The Home Depot is in the midst of a five-year, $1.2 billion expansion of its distribution network that will allow railroads to increase their share of inbound bulk items sold in the retailer’s 2,200 stores.
The expansion, which includes larger buildings with more rail spots, is an opportunity for railroads to convert freight from the highway, Wesley Ann Barton, Home Depot’s senior manager of transportation and rail design, told the Pacific Northwest Association of Rail Shippers this week.
Railroads currently handle about half of the freight that moves into Home Depot’s 25 bulk distribution centers. The retailer has outgrown many of those centers, some of which were built 20 years ago.
One bulk distribution center, for example, has just two railcar unloading spots. “Even if we wanted to do more volume through that facility, it’s just not possible because we just don’t have the car spots in order to do it,” Barton says. “That’s why I say this is a great opportunity for the railroads as we build new buildings because we’re building more car spot capacity. We recognize there is value of using rail.”
A new bulk distribution center that opened in the Dallas area in 2019 tops 800,000 square feet, up from less than 300,000 square feet at the distribution center it replaced, Barton says.
Home Depot’s bulk distribution centers receive inbound flatbed trucks and railcars loaded with items such as lumber, plywood, roofing shingles, and drywall. Home Depot also operates five transload centers. Trucks deliver goods from the bulk distribution centers and transload sites to Home Depot stores.
The centers receive about 110,000 inbound flatbed trucks and 26,000 boxcars and centerbeams annually. Products are then sent to stores in 240,000 truck shipments.
“Obviously we like rail. Certainly, pricing is very attractive to us versus truck. And some of these products we receive into these DCs are moving a very long distance,” Barton says.
Service consistency is important, too, even if rail is slower than truck. “We can plan for longer lead time but it’s harder to plan for a volatile lead time,” Barton says.
As concerns rise about climate change, railroads have an environmental advantage due to their lower carbon footprint.
“Another reason … why we like rail is we do get some environmental benefits from freight moving rail versus truckload, and that can be either carload or intermodal,” Barton says.