counter threats, and create competitive advantage, according to a recent Gartner report.

KEY REPORT FINDINGS

Artificial intelligence (AI) opens up a new frontier for digital business. This is because virtually every application, service, and Internet of Things (IoT) object incorporates an intelligent aspect to automate or augment application processes or human activities.

Artificial intelligence (AI) opens up a new frontier for digital business. This is because virtually every application, service, and Internet of Things (IoT) object incorporates an intelligent aspect to automate or augment application processes or human activities.

The way we perceive and interact with technology is undergoing a radical transformation. Conversational platforms, augmented reality, virtual reality, and mixed reality will provide more natural and immersive ambient experiences within the digital world.

Digital representations of things and organizational processes are increasingly used to monitor, analyze, and control real-world environments. These digital twins combined with AI and immersive experiences set the stage for open, connected, and coordinated smart spaces.

Formal mechanisms to identify technology trends and prioritize those with the biggest potential impact on the business create competitive advantage.

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Regional Development Key to a Strong North American Trade Bloc

North American Trade Bloc

For many years now, a concern of mine has been that the purpose of free trade and the agreements that envelop trade between regions has not been properly explained or promoted to communities, especially at the grass roots level.

Recently, Guillermo Malpica, trade commissioner of Mexico and executive director at the American Chamber of Commerce in Monterrey, Mexico, paid San Antonio a visit for a series of roundtables and presentations on the United States-Mexico-Canada Agreement(USMCA). At an energy sector meeting with Malpica, San Antonio energy industry leaders investing in Mexico were expecting to get a sense of direction and clarity regarding Mexico's energy policies.

One roundtable participant asked "what industries are the winners and the losers" in the USMCA. When you ask questions like these, you are basically taking apart a macroeconomic tool and looking at the individual parts. Separate parts don't work unless they are put together like a precision clock.

These types of agreements are not meant to be dissected. Not unlike the cute little frog you dissected in school, the innards don't look pretty. Trade agreements are macroeconomic tools that are designed to benefit economies. Yes, there were industries that were hit very hard once NAFTA came into play, but those industries were not ready.

The signals were clear when Mexico agreed to enter the General Agreement for Trade and Tariffs GATT in 1978 (today the World Trade Organization). My father, the Deputy Director General for the Foreign Trade Institute of Mexico during the 1970s, would have conferences and meetings with Mexican manufacturers, warning them to be ready to compete, up their quality, and export.

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With U.S.-Mexico reaching agreement, trade tensions at southern border lessen

Mexico/ US Border Crossing
Canadian border with the USA. Canadian customs.

By Jeff Berman, Group News Editor • June 10, 2019

With last Friday's news that the United States and Mexico reached a deal that will put off the implementation of tariffs by the United States on Mexico, which it had planned to start today as a countermeasure to what President Trump called an "ongoing illegal immigration crisis" at the Southern border, it is likely cross-border trade stakeholders are breathing a collective sign of relief.

Had the U.S. tariffs come to fruition, it would have begun with the U.S. imposing a 5% tariff on all goods imported from Mexico and then raised to 10% on July 1, 15% on August 1, 2019, to 20% on September 1, 2019 and to 25% on October 1, 2019.

As previously reported, President Trump said in late May that tariffs would permanently remain at the 25% level unless and until Mexico substantially stops the illegal flow of aliens coming through its territory. And he added that if Mexico fails to act, tariffs will remain at a high level, with Mexican-based companies potentially moving back to the U.S. to make their products and goods, and companies that relocate to the U.S. not subject to tariffs or be otherwise impacted. Trump added that aside from immigration being the primary impetus for these planned tariffs that: "[o]ver the years, Mexico has made massive amounts of money in its dealing with the United States, and this includes the tremendous number of jobs leaving the country."

Well, quickly and fortunately, it looks like things are not going to get to that point, according to a joint declaration issued by the U.S. and Mexico that stated Mexico will "take unprecedented steps to increase enforcement to curb irregular migration, to include the deployment of its National Guard throughout Mexico, giving priority to its southern border."

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Freight costs still a concern at U.S.-Mexico border

US/ Mexico border delays

Wait times for trucks importing and exporting cargo across the U.S.-Mexico border have dropped considerably from April crisis levels but industry experts warn threats to the supply chain haven't been eliminated.

"I've been telling my members that maybe this is a blessing in disguise," said Bob Costello, Chief Economist and Vice President of International Trade Policy for the American Trucking Associations (ATA).

Costello, speaking at the annual Global Supply Chain summit hosted by the U.S. Chamber of Commerce on May 16, was referring to the backups and delays that ensued at the southern border after President Trump in late Marchthreatened to shut it down in response to immigration issues. The problem was exacerbated when federal cargo inspectors were redeployed from cargo entry ports to help deal with the migration problem.

"[Wait] times have proved significantly, but we now have another reminder of how critical this trade is, and the modes of transportation that have to move it. Sometimes we need those reminders…that if you shut down the border for a week, you're in a recession, I can almost promise you that."

Costello emphasized the importance trade on the southern border is to American trucking and the U.S. economy: 32,000 U.S. truck drivers participate in cross-border freight moves, representing roughly $1.1 billion worth of cargo per day.

The U.S. automotive sector feels delays and border closure threats particularly hard. Shutting down a single assembly line for an hour due to a lack of parts can cost an automaker $1.3 million per day, said Kristin Dziczek, Vice President of Industry, Labor, and Economics for the Center for Automotive Research, who participated on the panel. "You can't make a car without the parts, and some very critical parts are supplied by Mexico and countries south of Mexico. We were predicting the whole [automotive] industry would be down within a week if the southern border is closed."

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Mexico Border Delays Seen Weighing on US Investment, Factories

Border Delays

More cargo from Mexico to the United States is being held up at the border, accompanied by increasing evidence that such delays are dimming prospects for American companies.

Slower trade between the countries since federal border officers recently were redirected to deal with a surge in migrants has been socking businesses with additional shipping costs. The effects likely will cause a modest headwind for second-quarter nonresidential investment growth — which cooled at the start of the year — and already helped to push a U.S. factory gauge to a two-year low in April, according to Bank of America Corp.

"The delays generate a meaningful direct cost for businesses," economist Stephen Juneau said in an e-mail May 6. The disruption may have a significant impact on the flow of goods, as more than 86% of Mexican imports enter the U.S. by land, and impose some $5.5 million in additional costs on U.S. businesses each month, he wrote in a report May 3.

Trucking company Werner Enterprises Inc. said on an April 25 earnings call that it expects border crossing to be "slow for the foreseeable future."

"Freight is still crossing the border at a very slow rate by comparable standards," said Derek Leathers, CEO of the Omaha, Neb.-based company.

Werner ranks No. 15 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.

U.S. Customs and Border Protection said March 27 that trade processing would slow, with as many as 750 officers from crossings in the San Diego, Tucson, Ariz.; El Paso and Laredo, Texas, regions being re-assigned. President Donald Trump the next day renewed threats to close the border.

The Institute for Supply Management's factory survey last week showed April conditions at the weakest since October 2016, though still expansionary. The production component also fell to a more than two-year low, which Juneau said likely was in part because of border delays.

Ventus Global Logistics offer solutions to reroute your goods to avoid delays at the border. Contact us for a free quote.

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DOT sends HOS rule change to White House for review

DOT Changes Rules

Under current HOS rules, drivers can be on the road no more than 11 hours in a 14-hour period. If they stop to avoid rush hour or are stuck in a port waiting for a container, the clock on this 14-hour period keeps going.

Drivers want more flexibility and the ability to stop the clock on the 14-hour period if they take a break. This has become even more of an issue for drivers since the use of electronic logging devices (ELD) became mandatory.

"No one is looking for more drive time," Brian Brase, a heavy hauler out of Pennsylvania who helped plan a protest of HOS rules, told Supply Chain Dive earlier this year. "They just want some flexibility in it."

An early study on the effect of the ELD mandate showed it increased HOS compliance. The share of inspections that resulted in HOS violations fell from 6% before the mandate to 3.8% during a light enforcement period and finally to 2.5% during a strict enforcement period.

The DOT published an Advanced NPRM last August to get input on HOS and "received more than 5,200 comments, which have been carefully noted and considered," Chao said. This Advanced NPRM continues to receive comments.

"HOS needs more flexibility to allow for bad weather, delays at shippers and receivers, and traffic situations (wrecks, delays, construction, etc.)," a commenter named Sean Wright posted yesterday.

Many of the comments focus on a rule that requires drivers to take a 30-minute break after eight hours of driving. Peter Dombrowski, in a comment posted yesterday, suggested ending the 30-minute break requirement, saying drivers already take these breaks throughout the day.

Still, others are happy with the way things are: "Please keep the hos as is! Elogs are keeping companies from working drivers 18 hours a day," Robert Parker posted in February.

The details of the NPRM won't be known until its posted on the Federal Register. There is no set timeline for when this might happen or how long OMB will spend reviewing it.

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