Warehouses: For Baltimore City, Ugly Ducklings With Beautiful Potential

July 1995 / Abell Reports / Community Development

At stake are income and jobs; what’s needed to make it all happen are land, financing, and creative marketing.

Warehouses, historically, have not enjoyed a high place in the no­menclature of industry; always space monsters and considered an ineffi­cient use of scarce and valuable urban land, they have been thought of as necessary but ugly ducklings of com­merce. But warehousing and distri­bution have gone high-tech; new tech­niques have moved the functions into the 21st century. The ugly ducklings have become swans.

In the economy of the 90’s and beyond, large discount retailers (such as Walmart) are driving dramatic changes within the industry. These inventive leaders are using creative warehousing as an instrument to keep prices down — by doing away with back room warehousing, by reducing store inventory, and by selling larger quantities of products, making them available in pre-packaged configura­tions.

These strategies make it neces­sary for goods to arrive at the stores ready to sell at precisely the right time. The distribution center has taken on the function of packaging, pricing, and assembling. The store can post­pone how it wants a product packaged, configured, or priced until the very last minute. The practice has allowed the company to more accu­rately match product supply to con­sumer demand, which in time allows a reduction in inventory.

Although as little as fifteen years ago the warehouse was a simple storage operation, today many manufac­turers as well as retailers are seeing the benefits of outsourcing assembly, bundling, packaging, couponing and pricing to the warehouse/distribution center.

As a consequence, a new industry has been born — or reborn — which shifts functions from the manufacturing plant to the distribution center­ blurring the lines between the two.

With the opportunity to exploit the concept for revenue, the Mary­land Port Administration and Depart­ment of Employment and Economic Development have been toning up marketing muscle and going after the warehousing and distribution business. The effort is calculated to ben­efit the region — which is strategically located to capture a share of the dollar potential.

Unfortunately, Baltimore City has been a limited beneficiary of this regional growth. But it should be and it can be a larger beneficiary. Given the city’s need for additional jobs and revenues, perhaps it must be.