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Nov 19, 2023

Work starts on Cardinal’s $450m third

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An artist's rendition of Cardinal Logistics' new warehouse at Drury.

Work has started on Cardinal Logistics’ $450 million third-party logistics warehouse in Drury, which the privately-owned company says will go part-way towards solving New Zealand's infrastructure deficit.

Third-party logistics providers (3PL) manage inbound and outbound transportation for their clients, as well as warehousing.

Cardinal, which specialises in the fast-moving consumer goods sector - said the project will be the country's first fully automated 3PL logistics warehouse.

The company - New Zealand's biggest 3PL operator - said the facility will be capable of accommodating 115,000 pallets, making it what it believes to be the largest of its type in the southern hemisphere.

It also plans a similar 45,000-pallet facility in Christchurch and is looking at sites in Rolleston.

The facility at Drury will dwarf Cardinal's existing warehouses in south Auckland, which can each accommodate up to around 35,000 pallets.

Cardinal says the facilities, which will be kitted out with automated systems by Japanese specialist Daifuku, will improve order processing times by up to 400 per cent.

The development will take place over five years and is part of a wider multibillion-dollar industrial development in Drury.

A private investor will end up owning the building, while Cardinal - which is majority-owned by managing director Tony Gorton - will own the equipment.

"We are involved in the business of bringing product in from overseas in containers, warehousing it and then delivering it to stores around New Zealand," chief executive Brendon Furness said.

Cardinal differs from most 3PL companies in as much as it deals with a fairly narrow group of products – mostly food, beverages and grocery items.

Its customers are the likes of Griffins, Unilever, Kelloggs, Red Bull and Sealord.

The facility, which is being built by Haydn and Rollett, will go live in three stages – this December, then December 2024 and finally in June 2025.

For its part, Cardinal's investment will be funded by shareholders and third-party financing.

Furness said it was clear New Zealand had infrastructure and supply chain issues.

"It's part of the answer, not only to staff shortages, but there is also a lot of infrastructure ‘debt’ in New Zealand, and that's true in the supply chain," he said.

"New Zealand does not handle surge volumes very well and in the post-Covid era, there is a lot more surge volume," he said.

As the country discovered during Covid, ship visits became less frequent, which made the supply chain "lumpy".

"Our roads, ports and infrastructure are not geared to handle that, so bringing automated systems enables you to smooth the flow by running the machines harder, which you can't do with individuals, and certainly not individuals if they are not there in the first place."

Furness said the Drury facility will be one of the largest infrastructure projects that the country will need over the next 10 to 15 years.

"Large-scale infrastructure investments in automation like this will help flatten out the surges of volume that can occur when another part of the supply chain is constrained," he said.

"Combine that with more collaborative use of data analytics and artificial intelligence in areas like demand planning and forecasting, and we expect to see much better and faster logistics decision-making, which will ultimately benefit consumers."

The warehouse will also feature solar roof panels, capable of generating 1.4 megawatt hours - enough to power around 220 homes.

When operational, an order will be placed into the automated system, robotic cranes will retrieve specific cartons from their location and will, based on their weight, deliver them in the right order to the correct pallet, to be packed and then dispatched.

How delivery trucks are packed will be determined by the AI system and will be based on the best route to reach each customer.

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