Companies leasing warehouse facilities in Victoria may be entitled to a refund from their landlords thanks to a recent decision made by the Victorian Supreme Court of Appeal.
Essentially, the Court held that the lease of premises used to provide cold storage and logistics services was a ‘retail lease’ for the purposes of the Retail Leases Act 2003 (Vic), Hunt & Hunt lawyers has shared.
Hunt & Hunt noted that the decision has practical implications for warehouse operators and freight forwarders, making many entitled to repayment of expenses including land tax and repair costs going back six years.
The Retail Leases Act impacts all aspects of the formation, operation and ending of covered leases. In terms of costs for tenants, landlords are not able to pass on land tax liability or legal costs associated with the preparation of leases, and
landlord are responsible for maintaining premises in the same condition as at the beginning of the lease, this includes equipment, appliances and fittings provided on the premises under the lease.
For the case that brought about the decision, IMCC Group (Australia) Pty Ltd v CB Cold Storage Pty Ltd , the Court had to consider whether a lease of premises used to operate cool storage facilities would be classed as a retail lease.
“The landlord argued it was not due largely to the nature of the services provided and the fact that almost all of the tenant’s customers were businesses,” Hunt & Hunt shared. “The Court of Appeal held that the lease was a retail lease and took the following factors into account: any person could purchase the storage services if the appropriate fee was paid; the tenant’s business was open during normal business hours; and the tenants customers were the actual consumers of the storage service.”
The Court was reportedly not concerned that the premises were acquired for a business purpose.
Hunt & Hunt advises that the criteria for ascertaining whether a warehousing and logistics business’ lease is eligible to be classified as retail will include the rental amount, the size of the premises, whether customers can attend the premises, the hours of operation, the services provided and the permitted use of the premises under the lease.
“Every tenant that provides warehousing and logistics services should have their lease reviewed to determine whether it is potentially a retail lease,” Hunt & Hunt noted. “If it is a retail lease under the law, but the tenant has been paying land tax and maintenance and essential safety maintenance costs, there may be a very strong case to demand repayment of those costs from the landlord.”
Australian food distributor PFD Food Services will soon add a new cold storage and food production facility to its portfolio in western Sydney.
Frasers Property Australia will construct the $70 million, 22,208m2 development on a 60,000m2 plot at its industrial site in Chullora, 15km west of the Sydney CBD.
It is expected to be completed in mid-2018.
PFD also recently commissioned Vaughan Constructions to build a $36 million, 25,500m2 facility on a 74,400m2 site in Knoxfield, 27km east of Melbourne’s CBD.
It will comprise 20,900m2 of refrigerated, ambient and seafood storage, along with 3,000m2 of office space.
Scheduled for completion in late 2017, the development recently hit the halfway mark, and Vaughan Constructions has shared a time-lapse video of the project’s progress.
“Construction of PFD Food Services’ new Knoxfield facility is progressing well,” Andrew Noble, Managing Director, Vaughan Constructions told Logistics & Materials Handling. “Vaughan Constructions is anticipating project completion at the end of September 2017.”
Linfox has completed the construction of a new intermodal facility in Darwin.
The logistics provider partnered with Vaughan Constructions to design and construct the facility.
Situated next to the Darwin railhead, the 3,000m2 purpose-built site will create up to 15 ongoing local jobs, the company said.
The site features a chilled storage area to ensure temperature-controlled products can be be safely stored during transit.
“Each year, [our] intermodal team shifts more than 15 million pallets for Australia’s retailers using its multi-modal freight network,” said Linfox CEO, Annette Carey.
“Linfox has an extensive footprint in the Northern Territory, with sites in Darwin, Katherine, Tennant Creek and Alice Springs. This new investment increases our capacity and makes it easier for our customers to move inbound and outbound goods throughout the region.”
Carey said the Darwin facility would complement the capabilities of Linfox’s long distance road, rail and coastal shipping distribution services and followed the recent expansion of its Healthcare and Defence logistics capabilities.
The facility will also deliver on Linfox’s environmental commitment with a 100kW battery ready solar system to reduce the site’s carbon emissions. It also features rain water harvesting and high-efficiency LED lighting.
Brisbane Airport Corporation (BAC) will deliver a new 11,260m² facility at its Airport Industrial Park precinct for wholesale food distributor Quality Food Services.
BAC’s property division, BNE Property, will deliver the purpose-built office, warehouse, cold storage and distribution facility, scheduled for completion in March 2018.
John Tormey General Manager of Commercial Businesses, BAC, said the deal is a great win for the growing Airport Industrial Park.
“For Airport Industrial Park to attract a new tenant of this calibre in a competitive market demonstrates its strength as an industrial location,” Tormey said.
“Quality Food Services will join more than 400 other non-aviation commercial and industrial businesses that benefit from the airport’s accessibility, size and amenity.”
“Our vacancy rate across both industrial and commercial space remains amongst the lowest in Australia.
“This new development is not only a reflection of Airport Industrial Park’s location and amenity, but also our ability to deliver flexible solutions to meet our clients’ needs.
“We are very pleased to have Quality Food Services on-board at Airport Industrial Park and look forward to working with them on their new facility.”
Frank De Pasquale, Director, Quality Food Services, said Brisbane Airport was an ideal location for the company’s new headquarters.
“The airport precinct has excellent connectivity to road networks and tunnels in all directions which was important to Quality Food Services,” De Pasquale said.
“Combined with the land availability, development flexibility, future expansion options and nearby amenities, this location offered everything we were looking for.”
Siemens Postal, Parcel & Airport Logistics (SPPAL) has been commissioned to install an air cargo centre at the international London Heathrow Airport.
International Airlines Group (IAG) issued the contract for IAG’s subsidiary British Airways.
Siemens is equipping a complete new cargo terminal, allowing the airline to profit from a substantial expansion of the existing air cargo capacities and an optimisation of complex cargo processes. The centre will contain with a’ fast-track facility’ – capable of processing particularly urgent air cargo in only 45 minutes.
“With our many years of experience and our in-depth knowledge of air cargo logistics, we will be able to help IAG strengthen their competitive position,” said Michael Reichle, CEO, Siemens Postal, Parcel & Airport Logistics.
“We are proud to have held our ground for years as a major player in the highly contested air cargo business,” added Sarah Coulson, Head of Strategy and Business Development, IAG Cargo.” Premium solutions such as the ability to process air cargo at short notice will help us to successfully keep ahead of the competition.”
In order to enable fast cargo handling, Siemens has developed a streamlined operational concept which avoids long distances and supports optimal use of the area with a surface measuring just 11,30sqm. Siemens will install a sophisticated system consisting of four elevating transfer vehicles (ETVs) and four transfer vehicles (TVs). The scope of delivery also includes three truck docks for loading and unloading, and four conveyor lines for build-up and breakdown. The air cargo centre with a throughput of 135,000 tons per year will have over 110 positions for unit load devices (ULDs). Siemens will also deliver 54 special cold storage and deep-freeze rooms for perishable goods.
Temperature-controlled storage company NewCold Advanced Cold Logistics is building two new facilities in Truganina, near Melbourne – including a chilled one for the first time.
The chilled and ambient storage facility will handle product for dairy company Fonterra Australia which is consolidating its distribution network and six warehouses into the one facility. Opening in July, the 12-storey site will be capable of holding up to 110,000 pallets.
“The first of its kind in Australia, the facility is highly automated and, because of its technology, we can be more agile and responsive to our customers’ needs, deliver smaller and more frequent orders and importantly, improve our service delivery,” said René Dedoncker, Australia Managing Director, Fonterra.
The frozen storage facility will stock products for McCain Foods, Australia, as previously reported, and Peters Ice Cream Australia, part of the Froneri group.
It is being built by storage equipment manufacturer Dematic, and will comprise of an integrated system combining automated pallet handling systems using in-house warehouse and control software developed in-house by NewCold.
“The storage and handling of McCain’s frozen products in the new automated facility will give us a more stable temperature regime and highly accurate stock control,” said McCain Foods ANZ Supply Chain Director Taso Kourou.
“We have years and years of experience in automation and that gives us the edge over someone who is building an automated warehouse for the first time,” said Jon Miles, Country Manager, UK, NewCold adding that NewCold is a “truly international temperature-controlled business.”
Coles will reduce the payment times for its suppliers from an average of 30 days to within 14 days from July, the supermarket recently reported.
The move comes ahead of a report from Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell set to reveal the payment times of the nation’s major corporations, due to be released in the coming weeks.
John Durkan, Managing Director, Coles said that payment times will be reduced for the more than 1,000 suppliers that provide the supermarket with up to $1 million in merchandise each year, specifically those issuing electronic invoices.
“We understand how important cash flow is for small suppliers and shortening payment times will help to make it easier for them to run their business,” he said.
Carnell has reported ahead of the release of the report that payment times have become worse over the past 12 months, and large multi-national companies are the worst offenders.
“In fact, some large companies have moved payment terms to as long as 120 days,” she added.
Carnell added that Coles’ decision will benefit hundreds of small businesses.
A spokesman for Coles told Inside Retail that the supermarket’s movement towards shorter payment times did not come about due to the ombudsman’s report, rather it was part of its ongoing work to improve its relations with suppliers.
Financial services company Deutsche Asset Management (Deutsche AM) purchased two logistics facilities located in Melbourne and Brisbane from Australian real estate investment trust PropertyLink on Monday 14 February.
The US$56.07 million ($73 million) transaction was conducted off-market on behalf of a German institutional client.
The facilities located in Derrimut, Melbourne, and Parkinson, Brisbane, offer a total of 64,000sqm over two single-story warehouses with offices and parking.
The purchase follows Deutsche AM’s acquisition of a grade-A logistics warehouse in Tokyo in December.
The cold-storage facilities in Melbourne and Brisbane were originally designed for refrigerated interstate transport and warehousing company Rand Transport, and were purpose-built in 2010 to connect to the local port, airport, railway stations and major transport routes in both Melbourne and Brisbane.
“We are pleased to add Rand Transport’s facilities to our portfolio,” said Victoria Sharpe, Head of Real Estate – Asia Pacific, Deutsche Asset Management. “With good quality, cold storage accommodation in prime Australian locations in small supply, over the long term we expect the assets to deliver stable cash flows with low volatility in line with the strategy for our investors.”
McCain Foods Australia today announced a contract agreement with cold storage provider NewCold.
NewCold’s will manage the storage and handling of McCain’s frozen products at the storage provider’s new warehouse in Truganina, Melbourne, as part of a 10-year agreement commencing in July 2017.
Construction has significantly advanced on the automated facility, which will consist of an integrated system combining automated, state-of-the-art pallet handling systems, using in-house warehouse and control software developed by parent Dutch cold storage innovator, NewCold Advanced Cold Logistics.
Taso Kourou, Supply Chain Director at McCain Foods ANZ stated that the facility upgrade will drastically improve logistics capabilities, meeting the needs of local and international customers, demanding improved efficiency from production to distribution of frozen products. “The storage and handling of McCain’s frozen products in the new automated facility will give us a more stable temperature regime and highly accurate stock control,” he said.
Louis Wolthers, Regional President for Australia, New Zealand, South Africa, India & China at McCain Food said that the McCain team is keen to see the outcomes of the new agreement take effect. “From a sustainability perspective, through the use of the warehouses’ highly controlled in-and-outflows combined with efficient cooling equipment, energy usage per pallet stored is up to 50 per cent lower compared to a conventional storage option,” he said.
The warehouse’s unmanned stacker cranes, conveyors and automated truck unloading systems will handle receipt, storage and retrieval of palletised products, all together dealing with more than 11,000 pallet movements per day.
The global cold chain monitoring market is forecast to be worth $8.5 billion by 2022, according to research carried out by MarketsandMarkets. Valued in 2015 at US$3.11 billion ($4.3 billion), reaching US$ 6.23 billion ($8.5 billion) will represent a 9.84 per cent compound annual growth rate.
Pharmaceutical and healthcare applications held the largest share of the cold chain monitoring market in 2015, while the market for food and beverages applications is expected to experience rapid growth during the forecast period.
The market for the transportation sector is expected to grow at the highest rate during the forecast period. “The transportation sector is exposed to external influences, which are detrimental to the cold chain,” The MarketsandMarkets report stated. “This necessitates the use of enhanced monitoring solutions to effectively control the losses due to environmental changes and mismanagement. The growing cold chain also results in the rising transportational support required in the distribution activities of the cold chain.”
The report further predicts hardware components to hold the largest market share during the forecast period, though it expects the market for software components to grow at the highest rate.