The Liquor Distribution Branch is shopping for a supply chain and logistics management expert, three months after Liquor Minister Rich Coleman announced LDB would be looking for a new warehouse.
“The BCLDB is planning to relocate its main Distribution Centre from the current location on East Broadway to a new location in the Metro Vancouver area,” said the May 24-published request for proposals.
“The right facility in the best available location will allow Distribution to make improvements in its business operation. In order to take full advantage of a new, more appropriate facility for the volume of business flowing through the Distribution Centre, the BCLDB may need to procure new technology solutions for Warehouse Management, Transportation and Logistics and Supply Chain.”
The request for proposals was issued 10 days after the BC Liberals won surprise re-election. Deadline for bids is June 21 and a selection is expected by July 12. The one-year contract would begin July 15 and LDB would have the option of up to four, six-month extensions.
The 3150 East Broadway land, which has not yet been listed for sale, was assessed at $29.77 million in 2012. The 300,000-square-foot warehouse in the Grandview Boundary Industrial Area is near both the Rupert and Renfrew stations on SkyTrain’s Millennium Line.
The Vancouver Distribution Centre also includes the head office, the company’s flagship retail outlet, security control centre, data centre, test laboratory, support and training facilities, cafeteria, fitness centre and daycare.
Coleman told CKNW in February that the government was hoping to find a warehouse “already purpose-built.”
The biggest purpose-built warehouse in the province is ContainerWorld in Richmond, which has a pre-distribution contract with LDB and was one of four companies shortlisted in summer 2012 to privatize LDB’s warehousing and distribution. The controversial tendering was abruptly halted before the bidders could make final presentations, when the B.C. Government and Service Employees’ Union scored a new two-year, government-wide deal on September 27, 2012. That contract prevents LDB privatization.
“Is this another stealthy way to fulfill the original purpose of offloading some of this to a private sector investor that is closely tied with the government?” asked NDP critic Maurine Karagianis in a February interview with Business in Vancouver about the warehouse move.
The existing warehouse handles 250 inbound deliveries weekly and makes 850 shipments per week. LDB’s fleet of trucks delivers to half of Metro Vancouver customers and the other half are made by third-party carriers. Deliveries outside Metro Vancouver are handled entirely by third-party haulers.
The RFP also said the Warehouse Management System “is now outdated, has been heavily customized and is in need of replacement.”
LDB generated $911.1 million profit on $2.89 billion in sales for the year ended March 31, 2012. Results for 2012-2013 have not been published. The company employs 3,500 and operates 195 government liquor stores. It buys from 400 suppliers and manufacturers and also distributes to 1,400 private outlets, almost half of which are licensee retailers. While the RFP says LDB “operates with similar independence to a Crown corporation,” its general manager, Blain Lawson, reports to Coleman.
An April 2001 Finance Ministry report by Coriolis Consulting Corp. said the cost of a new facility would likely exceed the revenue from selling the 9.2-acre property. It estimated the government would receive $13 million to $15 million if LDB vacated the warehouse or leased it back on a short-term basis. The cost to acquire a suitable site and build a new distribution centre in South Burnaby, Annacis Island, Northwest Langley or Port Kells was estimated at $17 million to $19 million. To break even, the new facility would have to be 20% smaller, the report estimated.
"The only relocation options for the LDB in the foreseeable future will be to purchase a site and construct a new building or enter a build-to-suit agreement with a developer,” said the Coriolis report.
