Keelings, the Dublin-based firm of fruit importers and distributors, is the front-runner to win the contract to manage a new distribution centre planned by Tesco for north Dublin.

The centre, which is expected to be located near Ballymun, could create up to 350 jobs in the area and is expected to open next year.

Tesco is understood to have held discussions with a number of parties regarding the management of the new centre and is at an advanced stage in the selection process.

In line with others in the supermarket industry, Tesco has been taking steps to consolidate its distribution system over the last year. It is investing up to £30 million (€38 million) to centralise its distribution operations, creating three dedicated centres to supply all of its stores in the Republic.

The Irish retail sector has been consolidating rapidly in recent years, often at the expense of smaller, independent distributors.

Musgraves has spent millions in the last number of years on new centralised distribution operations in Dublin and Cork and Dunnes Stores and Superquinn are both expected to follow suit.

Tesco's first move in this direction was the modernisation of the 200,000 square foot warehouse in Tallaght, formerly owned by Quinnsworth, which is now used to distribute all fast-moving produce like tea, coffee and biscuits to its 76 supermarkets throughout the State.

Earlier this year, it announced the appointment of British group Exel Logistics to manage a second centre, which caters for slow-moving grocery and non-food products such as washing powder and baby foods, at Ballymount in west Dublin.

The supermarket group is now working on plans for a third centre which would cater for its fresh, chilled and frozen products. It is understood to be the buyer of a site, adjacent to the M50, which was sold by Ashquay Developments last April.

The management contract for the new centre was put out to tender, along with the Ballymount contract, late last year. It is understood that some 20 companies - including most of the major distribution firms in the State - were issued with tenders for one or both contracts and the company is close to making a decision.

Keelings has acted as consolidator and sole distributor of Tesco's fresh fruit and vegetables for the last year.