Balancing costs, convenience and congestion, the temperature-controlled logistics provider opened a new warehouse in Dayton, N.J.
The demand for temperature-controlled storage has increased steadily in recent years. It’s a trend that is expected to continue—but new capacity in the sector, especially near the container facilities of the Port of New York and New Jersey, has fallen short of the growth in market demand.
East Coast Warehouse & Distribution, a temperature-controlled logistics provider headquartered in Elizabeth, N.J., aimed to boost supply in the New York-New Jersey area with the recent opening of a 388,000 square-foot warehouse south of the port in Dayton, N.J. East Coast operates facilities in Elizabeth and Bayonne, in the NYNJ region, as well as in Pennsylvania, Maryland, and Georgia. The off-port location of the new facility represents something of a departure for East Coast.
The company, whose customers are concentrated in the beverage and confectionary sectors, knew that decision time was upon it when its lease on a warehouse on Pulaski St. in Bayonne, N.J., was about to expire. The company wanted and needed to expand in the New York metropolitan region, and in deciding where to locate a new facility, the availability of space, or lack thereof, near the port and the relative costs of operating near-port, or at somewhat of a distance, proved critical. The Dayton facility, a new building located in South Brunswick Township, around 30 miles south of the company’s Elizabeth headquarters, won out.
Expansion Mode
“When it comes to food and beverage, there always seems to be a shortage of temperature-controlled warehouse space in and around the port proximity,” said Kevin Daly, East Coast’s chief commercial officer. “We haven’t had any space to sell for the better part of 18 months near the port facilities in New Jersey. Our customers are back to their pre-COVID operations, but we didn’t have any room for additional organic growth.”
East Coast’s customers are some of the preeminent names in the beer, wine, spirits, candy, and confectionery sectors. The company is the northeastern distributor for Heineken, for example, as well as for Haribo, the makers of Gummy Bears. “We’ve got an entire building dedicated to their needs,” said Daly, speaking of Haribo.
With its customers growing and its desire to expand its customer base, East Coast needed to add capacity. “With the Dayton facility we’ll pick up over 20,000 pallet positions,” said Daly. “The new building will give us significant upside having the total capacity of about 43,000 pallet positions.” East Coast has now shut down the building on Pulaski St., which held around 16,000 pallet positions.
Cost considerations proved paramount in East Coast’s decision about where to expand. “In the last three or four or five years, property values and lease rates around the port have accelerated to a level where it’s almost impossible to run a business,” said Daly. “Given the rent increases and the need to support our growing business, we felt that we needed to explore other options.”
Lower lease rates in South Brunswick improves the company’s cost profile and expands its capacity, while also providing greater maneuverability for the trucks coming in and out of the warehouse. The crowded streets and roads nearer to the port are sometimes difficult to navigate.
Space in the Port: “Nice to Have or Need to Have”
“Trucks often struggle getting in and out of the port,” said Daly. “As costs continue to increase in and around the port area, we, as a solutions provider, needed to test the market to decide whether a building at the port is a nice to have or a need to have. Unless you’re bringing in containers that are overweight, you probably need to be looking a little outside of the immediate port area.” The container weight restrictions that apply generally do not pertain in the port district.
“There are plenty of dry warehouses in the marketplace,” Daly added. “The differentiation in our key verticals is that all our customers require some level of temperature control above freezing. It’s a niche market and the entire Dayton building, which will be dedicated to temperature-controlled storage, is going to be supporting our customers’ growth.”
The niche that East Coast occupies in the temperature-controlled space is in the 55 degree to 65 degree range. “Finding providers in that range is often very difficult for cargo owners,” said Daly. “In New Jersey, it’s a very tight market when it comes to that kind of space. We see the same thing as up and down the I-95 corridor.”
East Coast continues to maintain a significant presence in the immediate port area, with buildings in Jersey City and in Elizabeth, and still sees itself as a “port-centered” services provider. “The Dayton building is not exactly at the port but it’s also not in Allentown, Pennsylvania,” said Daly. “It’s an accessible location to the port and for our customers who are bringing product and inventory into the New York-New Jersey marketplace. It is also a centrally located facility for customer pickup and for distribution into the New York City area and the region generally.”
Drayage Services
East Coast also provides drayage services through its Safeway Trucking Corporation, an asset-based carrier and one of the largest drayage concerns serving the Port of New York and New Jersey. “Safeway picks up containers at the port on a daily basis,” said Daly, “and delivers them to our warehouse or to our customers’ warehouses.” He envisions that the Dayton facility will serve distribution operations within a 90-mile radius, which he called “our sweet spot,” and which would put southern New Jersey and the Philadelphia area at the periphery of its catchment.
In recent years, East Coast has made acquisitions in an effort to become more of a regional full-service temperature-controlled logistics provider. In 2021, it acquired Temp-Distribution of Maryland, Inc., a temperature-controlled transportation, and warehousing provider located on the I-95 corridor just outside the Port of Baltimore.
“That acquisition made us a regional temperature-control final mile trucking company for the candy and confectionery space,” said Daly. “It brought us to an operating area with about a 300-mile radius for container pickup and return and put us in the Baltimore-Washington metropolitan area.”
