VOL. 122 | NO. 138 | Wednesday, July 25, 2007
Logistics & Distribution
Memphis Company at Center of International Trade
By Eric Smith
CENTRE STAGE: Centrepôt Inc. owners Bill Fisher, left, and Michael Niclosi have seen their third-party logistics and warehouse company grow from revenues of about $600,000 to more than $8 million - in less than a decade. -- Photo By Eric Smith
Many people have trouble pronouncing Centrepôt, the name of the business that co-founder Ernest Craft coined in 1994 when he chartered the third-party logistics and warehouse provider.
For the record, it's pronounced SEN-truh-poh, a play on the French word entrepôt, which means "a location of international marketing and trade."
Centrepôt Inc. president, CEO and co-founder Bill Fisher said the "C" was added in front as a play on the French word to imply that the Memphis-based company would be at the center of international marketing and trade.
Unfortunately, the clever and creative moniker has caused more confusion than anything.
"While that's all well and good, nobody's figured it out in 10 years," Fisher said with a laugh.
But it doesn't matter, because business at Centrepôt - to again borrow from the French - has been tres bien.
In the nine and a half years since Centrepôt was activated, it has grown from one customer, three employees and revenues of about $600,000, to 20 customers, 125 employees and revenues of more than $8 million.
The company's origins date back to March 1998 - four years after the company charter was created - when Fisher and Craft opened the doors to Centrepôt (www.centrepot.com) at a small warehouse on Lamar Avenue, just south of Raines Road.
Fisher had been working for a large company in town when he saw a hole in the local logistics services - no one in Memphis was offering the Foreign Trade Zone (FTZ) designation at their warehouses at the time. It's now one of two in Memphis.
"(Craft) and I recognized the niche together," Fisher said. "He had the money to set the company up; I had the experience in what a Foreign Trade Zone is and how it needs to be run."
But what is a Foreign Trade Zone, exactly?
"When you layer on all the services providers - the trucking companies, the railroads, the air freight companies, all of them - then that gives Memphis the ability to serve a larger part of the planet than, say, Phoenix, Ariz. ... With Memphis, you're in the center of the nation."
- Bill Fisher
Centrepôt Inc. president, CEO and co-founder
"A Foreign Trade Zone is a location that is deemed to be outside the commerce of the United States," Fisher said. "Physically, we're inside the United States, but from a merchandise, storage and processing standpoint, we are an international commerce."
U.S. rules don't apply
The FTZ distinction, which is granted through the U.S. Department of Commerce's Foreign Trade Zones Board, means products manufactured, stored or repaired at the site are subject to different rules than those for products destined for American markets.
For example, automobiles built in a Foreign Trade Zone and bound for a foreign market don't need to comply with U.S. laws such as emissions standards.
"While you don't have to have a passport to enter a Foreign Trade Zone, and while you cannot be exempted from federal and state income taxes and payroll taxes, the merchandise that's physically in our building is treated the same as if it were in Europe or Mexico or South Africa or wherever," Fisher said. "It's exempted from U.S. laws."
Also, customers who use an FTZ can save broker fees because the import entry papers can be consolidated. And products built or stored in Foreign Trade Zones are exempted from import duties and taxes without the hassle of traveling to another country.
"Coming into the Foreign Trade Zone, we can receive that merchandise free of import duties and taxes, no brokerage charges," Fisher said. "We can consolidate that merchandise and the customer then could withdraw one big lump shipment and get all his merchandise and only pay one set of fees."
At the center
Centrepôt operates two locations, its headquarters at 5000 East Raines Road and another warehouse at 4250 E. Shelby Drive, totaling more than 800,000 square feet of warehouse space. Operating in Memphis has been a boon for Centrepôt.
"When you layer on all the services providers - the trucking companies, the railroads, the air freight companies, all of them - then that gives Memphis the ability to serve a larger part of the planet than, say, Phoenix, Arizona," Fisher said. "Phoenix is a great city, but most everything is east of Phoenix. With Memphis, you're in the center of the nation."
With the city's central location, namely its ability to serve 80 percent of the county's population within a day's drive, Centrepôt has found the perfect locale in the city known as "America's Distribution Center."
"I think being here has been a tremendous advantage," said chief financial officer and co-owner Michael Niclosi. "With all the Class I railroads here, the interstate crossings of 40 and 55 and the Mississippi River, it's a natural."
Niclosi and Fisher also touted the existence of FedEx, which has done plenty to inspire numerous national and international companies to move their distribution centers to Memphis - making Centrepôt's FTZ designation even more appealing.
Growing in excellence
There's more to the Centrepôt advantage than FTZ designation and a 25 percent annual growth over its decade in existence. The company received an award of excellence from Diversity Memphis for its diverse workforce, which Fisher said is 90 percent minority.
Centrepôt even has an employee in Shanghai, China, as customer prospects in that area increase thanks to more and more trade between China and the U.S.
With its arms reaching outward, and its feet firmly entrenched in Memphis' logistics hotbed, Centrepôt is poised to continue its explosive growth.
"Ideally, but very realistically, I could see us being a $20 million company in the next five years," Fisher said. "I would not be surprised if in 10 years we're not over $50 million in sales. Based on our history, that number is very achievable."