   |
Long-Distance Logistics
Getting Containers There And Back
By Steve Bergsman
Although the mobile self storage business has been an industry force for more than a decade, it has remained primarily a local business; the delivery of the empty containers, pickup of the full units, and transportation to a new location for unpacking all happens within a relatively short geographic distance of the storage operator.
Mobile storage operators yearned to go long distance, but there were strong impediments. The greatest lack was the establishment of a broad network of interrelated locations far, far away, that could receive the storage vaults, as well as the problem of the box itself, which would eventually need to be shipped back to the original location rather than orphaned and abandoned in some strange port-o-call.
After the turn of the millennium, mobile storage logistics swiftly improved and a few pioneering companies began creating that network of mobile storage operators that was long dreamed of by the industry. Today, there are a handful of companies, many of them using a franchise system, trying to create similar networks. And the question of what to do with the container after transport to its destination has also been addressed in various formats, from outsourcing the hauling process to disposable boxes.
It’s All Hush-Hush
In some regards, the history of mobile self storage is still being written, and many cutting-edge developments can’t be discussed. In fact, many companies flat out won’t go public about their new schemes and corporate tie-ins. One company that designs and manufactures modular portable enclosures for storage, for example, says it cannot address the issue with the press because it is the process of formulating a joint venture with a major moving company.
Bill Norris, president of Go-Mini’s in Jacksonville, Fla., says, “We have accomplished things that are very groundbreaking and will have a big impact on methodology in the industry, but I’m not sure how far I am willing to go in sharing information. I have a shipping partner and we will be using our equipment and our design.”
There are several issues involved with what Norris calls “containerized interstate movement.” The first issue is geographic presence. “In order to do this effectively, you have to grow to a point where you have enough dots on the map and enough presence in the marketplace on a national scale to move containers back and forth between your franchise locations.”
Ben Terrell, logistics and franchise sales director at Mobile Attic Inc., an Elba, Ala.-based portable storage company, says his company is exploring various opportunities, including a possible joint venture with an unnamed outside partner to expand its network and to offer long distance mobile storage moves.
For the past three years, Mobile Attic, like other firms, has been in the midst of creating a franchise network of operators. “There are logistical issues to resolve prior to rolling out ‘inter-franchise’ moves within our existing locations, but we are hoping to enter that part of the industry for a number of reasons,” Terrell says. “First, our customers want this service. It increases revenue, increases exposure, and you are not turning your customers over to the competition.” Terrell also was not yet ready to talk about future plans for his company.
Plan Of Attack
Michael Born, president of Joliet, Ill.-based MI-BOX, is attempting to develop a franchise network, working out a way to transport containers from franchisee to franchisee. MI-BOX uses a specific type of lift system to maneuver its boxes, so it can’t just ship randomly to anyone. In step one, MI-BOX is rapidly building its franchise network. Step two is the company’s teaming up with what Born refers to as “one of the largest logistic companies” to transport its containers as a solution to the problem of having to keep a fleet of vehicles in-house to accomplish that task.
“This will enable us to ship anywhere throughout the United States and Canada,” says Born. “This is a key piece to the puzzle. Just imagine if you only had five trucks to run containers to 50 franchises. You simply couldn’t be efficient at it. You need to have the availability of vehicles to use at a moment’s notice to transport anywhere.”
The third problem to be tackled by the industry is how to distribute containers to the franchisees and keep them in stock. MI-BOX’s solution is to have both corporate-owned containers and containers for each of the franchisees. “Obviously, there are areas in the country with more out-migration than in-migration,” he says. “If we had a franchise in Detroit, which is seeing a lot of out-migration, it might have five to 10 containers designated to it for long-distance moves. They may very well be leaving this facility not to come back.”
Born’s plan is that MI-BOX corporate would then re-supply the franchise with other containers. “If we have a vehicle running from Chicago to the East Coast, it could stop in Detroit and drop off containers,” he explains. On the other hand, a state such as Florida may have more boxes coming in then leaving. “If our outsource partner doesn’t have full loads, it could piggy-back our boxes and transport them to designated locations,” Born says.
UNITS Mobile Storage of Charleston, S.C., is working on a similar program. Each of its franchises has five corporate owned containers, and there are additional containers in the corporate pool. “If more containers are shipped from Charleston to Myrtle Beach, as an example, we will ship them back,” says UNITS President Michael McAlhany.
The problem comes from places such as Florida that get a large overflow, McAlhany adds. “We are doing a national roll-out right now,” he says, “and … from what I hear down in Florida, they have a buildup of containers since so many people are moving there from the North.”
When containers stack up in one place, UNITS ships them back to the home areas at corporate expense. There are several things UNITS is doing to expedite the process―and to do it cheaply. The company is looking at using what it calls “knockdown” containers, which are essentially containers that dissemble or collapse, so it could place a greater number on containers on a semi returning to Charlotte.
PODS Enterprises Inc. in Clearwater, Fla., is considered a leader in establishing a network. “It took PODS seven years to develop their territory and geographic presence before they felt they were ready to be an interstate company,” Norris says. “We are five-and-a-half years old and now we have the geographic presence and the capability of moving containers around. That is why you don’t see many players in the marketplace doing this, because they don’t have the geographic presence.”
The second issue is equipment and methodology, and the third is backhauling, or getting containers back to where you need them. Methodology and backhaul are two facets Norris feels his company has finally addressed, although he says it’s too early yet to talk about what Go-Mini’s solutions will be.
While all these long-haul solutions sound feasible, the question is, can it be profitable? “Absolutely,” says Born. “The shipping of containers can be very profitable,” says Randy Weissman, president of Storage Banc in St. Louis, Mo. “And the shipping of containers is more profitable on a longer haul than a shorter haul.”
For the moment, the industry is breaking into two factions, and that affects how containers are shipped and even what kinds of containers are used. The franchise owners deal with a “pool fleet” of containers that get relocated based on inventory levels, and these containers are built to last a long time. Then there are the independents, some of which ship their own containers and some that ship other people’s containers. In addition, a number of independents have banded together as informal shipping partners.
“There are companies that are in informal shipping organizations, and these groups generally assume that if you end up with one of its boxes, keep it, and vice versa,” Weissman notes. “We trade among each other.” Other independents use the one-way, or throw-away, containers.
Container Options
There seem to be as many opinions on vault or container materials and styles as there are companies in the mobile storage business. For example, Born says the throwaway boxes or one-way shipping crates are great for smaller loads, but if you are moving an entire house worth of goods, this container won’t be effective. Northwest Containers Inc. in Toledo, Wash., a manufacturer of containers for the mobile storage industry, says it’s all about customization. “Many of my customers have a specific box they want me to build,” says David Powell, the company’s president. “If you look at PODS, that is a 12-foot or 16-foot box that has been made from wood or composite materials. Other large franchises use a 16-foot container made from metal.”
Powell prefers wood rather than metal. “Wood boxes have a significant advantage in some climates,” he says. “In desert climates like Arizona, metal boxes retain the heat, and in cold and/or wet climates, moisture becomes an issue.” The companies that are trying to establish a network of franchises prefer to use more expensive boxes that will last after being shipped from place to place to place. Northwest Container developed an inexpensive wooden box that is essentially a one-way container, but Powell has found there isn’t a lot of interest in that type of box at the moment.
Other container manufacturers are having a different experience. “Our company uses steel boxes in our storage operations and we also sell them into the mobile storage industry to independent operators,” says Chris Havener, president of Havener Enterprises Inc. in Bradley, Ill. However, due to demand from customers looking for throwaway boxes, he says Havener Enterprises recently introduced one made of wood. “It’s something completely new for us and the reason we are doing it is that so many people have been asking for it,” says Havener. “We sell a lot of steel boxes to mobile storage operators, and more and more of these guys are asking for a oneway box.”
Currently, Havener offers 4-by-6 and 5-by-8 containers because that’s what customers want, although the company does sell up the bigger containers on the steel side. The larger boxes must be transported on a flatbed truck, but the smaller size can go into a standard freight trailer.
As Havener sees it, there are upsides and downsides to the wooden, one-way box. Since it is relatively cheap to construct, the cost to the consumer is low and can be built into the total price of the move. On the other hand, since the wooden boxes aren’t waterproof, they need covers. For mobile storage operators, the covers are a bonus because they are usually adorned with logos and advertising. It’s free promotion. For the consumer, however, the cost of the cover is almost as expensive as the container. One solution, somewhere between a steel vault and a throw-away box, is the collapsible container. After usage, the container can be collapsed, shipped back to a destination, and then reconstructed. The advantage of the collapsible container is that more of them can be stacked on a flatbed truck for transport purposes than can rigid steel vaults. As with all container transport methodologies, collapsible containers have advocates and detractors. One of the latter is Go-Mini’s Norris. “North American Van Lines tried the concept of collapsible containers to solve backhaul issues and it was a bit of a disaster,” he says. “You end up unable to keep the parts—bolts, nuts, fasteners, etc.—to put the containers back together. And there is an additional cost involved. Somebody has to break it down at origin and someone has to re-assemble it later on.” Norris says no one has yet proven that the collapsible container is a good solution for the backhaul problem.
But one company, Store To Door LLC of Woburn, Mass., took a look at the collapsible container, reinvented it, and now boasts terrific success with a unique new product. “About nine years ago, we recognized the opportunity in long-distance moves if we could include our vaults in the equation,” says Jim Wayman, president and founder of Store To Door, “but since there was no one at the other end of the transport to receive and ship it back, the cost to enter the long-distance business was prohibitive. So, we invented and patented the ‘one-way moving system,’ which is a disposable vault, meaning the homeowner or businessperson on the other end, using a screw-gun could take the vault apart in five minutes.”
Wayman says only 22 screws need to be removed from the container and it can be thrown away after dissembling, and the unit is completely recyclable. It can also be used temporarily for storage as it does have an all-weather cover, but Wayman says these containers, made of wood and cardboard, probably won’t last longer than six months. “We have sold thousands of the boxes and we’ve only had one or two problems, and that was operator error where they drove a forklift through the side,” he says.
Store To Door’s disposable container is only manufactured in a 5-by-8 dimension, and according to Wayman, size does matter: “The PODS size is all wrong. The 16-foot and 12-foot boxes are not the right size for mobile storage. The right size is the five-foot by eight-foot box for a number of reasons.” First, he says, it is easier to handle and the homeowner doesn’t have to pack 16-feet of items only to find out he or she needs something that is already packed. Second, the eight-foot box can load inside a van as opposed to the 16-foot units PODS hauls up and down the highway on flatbed trucks. “The big boxes don’t fit inside of a LTL [lessthan-truckload] trailer. My storage vaults fits, so I don’t need to be dependent on a long-haul, flatbed trailer,” Wayman says.
Why is the size of boxes and methodology of transport so important? As Wayman sees it, mobile storage is the future. “Mobile Storage is only about two percent of the self storage industry,” he says, “but when the public becomes more and more aware of the service, the big self storage operators will lose market share.”
The business for mobile operations has been about the same for the last two or three years, Wayman observes, and that’s only because there has been an overabundance of new competitors—entrepreneurs are looking to invest in the storage business of the future.
One service that will undoubtedly increase the mobile self storage industry’s customer base—and give both traditional self storage and the moving business a run for their money—is interstate moves. Indeed, mobile operators today see the need they must fulfill, and they are working today to create innovative systems that will fill the void.
Steve Bergsman is a freelance writer based in Mesa, Arizona, and the author of Maverick Real Estate Investing: The Art of Buying and Selling Properties Like Trump, Zell, Simon and the World’s Greatest Land Owner’s.
|
|
|
