Ahold Delhaize USA has inked a deal with cold-storage firm Americold to build new frozen-food warehouses in Connecticut and in Pennsylvania that will support the retailer’s move to fully self-distribute.
The new facilities are part of Ahold Delhaize’s $480 million three-year plan to unite and modernize its transportation, distribution and procurement operations and transition away from outsourcing those services to third parties—moves the retailer said would improve its cost structure and support freshness, speed of fulfillment and its omnichannel ambitions.
The new warehouses, each of which will be operated by Americold on behalf of the retailer for 20-year initial terms, will be built in Plainville, Conn. and Mountville, Pa., and will employ about 200 workers each. The Connecticut facility will primarily serve the Stop & Shop brand, while the Pennsylvania facility will support its Giant Co. and Giant Food divisions in the Mid-Atlantic states. Those legacy Ahold brands are in the process of transitioning away from outsourced distribution.
“Today’s announcement continues to reinforce how Ahold Delhaize USA is transforming our infrastructure to support the next generation of grocery retail,” said Chris Lewis, EVP of supply chain for Retail Business Services, the services company for Ahold Delhaize USA. “Through this expansion, we will continue to modernize our supply chain distribution, transportation and procurement through a fully integrated, self-distribution model that will be managed by our companies directly and locally. This will result in efficiencies and, most importantly, product availability and freshness for customers of our local brands—now and in the future—whenever, wherever and however they choose to shop.”
The new facilities will expand the company’s cold-storage space by 500,000 square feet. The company said an innovative design would enhance automation and leverage technology advancements, such as an integrated transportation management and end-to-end forecasting and replenishment technology.
Ahold in December said its supply chain transition plan would include partnerships to build two new frozen facilities but had not revealed details until this week. Americold is an Atlanta-based real estate investment trust focused on frozen warehouses. Local news reports indicate Americold recently won approval to build a new 246,000-square-foot frozen facility at the site of one of its current warehouses in Mountville, and is separately taking over development of a previously approved 252,000-square-foot development in Plainville.
“We are thrilled to partner with Ahold Delhaize USA to design, build and operate these strategically located retail distribution fulfillment centers over an initial term of the next 20 years. With state-of-the-art automation, these two facilities will deliver a combined 59,000 pallet positions to support the local brands of Ahold Delhaize USA in the Northeast and Mid-Atlantic regions,” said Fred Boehler, president and CEO of Americold.
Ahold Delhaize USA companies’ distribution networks include 16 traditional and e-commerce distribution centers. The network will grow to 23 facilities by 2023.