News story

Sysco weighs further use of fuel cells

Wednesday, 22 January 2014 ( #651 ) - Houston, TX, United States
Among its more than 10,000 materials handling units, Sysco Corp operates 740 fuel-cell-powered forklifts.

Gary Mills, vice president for warehouse and delivery in Sysco's Houston-based distribution services group, acknowledges the application is "a relatively new technology".

"The group is in the process of establishing a baseline of results, assessing overall efficiencies, value and return of the fuel cell technology for our operations," he says. "This will enable us to determine our path forward for implementing the technology on a more wide-scale basis and over what time period. This type of conversion is part of our overall commitment to sustainable business practices."

For its US broadlines business, the foodservice distributor uses 170 fuel-cell-powered forklifts at Sysco Boston LLC, in Plympton, Massachusetts; 110 at a central Texas facility in New Braunfels; 105 in Riverside, California; 102 each at facilities of Sysco in North Houston, Texas, and Baugh Northeast Co-op Inc redistribution centre in Fort Royal, Virginia; 95 in Philadelphia, Pennsylvania; and 56 in Central Islip on New York's Long Island.

Mills says the 740 "is an estimated 5%-7% of our total warehouse forklift and pallet jack equipment for US broadlines".

Sysco operates 193 distribution facilities in 43 US states, the District of Columbia and Puerto Rico; nine Canadian provinces; the Bahamas; Ireland; and Northern Ireland.

In an industry consolidation proposed on 9 December, Sysco agreed to merge with USF Holding Corp, of Rosemont, Illinois, for USD8.2 billion in equity and debt assumption. USF is the parent of US Foods Inc, which has 80 US distribution facilities using materials handling equipment.

William DeLaney, Sysco president and chief executive officer, on 14 January at the ICR XChange conference in Orlando, Florida, said Sysco and USF were the two largest US foodservice distributors, "but there are 16,000 other competitors ... from regionals to specialty to local".

At the projected closing in the third quarter of 2014, the combination of Sysco and US Foods is expected to have annualised sales of about USD65 billion. Publicly traded Sysco had a profit of USD992 million on sales of USD44.4 billion for the fiscal year to 29 June. US Foods has annual sales of about USD22 billion and is jointly owned by affiliates of private equity investment firms Clayton, Dubilier & Rice LLC and Kohlberg Kravis Roberts & Co LP.
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