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VOL. 130 | NO. 29 | Thursday, February 12, 2015

Critical Link

Memphis firm finds niche transporting wine from Napa Valley

By Amos Maki

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If you’re a wine lover along the East Coast – everywhere from Florida to the Mid-Atlantic and New England - chances are a Memphis-based third-party logistics provider played a significant role in getting your vino into your glass.

Cornerstone Systems Inc. president and CEO Tim Clay (left) shares a toast with founder and chairman Rick Rodell at the company’s headquarters in the Southwind area. 

(Daily News/Andrew J. Breig)

Using insulated boxcars that protect their precious cargo from extreme heat and cold, Cornerstone Systems Inc. has carved out a niche transporting wine from the rich Napa Valley region in California to distributors in the east.

“It’s been highly successful and a huge part of what we do and it just keeps going,” said Rick Rodell, chairman and founder of Cornerstone Systems.

“It has a bright future,” Rodell said. “I don’t see any downside to it soon short of people quitting drinking wine, and I don’t see that happening any time soon.”

Over the last 10 years Cornerstone Systems has moved more than 100 million cases of wine in their insulated boxcars and in that time has not recorded a single case damaged by extreme temperatures. The company has moved another 25 million cases of wine via intermodal containers over the same period.

The company has a 10-employee team based in Boston focused on getting wine from producers on the West Coast to distributors on the East Coast.

Cornerstone Systems is moving wine from every winery in California to its eastern seaboard distributor network, including Treasury Wine Estates, Trinchero Family Estates, Jackson Family Wines, Bogle, Rodney Strong and The Wine Group.

Transporting wine should be lucrative for Cornerstone Systems as American demand for the product continues to grow. Americans consumed 892 million gallons of wine in 2013, up from 856 million gallons in 2012 and 639 million gallons in 2003, according to the Wine Institute.

Cornerstone Systems’ entry into the wine distribution market came when wine makers had problems getting enough of their product to distributors on the East Coast.

“We were challenged by a couple of the larger distributors in New England to come up with a solution to capacity constraints during the fall peak season, to protect the wine from extreme fluctuations in temperatures, and to do it at a rate that was priced competitively,” said Burke Anderson, vice president of railcar services and wine and spirits sales for Cornerstone Systems. “Over the last 10 or 11 years we’ve expanded our program to pretty much every major wine producer in California and pretty much every major distributor in the east.”

Essentially, there was a gap in the American wine supply chain. Wine producers usually do not have rail access available at their production facilities. The same goes for the distributors in the East. How, then, could wine producers get more of their product into the hands of thirsty tipplers?

Cornerstone Systems had the answer: It could become a single-source solution for producers and distributors by using the railroad system and insulated boxcars.

Cornerstone Systems will pick up the wine from wineries and truck it to one of two Northern California warehouses. From there, Cornerstone Systems loads the wine onto insulated boxcars that eventually make their way to Chicago, St. Louis or Memphis before heading to food-grade distribution centers and eventually the distributors and then customers.

“It’s a very complex, complicated supply chain,” said Anderson.

Cornerstone Systems appears poised to grow the business even more.

As railroads get out of the business of providing insulated boxcars, Cornerstone Systems has entered an agreement with the MHW Group to lease insulated boxcars, ensuring the company can continue to provide much-needed transportation options for wine producers and distributors.

“We're taking the industry lead by committing capacity to replace what has historically been supplied by the railroads," Anderson said.

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