Railex & Ste. Michelle Wine Estates Create Temperature-controlled Rail-based Wine Transport System

Joint project includes development of Railex wine services distribution center to manage inventory and transportation logistics

Woodinville, Wash.July 19, 2012—Wine company Ste. Michelle Wine Estates and rail transport services provider Railex LLC teamed up to create a temperature-controlled rail-based system to transport wine efficiently and sustainably across the U.S.

The project includes development of a new wine services distribution center which will be built adjacent to Railex’s existing transload center in Wallula, Wash. Railex will invest $18 million to $20 million to build and operate the 500,000-square-foot bonded wine storage and distribution center—scheduled to open February 2013.

Ste. Michelle signed a long-term lease for the majority of the warehouse footprint and also will contract with Railex to transport its domestic and import wines throughout the U.S. This represents a significant expansion of the current work that Railex is managing on behalf of the wine company.

“Ste. Michelle is an expert at growing grapes and making wine,” said Rob McKinney, Vice President of Operations, Ste. Michelle Wine Estates. “Although we have expertise with transportation and distribution issues, we determined that our business has grown to a scale that requires a third party logistics provider to manage our distribution requirements according to our exacting standards.”

The Railex wine services distribution center will offer refrigerated, humidity-controlled storage plus numerous efficiencies to manage inventory and transportation logistics to better respond to customer requests.

The company operates three, state-of-the art distribution facilities which are linked by a refrigerated perishable unit train that is the first to be marketed to the food and beverage industry. The Wallula, Delano (Calif.) and Rotterdam (N.Y.) hubs will transfer finished goods from the heart of wine country to retailers nationwide or imported wines from an Eastern port to the warehouse in Wallula.

Railex guarantees five-day rail transit from both West Coast locations to New York. A Southeast location, which is planned to open in 2013, also will offer five-day rail transit from the West Coast.

Railex is uniquely positioned to provide the highest level of customer service to SMWE, their employees and customer base,” said Jim Kleist, Senior Vice President, West Coast Operations for Railex. “Our location in the heart of Washington wine country, the latest inventory control and warehouse management technologies and high speed refrigerated rail transportation will enable us to deliver wine quickly while maintaining the highest standards of quality.”

Since its inception, Railex also has been committed to environmental sustainability. The company worked with the U.S. Environmental Protection Agency to quantify its impact on the environment. Since 2006, Railex reduced diesel fuel consumption by 45 million gallons and CO2 emissions by 900,000 metric tons, as opposed to existing truck transportation.

Railex has a proven business model for storing and shipping Pacific Northwest produce to East Coast markets by rail,” said Paul Schneidmiller, President of the Port of Walla Walla. “Ste. Michelle is the premier Pacific Northwest winery and its wine storage and distribution services make for a great partnership with Railex. The Port of Walla Walla is pleased to see a new large investment come to the Port’s Dodd Industrial Park. The Port over the last several months has worked closely with Railex to ensure that the required infrastructure is in place to accommodate a new wine distribution warehouse. The Port, with assistance from the State of Washington, will be investing in public infrastructure. When completed, the wine distribution warehouse will create new jobs and a substantial new tax base for Walla Walla County,” Schneidmiller said.