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Taking logistics for Arla to the next level

Last year, the long-lasting road transport cooperation with DSV was extended to also include logistics planning, building and warehouse operation.

DSV has known Arla for years, as a customer. The normal delivery isroad transport of dairy products across Northern Europe. Last year, the long-lasting cooperation was extended to also include logistics planning, building and warehouse operation.

"Arla didn’t think of DSV in terms of warehouse logistics, so the tender actually came in through our Danish Road connection to Arla." Heiko Henkel, Director of Business Development, DSV Solutions explains and adds: “We had a lot of help from Danish colleague Michael Gregersen who was able to establish the contact."

Following a number of productive meetings, DSV Property was chosen as the right partner in building Arla’s new logistics hub in Northern Europe; in one of the last meetings, DSV Property presented a logistics solution and a location that suited Arla to a tee:

A 10,000 m2 combined warehouse/cross-docking terminal at Heidenau 20 km south of Hamburg:

  • 800m² office (for DSV as well as Arla staff)
  • 7,500 m2 chilled to 2-6 degrees Celsius (dairy products)
  • 150 m2 chilled to 0-1 degrees Celsius with extra ventilation (special dairy products such as blue cheese)
  • 2,500 m2 with ambient temperature (dairy products with no cooling requirements, e.g. UHT milk)
  • 850 m2 mezzanine (dedicated to value added services)
  • 20 docks and 20 truck parking lots with direct access to power supply to ensure continued cooling

The new logistics hub will replace Arla’s old logistics set-up with pick-ups and storage at 30 dairies in Northern Europe so that the various products from Arla can be consolidated and shipped to retail customers in Central Europe.

Managing the project from start to finish

When DSV Property wins a building project, they manage everything from finding a location, buying a piece of land to choosing an architect and sourcing contractors. In this case, a joint venture with local German company Freo Logistic Properties was formed.

Freo brings extensive experience in warehouse building to the table. With their local knowledge and experience, they were also instrumental in finding the location and were able to establish excellent relations to the German authorities from the start and ensuring that the building permit was approved on time.

The first ground work started in early August, and while the operations contract has an official start date of 1 March 2016, the realistic expectation is that the new warehouse/cross-docking terminal will actually be up and running 1 February 2016.

"We don’t like to disappoint, so when Arla asked us to finish as soon as possible, we had a look at the project and made a realistic assessment. We should be able to finish by then barring frost in August," Heiko Henkel jokes.

A 10-year contract

The building lease runs for 10 years, which is unusual, but essential for a dedicated warehouse/terminal, Heiko Henkel points out:

"Arla’s requirements for the new logistics hub were very specific, so a standard solution really wasn’t an option. Arla asked for three different temperature zones and a very high throughput to be increased at peak times. A dedicated solution was our best bet of meeting these requirements 100% and ensuring a smooth operation." 

DSV Property has secured an option to buy additional land at the site to extend the warehouse to 15.000 m2. “It’s a good thing to be geared for growth,” Heiko Henkel says.

Initially, the warehouse/terminal will employ 35 blue collar workers and five admin staff. The operation will be managed by the German DSV Solutions division.

The handover of the building is planned for 25 January making the project one of DSV Property’s fastest – from ground zero to turnkey in six and a half months.