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INDUSTRY FOCUS: Points of Entry for Cash-Rich Cargo

By Shana Daley
From the January/February 2013 issue

Competition for market share of inbound shipping remains fierce among U.S. ports, especially as the east coast gears up for an expanded Panama Canal and trade flows continue to shift among developed and emerging countries, according to Jones Lang LaSalle’s fourth annual seaport report. As reported in the firm’s earlier studies, commercial real estate surrounding major U.S. seaports continues to outperform the broader industrial market.

The report, which analyzes the health of major domestic container seaports and their surrounding real estate, also reveals that exports are creating inland development opportunities and are driving new connections between domestic maritime ports, inland destinations and their surrounding distribution real estate markets.

According to the Jones Lang LaSalle report, investment is pouring into ports: At least $13 billion of public investment is earmarked for port development in the next decade. Limited options are available for large space users: only 20 blocks of space are available for users requiring 250,000 square feet within five miles of a major U.S. port.

“Developers, investment interests and supply chain executives remain optimistic about our nation’s seaports,” said John Carver, head of JLL’s Ports, Airports and Global Infrastructure (PAGI) group, “Influenced by an evolving maritime logistics industry, global and trade transformations such as the extension of the Panama Canal and growth of U.S. exports, they see a bright long-term future. Capital is being poured into seaport infrastructure from both the public and private sectors.”

CHICAGO EXEC ANCHORS WHEELING

The Village of Wheeling’s manufacturing base is anchored around its general aviation airport, Chicago Executive Airport, the third busiest in Chicagoland. The Village recently approved the third new corporate hangar project in as many years and is reviewing opportunities to create expanded land availability in response to increased demand.

Few communities can boast of a similar connection to the national and international world of business and commerce. Chicago Executive Airport serves as a hub for business and industry and as a logical magnet drawing businesses to the area.

Chicago Executive Airport has seen significant improvements recently, and many of those improvements are ongoing. For instance, in 2012 the airport completed a 780-foot extension of Taxiway Echo and Atlantic Aviation built a new hangar to service the needs of a new client, a client who recognizes the potential of Chicago Executive Airport.

That new hangar includes 26,000-square feet of hangar area and 7,800-square feet of office space. An attractive building, it is consistent with the style of Atlantic’s other facilities.

Atlantic Aviation

Atlantic Aviation

Atlantic Aviation also renewed its commitment to the airport with a $750,000 remodel of its terminal at CEA. Both stylish and functional, the remodel has improved traffic flow, includes a second cafeteria, larger restrooms and a more spacious pilot’s lounge. While aesthetically embracing the new century, the remodel also incorporates the latest in technology, including large-screen television monitors and wireless Internet access for personal and professional use. The monitors are connected to Apple TV providing games, movies, television programs and business presentation capabilities.

Another new hangar is on the planning board, and a third FBO will be coming to Chicago Executive. The new hangar and the new FBO bring additional partners to the airport. Hangar 18 is an 18,000-square-foot hangar that Signature Flight Support is building for “Tin Goose Garage,” a flight support company previously based at DuPage Airport.

The new facility will include 15,000-square feet of hangar space and 3,000-square feet of office complex on the north side of Tower Road. The plans call for a state-of-the-art building that will help to keep Chicago Executive Airport at the forefront of aviation for years to come. The company plans to construct an $8-million facility in the southeast area of the airport. It will include 30,000-square feet of hangar and a 10,000-square-foot terminal.

More development is on the way. In July 2012, Wheeling retained a land planning consultant to evaluate alternate development scenarios over the eastern portion of the airport district to outline aviation and commercial development options. Once complete, the new comprehensive plan will serve as a concise guide for the future growth of the airport district and the Village is actively recruiting aviation developers to assist in implementing new redevelopment projects.

PORT OF STOCKTON NETS $1.6 BILLION IN INVESTMENTS

The Port of Stockton is one of the most vibrant seaports in California, which has attracted more than $1.6 billion in private sector investments and creating more than 2,100 family-wage jobs for our community in just the last five years alone, while the local area is contending with nearly 20 percent unemployment. Additionally, another $1.7 billion in projects are currently under negotiation, which will bring an estimated 1,100 new jobs to Stockton.

Port of Stockton

Port of Stockton

Following the economic downturn of 2008, the number of ships calling the port has increased 45 percent. Tonnages crossing Stockton’s docks have increased by 63 percent. A decade of infrastructure investment exceeding $130 million has combined to bring these new economic opportunities to the greater Central Valley region.

The Port of Stockton recently became one of the rare West Coast ports that is a net exporter of American products, shipping iron ore from Utah, rice from Northern California, City of Stockton-processed sulfur, and coal from Colorado, putting more people to work on the docks and in the warehouses. It recently doubled the tonnages of chemical fertilizers imported to support the agricultural industry of the entire San Joaquin Valley and now imports more than 95 percent of the chemical fertilizers used in the valley.

PROJECT OVERVIEW

  • $30 million TIGER grant is supporting the project. The Port of Stockton received $13.5 million.
  • Port of Stockton purchased:
    a. Two mobile harbor cranes
    b. Two barges (cell guides being installed)
    c. Invested in port infrastructure improvements: yard, dock and rail

The port generates more than $5 million in tax revenue every year with existing projects, which will nearly double in the short term as projects under construction and in negotiations are built. These funds are used to help pay for local government services for our community. The Port of Stockton does not tax its citizens to pay for port activities.

A new containers-on-barge service, called the M-580 Marine Highway, for shipping ocean containers between the ports of Stockton and Oakland is scheduled to start operations this year. This service can remove about 700 trucks from the highways with each barge movement, making a major contribution to improving the air quality, safety and road capacity for our region.

M-580 Project Scope

  • Import containers arrive at the Port of Oakland and are trucked along the I-580/I-5 corridor to distribute centers in the Central Valley.
  • “Import” containers return to the Port of Oakland empty, causing inefficient logistics. Marine Highway project will assist in “interchange” of empty imports to loaded exports at inland DCs.
  • Current transportation inefficiencies create major issues with congestion, pollution and public safety.
  • 1600 containers move via truck everyday between the Port of Oakland and the Central Valley.

The service contemplates three round trips per week, handling import and export traffic. The goal is to have nothing but revenue-bearing loads as opposed to empty containers for re-positioning. The approximate cost is estimated to be the same per container, which includes diesel fuel charges. One advantage by using the barge is that containers can be loaded heavier than the 80,000- pound weight limit for trucks traveling between Stockton and Oakland via the highway system. This could translate into a 20 percent savings in ocean freight to the cargo owners.

Please contact the Port of Stockton for more details: (209) 946-0246, or visit the Web site.

HENDRICKS COUNTY, IN: CENTRAL LOCATION, GLOBAL RESOURCES

Given that it’s a substantial distance from any coasts or borders, Hendricks County, Indiana might seem to be a surprising place for a Foreign Trade Zone (FTZ). However, its central location, transportation network, and labor resources have proven to be a tremendous benefit to companies that do business globally. At the same time, the county’s comfortably attractive way of life strengthens manager and employee satisfaction.

Hendricks County is adjacent to the Indianapolis International Airport’s extensive international air cargo resources, including a FedEx hub and dedicated Cargolux service to Europe. The UPS Louisville hub is just two hours south by Interstate highway. The county is home to Avon Yard, the center of CSX Railroad’s extensive Indiana network, with scheduled intermodal service connecting local companies to West Coast ports.

Combining that access to international transportation with the financial benefits of the FTZ has led many companies to give Hendricks County pivotal roles in their global operations. For example, wireless device supplier BrightPoint uses its Hendricks County FTZ facilities to package and program devices and accessories sourced from multiple countries, and then to distribute the ready-for-retail kits worldwide.

Domestic distribution is just as convenient. With fast connections to Interstates 65, 74, 70, 465 and 69, Hendricks County is less than a day’s drive from New York, Chicago, St. Louis, Dallas, Cincinnati, and Atlanta, providing overnight trucking access to more than half of the nation’s population. County officials have improved those connections with the development of the locally funded Ronald Reagan Parkway, which will ultimately link I-70, I-74, and I-65. The ability to move goods in and out of the county quickly has made it one of the nation’s most popular sites for logistics operations.

With a population of just under 150,000, Hendricks County is at the center of a large labor shed that incorporates the Indianapolis area and several smaller cities. Employers are able to tap into an abundance of highly skilled labor, including workers with expertise in technically demanding fields such as bioscience, medical devices, and motorsports. Hendricks County is home to VULTC, Vincennes University Logistics Training Center offering a certification in logistics and materials handling. Numerous colleges and universities are located within a two-hour radius, including the research facilities of Purdue University, Indiana University, and IUPUI.

That powerful combination of assets explains why the county has remained strong as the rest of the nation has struggled to recover from the recent recession. Over the past half-decade, companies have invested more than half a billion dollars into the local economy, leading to more than 7,800 new jobs, and squarely placing Hendricks County on Money Magazine’s list of the top 20 counties nationwide for job growth. In 2012 alone, companies poured $118 million into the county and created 1,710 jobs.

The county’s public- and private-sector leaders have taken an aggressive, two-pronged approach that focuses on both attracting new businesses and encouraging growth among existing employers. That strategy is powered by highly effective collaboration between business, government, education, and other sectors, allowing faster decision-making and innovative, practical solutions for business needs.

A prime example is the Hendricks College Network, a non-profit linking employers with Indiana’s wealth of educational and workforce development resources. The group leverages its connections with Indiana’s colleges and universities to develop specialized, highly sophisticated training programs for companies, and its success has been instrumental in attracting new local campuses of several universities.

To ensure that growth won’t compromise the way local residents live and play, private-sector leaders have joined forces with government officials and area non-profit organizations to create Hendricks County In Focus. This cooperative undertaking is developing ways to monitor the factors impacting local lifestyles, giving local leaders valuable guidance for decision-making—and making sure that Hendricks County continues to be a successful center for global companies.

TUPELO/LEE FTZ: 15M SQ. FT.

Foreign-trade zones help U.S. companies overcome competitive disadvantages stemming from U.S. trade laws and procedures. Within a Foreign-trade zone, companies are permitted to perform a number of procedures before the merchandise is charged duty. These procedures include sampling or inspecting merchandise (and destroying faulty merchandise without ever paying duty on it), storing and warehousing, re-labeling, repairing, displaying, assembling, These steps allow companies to benefit from interest on capital by delaying duty payment and permitting goods in the zone to be used as capital against loans. FTZs also drastically reduce the number and aggregate costs of entry fees.

As a member of the Greater Mississippi Foreign Trade Zone, Tupelo/Lee County couples these FTZ benefits with a long-standing history of community support for manufacturers.

With eight FTZ sites including over 5,881 acres of land, 2,780 developable acres, 15 million square feet of manufacturing space, 6.1 million square feet of warehouse/distribution space, and over a hundred companies already receiving the benefits of FTZ operation, Tupelo/Lee County provides not only the most beneficial import/export status, but also the leadership and cooperative spirit that have made us one of the foremost manufacturing locations for over a half century. If you have any questions please contact Shane Homan at (800) 523-3463 or [email protected].

 

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