Logistics: Where To Go And How To Get There

Logistics industry professionals must sometimes resolve issues C through Z to get from point A to B efficiently and hold costs down for the trillion-dollar U.S. distribution industry.


https://businessfacilities.com/2015/05/logistics-winding-roads/
Logistics industry professionals must sometimes resolve issues C through Z to get from point A to B efficiently and hold costs down for the trillion-dollar U.S. distribution industry.
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Industry Focus: Logistics – Winding Roads

Logistics: Where To Go And How To Get There

By Business Facilities Editorial Staff
From the March/April 2015 issue

The Council of Supply Chain Management Professionals’ (CSCMP) 25th Annual State of Logistics Report® presented by Penske Logistics and written by author Rosalyn Wilson, senior business analyst at Delcan, was released in June 2014 and subsequently updated. The report delivers findings that are the result of extensively tracking and measuring all costs throughout the U.S. supply chain.

According to the report, as a nation, U.S. businesses spent approximately $1.39 trillion dollars on logistics in 2013, a 2.3 percent increase over 2012. Unfortunately, logistics as a percent of U.S. gross domestics product (GDP) declined for a second year in a row, indicating that the sector may not be keeping pace with overall growth in the economy, despite its gradual resurgence.

On the bright side, the December report marked the highest end-of-year values in seven years.

“Fourth quarter 2014 freight shipment volume was the strongest since the start of the recession in 2007. Despite the difficulties getting goods out of the ports of Los Angeles and Long Beach due to labor and capacity issues, both railroads and trucking companies posted shipment volumes that were significantly higher than for the same period in 2013,” Wilson said in her report. 

Looking ahead to 2015, the report predicts higher rates (in the 8 percent to 10 percent range); the rise of truck drivers (or lack of) as a top problem for the entire economy; and continued problems at ports handling larger TEU ships.

Wilson says, “The trucking industry is ordering new equipment at record levels, but is finding it hard to train, seat and retain qualified drivers.” She believes growing demand related to gains in the U.S. economy will make things even more difficult.

As for the port issues, Wilson says, they are “complex and involve a large, diverse number of players.” And adds, we should “Expect the delays to increase costs to move goods to and from the ports. Ocean rates are also forecast to rise throughout 2015. And because of slower and less predictable delivery times, expect to adjust ordering times and supply on hand to compensate.”

Licking County offers diverse and distinct facility options, from office to industrial.
Licking County offers diverse and distinct facility options, from office to industrial. (Photo: GROW Licking County.)

The American Trucking Association (ATA) advises that trucking serves as a barometer of the U.S. economy, representing 69.1 percent of tonnage carried by all modes of domestic freight transportation. A positive sign since ATA Chief Economist Bob Costello said, “Overall, 2014 was a good year for truck tonnage with significant gains….” 

Costello also noted that, “Freight volumes look good going into 2015.” And Wilson agrees that shipping demand should stay steady.

Wilson said, “Given the banner year for the freight industry in 2014 and the strengthening of the underlying economy, I predict an even better year in 2015. Freight volumes and carrier revenues will grow steadily, which is good news for carriers operating on razor thin margins, less good for shippers and consumers as the higher rates will be passed through as increased goods costs.” 

However true or false the predictions, logistics industry players can help tip the scale in their favor by positioning themselves for success. Here are some favorable locations for that move.

LICKING COUNTY, OH: AN EXPANDING CONNECTION

Licking County, OH has an impressive story to tell to, and about, its business community. Located in center of the Greater Columbus region, in the heart of the Midwest, the community offers accessibility, affordability, a strong work ethic among its employees and cutting-edge training and workforce development programs. Beyond just offering these assets, the community has committed to facilitating access, and the leveraging and deployment of these and other resources businesses need to succeed, through GROW Licking County Community Improvement Corporation. This public-private partnership is designed to provide firms a single point of contact for all development-related questions or assistance, simplifying the process and maximizing local and regional resources.

Long a center of innovation and manufacturing, as well as a logistics and agribusiness hub, Licking County never wavered in its focus on these key economic sectors. As a result, the county has seen substantial investment activity over the past two years, as its resources remained poised to provide a competitive advantage to companies coming out of the recession. Licking County is increasingly being recognized—by site selection professionals and business leaders—as a premier location for logistics operations, manufacturing and technology-enabled development. There are a number of factors that contribute to this, including:

  • Exceptional access to major markets, and for employee commuting. A Licking County location places a business within a 10-hour drive of nearly 50 percent of the United States and 33 percent of the Canadian markets. Licking County employers are located in the middle of a region with access to a labor force in excess of 1.1 million people, and draw employees from throughout the region. This access is built upon a transportation network offering direct access to interstates via improved multi-lane state routes, making transporting people and product simple and cost-effective. Facilities and development sites throughout the county offer clients short line rail service with connecting service to CSX and NS, further enhancing this superior access. Commercial and freight air service is available within 30 minutes, or less, of the majority of the community. A regional airport serving small corporate aircraft is located in the center of the county;
  • Cost-effective sites, facilities and development options. Locations throughout Licking County are readily available for clients. Existing facilities, speculative logistics and manufacturing space, and build-to-suit opportunities are offered by innovative, collaborative development firms, and enhanced by creative state and local incentives and financing options;
  • An extraordinary workforce. A company’s most valuable asset is its people. Existing businesses and companies that have made the decision to locate in Licking County consistently comment on the quality and work ethic of the community’s employees, and the innovative, collaborative training and recruitment resources available.

Recently, xperion Energy & Environment, a Germany-based automotive components manufacturer, selected Licking County as the home for its new, 50,000-square-foot facility in Heath’s Central Ohio Aerospace & Technology Center. This investment marks the organization’s first North American manufacturing and sales presence. A subsidiary of Avanco’s Energy & Environment (E&E) division, xperion’s Licking County facility will focus on the production of composite automotive tanks for the compressed natural gas (CNG) sector.

The company conducted an extensive multi-state site selection and review process before selecting Licking County. Roland Schillo, who will lead the new Licking County manufacturer, noted that this is “…an ideal location for our new U.S. facility because of its strong reputation in the manufacturing sector, and also its proximity to key automotive customers,” adding “We look forward to growing our operations and workforce in Licking County.”

Ascena Retail Group recently completed a significant expansion of its existing Licking County operations. The company, after evaluating locations throughout the Midwest and East Coast, selected Licking County for an approximately 500,000-square-foot facility expansion. This $74 million project resulted in the construction of a new, state-of-the art logistics center. The location also houses corporate finance, data processing and administrative operations for Ascena. The facility is located in a corridor of successful national and international logistics firms. Companies such as Menlo Logistics, SpeedFC, GENCO Marketplace, Jeld-Wen and Coty also operate logistics and customer service centers from Licking County locations. This is in addition to major international manufacturing firms that both produce and distribute product in Licking County.

Ascena and xperion join major international firms, including Goodyear Tire and Rubber, which recently opened a research and development center in Licking County. Owens Corning, Ohio Metal Technologies, TenCate Advanced Armor, Anomatic, Inc. and a host of other firms have committed to new investment or expansion in Licking County. These projects will result in over $300 million in new investment; over 1,500 new job opportunities; and over 1,000 existing jobs retained.

These commitments represent tangible market validation of a growing realization. Licking County, Ohio is a location of choice, committed to simplifying success for its business partners.

JOPLIN, MO: A REGION OF STRENGTH AND SUCCESS

Central U.S. location, efficient transportation connections and a skilled workforce add up to make the Joplin region a great location for distribution and manufacturing operations.

Anchored by the Joplin, MO-Miami, OK, metropolitan area and the Pittsburg and Parsons, KS, micropolitan areas, the Joplin region is the heart of the U.S. The market reaches from the Midwest to the Southwest creating market access to more than 30 million people within a 350-mile radius.

“That market reach is more than what people consider traditional distribution hubs like Tulsa and Kansas City,” noted Kevin Welch, director of the Joplin Regional Partnership.

The Partnership represents more than a dozen cities in seven counties, in the three-state corner of Missouri, Kansas and Oklahoma. This gives companies a choice in picking a location that is right for their specific needs. With Interstates 44 and 49 crossing the region, most of the continental U.S., and parts of Canada and Mexico, can be reached in two day’s shipping time. The area also has three Class-One railroads and two short-line providers, guaranteeing ample access to rail and additional connectivity to West Coast and Gulf ports. Commercial air service is provided by the Joplin Regional Airport and three other commercial airports from 70 to 110 miles away.

While the Joplin region has a great location and excellent transportation access, it is the workforce that makes many companies successful. The region’s workforce gets high marks from area employers, who note employees’ ethic and commitment to ongoing training. With the region’s history in manufacturing and distribution, people are still interested in working in these two sectors, as well as in transportation. 

“The commitment and pride in their work residents have is enhanced by the training and education facilities throughout the area,” said Welch. 

Missouri Southern State University and Pittsburg State University offer a number of standard and customized programs in business management, quality control, logistics management and applied engineering. In addition, the presence of four community colleges provides a wide array of basic business and technical skills training for manufacturing and distribution firms.

Recently, the region aggressively worked with ACT to implement career-ready certification to national standards. Jasper County is the first ACT Career-Ready Certified community in the United States. Other counties in the region are working on their designations, but even now, more than 5,000 people in the workforce have their skills certification.

Along with the key business success factors of central location, strong transportation access, strong workforce and reasonable operations costs, the region has other attributes that are beneficial to distribution operations. Although not available in every county, the region has Foreign Trade Zone areas that provide benefit to companies importing or exporting goods to and from countries outside the U.S. In addition, a new EB-5 regional center is in place, giving expedited residency permits to foreign individuals making qualified investments in the region. 

Companies seeking a central U.S. location with strong market reach to both coasts, Canada and Mexico will find the Joplin region offers multiple possibilities for sites, buildings, transportation and workforce skills. Learn more by contacting Kevin Welch at the Joplin Regional Partnership at [email protected] or 417-624-4150.

HOOSIER ENERGY: THE EXPANDING LOGISTICS OF SOUTHERN INDIANA

Southern Indiana, an area firmly established as part of the Midwest’s “Crossroads of America,” will always be a draw for logistics and warehousing companies. From Indiana, 65 percent of the U.S. population is reachable within an 11-hour drive. Southern Indiana supports numerous logistics sites, which the host counties regard as a huge part of their economic growth. Highway, airline and rail systems required to help these areas thrive are woven through the region like a supportive spider-web. That infrastructure helps guarantee efficient movement of goods across the nation.

About six years ago, the economy slowed down, and the transport of goods did the same. But in the past several months, Hoosier Energy and local REMC co-ops, which serve Southern Indiana with efficient, affordable power, has seen promising signs as various logistics companies act to expand their operations. 

Immediately south of downtown Indianapolis is Johnson County. In 2005, Interstate Warehousing constructed a new, state-of-the-art cold storage and transport facility in Franklin, IN. Their everyday needs go far beyond “normal” power and efficiency. The company expanded the facility in 2008, 2010 and 2012, with phases 5 and 6 currently underway. The expansions will add 309,000 square feet, bringing the total campus to 889,000 square feet at an additional investment of $39 million. Chet Aubin, the CEO of Johnson County REMC, notes, “Our biggest current challenge with Interstate Warehousing is relocating our facilities to other parts of the site so that we stay out of their way. We’re in the process of moving an underground conductor, where their new office space is going up.”

In the meantime, ULTA Inc., a major cosmetics company, is investing $51.6 million to construct a new 670,000-square foot warehouse in Greenwood. This will be the company’s first warehouse in Indiana, and ULTA is positioning the facility to be their Midwest distribution hub. The facility is on schedule to open later this year. ULTA will fill 537 new fulltime jobs.

To the west of Johnson is Morgan County. Within the county, in Mooresville, TOA, Inc., a Japanese-based tier-1 parts supplier to Subaru and Toyota, houses their only U.S.-based manufacturing plant, whose site provides convenient access to both auto assembly plants. In June 2014, TOA broke ground on what will be their ninth expansion since opening the plant in 2001. The $72 million investment will add over 100,000 square feet of new warehouse space and 260,000 square feet of new manufacturing space to the campus, plus machinery. The expansion will bring 220 new jobs to the area, and is their largest expansion to date. “The South Central REMC has been a great partner,” said Chelsey Manns, Executive Director for the Morgan County Economic Development Corporation. 

Meanwhile, last October, 50 miles east of Indianapolis in New Castle (Henry County), Boar’s Head Brand, a leading provider of delicatessen meats and cheeses, broke ground on a new manufacturing and research facility. Boar’s Head is initially invested $80 million in exchange for a tax abatement that will equal $5.5 million in savings over the first 10 years. Boar’s Head will construct a new, state of the art 150,000-square-foot food processing facility and distribution plant. The facility will occupy 66 acres at an existing industrial park on the south side of County Road 400 S in New Castle, two miles from I-70, and offers easy east/west access to the Midwest. Boar’s Head first contacted Henry County about a potential site in March 2014 and broke ground seven months later. According to New Castle / Henry County Economic Development Corporation Executive Director Corey Murphy, that’s the development equivalent of the light speed. The company will fill more than 200 permanent jobs by 2018, and Boar’s Head will be New Castle’s first food production plant, a notable “score” for the area’s economic development.

Dropping south into Columbus, IN, and Bartholomew County, the community is supporting a similar logistics boom with two major automotive parts manufacturers. Cummins, Inc., a Fortune 200 diesel engine company with its world headquarters in Columbus, just opened a new Logistics Center in December with an investment of $15 million to build 428,000 square feet of consolidated storage to house parts from numerous manufacturing sites for efficient global transportation.

Prior to this in 2012, a company new to the community, the Phoenix Group, another major automotive supplier, built a new facility of 460,000 square feet in an established industrial park. “They needed 40 acres and we had 20 on the market. The company negotiated with the adjacent landowners to create the necessary parcels of land,” said Jason Hester, Executive Director of the Columbus Economic Development Board. The Phoenix facility opened in 2013.

On Hoosier Energy’s approach to growth, Chet Aubin of Johnson County noted, “Hoosier Energy builds with…future expansion in mind. Being able to say we’re ready to provide power…helps us sell sites.”

Southern Indiana stands ready take full advantage of the next wave of logistics expansion. As product production ramps up and gets back “on the move,” Hoosier Energy and their partners are proving that they’re ready to supply the abundant, affordable power their customers need for that growth.

YORK COUNTY, NE IS NOT YOUR AVERAGE COMMUNITY

What makes York County, NE unique from a business perspective? There are many competitive advantages, but the location, agricultural assets and workforce are three driving forces in the economy. For companies looking to take advantage of these assets, there are available sites appropriate for rail served, warehousing and distribution, manufacturing and commercial. All sites are within five miles of Interstate 80, and the Burlington Northern Santa Fee mainline travels east/west, which gives rail access to a bevy of manufacturers, agri-business and logistic companies alike.

York County’s location has been key. Located less than 45 minutes from Lincoln, NE’s capital city and Grand Island offers access to a highly skilled workforce and many educational opportunities. York County is located on Interstate 80 with four exits. I-80 is one of America’s busiest roadways, and connects the east to the west from downtown San Francisco, California to Teaneck, NJ, near New York City. I-80 intersects with U.S. Highway 81, otherwise known as the Pan-American Expressway Corridor, allowing for travel in any direction. Highway 81 provides quick and easy access into Canada, as well as to the Ports in Texas. Metropolitan areas within six hours of the County include Kansas City, Denver, Des Moines, Oklahoma City and Sioux Falls. In fact, from York County, shipments can be trucked to 90 percent of the lower 48 states in two days or less. Being located in the center of the United States offers businesses numerous advantages when it comes to their shipping needs. 

In today’s competitive workforce market, it is great to say York County has a solid and loyal workforce with characteristics that standout from the average community. York County is a small, rural community with a population of around 14,000. However, the location creates a labor pool of over 318,000 potential employees. In fact, York County has become a magnet for the commuting workforce with just over 40 percent commuting from outside of the county to work here. York is home to York College, a four-year liberal arts institution, which recruits over 75 percent of their students from outside of Nebraska. Many of the York College alumni end up making York County their home after graduation because students love the feel of a small town while being located near city amenities. Three other colleges and four community college campuses within an hour provide additional access to graduates for businesses to recruit from. In addition, the Midwest is known for employees having a great work ethic and understanding of hard work, and York County fits into this category. 

York County Development Corporation (YCDC) and community partners have undertaken workforce initiatives to help connect workers and address long-term workforce challenges. One of the initiatives was the organizing and extensive marketing of a Tri-County Job Fair and Career Day. This two-tier approach was organized to help recruit workforce to the area while exposing high school students to the opportunities in the region. The Job Fair and Career Day was a direct result of YCDC’s Business Retention & Expansion Program, which identified skilled workforce positions available and the need to identify future skills and opportunities needed by industries. The regional approach is able to attract more potential employees than a single community.

The second annual job fair, with 60 businesses participating, was held in March in York. A Career Fair led up to the Job Fair, and students attended panel discussions from businesses representing agriculture; food & natural resources; business, marketing & management; communications & information systems; health services; human services & education; and skilled & technical sciences. Students were provided with resume review services, the opportunity to hear a presentation on interview techniques and participated in mock-interviews. York Public Schools was one of the early partners, and Dr. Mike Lucas, Superintendent said, “It is extremely important for York Public Schools to be able to expose our students to different job and career opportunities. Partnering with YCDC allows us to better expose our students to numerous opportunities; many of which they don’t know about prior to the event.”

Being home to DuPont Pioneer, Dow Agrosciences and Abengoa BioEnergy shows that agri-business has invested in York County. Local farmers are proud to say we have some of the best soil in the state, and a highly irrigated county with access to one of the most abundant water sources in nation, the Ogallala Aquifer. These assets provide the backbone to many agri-businesses located in York County, including regional warehouses and advanced manufacturers.

York County also has developed a niche in clean advanced manufacturing. Cyclonaire, UTC Aerospace Systems, and Klute Inc. find many advantages to being located in York County. In addition to ease of logistics and workforce, Nebraska offers low electric and natural gas rates. York County has some of the lowest electric rates in the nation due to Nebraska being a 100 percent all public power state. Nebraska Public Power District (NPPD) is the electric supplier to York and 86 of Nebraska’s 93 counties.

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