INDUSTRY FOCUS: Ships, Planes, Trains and Automobiles
By Dominique Cantelme
From the January/February 2012 issue
There are many specific definitions of logistics but they all generally mean the same thing—a process needs to be in place to move materials, services, people and/or information from point A to point B and possibly C and D or more. It should be done in a cost-effective, timely, safe and secure fashion in order to be deemed successful and efficient.
The Council of Supply Chain Management Professionals (CSCMP) released their 22nd Annual State of Logistics Report delivered by author Rosalyn Wilson. The report offers insight into the state of the logistics industry over the course of the last few years. Specifically that:
- Logistics costs increased 10.4 percent in 2010 after dropping in both 2008 and 2009, and logistics costs as a percent of nominal GDP moved back up to 8.3 percent.
- Inventory carrying costs increased 10.3 percent in 2010, due to higher costs for taxes, obsolescence and insurance, which were offset by declines in inventory carrying rates and warehousing costs.
- Transportation costs increased 10.3 percent in 2010. Motor carriages, which comprise 78 percent of the transportation segment, rose 9.3 percent, while air, rail, water and pipeline combined increased an average of 15.4 percent in the same period.
The International Air Transport Association (IATA) referred to 2010’s results as “the best year of the decade” with an $18 billion profit in air freight; however, only a 3.2 percent profit margin was realized. Air carriers started to see business dwindle in the second half of 2010 and into the first half of 2011 as customers, facing higher transportation costs due to rising oil prices, went with cheaper options whenever possible. IATA expected overall profits for the global airline industry in 2011 to be $6.9 billion; a net income drop to $3.5 billion is expected in 2012.
While ocean traffic through U.S. ports declined in 2010 (even though most top ten ports registered a rise in TEUs moved), costs for the water sector went up 14.1 percent. Prior to the downturn, the sector had ordered mega containerships, nearly doubling its available volume. Having received the new vessels through 2009 and 2010, ocean carriers have had to deal with excess capacity and weakening demand.
The railroad industry appears to be back on track. The Association of American Railroads (AAR) released the 2011 Edition of Railroad Facts. The publication notes that in 2010 rail traffic began to recover from recession-related decreases of 2009, which helped railroads bring equipment back into service and hire employees. According to a Progressive Railroading interview with
Norfolk Southern Railway’s Chairman, President and CEO Wick Moorman, its freight customers would agree with the company’s outlook that “they don’t see extraordinarily robust growth…in 2012, but neither do they see anything which would portend a downturn.” He added, they “are anticipating a stable economy that continues to grow…[at] a somewhat reduced pace.” In interviews with Progressive Railroading, railway CEOs advise that the key factors to impact traffic growth next year likely will be consumer confidence and employment levels, but executives also seem to think the worst has passed.
Less than truckload (LTL) shipments (AKA motor freight) range from 110 to 15,000 pounds and are usually palletized, shrink-wrapped and packaged for a mixed-freight environment. This $27.5 billion sector has not been profitable recently due to overcapacity, high overhead costs and losses from some of its biggest players. Shipments larger than about 15,432 pounds are typically classified as truckload (TL) freight. These shipments have exclusive use of one larger trailer rather than share space on a smaller LTL trailer. The TL sector, which supplies some 95 percent of capacity in the $403 billion for-hire intercity trucking industry, is finally on the rise after setbacks in 2008, 2009 and 2010.
A Logistics Management article notes that, “according to analyst consensus, trucking, rail and intermodal rates are forecasted to inch up by 2 percent to 3 percent over the course of 2012. Ocean and air cargo providers are seeking similar improvement, but will encourage shippers to sign long-term contracts designed to give carriers sustainable returns to cover their capital investments.” The article adds that, “the biggest rate jump…has…been announced by parcel shipping players—and shippers say they’re ready to live with at least a 5 percent hike when going express air and ground.”
Companies looking to build a durable business need to continuously offer added value. The procedure can be more or less complicated for a business depending on where it is physically situated, logistically speaking. Setting up facilities in the right location can mean a world of difference to a company’s success and the following locations can help with that precise positioning.
I-69 is Nearing Completion in the Hoosier State
Construction of the extension of I-69 in southwestern and south central Indiana continues with a vengeance. The Indiana Department of Transportation (INDOT) has announced that 107 miles of the southwest portion of Indiana will be open by the end of 2012. The new interstate will provide an important north/south corridor connecting two interstates that run east and west: I-70 and I-64. In the longer term, future construction of I-69 in Kentucky, Tennessee and additional southern states will extend the highway from the Mexican border to the Canadian border.
According to economic development leaders who serve this area of Indiana, the interstate can’t open soon enough.
Here are just a few of the immediate benefits to the area:
- New interstate interchanges will provide premium sites for logistics firms to locate; four new interchanges between Bloomington and Evansville will open in 2012.
- Increasing range of trade for manufacturers since I-69 will make it easier and faster for producers and manufacturers to tap a larger pool of raw materials.
- Decreased commute time for workers.
- Safety impact on rural communities—separate routes for interstate and local traffic means school buses, tractors and combines will no longer share roads with commercial trucks and long-distance commuters.
- Technology and retail infrastructure for rural communities; rural areas will benefit from the technology and infrastructure growth.
- Easier access to healthcare facilities.
David Cox, former Daviess County Economic Development Commission Director, discussed Perdue Foods in Washington, Indiana. “Perdue needs an efficient supply line, both into its facilities and out. Perdue is a meat processing company, and a huge consumer of corn.” Another nearby food processor who will be positively impacted by I-69 is GPC. “Among their (GPC’s) products is Maltrin, a corn syrup solid used in a variety of sweeteners.” Perdue and GPC are only two of several manufacturers who will be able to enhance their productivity thanks to improvements in interstate access.
Cox also referenced Crane Naval Weapons Support Center, Indiana’s military munitions storage and electronics manufacturing facility. “Reduced transportation costs and access to the interstate mean Crane can bid lower and provide a higher quality product.” The U.S. Hwy 231/I-69 interchange will be located about three miles from the Crane facility gate. Westgate at Crane Technology Park is already developing into a location of choice by defense contractors, in part, because of the promise of easy access to Crane via I-69.
Paul Lake, executive director of the Pike County Economic Development Commission, says they’ve been “blessed with an excellent state highway infrastructure, but I-69 provides us with a new high speed route to reach Bloomington and Indianapolis. Businesses have embraced a ‘just in time’ delivery system, and maneuvering though stoplights and traffic is not conducive to good business.” Lake cites coal as a staple product of southwest Indiana. “As the cost of transportation decreases, local manufacturers can move product more efficiently, and at a more competitive rate. I-69 will connect us to the world marketplace.”
Lake added, “If you look at a 500 mile radius, there are over 50 million people. That circle touches Nashville, Atlanta, St. Louis, Indianapolis, Chicago and Detroit—significant markets that the interstate will draw us closer to.”
Todd Mosby, president and CEO of the Gibson County Economic Development Commission, referenced their Toyota auto manufacturing plant in Princeton. “North American Lighting, a supplier of the Toyota plant, is building a new facility in Warrick County’s Industrial Park on the promise, in part, of how simple I-69 will make it to conduct business.”
Many of the sites along the expanded I-69 interchanges will be served by rural electric co-operatives, with Hoosier Energy as the power supplier. On this, Cox said, “Hoosier Energy’s partnerships have allowed smaller communities to attract more significant manufacturing business than they could otherwise.” Through the rural electric cooperatives in the region, the needed site development at the new I-69 interchanges can be promoted and enhanced. Several state-certified shovel-ready sites have already received an assist through the local REMC’s.
New interstates are not constructed very often in the U.S. anymore, so the emergence of I-69 during the opening years of the 21st century is an exciting opportunity to see the modern logistics industry get in on the ground floor to take advantage of newly opened interstate interchanges and adjacent developments. Indiana is the epicenter for this exciting new development—all 107 miles of it opening in 2012.
Topeka: Center of the Heartland
Right in the heartland of the U.S., Topeka, Kansas is the perfect place for transport. Direct access to a 12,800-foot runway with a load bearing capacity of 300,000 tons, major interstates (I-70 and I-35) and railroad arteries allow for inexpensive, simple shipment and delivery to business sites.
Whether it’s bringing raw materials in or shipping finished product out, Topeka’s central location makes for timely and cost-effective delivery throughout North America. Within one day, goods shipped by truck reach 25 percent of the U.S. population, reaching 90 percent by day two. In addition to convenient access to major roadways, Topeka offers rail service and an air logistics facility at Forbes Field, with Kansas City International Airport only one hour away.
Because Topeka is conveniently located right in the middle of everywhere, products make it to customers quickly and efficiently. The city also has available sites, low energy costs, aggressive development incentives and a highly skilled workforce. If a company wants to ship all over America, Topeka, Kansas is a great place to be.
- Two large, shovel ready Commerce Parks with BNSF rail-served sites
- Major North-South, East-West Interstate transportation network
- Forbes Field Air Logistics Facility offers direct access to two runways (12,800 feet and 7,000 feet)
- Foreign Trade Zones are “user friendly” site specific and allocated on an individual company basis
- Region has five intermodal yards and is served by two Class I rail companies, BNSF and Union Pacific
- Already home to major logistics centers including Home Depot Rapid Deployment Center and Target Distribution Center
- Kansas Turnpike Authority provides the opportunity for trucks to haul multiple trailers on sections of the highway, reducing overall transportation costs
- Existing Business Program fields the needs of logistics companies in the region and offers support as they grow their operation
- Washburn Institute of Technology offers two in-depth certifications for the logistics industry workforce
For information on the ideal location for your company and how GO Topeka can help you grow, contact Dawn Wright at 785-234-2644 or firstname.lastname@example.org.
Dyersburg, TN: Gateway to the American Marketplace
Dyersburg, TN is located at a strategic point on the North American transportation grid, very near the center point of the United States population. As a result of this location, Dyersburg/Dyer County offers a number of logistical features and attributes.
Dyersburg is positioned on the interstate highway system roughly equidistant from Chicago and New Orleans, within a two-day drive by truck to 65 percent of the U.S. population. Situated on the main line of the Canadian National Railway, also halfway between Chicago and New Orleans, it provides direct rail connections from as far away as Prince Rupert Sound in Canada and Halifax, Nova Scotia. Dyersburg/Dyer County is home to Dyersburg Municipal Airport, a general aviation airport which can accommodate corporate and some commercial jets on its 5,800-foot long runway. In addition, it is only 75 miles from the World Headquarters and SuperHub of FedEx at Memphis International Airport, which has international freight and passenger service.
Dyersburg has been designated a federal Scenic Byway along the Great River Road through Dyer County for the purpose of preserving alternative travel routes with scenic views and vistas to auto travelers, runners and bicyclists throughout the United States. And its Riverfront Park is part of a newly designated federal Blueway, which connects Dyersburg to Memphis via a canoe and kayak route that begins in Dyersburg and terminates at the cobblestone wharf in Memphis. This park is within easy walking distance of the newly renovated McIver’s Grant Public Library in downtown Dyersburg. The Forked Deer River, a tributary of the Mississippi River, runs through downtown Dyersburg with a Riverfront Park currently under development that is set to include a scenic hiking trail, a Farmer’s Market, a canoe and kayak floating dock, a River Center (for study and preservation of the inland water system), a walking trail and scenic overlooks along the riverfront.
Dyersburg is served by Interstates 69, 55 and 155, as well as by US Highway 51 and US 412; the distance to I-40 is only 40 miles via US 412. The area boasts an abundant amount of telecommunications capacity, including fiber optic cable service in its industrial parks with telecommunications options provided by a number of national carriers. And the Dyersburg/Dyer County connection does not end there.
- It is located only 75 miles from Memphis, Tennessee, which has the third largest rail center and fourth largest inland port in the U.S.
- It is located on the corridor of Interstate 69, which will connect Canada to Mexico through seven U.S. states.
- Dyersburg/Dyer County has an interstate highway bridge crossing the Mississippi River into Missouri—the only such bridge between Memphis and Cairo, IL.
- The Port of Cates Landing, an intermodal river port on the Mississippi River, is now under construction only 25 miles from Dyersburg.
- The Port of Cates Landing will be a Foreign Trade Zone, and will allow barge shipments from the Gulf of Mexico via the Port of New Orleans, as well as northward along the river system.
Port Freeport: First-Class Business Opportunity
Port Freeport came into being more than 100 years ago when the first jetty system was built in Freeport, Texas. Since that time, Port Freeport has become one of the fastest growing ports on the Gulf Coast and currently ranks 16th among U.S. ports in international cargo tonnage handled. With a current channel of 45-foot depth, soon to be widened and deepened, just 3 miles from open Gulf of Mexico waters, Port Freeport offers more than 7,500 acres for future development. Port Freeport serves its customers and stakeholders through development and marketing of competitive world-class navigational capabilities, technically advanced marine and multimodal terminal services and port-related industrial facilities while achieving profits and creating jobs as a leading economic catalyst for the Texas Gulf Coast.
Port Freeport offers the following benefits: rail, highway, vessel and/or barge transportation can be seamlessly utilized; direct access to the Gulf Intracoastal Waterway, Brazos River Diversion Channel, State Highway 36, State Highway 288 and Union Pacific Railroad; only a few minutes commute from quality schools, housing and medical care and just 59 miles south of downtown Houston, Texas—the nation’s fourth largest city; surrounded by a highly qualified, technical labor pool; available existing water supply, wastewater collection, electrical distribution, gas and telephone; existence of adjacent properties that could support future growth and development; air freight service by all national carriers from multiple surrounding airports within a 60-mile radius; availability of local, high-quality trainable workforce and close proximity to universities and technical colleges; ability to manage inventory and/or manufacture duty deferred, inside the Foreign-Trade Zone; Texas is a right-to-work state, which leaves you the right to choose between union and non-union labor; and the state of Texas, Brazoria County and Port Freeport offer competitive incentives, tax credits and exemptions.
Recent developments at Port Freeport include the construction of the first phase of Port Freeport’s Velasco Terminal, adding further cargo-handling capabilities at the Port, with a new 800-foot-long dock and 20 acres of backlands, promising an eventual offering of 2,400 feet of berthing and more than 90 acres of supporting land.
Meanwhile, the Port continues to work in conjunction with federal and state authorities to advance the project to deepen the Port’s channel to 55 feet from its present 45 feet, plus substantially widen the channel as well. It is hopeful that the seven-year feasibility study will indicate, as have preliminary analyses, that benefits of the channel project should exceed its $300 million cost.
With so many developments pointing toward growing diversified activity at Port Freeport, the people look forward to the Port expanding upon its already impressive status as an economic cornerstone of the community and region—a dynamic force directly and indirectly responsible for nearly 60,000 jobs and having an overall annual economic impact in Texas of $10.2 billion.
Unlike many ports, which are running out of available land, Port Freeport boasts thousands of acres of currently undeveloped tracts, all proximate to the waters of the Gulf of Mexico. The Port is a mere three miles—45 minutes by ship—from the open sea.
The Foreign-Trade Zone Program adds to Port Freeport’s appeal. Since established in 1988, Port Freeport’s Foreign-Trade Zone No. 149 has helped American companies involved in global commerce to save money on the products they import into the U.S. through deferral, reduction and/or elimination of Customs duties assessed on foreign merchandise, and port officials have been fielding a lot of inquiries about the FTZ of late.
Port Freeport Managing Director Phyllis Saathoff, a past president of the National Association of Foreign-Trade Zones, pointed out that there may be no better time for businesses engaged in international trade to explore the benefits FTZ No. 149 has to offer.
“Especially in challenging economic times,” Saathoff said, “we are pleased to be able to offer businesses in the region another tool to stay competitive and reduce costs.”
Wheeling, IL: Regional Winner
Wheeling, IL enjoys an infrastructure most communities would envy. Located in Chicago’s north suburban market, it is in the heart of the Chicagoland area, a region companies value for its central location to markets across the nation. With two interchanges and direct entry onto I-294 (Tri-State Tollway) and Illinois Route 53, Wheeling businesses enjoy easy roadway access to and from destinations throughout the Midwest. Rail service in the community provides freight service to its business parks, and commuter service to the Wheeling Metra train station, offering convenient transit options for the region’s workforce.
The Village is nine miles north of O’Hare International Airport and in conjunction with the City of Prospect Heights, owns Chicago Executive Airport (formerly Palwaukee Municipal Airport). Chicago Executive is a low-cost/no delay alternative to O’Hare for business travelers and for the shipping of airfreight. It is the third busiest airport in Illinois—handling nearly 200,000 private and corporate flights each year—and offers a flight training school and an additional transportation option for executives in the region.
Chicago Executive Airport has begun a series of multi-million dollar improvements, including runway enhancements and new hangar construction, to hold its position as the location of choice for major companies that maintain private fleets, as well as for individual pilots. The Village recently encouraged development of a new 40,000-square-foot corporate office and hangar, which will be a significant property tax and traffic generator for the community and has led to additional development inquiries regarding available land at the airport.
Wheeling also is experiencing community-wide investment and redevelopment in its industrial, retail and office markets and its Economic Development staff is available to discuss current and upcoming development opportunities with prospective businesses and investors. The local government administration is aggressively encouraging the development of new retail and industrial businesses and has implemented a number of incentive and financing programs to encourage its continued growth.
In the heart of Wheeling’s Town Center TIF District, the Village purchased a 10-acre former Wickes furniture site on Dundee Road, directly adjacent to the Metra commuter train station. The Village anticipates a $120 million project with a large anchor store, smaller retailers, two residential towers, a greenway and parking. Plans are still being worked on but the town center is expected to open by summer 2014.
The Village’s Economic Development Department regularly monitors local real estate conditions and maintains an updated list of available buildings and land development opportunities. The Village encourages inquiries about site availability and has professional staff at hand to assist your company in finding a home for your business in Wheeling. Visit www.wheelingil.gov for more information.
Welcome to Hendricks County
With a location that is within a days drive to so many of the nation’s population centers, an extensive transportation network, a skilled workforce and an outstanding quality of life, Hendricks County, IN has become one of the nation’s premier business locations with accessibility second to none.
All kinds of businesses, from service providers to steelmakers, have found a supportive, productive environment in Hendricks County. Local government officials understand the value healthy businesses bring to communities, and the community’s workforce is skilled and enthusiastic.
Hendricks County’s proximity to the Indianapolis International Airport and FedEx, along with interstate and rail access has been a key factor in the growth of three of the county’s most active business sectors—logistics and distribution, motorsports and life sciences. This location has been able to combine the many resources available to those industries in central Indiana with an extraordinary quality of life and an abundance of highly talented people.
There is an astounding 28 million square feet of prime distribution center space under roof in Hendricks County, which is designated as an Alternative Foreign Trade Zone. There also is an abundance of open land, allowing you to construct facilities to meet your own specifications.
Hendricks County provides fast, easy connections to Interstates 65, 74, 70, 465 and 69, putting them less than a one-day drive from major population centers such as New York, Chicago, St. Louis, Dallas, Cincinnati and Atlanta. Its location allows overnight trucking access to more than half of the nation’s population. In addition, the county is improving access to the Interstate network with the Ronald Reagan Parkway, which will provide direct links between Interstates 65, 74 and 70; the CSX Avon yard; and Indianapolis International Airport, bypassing the city.
Hendricks County is adjacent to the new Indianapolis International Airport, which has extensive international air cargo operations. The airport is also home to the 2nd largest FedEx hub, so critical shipments can travel from your loading dock to the plane in a matter of minutes. Corporate aircraft can travel quickly in and out of Hendricks County Airport-Gordon Graham Field in Danville, as well as nearby Eagle Creek Airpark, an ILS-equipped facility located just east of Brownsburg.
Hendricks County is at the center of the CSX railroad network of more than 1,700 miles in Indiana. The CSX rail yard in Avon offers intermodal and bulk transfer services, including regular service to West Coast ports. That gives local companies easy connections to obtain raw materials and ship finished goods worldwide. The southeast corner is also served by RailAmerica’s Indiana Southern Railroad, with connections throughout the southwestern part of the state.
A key resource for companies doing business in Hendricks County —or who are thinking about locating there—is the Hendricks College Network. This non-profit connects local employers and residents with Indiana’s wealth of educational and workforce development resources.
Through one-on-one guidance; success workshops; local access to university classes, programs and resources; onsite business training and workforce development; and community support, the Hendricks College Network provides the path to success at any point from GED to PhD. The Network’s staff is experienced at helping employers and individuals overcome obstacles by identifying opportunities available through more than a dozen colleges and universities.
Their efforts include helping employers develop specialized training programs for employees. As a result of the Network’s work, Ivy Tech Community College, Vincennes University, Trine University and Indiana Tech have all launched local campuses and programs to serve Hendricks County residents and companies.
Joplin, MO: Center of Activity
For companies seeking a central location that reaches numerous major metro areas, excellent transportation connections and a capable labor force, Joplin, MO is a great place to locate.
The Joplin Metro area in southwest Missouri is in the center of North American markets. Major metros such as Dallas, Kansas City, St. Louis, Tulsa, Little Rock and Memphis are just hours away. Transportation to those markets is efficient, thanks to Interstate highways and substantial rail connections. Commercial air service is available at Joplin Regional Airport and three other major airports within 90 minutes drive time.
Companies in the Joplin Metro area benefit from a productive, available labor pool of more than 93,000 people. Missouri Southern State University in Joplin offers a broad range of standard and business-specific classes, and a strong industrial technology program. Crowder College is a source for customized technical training. Overall, between the Joplin schools and MSSU, more than $100 million has been spent on educational facilities.
Joplin’s quality of living is enhanced with two major regional medical centers, more than 150 restaurants and a wide variety of retail from locally owned shops to the 114-store Northpark Mall.
With Wal-Mart’s headquarters in nearby Bentonville, AR (just 45 miles away), Joplin is well positioned geographically to serve as a distribution center for suppliers who have a directive to provide just-in-time deliveries. Joplin is located within two hours of six of Wal-Mart centers, which gives the region a logistics advantage for supplying the Wal-Mart system, the largest retailer in the U.S.
Joplin has an excellent location for distribution based on the population within 150 and 250 miles. A market of 5.2 million people can be reached within a 150-mile radius of the Joplin area. Among its competitors within that radius, Joplin’s population is the largest. The population in the local market has as much of an influence on distribution costs as the overall population within the distribution radius, as it is far cheaper to distribute to local customers than to customers that are at least two hours from the distribution center.
The Joplin Metro area’s position for serving national markets is nearly as advantageous as Chicago or Kansas City. Interstates 40 and 44 (east-west) and US Highway 71 (north-south) connect to every region in the country. Four airports within 110 miles serve the region, providing commercial and cargo service to markets throughout the world. Two Class 1 and one local railroad are important parts of the transportation system. Both UPS and FedEx offer daily early morning deliveries in Joplin and Neosho through their regional hub in Springfield, MO.
The Joplin area already has several back office operations that have prepared a large pool of full- and part-time workers in this industry. Companies such as La-Z-Boy, General Mills and Owens-Corning transport their finished products from the area.
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