Volume 3 | Issue 3 | Year 2007

More than a half-century ago, a company that was known at the time as Southern Michigan Cold Storage Co. was founded with a simple mission: to create a network of warehouses to store produce from the southern Great Lakes’ fertile cherry and apple orchards.
Today, that company is called Hanson Logistics, and not only is the firm now the 13th largest refrigerated warehouse network in the United States, but its expanded offerings include a growing fleet of refrigerated tractor-trailers as well as state-of-the-art, Web-based information management.

The crowning symbol of Hanson Logistics’ growing success, and its plan for future growth, is its 14.5-million-cubic-foot Chicago Consolidation Center, located on the east side of the sprawling metropolis in Hobart, Ind., that now gives the company access to one of the nation’s most important shipping markets.

This so-called “best in class” facility, specially designed to meet a variety of customer requirements including case-pick consolidation and cross docking of temperature-controlled food products, was on track for an official opening this summer.

A lucrative market

“There is no question that this is a strategic move for us,” said Andrew Janson, the vice president of business development for Hanson Logistics, noting that prior to this year, the company’s facilities in Indiana and Michigan were located too far east to capitalize on this lucrative market. “We did quite a bit of market research and in the entire Midwest, Chicago has been and, we believe, will remain a strong market for the types of service that we will provide in the future.”

The new facility will be constructed in three phases with a total of 45,000 pallet positions, ranging from deep frozen (-20°F) for ice cream to (0°F) frozen and (32- 40°F) cooler. Its opening will allow Hanson Logistics to expand its already growing fleet of trucks. The first phase of the project that opens this summer will feature 5-million cubic feet of storage.

“When it reaches 14-and-a-half million cubic feet, that is going to be 50 percent of our current size (company-wide),” Janson said enthusiastically. “Over the next two to three years, our focus is going to be to maximize the potential of this facility, and to grow our transportation offerings around the facility.”

In addition to its truck-oriented features, including shuttle service for food manufacturers requiring short-term production warehousing, the Chicago site will also be fully accessible by rail.

The enthusiasm for the new project is not that surprising for a company whose motto is “Yes, We Can.” Hanson Logistics proved that philosophy on March 16, 2006, when a sudden and horrific windstorm ripped apart the storage facility for a customer, Maple Leaf Farms of Milford, Ind., and threatened its large supply of frozen ducks. Hanson launched an around-the-clock shuttle and warehouse operation to its own facility some 71 miles away, and it was able to salvage the vast majority of the ducks – some 3,800 pallets worth.

“They responded quickly, and we were able to minimize product loss and keep our distribution process pretty much intact,” Don Ratliff, the vice president of operations for Maple Leaf Farms, said later. “But it was quite an ordeal.”

A new name

The company’s large ambitions for Midwestern warehousing, transportation and logistics began with fairly humble origins. It was founded as a small regional cold-storage player in 1954, with its first large warehouse located in Benton Harbor. The firm launched a long and steady period of expansion, both through acquisitions and organic growth, beginning in the late 1960s that has continued to the present day.

The Hanson family took over the growing company in the early 1990s, and the name was changed to Hanson Cold Storage in 1993, and again in 2005 to Hanson Logistics, reflecting the growing complexities of both the marketplace and the services that the firm now offered.

Janson said that the company’s original business model, which was based upon full pallet storage and on shipments in and out of the warehouse, has become outdated. He said the customer is demanding change.

“The consumer has bought into the “low cost” business model of successful companies like Wal-Mart, Meijer and Club stores,” Janson said. “Every player in the supply chain is being challenged to drive costs down through innovation and creativity. We try to be at the forefront, with our technology, to streamline communications between us and our customers.”

Along with the name change in 2005, Hanson Logistics launched a new program called Velocities aimed at transforming the way that it does business, relying on a network of regional “consolidation centers” to simplify the transportation system. The Velocities system combines a customer’s orders with those of multiple vendors, creating full truckload shipments for scheduled delivery to the same retail or foodservice distribution center.

The network of Hanson Logistics now includes some eight warehouse facilities, including the new Chicago-area site; Lafayette, Ind.; Logansport, Ind., which is primarily dedicated to Tyson Foods; the Benton Harbor site, which is the Midwest distribution center for McCormick spices; Hartford, Mich.; Riverside, Mich.; Hart, Mich., which services a number of cherry and apple growers, and Decatur, Mich., which serves the blueberry and vegetable industries of the state.

Company officials say that a number of factors, including the higher cost of diesel fuel and stricter hours-of-service rules for drivers, have driven many mid-sized food manufacturers to look to outsource shipping and logistics. One company that recently signed up Hanson Logistics is Cole’s Quality Foods Inc. of Grand Rapids, a leading garlic bread maker.

Employees are key

“The focus on the supply chain is very critical, and you have to have expertise in that,” Cole’s president, John Sommavilla, said later.

Hanson Logistics is headquartered in St. Joseph, Mich., and the family-owned company employs roughly 100 people, mostly in warehousing, although Janson said the number of workers often expands with seasonal temporaries. He said worker training and excellence has been key to the company’s growth and success. “Our business is a people business,” Janson said.

The company executive added that Hanson Logistics is ever looking to expand its core competencies, with dry storage and logistics an increasingly important add-on to its leadership in cold storage. Janson noted that mid-market companies, which have to compete with larger national players and historically have faced longer lead times and higher costs per case, are eager for the types of logistical services that Hanson provides. The firm has posted double-digit revenue growth in each of the last three years.

And that was before this hard-charging company breezed into the Windy City.

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