Logistics Networks Are Getting Back On Track

Lower fuel prices, a surge in railroad hiring and the need to get goods to market faster are boosting growth and profits in the logistics sector.


https://businessfacilities.com/2015/10/logistics-networks-are-getting-back-on-track/
Lower fuel prices, a surge in railroad hiring and the need to get goods to market faster are boosting growth and profits in the logistics sector.
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Logistics Networks Are Getting Back On Track

Logistics Networks Are Getting Back On Track

By the BF Staff
From the September/October 2015 Issue

U.S. railroads are getting back on track as heavy spending on locomotives, track and bridges gains traction. The Class I railroads are now spending about $2 billion a month on this initiative, according to the Association of American Railroads. The rails hired over 17,000 new employees last year and continue to hire, according to Wagner Logistics’ Supply Chain Blog.

Truckload carriers are being helped by an hours-of-service rollback. With more driver schools and recruitment of nontraditional drivers, there will be an influx of drivers to fill the new tractors carriers are buying to expand capacity. However, Wagner predicts that an overall driver shortage will persist and the squeeze on carrier capacity will likely induce shippers to continue to adopt some form of private fleet operations to supply their core capacity.

Less-than-truckload (LTL) carriers are having a good year as they don’t have the same degree of driver turnover. Lower diesel pricing and higher volume are helping LTL carriers maximize their terminal network. Parcel carriers also are benefiting from a stronger consumer economy, and the growth of e-commerce sales is providing a surge in volume for these home-delivery networks; this surge also is fueling growth in regional parcel companies as shippers look for ways to hold down their growing cost of shipping due to dimensional pricing implemented by UPS and FedEx, Wagner reports.

Shippers depending upon parts, electronics and fashion goods are expanding their use of air cargo to move goods faster into the U.S. from overseas. Lower fuel costs, meanwhile, are boosting profitability across the logistics and distribution industry.

KENTUCKY’S GOT LOGISTICS COVERED

Why are so many businesses opening or expanding facilities in Kentucky? Logistics are a major factor.

Whether a company needs to ship a product by ground, rail, water or air, Kentucky has it covered. With the state’s ideal geographic location, shipments also reach their destination more quickly than from most anywhere else in the country.

Nearly 400 facilities in Kentucky are providing distribution and logistics services to companies both in and outside Kentucky. In the past five years, the state has announced 140 new location or expansion projects related to the distribution and logistics industry with investments of close to a billion dollars and nearly 10,000 new fulltime jobs to be created.

Across the nation and around the world, business leaders and logistics providers are increasingly looking to Kentucky as the strategic partner they need to aggressively compete in the global marketplace. Last year, Kentucky announced more than 350 new projects with companies investing $3.7 billion and adding roughly 15,000 jobs. The projects included a variety of sectors, such as healthcare, food and beverage, plastics, machinery manufacturing, etc.

Kentucky’s substantial automotive presence benefits dramatically from the state’s logistical capabilities. Products are being shipped from Kentucky throughout the country and around the world. In 2014, $5.9 billion in motor vehicles and parts were exported to more than 100 countries, making it the state’s second-largest export category. Ford, Toyota and Chevrolet have each led expansion projects in Kentucky over the past two years, and the state’s excellent track record in providing these companies with the logistics they need is a big reason why.

One major factor in Kentucky’s success is the presence of two global air shipping hubs. The two international airports serving Kentucky also are home to UPS and DHL. The UPS Worldport at the Louisville International Airport is the world’s largest fully automated package handling facility, handling more than 130 aircraft daily and processing an average of 1.5 million packages a day. The company has invested $2 billion in the air hub, and its air express flights carry goods to 800 airports in 220 countries and territories.

DHL has had a similar influence at the Cincinnati/Northern Kentucky International Airport, where 90 percent of the company’s shipments entering the U.S. are processed. DHL’s global hub handles shipments from more than 80 aircraft daily, with 148,000 packages passing through each day. DHL Express has invested nearly $154 million since 2014 to expand its footprint at the airport. That includes a 180,000-square-foot sorting facility to accommodate larger express shipments. Thanks to UPS and DHL, Kentucky enjoys a top-three ranking in the country’s air cargo shipments.

There are many examples of companies choosing to locate or expand close to one of the global air facilities. An eBay Inc. company, eBay Enterprise, has expanded its footprint by investing $52 million and adding 354 jobs in northern Kentucky. Just Fabulous made a $22.2 million investment in 2015 for a fulfillment center, which is adding 310 jobs to the region. The company also invested $3 million in 2014, adding 75 employees.

In Louisville, Clearwater Fine Foods chose to locate close to the UPS Worldport and the Louisville International Airport for one fresh reason—lobsters. The company receives shipments after the lobsters are fished from the icy waters of Canada’s North Atlantic coast, and then kept alive in massive salt tanks that resemble their natural environment for water quality and temperature. From there, they are packed and shipped overnight to fine restaurants throughout the nation. Kentucky’s location is ideal for this type of business.

So what other factors make Kentucky a leader in logistics? There are many reasons:

  • It is home to five commercial airports and dozens of regional airports
  • It’s within a day’s drive of two-thirds of the U.S. population
  • The state has 19 interstates and major highways
  • There are 2,760 miles of rail track used by 13 freight railroads, including CSX, Canadian National and Norfolk Southern
  • Kentucky also boasts nine riverports and 1,590 miles of commercially navigable waterways

All this means that a product can leave Kentucky and be shipped anywhere in the world in a matter of hours.

Even with Kentucky’s unparalleled logistics assets, planning for the future continues. One of the largest infrastructure projects underway in the country is the $2.6 billion Louisville-Southern Indiana Ohio River Bridges project. The initial phase of the project is on target for completion late this year, and its effects are already starting to be felt. It is a crucial piece in expanding economic opportunities and will allow companies in the region to conduct business more efficiently.

The project entails building two new bridges, one in downtown Louisville that includes six new lanes for northbound I-65 traffic, and a reconfigured junction where I-65 meets I-64 and I-71. Another bridge east of downtown will expand route options and cut travel times. An economic impact study estimated that the Ohio River Bridges Project alone will generate an average of 15,500 jobs annually through 2042.

JOPLIN: CENTER OF IT ALL

A 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.

logistics-networks
It’s easy to get to there from here: 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 from the Joplin, MO metropolitan area. (Credit: Joplin Regional Partnership)

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 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 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 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. Jasper County became the first ACT Career-Ready Certified community in the U.S.

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.

OSWEGO COUNTY, NY: WELL POSITIONED

Oswego County is a truly multi-modal location, with access to ground, rail, air, and water transportation for shipment of goods. Situated in Upstate New York, Oswego County is located centrally to New York City, Boston, Philadelphia, Cleveland, Toronto and Montreal. A great location and a host of transportation options place Oswego County at the top of the list for site selectors.

logistics-networks
The Oswego County Airport offers two paved runways ideal for business, industry and private aviation. There are approximately 170 acres of land available for industrial development adjacent to the airport. (Credit: Oswego County)

The Port of Oswego Authority is a deep-water port on the shores of Lake Ontario. It is the first port of call on the great lakes within the St. Lawrence Seaway. As a hub in the Great Lakes St. Lawrence Seaway System, it is part of over 2,300 miles of water transportation from Duluth, Minnesota to the Atlantic Ocean. The Port of Oswego provides on-dock rail and truck loading, making for a smooth transition of goods to market. The Port’s just-in-time storage capabilities provide additional flexibility to delivery schedules. Recent upgrades to the Port’s security system allow the Port to handle high-security shipments.

Oswego County also has access to water transportation via the NY State Barge Canal System for both commercial and recreational traffic. The canal system stretches from Albany to Buffalo, from the Great Lakes to the Hudson River, providing an additional connective corridor for the transport of goods and materials.

Oswego County is one of four contiguous counties that make up Foreign Trade Zone #90. The benefits of locating within a foreign trade zone could include the elimination, deferment or reduction of duties associated with materials and products being imported and exported within the zone, thus reducing overall cost of doing business.

CSX offers daily rail transportation to Oswego County. In addition to rail access at the Port, service is available throughout the County, with direct access at several sites and industrial parks. With a nearby switch yard, CSX provides access to more than 21,000 miles of track in 23 states and the Canadian provinces of Ontario and Quebec, plus 70 ocean, lake and river ports. Coupled with nationwide transloading and warehousing, CSX makes rail a very viable transportation option for Oswego County businesses.

The Oswego County Airport offers two paved runways ideal for business, industry and private aviation. One runway, measuring 5,200 feet, runs north to south, while a second 4,000-foot runway travels east to west. There are approximately 170 acres of land available for industrial development immediately adjacent to the Oswego County Airport in the Oswego County Airport Industrial Park (AIP). The AIP has excellent potential for manufacturing or services companies which may find close proximity to air transport service advantageous. Syracuse Hancock International Airport is within minutes of Oswego County. In addition to worldwide passenger transport, Hancock has facilities for airfreight transport including a 53,000-square-foot cargo building.

Oswego County has convenient access to Interstates 81 and 90, which provide north/south and east/west movement. Over 25 carriers provide both local and long-distance trucking to and from Oswego County. Connecting lines enable transport to every major US market. Local carriers provide transloading from truck to rail and offer myriad warehouse storage options, including dry, climate controlled and frozen.

In addition to multimodal logistical advantages, Oswego County has Greenfield sites ready to build on. All sites within three industrial parks have utilities and other necessary infrastructure in place. The Oswego County Industrial Park, being adjacent to NYS 481 and just minutes from Syracuse, N.Y., has attracted both manufacturing and R&D business investment recently.

Myriad transportation options, plentiful high-quality water and an existing workforce with prior food processing experience makes Oswego County a prime location for food processing manufacturers. This explains the recent growth spurt in the county’s food processing sector. In recent years, three new companies have expanded their food processing ventures in Oswego County. Oswego County has the available space, skilled workforce and infrastructure capacity for continued growth in this sector.

Many businesses rely on Oswego County’s vast transportation network on a daily basis. Novelis, Oswego County’s largest manufacturer, imports aluminum and exports product via ship, truck and rail through the Port of Oswego. Novelis also takes advantage of the Port’s just-in-time storage. The Port of Oswego is a designated grain location for Perdue Agribusiness. Perdue utilizes the Port for grain storage, as well as truck and rail transport. Sunoco transports corn in by truck from NYS farmers and by rail from farmers in the Mid-west directly to their Volney plant to produce Ethanol. The ethanol is then transported by truck and rail to Sunoco fuel terminals to be added to gasoline.

The combination of various forms of transportation with warehousing capabilities and specialized material handling equipment supports Oswego County’s stance as a true multi-modal location. The availability of ready-to-build sites and skilled workforce make Oswego County the ideal setting for manufacturing, food processing and R&D companies.

SWLA: NATURAL GAS EXPORT HUB

Southwest Louisiana is in the midst of becoming the Clean Energy Capital of the World. SWLA is busy installing the infrastructure the soon will make the region the largest exporting hub for liquefied natural gas (LNG) in North America.

The area consists of five parishes Allen, Beauregard, Calcasieu, Cameron and Jeff Davis. As a whole, the region is located near the Sabine River, which makes the state of Texas our nearest neighbor. Professionals in the academic world contend that Southwest Louisiana is part of the Houston Megalopolis.

SWLA’s claim to the title of Clean Energy Capital of the World is backed by an unmatched surge in natural gas production. Currently, the region has $90 billion in announced development projects, leading the nation Eight LNG export terminals are in the process of being constructed or close to breaking ground in the region:

Cheniere LNG ($20 billion); Cameron LNG ($10 billion); Lake Charles LNG/BG ($10 billion); Southern California Telephone and Electric LNG ($9.25 billion); Venture Global LNG ($4.25 billion); Magnolia LNG ($3.5 billion); Live Oak LNG ($2 billion); and Commonwealth LNG ($200 million).

Added to those projects are two liquid-to-gas facilities that have been announced, including Sasol North America ($14 billion) and Juniper GTL ($100 million). Other major projects include: Sasol Ethanol Cracker ($8.9 billion); Axiall/Lotte ($3 billion); Big Lake Fuels/G2X $1.6 billion; Lakes at Morganfield ($495 million); Westlake Chemical ($330 million); Bell Savanne ($270 million); Port of Lake Charles/IFG Holdings ($192 million); ART ($135 million); and Packaging of America ($111 million).

“We are excited about the opportunity that has been created due to all of the industrial development that is happening in our region,” said George Swift, president and CEO of the Southwest Louisiana Economic Development Alliance. “At the turn of the new century, nobody in our area would have thought that the possibility of everyone living here would have the chance to make a decent wage or start a business in a diversified market would exist.”

Lake Charles is the largest city in the five parish area, followed by Sulphur. The five parish region has a population of 296,065.

Workforce development has been a key topic for governmental and business leaders. It is estimated that between 2015 and 2019, 58,776 jobs will be created as a result of the announced projects. Of that number, 40,447 are construction jobs and 18,329 will be permanent.

What sparked the interest in Southwest Louisiana?

“Our region has infrastructure. Interstate 10 passes through, there are seven ports, eight airports, railway, the Calcasieu Parish Ship Channel (which is 34 miles from the Gulf of Mexico), Intercoastal Canal, industrial infrastructure, a university and community college, and a population that wants to work and wants better for their families,” Swift said.

Along with finding ways to fill the job needs, area governmental and business leaders are striving to make sure entrepreneurs are afforded the chance to capitalize off the historic economic growth that will be experienced in the region.

The Southwest Louisiana Entrepreneurial and Economic Development Center and Business Incubator at McNeese State University is home to the Southwest Louisiana Economic Development Alliance, the Imperial Calcasieu Regional Planning and Development Commission, Louisiana Small Business Development Center at McNeese State University, Institute for Industry-Education Collaboration, McNeese State University Innovation Center and Business Incubation Studio, Service Corps of Retired Executives (SCORE) and the Louisiana Procurement Technical Assistance Center (LA PTAC).

Within the walls of the $12 million facility, potential and current entrepreneurs get access to Internet, utilities, telephone equipment, conference rooms, receptionist, professional address, building security, private parking, guest parking, copier/printer, office furniture, start-up space and business mentoring on a variety of subjects.

To learn more about the fast paced developments in the region, contact the Southwest Louisiana Economic Development Alliance at (337) 433-3632 or visit www.allianceswla.org.

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