Anne Strauss-Wieder, senior freight and logistics researcher and lecturer at Rutgers University, issued a directive to attendees at a panel discussion on the evolution of supply chains at I.CON East in Jersey City, New Jersey, this week:
“I don’t want you to think about your occupier’s demands of you as building owners or developers. I want you to think about what demands are being placed on that potential occupier. Just think of how we buy and what we buy today, and how that’s rapidly evolving. There are a number of demands that customers are placing on the companies, and that affects what goes on in the building and what they’re shipping out.”
The term “rapidly evolving” also applies to the supply of materials, including where those goods are coming from, and the operating context for supply chains, said Strauss-Wieder, who moderated the panel. “One [thing] I’ll highlight is disruptions. Whether they’re caused by nature, whether they’re manmade, whether they’re a supplier, whether they’re transportation, whether they’re cyber, we’re having a lot more disruptive events today.”
In turn, these disruptive events have resulted in the diversification of production locations, ports and transportation providers, and distribution facilities as occupiers have learned it is unwise to operate without backups.
Nolan Lewin, executive director of the Rutgers Food Innovation Center, noted that food supply chains now carry a very significant risk. “We only have to look at the news to understand why that is. There are situations going on in the Middle East, in Asia, in Africa, all over the world, where we used to get a lot of products.”
Resilience is replacing optimization, Lewin said. “‘Just in time’ doesn’t always work anymore for a lot of different businesses, including the food business. You need some way of falling back on other resources, building relationships with suppliers, with transportation folks. Because if you can’t get a truck to bring you product because they’re booked up doing something else, our production in the food world can stop pretty quickly.”
Among the major supply chain shifts he’s noticing are more regionalization and nearshoring. “That means basically we want to look in our own backyard here in the United States for as much product as we can to ensure there’s an unrestricted flow of that ingredient source” for clients that want to develop products at the Food Innovation Center.
Federal Business Centers Inc., a fourth-generation family-owned commercial real estate company, focuses exclusively on Raritan Center, a business park in New Jersey that it developed after purchasing the former arsenal site from the U.S. government in the 1960s. Today, Raritan Center has about 80 buildings totaling approximately 10 million square feet, including office space, flex space and warehouse/distribution space.
Federal Business Centers is developing a multimodal aspect to Raritan Center, partnering with a short-line rail carrier to service the center. According to Patrick Connelly, the company’s chief operating officer, about 12,000 rail cars come to and from Raritan Center per year.
“I would say about 70% of those are in the plastics world, so bulk plastic products come in by rail in various aspects of what we do. We do a lot of building products. Home Depot is there as well. And then lastly, food. Arizona Beverage has a bottling plant. So sweetener is brought in, [and] they participate in the plastic use because they do the bottling there as well. We also have flour as a raw commodity. We’ve had produce a little bit. And now we’re starting to see some food production, food manufacturing taking place for us.”
The former U.S. Army port at Raritan Center that was once used to send munitions over the Atlantic Ocean during World War I and World War II is too shallow for today’s shipping. “But the way to the future for us would be barge services,” Connelly said. “We’re working with the state agencies, federal agencies … and looking to create more synergy between the port, the rail and the trucking.”
Ultimately, he said, “we’re really looking to just improve ways in and out of our buildings for the occupiers … and also just reacting to what’s in the greater supply chain.”
Matt Schlindwein, managing partner in charge of development and creation of assets at Greek Real Estate Partners, noted the first question tenants in the industrial market used to ask was about the availability of labor. Now it’s about the availability of power.
“And a lot of the tenants that are asking about the availability of power don’t even necessarily need the power [right now],” he said. “They just want to know that there’s a pathway to get the power should they need it in the future.”
“I think a lot of it is just sometimes educating our users and making sure they know what they really do need to use and what their future needs might be and trying to do those projections. Because the one thing that we also run up against is, although we’re willing to speculate on power requirements, the utilities are not. They’re not in the business of speculation.
“We’re trying to play the game where we want to give the tenants the ability to have that flexibility that they need, all while working with the utility to not be the boy who cried wolf.”
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