Inside Amazon's 3,000-Site Network, AWD 3PL Push & 12-Year Automation ROI

Marc Wulfraat 00:53

It's my pleasure, Justin.

Marc Wulfraat 01:25

Well, I I've been in the consulting business for supply chain well, going back to really was my first job out of university, so close to thirty eight years ago and the very first firm I worked for was a company that was an independent agnostic boutique consulting firm and that became my fabric, I guess. I just carried the torch forward with that business model after I started my own company you know twenty years ago. And I think it's all about trust, Justin. At the end of the day, if I'm trying to if you hire me as a consultant and I'm trying to you know my my agenda is to decide to sell you a a 3PL service or to sell you a particular type of automation system or anything. It's pretty difficult to remain unbiased when you put together your storyboard. and I don't think that's what people really want to pay for, right? At the end of the day I think they want honest advice as though you were the owner of their company. What would you do if you were in my shoes? And and that seems to be the model that works best for us.

Marc Wulfraat 02:59

Well, you know, the I think the counter argument might be, well, my role in life is to sell more consulting services, right? Yeah. So there's always something somebody's trying to sell somewhere. Fortunately, we oftentimes if we bill underneath what the agreed-to amount is, we actually don't charge the full amount. We say, look, we didn't need the hours we thought we would, so we'll we'll just end the engagement here and you only have to bill for what we did. So that's not our our gain. and I think what ultimately comes out of that is goodwill. And goodwill translates itself into many positive things downstream. It could be word of mouth. You know, the number one sales rep we have is word of mouth from past clients that tell other clients we really enjoyed working with so-and-so. They they gave us good advice and they were really fair about what they charged us. all too often the complaint I get about Consultants in general is, you know, the school bus driver shows up at the sales cycle and drops the kiddies off after the deal is signed, right? And a lot of these kiddies don't even know what a pallet looks like or anything like that. And in our business, having some gray hair or no hair is kind of is kind of the is kind of something that, you know, people I think appreciate just having that experience where you've seen especially with automation, Justin. I mean we're into a very complicated topic. the promise doesn't always get delivered. people wanna know ahead of time if there's something they have to be really careful about or cautious of because they don't want to be the one that gets fired after they made the wrong decision. So but it like I say it goes back to experience and trust and in order to get that you just have to be as honest as you can with people and as trustworthy as you can with people. Bad mistakes along the way where you're just out for money or or or some something like that. ultimately will in the end you know, you won't stay in business very long if that's the game you play.

Marc Wulfraat 05:17

Mm-hmm.

Marc Wulfraat 06:21

Well, to tell you the truth, it's I accidentally stumbled across what we're doing here. It wasn't a a stroke of genius or anything like that. It was just kind of luck. So I kinda go back to 2006 for the story that will unfold here is, you know, I was hearing more and more at the trade shows and from clients, you know, these guys at Amazon, they're losing money, they'll never make it. You know, that was kind of the thought process at that time. and and so everybody was interested to know how they were going to market, but nobody knew because they were so secretive. Quite often they'd even put a sign on the outside of the building, that kind of thing. So I I hunkered down in my basement and said, gee, you know, I was just starting my own company. I said, I wonder how these guys go to market and We didn't have AI or anything like that back then. so it was just hard work, you know, figuring out where they were, how big the buildings were, what was inside those buildings, how many people worked there, what did it cost for them to operate the place, how much capital did it take to set it up, what type of automation or mechanization were they using in the building, and so on. and so what started out as a little grassroots hobby, and it was easy back then, there was maybe 20 buildings to speak of, and they were all in What they called non are or sorry, tax friendly states, you know, places where they wouldn't have to charge retail sales tax when they sold something. so there was nothing in California, you know, it was all places like Arizona and whatnot. They were they were really wherever the the tax legislation said you didn't have to charge sales tax upon selling something, that's where they've located. anyhow, what what started out as as being twenty buildings, we've now got over close to three thousand or or three more than three thousand buildings in a data set that we've compiled over twenty years where we're updating it daily and it's it's all over the world, you know. So whether you're talking about the US or Japan, they've got massive infrastructure. in all these different countries where they operate. And it's not just fulfillment centers, you know, a lot of people get get confused between the different rules of the buildings. there's sortation centers, there's delivery stations, there's cross-dock facilities, there's all kinds of supporting transportation infrastructure. And there's other types of stocking locations like inbound receiving centers and so on. So figuring all of that out as it evolved over time has been almost a full-time job. And so It started with Amazon and we've since you know

Marc Wulfraat 08:57

Well, I you know, the next obvious question was well how does Walmart go to market? What's their cost structure look like and who has the competitive advantage and you know, Wall Street was clamoring for this type of information. And so that's kind of how it all got started was frequent presentations with the investment community, finding out what they were interested to learn, you know, what's the cost to serve and so on. and that just led us further down the garden path. And we're really the only people that are doing this. There's been a lot of people that are plagiarized our work, but we're really the only people that maintain f our finger on the pulse of what these companies are doing. And I'm not to say we're perfect at it because you can't be unless you're on the inside with all the you know the general ledger, but we do the best we can with the public information that's available. And I have to tell you, you know, there's weeks go by where Amazon adds four or five million square feet a week. So it's a it's a story that is definitely not done and over with. And by the same token, Amazon closes a huge number of buildings. So for them a warehouse is like a store for anybody else. If it's not if it's not making money or it's if they don't need it, they'll they'll abandon ship and they'll go somewhere else. so anyway, it's been a really it's been a really interesting ride. It's taught me a lot about supply chain strategy. If you're gonna learn about supply chain strategy, you might as well follow the best in the business and the biggest in the business. So that's kind of one of the major incentives for for doing this in the first place.

Marc Wulfraat 11:19

Well, going back to twenty twenty two, Q one when their quarterly results came out and they were they were not good on Amazon immediately slammed the brakes on and said, Okay, we gotta shed assets, we've got to shed operating expenses and so that's when that Massive closure of facilities started happening right about that time. And so they peaked at around two hundred million square feet, net new square feet per year in twenty twenty one. And then when I say that number, I'm including upper levels of the building, not just what's sitting on the ground level.

Marc Wulfraat 11:58

two

Marc Wulfraat 11:58

hundred million net new, so that's That's you know, how much they added minus what they closed down in one year. Which you know, is is unprecedented in the history of of anything. That that was a world record. so if Guinness published a record, that would have been it. any

Marc Wulfraat 12:15

case,

Marc Wulfraat 12:23

Oh well that

Marc Wulfraat 12:23

was one company in one year and that was the height of COVID, right? We were all hunkered down and we couldn't go to the stores and we were ordering and it was a a one time bonanza and for the company and so anything that looked like a warehouse basically Amazon grabbed up at that time. but they overshot the mark, you know, ultimately COVID became a memory and people wanted to go back to the stores and sales started declining within the e-commerce sector. So since that time, you know, the the net new square footage has still been astronomical. You know, we're talking fifty to seventy million square feet a year. But it's been significantly reduced since that that peak here in twenty twenty-one. So it dropped to about fifty-four million in twenty twenty five. That that was kind of of the lowest post COVID number. and this year we're c estimating it'll go back up to eighty five. So about a forty five percent increase

Marc Wulfraat 13:16

over last year.

Marc Wulfraat 13:18

This is net, yeah, this is this is global net new square footage of space. Roughly seventy percent of the space is gonna always be in the US. But call it about eighty five million net new global square feet this year in twenty twenty six. Next year probably gonna look a lot similar to this year. based on what we can see so far. so, you know, one has to imagine most companies don't even have anywhere close to that amount of space in their total network, never mind adding that much in one year, right? so you know what's the driving force behind that right now, currently right now, is there's been this announcement they made about Amazon supply chain services. which is we will you know go the the Amazon going to all of the merchants, the 3P merchants around the world. And let's say you're a merchant in China and you have to satisfy numerous sales channels that are online because you don't have any stores in the US. So you're moving merchandise to the Walmart channel, to the Target channel, you know, Shopify, eBay, Amazon, all these different sales channels. And so that means you've got inventory repositories on North American soil for all these different companies, and inevitably you're going to get it wrong. You will have too much here and not enough. there or losing sales on one channel and and having dead stock in another and furthermore in the wrong locations, right? So too much on the west, not enough on the east. And and you can imagine how complicated it must be for some of these merchants who have to move merchant merchandise from twenty five thousand miles away to a geography they're not familiar with. and then furthermore that they have to pay penalties with some of these retailers if they're overstocked or or understocked on specific SKUs during specific months of the year. And so it it's it's a complex world they live in and what Amazon is saying is well take all that away from you. You know, we'll we'll be your sole provider of third party logistics everything. Send us a hundred percent We will decide where to move it within our network so you don't have any more of these stocking penalties. We'll we have AI, we've got big data, we'll figure it all out for you.

Marc Wulfraat 15:31

We'll have you know, we'll we'll even move your goods to other sales channels for you when you need us to do so. So if you want us to send a a truckload of goods over to Walmart.com, we'll we'll be your third party logistics company, one-stop shopping for all the freight, all of the warehousing, and then on on top of that the FBA. Fulfillment by Amazon. So they're becoming a pure soup to nuts 3PL, not just fulfillment by Amazon, but a pure 3PL, which means a boatload more warehouse storage capacity is needed to do what they call Amazon warehousing and distribution, AWD. And that is the explosion of space, which they branded as being their IXD network or inbound cross-dock network. These are all the buildings that stock merchandise in advance of the fulfillment center. So they bring the goods in at the ports, they move them into these national inbound cross-docks centers or NIXD buildings. They hold them there, think of these as long term storage tanks, and then they move them to RIXD buildings, which are regional inbound cross-docks, closer to where the action is, and then from there it moves to the fulfillment center. So it's a it's the first time I've seem kind of a two step inbound process even before it gets to the you know the point of sale or or in this case the fulfillment center. most of the other big retailers out there will have an import distribution center that feeds the regional distribution center that feeds the store. That's kind of the flow there. So in a way it's a two-step process as well. But in the case of Amazon, you've got NIXD to RIXD to FC. And that's a that's a you know, that's an involved process, but it it it also means you've got you know, tens of millions of square feet being added just to support that that inbound network and optimize where goods are positioned. within the the country in order to minimize ultimately the outbound transportation shipping expense. Because if you can get goods positioned strategically in the right places around the country, that means you're shipping less you know, you're less packed ton miles when you actually have the sales order in hand. And and so that's at the name of the game is to get shipping expense down to a minimum outbound. minimize the amount of air freight you gotta send because you're moving something across the country a long distance. And all of these things are panning out. They're paying off. The idea is now with all this additional capacity, Amazon will drive more 3P services revenue to help pay for it all. So now they'll not only have this additional capacity for third party vendors, but they'll have it for themselves as well. And Amazon's business model has always been get the other guy to pay for it the fixed expense. And then I can leverage my own I can use that to to make my own business pay for itself.

Marc Wulfraat 19:35

Right. Well there may be some market share erosion. I would expect there would be. But one has to also remember, you know, e-commerce in general as a market is still growing. Amazon's latest unit sales volumes fifteen percent year over year. So You know, it's still a sizable market. There's still plenty of room for sales growth and I don't think the full shock of Amazon moving into the sort of the pure 3PL market has really been felt yet 'cause we're still in the first inning on this one.

Marc Wulfraat 20:44

Gosh,

Marc Wulfraat 20:48

Kind of half and half for us, I'd say. they're they're very closely intertwined because let's say you're a company when you have fifteen, twenty billion dollars of sales. And you're operating multiple distribution centers and they're they're expensive buildings. They have a lot of people inside of them. Let's say you've always done things conventionally, like you've never deployed automation. you might be asking questions, or at least maybe the ownership of the business is asking questions to say, are we operating the right number of warehouses? Or should we reduce the the facility count that we have, put more volume under one roof and And and that'll give us the ability to cost justify automation because automation needs automation needs volume to pay for itself. And and so there's always that question that nags I think CEOs to say, are we set up from a supply chain perspective? Possibly. So you have the automation.

Marc Wulfraat 21:49

We're never done. Yeah, and I mean automation says Centralize more volume under one roof, get more volume under into one building so that we can put the automation in, reduce the warehouse headcount accordingly. but there's this pendulum swinging in the opposite direction that says we need faster speed. You know, it's great having one warehouse to service the whole country and getting efficiency inside

Marc Wulfraat 22:11

the

Marc Wulfraat 22:11

four walls.

Marc Wulfraat 22:13

We want two-day service level, right? And so you're not gonna do that if you put everything in Indianapolis or something like that. So now you got the opposite tug of war happening where the dynamic is. We want to be in more places closer to the market. should we do that for all of the SKUs we sell? You know, if you have a hundred thousand SKUs and fifteen or twenty thousand of them cause all the excitement. do you need to have all hundred thousand replicated in every building or should you really go with the fastest velocity items? close to market. So there's There's all these different angles people want to understand. What happens to my transportation expense, inbound and outbound, what happens to my warehousing expense? What's the capex of the automation? Will I shrink my building footprint and go higher? And how does that impact the capex story? so you know and and then what if something breaks? What's the risk of me not being able to sell my products if the automation goes down? You know, think of an AS/RS crane. If that crane goes down, everything in that aisle is shut off from being sold. and and that's just one example of many. And so, you know, risk is plays a big role in all this decision making process too. So CapEx interest rates, uncertainty in the marketplace, whether that be political uncertainty, whether that be you know, interest rates not being locked and loaded for the next twelve to twenty four months or high interest rates. you know All these dynamics changed every single day. And when we saw boats trapped out on the water during the COVID time period, you know, remember all the ships they couldn't get into the ports. People had inventory sitting out there on the water that they couldn't get a hold of. They were starting the shelves were starting to line barren and there's there's the risk of not having enough inventory on domestic soil, right? Being too lean. And people learn from that. So maybe I need to have more inventory, fatten up a bit just in case. bad things happen. so this is the world we live in and y yesterday's answer may not be tomorrow's answer. That's the thing that makes it exciting and interesting is you know every b almost always before somebody signs a check for automation say, you know, is there going to be something better that comes down the pipe tomorrow? So that makes this system we're buying redundant. And the answer is of course. You know, we we don't have a crystal ball, we can't tell, but there's always going to be something better down the horizon. fact of the matter is if you don't do something now, your competitors are busy working on it and and you're gonna be more reliant on human labor than they will be, and that's a disadvantage. Look at you know, by way of example, look at Amazon today, over a million robots in the field deployed, right? they manufacture their own robotic capacity. They're adding more plants to roll that out at an even faster pace so that they can internally produce faster. Versus Walmart that's really reliant on third-party vendors to get automation done. And the capacity of those third-party vendors becomes their Achilles heel. It becomes their limiting factor in terms of rollout and their speed to go to market. There's a big, big competitive disadvantage that they're experiencing. in my opinion, because

Marc Wulfraat 25:29

they

Marc Wulfraat 25:29

don't own.

Marc Wulfraat 25:31

It's like vertical integration and and exactly right. And so a million robots, I mean that's bigger than any automation company's ever deployed, and this is a retailer. So you begin to get the to the sense that, okay, it's not just about being automated, it's how fast can you do this? How much can you control? and and therefore innovate. And I have R and D people working on the latest generation of newer things, taking that robot, the Kiva robot they bought and modifying it six different ways from Sunday to get it to do different things. And it's really worked out well for them. So if you're not automating, your competitors, all right, that's the moral of the story. And you know, I've seen automation get deployed things like robotic picking in companies as small as fifty people. So you don't have to be Walmart or Amazon to do this. You can be you can be small, mid-size and and and still get your you know, stick your foot in the water your toe in the water and get a sense of it of what it's all about.

Marc Wulfraat 26:53

I

Marc Wulfraat 26:53

think you're in the ballpark.

Marc Wulfraat 26:57

Yeah. At least you know, when you start traveling the world and seeing beyond North American soil, you start to realize Western Europe, China, Japan. These are markets where automation has been rolling out in a in a big wave for twenty years before us even in fact all the great automation vendors came out of those markets. And and there's a reason. I mean one reason number one is World War Two, they lost a lot of people. in in the war and so the labor pool available to do the work is not the same as what we have here. number two is the cost of land and the availability of land is much lower. Like, you know, they don't have those big fields in Texas

Marc Wulfraat 27:40

where you

Marc Wulfraat 27:40

can

Marc Wulfraat 27:40

throw a

Marc Wulfraat 27:40

million.

Marc Wulfraat 27:42

Yeah, availability is low cost is high. So you got to build up and it's expensive to get the space, right? So automation is a natural for the European, especially the Japanese market, where 85% of Japan is not even habitable. It's just mountains. so you end up in in these markets where they've been pushing the automation button for decades well in advance of us. And we're just starting to arrive at that destiny now, and the fundamental reason is the changing population dynamics. You know, I always talk about the age dependency ratio ADR as being the number one thing to watch out for, which is how many people under the age of 16 and over the age of 65 depend on the people that are actually in the workforce. And the more that number rises, the higher the ratio gets. the less people you have to do the work to pay the bills for everybody else that isn't working.

Marc Wulfraat 28:34

and that's where we're

Marc Wulfraat 28:35

arriving, you know. We're arriving at the point now where US is starting to look a lot more like Europe. Hence there will be a big push for automation. And the thing is you don't want to be at the back of the bus on the at the eleventh hour saying, Guess what, we can't find people, we better automate 'cause those vendors are going to be sold out for three, four years. We're already seeing signs of that now where the vendors are sold out. You know, come back, you want something from us, 2031 is the earliest we can do it. and and so it's becoming, you know Labor and the ability to find the labor, the ability to reduce turnover and keep a steady crew, is getting expensive. You have to keep ahead of the Joneses with your wage rates. All these labor pressures are upon us. So the US, like I say, is starting to look a lot more like Europe. And automation is going to become warehouse automation is going to become like what it is in manufacturing. It's inevitable.

Marc Wulfraat 30:42

Well, you know, Justin, when I was a a kid and I remember starting out in the business in the eighties and the CFO would be at the boardroom table, you know, and if you came back to him with a storyboard that said, This'll take five years to pay back, you know, and especially if it was a publicly traded company, they'd they'd throw you out, you know, get out, just do it conventionally, you know, kind of thing.

Marc Wulfraat 31:05

Yeah, yeah, that's ridiculous, you know. With five years, you know. Today I'm regularly presenting to, you know, executives and saying, you know, we've really done our homework here. We know what not only the capex is gonna be, we know the ongoing opex implications for the next decade and beyond. and we've really dotted the I's and crossed the T's on this and it's gonna be a minimum of a twelve year payback. You know what, no one's throwing me out of the room anymore. they're saying,

Marc Wulfraat 31:33

okay,

Marc Wulfraat 31:35

twelve

Marc Wulfraat 31:35

years. Twelve years. Yeah, because you know, once you plug that automation engine into a warehouse, it doesn't run by itself. The engineers that are needed to keep it going and the maintenance, the wrench turners, and all of the upgrades and the parts that were out and the spare parts consumption and all and and the IT support and all these additional costs. If you don't do your homework, you're gonna not catch those and then you'll find out when it's too late. But catch them up front and do your homework. And yes, you're gonna save on headcount, but you're gonna add back all this other cost structure. And the capex isn't going down, it is what it is. And so when you really do your proper, responsible job on this, you're gonna see it's ten to twelve years. Wage rates play a big role in that number, right? If you're paying twenty five dollars an hour, if you're paying forty five dollars an hour You know, obviously the more you pay for for base wage rate and benefits will accelerate the the the the payback time frame. But no, twelve years is not an unusual number for payback and companies aren't batting an eyelash with twelve years anymore. It's it used to be five. Now twelve years, okay. We gotta do this. You know, we gotta do this. We can't Look, we've got thirty new faces showing up on the receiving dock for training. Every Monday morning it's ridiculous. You know, we can't operate this way anymore. And and so that's the hue and cry is if if you can't service the stores or you can't service the customers, then what are you doing in business? The warehouse is a critical function towards selling and and supporting sales. so if you're struggling

Marc Wulfraat 33:13

to m to p to put the manpower into the building there's no future for you, right? You're gonna go to the way of the dodo bird. So that's what everybody's look focused on is just how do we get this in so that we don't risk the business. Because there's plenty of horror stories out there about automation projects that did not go well. so

Marc Wulfraat 33:32

that's

Marc Wulfraat 33:33

I think

Marc Wulfraat 33:33

the foremost concern. Yeah there are there are there. I mean the ones that fail inevitably were the ones that were rushed. You know, I hate to generalize but That's quite often. You we need it we need it up and running by by December, you know, and and nothing happens by December. You know, you have to we you have to troubleshoot and QA the heck out of these things before you even start to do any type of sales volume in them. and if you do your homework and you do it right and your responsible, automation's a wonderful tool, right? It really is a game changer.

Marc Wulfraat 35:23

Yeah, real estate strategy and automation are go hand in hand as far as topics are concerned. And you're you're on you're you are focused on the topic with what you just said, that's very, very crucial. If I'm bolting automation to the floor, let's say it's AutoStore for the sake of discussion, that's a system that takes months to install. You've bolted it to the floor. Okay, the 10-year lease is up. I've decided that I'm gonna move across the street to a bigger building. So I've outgrown the one I'm in. I can't just shut down the AutoStore and have the vendor come in and over the weekend take it all down and move it across the street. You know, that that's a multi month process. And and so what do you do in that time period when you relocated to the other building and now you're without this piece of automation. All the inventory that's in that automation is not easy to get to. You got to get it all out, right? Because it's a big cube of dense storage. It's not so complicated if it's an AMR type system where the robots are autonomously moving around the warehouse, right? You put those on a truck, you move them across the street, they digitally map the new building and then they're ready to roll. That's the beauty of the AMR, is it's flexible. but anything bolted to the ground, whether be a sophisticated conveyor system, an AutoStore, any other type of fixed material handling system. Boy, that's tough. You know, and so you know I don't know if you've noticed, but when you look at all of the big Amazon buildings that have gone up really over the last five years, so many of them have been owned rather than leased. They're built to suit the Amazon Robotics Small Sortable Facilities, custom built for Amazon, and they're not rent leasing them the way they used to. They're owning it. I don't know if I think they figure we're gonna be here for more than twenty-five years, right? So why pay for the whole thing twice? Let's just own it and at the end of the day we'll save money because once we've paid off the depreciation, it's ours, right? And we're printing money. So maybe the market in general, as we go more towards automation, we'll see more ownership play a role in the market. or maybe we'll see people learn you know negotiating longer-term lease deals where they want the first 10 years. Here's the you know the inflation riser we're going to agree to, and we want first right of refusal in the year 10. And we want to set up the terms for years 10 to 20 as part of our upfront negotiation strategy so that we're

Marc Wulfraat 38:49

Like

Marc Wulfraat 38:49

that.

Marc Wulfraat 38:53

I I have to be honest with you, there you know, there there's only so many hours in a week that that I can dedicate towards, you know, after I still have my consulting practice on money and then to to doing all this almost like PhD type work, if you will. almost

Marc Wulfraat 39:09

like being

Marc Wulfraat 39:09

a professor.

Marc Wulfraat 39:10

Yeah. You know, there's there's a lot of subjects that are out there. The parcel industry is a big example where there's a huge interest to understand what the dynamics are taking place in the parcel industry right now. And you know, I know enough to be dangerous. I can talk to to about all the different companies, the volumes of cost structure. But I could spend you could spend your entire career just doing the parcel industry and to gain expertise in that. So supply chain being the size of subject that it is. is so huge. That you really got to pick your battles in terms of where you focus. And if you want to go deep in and narrow in a given area, it's kind of where what I do. I chose strategy as being my my the area that interests me the most. But I also get into facility design down to the down to the inch, right? so we were doing all these AutoCAD layouts for very, very complex buildings, over a million square feet and lots of automation that real one off type projects. And so the design engineering work on all the supply chain strategy that even leads up to that. That's a lifetime right there. So I don't have the time to think about what what they're doing over at you know satellite production facilities or Elon Musk or any of the things there. I'm I'm like most people I just read the headlines.

Marc Wulfraat 41:29

No, I mean it's it's you're right. Yeah when you're doing one of these projects you tend to look out into the future as best you can, right? If nobody really knows the future. So you start with assumptions around growth and We gather data on the existing business, if it's there, and then you use that to start simulating and modeling what different types of materials, handling systems, and options are available for the customer. and if you're starting with a greenfield clean sheet of paper, you can build utopia, right? Say here, let's go find something that looks that looks like this. but then all the reality starts to come into play. Well, these Marc, these are the ones that are available on the market to market then the building. building columns and everything start to play a role, the depth, the width of the building, number of dock doors, size of the yard, and and so as soon as you find a potential site you're trying to make it fit, and you know, eventually you're you're deviating away from utopia from perfect, right? so that's why built when you're talking about highly complex projects like automation, build-to-suit facilities oftentimes play an an extensive role there because they want the glove to fit around the hands, so to speak. but you know, when you're talking about going out and leasing a a brownfield or greenfield building and making it work, that's a big reality for for what's a big part of the work we do as well. So you know, I can't un underemphasize building column spacings, looking for something like if you want to go with a twenty foot column spacing. you're not gonna get a lot of options out of that. If you wanna go fifty six feet, you're gonna have more options. So it's

Marc Wulfraat 43:11

Yeah, fifty six by fifty is kind of a standard, you know, grid pattern or fifty six by sixty and forty foot clear height. You know, the boxes they're coming out with today are are you know good good boxes for flexibility 'cause you can go single deep, double deep, very narrow all in that same column space and so you've got some options there. You gotta multiple zones in the building that do the different things. So yeah. We're we're smarter today than we were even a decade ago about generic building design.

Marc Wulfraat 44:07

That last mile, you know, I think there's different flavors of that too, right? Like we've got this Amazon Now rapid fulfillment center, they're rolling out a thousand of these across the country, right? What's what's one of that's a five thousand square foot ugly brownfield building in the inner core of a city somewhere. Could be an old dollar store, for example. Walmart's

Marc Wulfraat 44:30

behind

Marc Wulfraat 44:31

Roughly, that's the average. And Walmart's right behind them doing the exact same thing. So they're gonna do the same thing. They're gonna have little tiny dark stores spread across the country. in order to do 15- to 30-minute service level. so that's a new spin on things. We you know, these ugly old buildings that have been abandoned for a long time are suddenly worth, you know, eighteen, twenty, thirty bucks a square foot. and, you know,

Marc Wulfraat 44:53

they're in hot demand. Yeah. So so anyway, another just when you thought you had it all figured out, something new comes along. Whether or not any of this makes money is the real question. I mean what the are they gonna shut it down a year or two from now because it's all shooting ourselves in the foot whenever we get a sales order we're losing money. That's to be seen, you know. none of this high speed stuff in the past has really been economically astounding. A lot of it is is red ink, to be honest with you.

Marc Wulfraat 45:28

it it's cost

Marc Wulfraat 45:29

money

Marc Wulfraat 45:29

for speed. Right. That the guy in the car who makes the delivery, the manual work done in the store to fill the order, the cost to replenish the store in the first place from another building, all of that adds up. And the order size is not a hundred bucks, it's it's thirty bucks or twenty bucks. And so you start throwing ten, fifteen dollars of labor at at a problem at a thirty dollar order and you're not making money. I'm gonna assure you that. So we'll see. We'll see what the future holds for some of these things.

Marc Wulfraat 46:03

Okay,

Marc Wulfraat 46:04

Justin.

Marc Wulfraat 46:17

Well thank you for having me.

Marc Wulfraat 46:27

Okay. That sounds awesome.

Marc Wulfraat 46:29

Bye

Marc Wulfraat 46:29

now.

Marc Wulfraat 46:30

Bye.