According to the U.S. Census Bureau, reshoring activity largely accounts for more than $195 billion in annualized construction spending in 2023. This is up 79.9% year-over-year and is well above the decade average of $60 billion in annual spending.

Megasites Support Megaprojects

The spotlight is undoubtedly on megaprojects—endeavors that involve north of $1 billion in investment and have significant labor, utility, and transportation infrastructure requirements—and the megasites available to sustain them. 

Defining Megasites

Megasites, roughly defined in this context as areas larger than 1,000 acres that are available for industrial-scale development, are in short supply, and sites that meet both utility and transportation infrastructure demand requirements and are controlled by a single-ownership entity are even more limited.

From an economic development perspective within the Kansas City market, we’ve seen these factors play a significant role in the attraction of megaproject deals. With a shortage of viable options available across North America—states, communities, and developers are looking to create a competitive edge that will attract these large-scale projects. 

The market surrounding a megasite plays a critical role in that property’s ability to attract significant investment. A business-friendly operating environment, impactful incentive tools, and access to a major population center with a proven skilled workforce pipeline are top drivers in the site selection process.

A recent example is Panasonic’s decision to locate its $4-billion battery manufacturing plant at Astra Enterprise Park in De Soto, Kansas, capitalizing on the site’s location within the Kansas City metro to support the facility’s anticipated 4,000 jobs.

Megasites Provide Connectivity

Megasites are more than just expansive areas of land; they must serve as a nexus of connectivity. The Kansas City region’s central location and access to road, rail, river, and air cargo transport provide companies with strategic access to the epicenter of the North American transportation network and the ability to ship to 90% of the continental U.S. population in two days or less.

Access to multiple modes of transportation ensures unhindered movement of resources and products across North America and beyond, expanding reach and offering risk reduction, resilience, and flexibility.

Speed-to-market is a critical factor for most companies looking to build a new plant. Sites with robust utility infrastructure in place—particularly those with access to clean/renewable energy—reduce project timelines and price tags.

Additionally, locations that proactively secure flexible zoning approval and expedited permitting provide prospects more certainty on the front end and reduce potential obstacles post-site selection as they move forward with the build process. Hunt Midwest’s 3,300-acre KCI 29 Logistics Park within the Kansas City region is garnering a significant amount of attention from megaproject opportunities for its pre-approved zoning and permitting entitlements for manufacturing, distribution, ecommerce, office and technology uses, and more.

Companies can access additional cost- and time-saving benefits in megasites that are approved to be a Foreign Trade Zone (FTZ). An FTZ is a designated area that operates outside of Customs territory for purposes of collection of Customs duties and fees until the product enters U.S. commerce or is exported. Kansas City’s FTZ includes zones in both Kansas and Missouri and is one of the largest in the United States.

As industrial development continues at a lightning pace, it’s essential for communities throughout North America to enhance their megasite offerings in order to meet demand. The areas that provide speed, strategic assets, cost savings, and strong partnerships will rise to the top and will continue to win these transformational mega investments.

About the author: Elli Bowen is vice president at KC SmartPort, the region’s industrial business attraction organization and an affiliate of the Kansas City Area Development Council. She has been actively involved in the attraction of projects to the Kansas City region accounting for $6.5 billion in capital investment, 13,167 new jobs, $615.5M in new payroll and 24.5 million square feet of space. A few projects of note include Panasonic’s $4B investment in an electric vehicle battery manufacturing plant, Chewy Inc.’s $143-million, 1,600-job fulfillment center, and most recently, a 1.5-million-square-foot distribution center for ACE Hardware. 

More on site selection here: How to Make a Site Selection Slam Dunk

The post How to Attract Megaprojects: Become a Megasite appeared first on Inbound Logistics.

In the logistics arena, the real estate mantra sets up the winning play. Pinpointing the right location determines the effectiveness or failure of all that follows.

As basketball star LeBron James, who knows a thing or two about picking his spots, once said: “If I’m on the court and I throw a pass, the ball that I’ve thrown will lead my teammate right where he needs to go, before he even knows that that’s the right place to go.”

The same is true in logistics. Knowing where your products need to go and how to get them there as quickly and efficiently as possible—whether through road, rail, intermodal, air, or sea—is at the essence of the supply chain playbook.

Understanding the critical factors a company needs to consider in determining where to locate a warehouse, distribution center, or manufacturing facility is essential to the decision-making process.

Site selection experts tell us those factors include access to customers, transportation modes, workforce, utilities, and business services. All these factors must be weighed in the context of cost and potential revenue.

In addition, the “soft” factors of lifestyle—such as climate, culture, recreation, and available educational opportunities for families—are likewise intrinsic to the process both formally and informally.

If you work where you live, you—that is, employees and management—want to work in a community that brings you comfort, fulfillment, and pleasure as well as business success.

Getting in the Zone

Is there one “perfect” spot that satisfies all your individual and company goals? Fortunately, there are plentiful resources to help you sort out the options—site selection consultants, community economic-development organizations, commercial real estate firms, and professionals from logistics providers such as ports—as well as the leaders of your company’s own internal operating departments.

Working in tandem, your site selection team should have the expertise to review all the critical location factors, sift through the data, and reach a consensus.

The winning move is finding consensus. Unless all disciplines within the organization are fairly consulted, the potential that the process—and, therefore, the result—will be flawed is dramatically increased.

Moving from a long list of possibilities to a short list of finalists will involve extensive research as well as financial modeling, location analysis, and site visits, all of which will have the bonus of helping you achieve a better understanding of your company’s strengths, weaknesses, and goals across the entire organization.

You may be tempted to believe the importance of physical location has been diminished in the digital age. That notion is far removed from reality, according to Edward (Ned) Hill, a site selection authority and professor of economic development in the John Glenn College of Public Affairs at The Ohio State University.

“Location is the gateway to talent, customers, knowledge, and suppliers,” Hill says.

Whether virtual, actual, or a combination of the two, your tours of potential sites are likely to introduce your team to location possibilities that were not at the top of the list when the selection process began. For that reason, it is vital to trust guides who know the territory.

Offering businesses increased supply chain efficiencies, the newly redesigned Container Berth 1 at the Port of Savannah’s Garden City Terminal can simultaneously serve seven ships, including four vessels with a capacity of 16,000+ TEUs. The upgraded berth boosted capacity by 25%.

Winning Ways: Georgia’s Ports

The southern region of the United States is of keen interest to site selection teams due to its strategic logistics location and assets, not the least of which are its port assets represented by the Georgia Ports Authority (GPA).

“The population of the U.S. Southeast is growing faster than any other region of the country, and manufacturers are flocking to the area’s business-friendly states,” says Griff Lynch, the GPA’s president and CEO. “Overseas, production is shifting to locations such as India and Vietnam that favor delivery via Savannah.”

From 2020 to 2022, the population of the U.S. South increased by 2.3 million people, according to U.S. Census data. Comparatively, the population of the Western United States grew by only 92,000.

“As the nation’s fastest-growing region, the South is seeing increased consumer demand, which translates into higher port volumes,” Lynch says.

“The area has also seen strong growth in manufacturing, including the recent announcement of the Hyundai Metaplant,” he adds. “The carmaker is poised to establish a whole new ecosystem of auto manufacturing and ancillary suppliers moving cargo through Georgia’s deep-water ports.”

Lynch says producers are drawn to the Port of Savannah’s market area by the South’s lower operating costs, growing population base, and logistical advantages.

Stacy Watson, director of economic and industrial development for Georgia Ports Authority, points out, for example, that 45% of the U.S. population is accessible via intermodal rail service from the Port of Savannah. The port’s service area ranges in an arc from Dallas to Chicago.

“No other port community in the nation provides more targeted workforce training or more room to grow than Savannah,” Watson says. “With multiple universities in the region and the state’s Quick Start program, industries can rely on Georgia for well-trained employees at every level.”

Quick Start is one of Georgia’s most important economic development incentives for attracting new investment to the state and promoting job creation. The internationally acclaimed program provides customized training free of charge to qualified new, expanding, and existing businesses.

Another important factor that businesses should consider in their site selection deliberations is the superior connectivity to global markets available through the Port of Savannah.

“With the most weekly vessel calls of any port in the mid-Atlantic, Southeast, or Gulf coasts, the Port of Savannah offers more options to more locations,” adds Watson. “On-terminal rail and direct truck routes from the terminal gates to interstates 95 and 16 mean greater efficiency in cargo flow from the port to industrial corridors and retail markets.”

There is ample land permitted for private development within 30 miles of the port, and in a developing market of properties an easy 40- to 45-mile drive from the port.

At 1,500 acres and nearly 10,000 feet of contiguous berth space, the Port of Savannah’s Garden City Terminal is the Western Hemisphere’s largest single-operator container terminal.

Its gates process approximately 12,500 truck transactions per day. It takes only 34 minutes for drivers to drop off an export container and depart the terminal. Dropping off an export container and picking up an import takes only 53 minutes.

The Port of Savannah’s Mason Mega Rail Terminal offers 85 acres of on-port rail capacity. Georgia Ports Authority and CSX provide 7-day-a-week rail departures between the Mason Mega Rail Terminal and the railroad’s terminal in Rocky Mount, North Carolina.

Calling the Shots

When all is said and done, it is vital that everyone on your site selection team has a comprehensive understanding of precisely what it is the company is seeking to accomplish in its new or expanded location.

“Is the search strategic or tactical?” asks Ohio State’s Ned Hill. “If it is a ‘fire drill’ to solve an immediate production or space problem, the dangers of making a long-term mistake are increased. If the goals are part of a long-term strategy, the entire location team needs to share the same vision.

“Is everyone clear on the purposes of the proposed facility?” Hill asks. “Another way of saying this is to ask what problem will be solved or what opportunity is being taken.”

Once you answer those questions, and establish and understand your goals, you can tackle the more specific and practical questions about individual potential sites—including environmental factors, zoning issues, and site-preparation costs—with the help of the government, as well as the utility, commercial real estate, and transportation leaders in the community.

Just as in logistics itself, if you properly execute the site selection playbook, you will score exactly the right location for your new facility.

Play-by-Play

How consensus drives the process of selecting a location

Whether for a distribution center, warehouse, or manufacturing facility, the community site selection process usually can be completed within three to four months. Edward (Ned) Hill, professor of economic development in the John Glenn College of Public Affairs at The Ohio State University, cites the following key 10 steps in the selection process:

1. Assemble your team (internal and consultant).
2. Define goals, objectives, and key operational concerns.
3. Establish consensus on steps 1 & 2.
4. Define your business model and corporate culture.
5. Create a project timeline.
6. Establish consensus on steps 3 & 4.
7. Identify factors and variables critical to the company’s success.
8. Establish consensus on step 7.
9. Rank the regions under consideration.
10. Establish consensus on step 9 before commencing to identify specific potential properties.

The post How to Make a Site Selection Slam Dunk appeared first on Inbound Logistics.

A leading Fortune 500 media company’s fulfillment partner abruptly closed, leaving them with an imminent warehouse shutdown. The media company faced a critical challenge. Within a 60-day timeframe, they needed to issue an RFP, secure a new partner, and relocate a substantial program consisting of 1,500 pallets, 5,000 unique products, and support for 150 sales executives.
Time was of the essence; the decision was made, and All Points was chosen. After the RFP process took place, there were 8 days remaining for the transition of all marketing and promotional materials.

The Solution

All Points emerged as the ideal 3PL partner, providing a transformative solution to meet the major media company’s complex requirements. Securing a dedicated 35,000-square-foot logistics hub next to All Points’ existing location, the 3PL was able to use the facility to receive and inventory 75 truckloads of products in real time.

All Points representatives flew to Chicago and, working with the former fulfillment partner, devised an inventory manifest on what product would need to be placed on each pallet/truck. In just 8 days, All Points efficiently transported 75 truckloads of products from Chicago to Atlanta. Meticulous inventory management was ensured through advanced automated systems, enabling accurate tracking and receiving of inventory.

All Points developed a temporary online order site that outperformed the previous system. Simultaneously, work commenced on a permanent online site, incorporating virtual allocations, intuitive organization of 5,000 products across campaign and series categories, and customized reporting to fulfill the media company’s specific business needs. With time-saving features, personalized visibility, and efficient inventory management, All Points’ online platform provided an exceptional user experience for the sales team at the media company.

The Results

The partnership with All Points resulted in downtime of less than 6 business days and equipped the sales executives to use the marketing materials more effectively. All Points was able to reduce inventory 27%. Managing fast-moving products and discarding obsolete and stale inventory resulted in significant cost savings and increased product utilization.
Enhanced visibility empowered stakeholders at the media company to track sales rates accurately and adjust ordering quantities based on actual usage, optimizing their supply chain operations and driving business success.

Conclusion

All Points is a unique boutique fulfillment company that focuses on solving difficult challenges.

The seamless relocation of a complex program, coupled with personalized technology solutions and commitment to delivering exceptional results, positions All Points as an ideal choice for large companies seeking a 3PL partner. Its ability to solve complex problems to drive efficiency, optimize inventory management, and enhance order fulfillment highlights the significant value All Points has brought to supply chain operations for 28 years.

To learn more:
info@allpointsatl.com
877-352-5508
www.allpointsatl.com

The post Providing Transformative Fulfillment Services appeared first on Inbound Logistics.

Seeking to optimize Northwest supply chain operations and having outgrown its existing 204,000-square-foot distribution center, one Holman Logistics client needed a new facility.

The major consumer lawn and garden products supplier needed a space that could accommodate growing omnichannel operations and updated picking processes—and it needed the new space fast.

While the typical timeline to find a building, negotiate/execute a lease, and move product is 12 to 18 months, this move would be much shorter: In spring, the client decided not to renew its lease, which would terminate in early fall.

That gave Holman just five months to locate a new facility and execute the move, including relocating 200 truckloads of product.

Adding to the complexity, the process was orchestrated during the COVID-19 pandemic, so leadership from the client company were not able to evaluate the site in person.

Instead, they would be relying entirely upon Holman Logistics to deliver truly extraordinary service, acting as their eyes and ears and hands by executing the process on the company’s behalf.

One final wrinkle—the client wanted a location that would be more cost-effective than its existing one, which was in an area where lease rates and taxes had increased greatly.

Holman Logistics was up to the task.

The Solution

Holman used ESP, its proprietary process to provide Extraordinary Service. Using Holman operational expertise and Extraordinary Service Process, the client’s operations team was able to work seamlessly with Holman to accomplish the move.

To ensure flawless execution, a Holman Division Manager and the Director of Continuous Improvement worked together throughout the process. The Holman Director of CI acted as team lead, tasked with overseeing everything from facility design/set up to installation of technology and hardware; management of vendors, permits, and service installations; meetings with landlord/contractors; and product transfer to the new DC, done in strategic phases over six weeks.

The Holman Extraordinary Service Process included:

• Maintaining communication via weekly phone/video/photo updates,
• Suggesting process changes like setting up pick lanes based on velocity rather than volume to boost productivity,
• Creating a detailed project plan to ensure air-tight deadlines,
• Tapping into existing vendor relationships,
• Using Holman ground transportation team to maximize flexibility,
• Expediting purchases of materials, equipment, and permits.

Ultimately, the move was completed on-time and under-budget, earning Holman the prestigious Partnership Award, given to the client’s most valuable partner each year. For Holman, however, the move was simply part of its nearly 160 years of living up to its Brand Promise to provide Extraordinary Service.

To learn more:
solutions@holmanusa.com
holmanusa.com

The post Masterful Moves: Overcoming Deadlines, Pressures, and Distance with Extraordinary Service appeared first on Inbound Logistics.

While current approaches have been monumentally successful and offer benefits for those who follow the rules, logistics automation—specifically new developments in warehouse automation—gives forward-thinking supply chain managers some counter-intuitive choices on warehouse or fulfillment center locations. Three factors drive that counter-intuitive thinking.

1. Products follow people and some centers of American consumption are reshuffling. “Where are my customers now? Where will they be in 5 years?” That’s hard to know. But smarter, and in some cases older, consumers who hanker for less crowded, less congested, less contested, and more clement climes are moving elsewhere as a result of the pandemic, work from home, high taxes, social challenges, onerous regulations, and other factors. Companies are planning and building a new wave of distribution assets to serve that mini migration.

2. Warehouse labor shortages in many areas. Conventional thinking was to locate a new facility in larger, more urban centers of population to gain access to a good and reliable labor pool. Yet many modern and automated DCs are less labor intensive and more labor light, meaning product can move with fewer hands on the boxes.

That also means you don’t need to locate your distribution facility in traditional urban areas. Consider that those locations are typically more highly taxed, have higher energy costs, and, in some cases, a more stringent regulatory environment, prompting the question: What am I doing here?

3. A new wave of available warehouse automation and robotics. Lower-cost, hard-working automation solutions enable you to locate your facility in sites more distant from your final mile. While it’s true that automation costs are high, amortizing those investments over time is likely to offset the costs associated with traditional locations, even accounting for higher transport costs.

New choices are here. You don’t have to be a robot whisperer to listen to where your robot tells you to go.

The post Warehouse Location Automation appeared first on Inbound Logistics.

Traditionally, site selection criteria have focused on freight costs, real estate costs, and proximity to population centers for access to labor. In recent years, the labor piece of the equation has loomed large as the competition for workers has intensified. Automation, particularly automated storage and retrieval systems (ASRS), has the power to remove that labor consideration from the conversation, giving organizations invaluable flexibility.

Addressing Automation Earlier

Most warehouse and distribution center facilities open with mid to low levels of automation and then gradually become more automated over time. At the outset, they must factor labor heavily into their site selection consideration, absorbing higher real estate costs to locate closer to population centers.

Today’s organizations, however, should weigh whether to speed that automation journey up. In particular, they should ask: If we invest more in automation from the outset, does that lead to significant savings on the location that we choose?

Historically, many organizations have planned their network with automation in the back of their minds. The approach is, “Let’s get the DC up and running and then we’ll automate to save on our annual operating expenses.” When you make automation part of your initial decision-making, it might require more time and investment in the planning process, but you can save a substantial amount in the long run.

Finding the Right Fit

ASRS encompasses a variety of solutions, ranging from very high throughput systems with massive efficiency gains to more flexible and cost-effective systems. The size of an operation, the location of the operation, and the extent of the labor constraint can all play a role in which tier of ASRS is the best fit.

Organizations engaged in site selection should enlist the help of third-party automation experts to evaluate their ASRS options. These experts can determine the true value of automation to your operation and the cost savings and efficiency it can bring, while helping you wade through the many ASRS solutions available.

A Forward-Thinking Solution

Automation’s flexibility is invaluable when you look toward an uncertain future. Those who study the labor market do not see it improving in the years ahead. Meanwhile, warehouses and DCs are facing growing demand to process higher volumes at elevated speeds.

When your organization does capacity planning and considers expected volume growth in the years ahead, you must weigh the mobility of your operations, gaps in your networks, and places where you are exposed to such unseen challenges as fresh labor shortages or population shifts. Savvy companies are eyeing that horizon and exploring how ASRS can help protect against those challenges and safeguard for their futures.

The post How Automation Can Expand Your Site Selection Options appeared first on Inbound Logistics.

Seeking to optimize Northwest supply chain operations and having outgrown its existing 204,000-square-foot distribution center, one Holman Logistics client needed a new facility.

The major consumer lawn and garden products supplier needed a space that could accommodate growing omnichannel operations and updated picking processes—and it needed the new space fast.

While the typical timeline to find a building, negotiate/execute a lease, and move product is 12 to 18 months, this move would be much shorter: In spring, the client decided not to renew its lease, which would terminate in early fall.

That gave Holman just five months to locate a new facility and execute the move, including relocating 200 truckloads of product.

Adding to the complexity, the process was orchestrated during the COVID-19 pandemic, so leadership from the client company were not able to evaluate the site in person.

Instead, they would be relying entirely upon Holman Logistics to deliver truly extraordinary service, acting as their eyes and ears and hands by executing the process on the company’s behalf.

One final wrinkle—the client wanted a location that would be more cost-effective than its existing one, which was in an area where lease rates and taxes had increased greatly.

Holman Logistics was up to the task.

The Solution

Holman used ESP, its proprietary process to provide Extraordinary Service. Using Holman operational expertise and Extraordinary Service Process, the client’s operations team was able to work seamlessly with Holman to accomplish the move.

To ensure flawless execution, a Holman Division Manager and the Director of Continuous Improvement worked together throughout the process. The Holman Director of CI acted as team lead, tasked with overseeing everything from facility design/set up to installation of technology and hardware; management of vendors, permits, and service installations; meetings with landlord/contractors; and product transfer to the new DC, done in strategic phases over six weeks.

The Holman Extraordinary Service Process included:

• Maintaining communication via weekly phone/video/photo updates,
• Suggesting process changes like setting up pick lanes based on velocity rather than volume to boost productivity,
• Creating a detailed project plan to ensure air-tight deadlines,
• Tapping into existing vendor relationships,
• Using Holman ground transportation team to maximize flexibility,
• Expediting purchases of materials, equipment, and permits.

Ultimately, the move was completed on-time and under-budget, earning Holman the prestigious Partnership Award, given to the client’s most valuable partner each year. For Holman, however, the move was simply part of its nearly 160 years of living up to its Brand Promise to provide Extraordinary Service.

To learn more:
solutions@holmanusa.com
holmanusa.com

The post Masterful Moves: Overcoming Deadlines, Pressures, and Distance with Extraordinary Service appeared first on Inbound Logistics.

The lineup of cities that traditionally appear on popular lists of “best” logistics sites is finite and predictable. But the actual list of ideal locations for your next distribution center (DC) is by no means consistent for every company—including companies that share the same classification code.

At a time when the nature of supply chain economics is rapidly evolving, the process of selecting a DC site is by no means a one-size-fits-all analysis. Nor can companies find the correct answer through website searches.

“It all depends on the grocery list for your house versus my house,” says Adam Roth, executive vice president of Chicago-based NAI Hiffman, an independent real estate services firm. “We might go to different grocery stores, but we all buy groceries.”

Going Soft

The checklist of viable DC site possibilities is affected not only by the specific distribution needs and financial drivers of individual companies but also by such “soft” assessment factors as company history and lifestyle preferences.

Sometimes for soft reasons alone, companies will choose to grow in the same place where they were first planted—even if the location is no longer financially optimum.

“There are all kinds of reasons why companies keep certain locations,” says Marc Wulfraat, founder and president of MWPVL International, a supply chain and logistics consulting firm headquartered in Montreal.

“More often than not, companies want to keep a certain building for historical reasons—for instance, that’s where the president who started the company lives,” he says. “There’s no such thing as a blank sheet of paper. There are always some constraints or sacred cows.”

Sacred cows notwithstanding, data still reigns supreme for any company committed to optimizing its distribution network.

DC site-selection teams must apply a “tremendously robust” algorithm to their search analysis, Roth says. Companies may use different versions of the algorithm, but they all include key variables such as property value and assets, real estate taxes, transportation access, and labor estimates, as well as supplier and customer wants and needs, financial incentives, and service requirements.

Traveling the road ahead

The variables are just that—variables, dependent on both the subjective and objective considerations of individual companies.

“If a site selection team can control for the top three variables, they could save a lot of time by calling on some experts who are familiar with the regional market,” says Terry Coyne, vice chairman in the Cleveland office of Newmark, a global commercial real estate advisory and services firm.

While Coyne relies on up-to-the-minute data, trends, and forecasts to inform his site-selection analyses, he says his core passion is people. But it is for reasons more practical than passion that he puts labor at the top of the list of DC site-selection priorities.

A generation ago, a regional utility company adopted the slogan “Best Location in the Nation” to brand Coyne’s hometown of Cleveland. Depending on a company’s labor needs and other considerations, Cleveland may yet be the best location for your DC. But so too might be any of the locales that rank in the Top 10—or 25 or 50—cities on your favorite list of “best” logistics sites.

So how does a company move from a “robust algorithm” to finding its own hotspot on North America’s DC heat map?

By definition, companies must look to transportation in their quest to find the right region in the logistics landscape—and the right dot inside the regional circle—for their DC. And as part of that study, site-selection teams are well advised to apply what Roth refers to as “the rule of 1.5.”

“Whatever happens in transportation impacts industrial real estate a year and a half later,” he explains.

For example, Roth cites the dramatic changes in transportation that occurred when new regulations and policies were implemented in the railroad and trucking industries in 2017.

The widespread adoption of precision scheduled railroading (PSR), an economics-driven initiative to reduce the number of geographical points that railroads serve, drove trucking companies to alter and increase their own traffic volumes and patterns.

All well and good but just some three years later a federal mandate requiring truckers to replace manual logbooks with electronic logging devices (ELDs) was put in place. The mandate had the effect of reducing the ranks of truck drivers by about 10%.

Ahead of the Curve

Companies that were ahead of the curve on these changes and how they would affect individual sites were likely to make better decisions on where to place their DCs than those that did not anticipate what was coming around the corner.

Risk assessment requires similar foresight. “Because of the pandemic, corporations are assessing risk differently,” Roth says. “International supply chains were not as resilient as was thought.

“For the past 20-plus years, everything has been based on efficiency,” he adds. “What we learned over the past two years is that if you lose a sale, that wipes out the efficiency, so it’s difficult to rely on the historical supply chain.”

As a result, forward-thinking companies are now establishing not only a single supply chain path but alternatives as well.

“We can’t change our China integration overnight,” Roth says, “but we want to have at least one other alternative—China plus one, maybe plus two. Where product allows, companies need to start to migrate away from China.”

An alternative supply chain solution may, for example, include Taiwan, Malaysia, or Mexico. Whatever alternative path is chosen will impact the list of potential DC sites.

“Network strategy is all about the big picture,” says Wulfraat. “Figure out how many circles to put on the map and how big each circle should be. Should you have three, four, five, or six buildings? Once you figure out where you need to be geographically, then look at the circles and finally the dot within the circle.”

Choosing a DC site to optimize your distribution network also depends on whether your company needs—and can afford—numerous DCs serving multiple markets or a solo location to serve as a national portal.

“If you were to draw a straight line from Memphis to Louisville, along that extended line you would see Columbus, Ohio,” says Wulfraat, who adds that all three cities qualify as major logistics hotspots.

“Louisville qualifies because it’s the UPS worldwide hub,” he says. “Memphis qualifies because it’s the FedEx hub, and Columbus because it’s one of the strongest LTL/FTL trucking points in the country.

“So if you had a single DC to service the entire country, if you want the optimum case to access the entire market out of one place, that corridor is where you would position yourself,” Wulfraat says.

Granular Analysis

Whether the geographical circles under consideration are limited to regions providing direct access to the Port of Los Angeles—the nation’s number one container port—or the numerous seaports of Florida, or perhaps a more centralized or inland location, the final choice of the precise spot for your DC requires more granular analysis.

That’s where regional expertise comes in. “If a company tells me they want to be in Cleveland or Columbus, and cites their top three motivational factors, I can tell them in 10 minutes and within 5% where they are going to go,” says Newmark’s Coyne, who adds that the regional labor market must always be among a company’s most important motivational factors in choosing a DC site.

Brokers will narrow the field quickly, Coyne says, because they know and understand the size and scope of the local labor market. That’s why, while recognizing the importance of every department’s input, he prefers to have the HR representative on the company’s site-selection team serve as his primary contact.

Creating a supply web

Each member of the site selection team needs to approach the task with an open mind. It’s also important to ask the right questions: “If we have a building that’s running out of capacity and has a labor problem in that market, do we want to consider automation as an alternative to having a labor-intensive operation?” Wulfraat says.

In the end, appropriately enough, transportation will take companies to their final DC destination.

“By far the biggest determining factor in this whole algorithm is transportation,” Roth says. “Part of it is construction and part of it is that transportation is the biggest spend for network design.”

Looking ahead, companies will need to confront the challenges of physical distance in their distribution strategy. “They will need to shorten their length of haul,” Roth says. “Reshoring and nearshoring are definitely more prevailing than they had been in the past.”

The process of decoupling from China will alter international trade agreements. “There will be more bilateral trade agreements where democracies are going to trade with democracies,” Roth says, adding that planning for this eventuality will impact distribution networks.

“Companies that can, and where product allows, need to be regional in nature,” he says. “I like to call it ‘international regionalization.’ Supply chain will become a less common term; instead it will be called ‘supply web.’ We will have multi-state replenishment locations with access to intermodal transportation options.”

Haste makes waste

The evaluation process necessary to identify the right DC location is neither simple nor fast. Most companies will not make the determination alone, but rather will engage a qualified and experienced consulting firm to coordinate the effort with the company’s internal team.

When Wulfraat engages in a dialogue with a company, they usually want to figure out the site selection process in the next eight weeks.
However, doing the job properly will take considerably longer—and it should.

“Imagine a company that sells billions of dollars of merchandise,” Wulfraat says. “They’re a well-known brand name, they’ve got existing facilities, they’ve got thousands of people whose jobs are on the line. They want to blow it up and look at the map totally fresh. That’s not done over six, seven, or eight weeks. That takes months.”

It is neither credible nor diligent to expect otherwise. “If you’re going to be responsible about the business, the workers, and the customers, you owe them the decency of doing a good job of site selection,” Wulfraat says. “You can’t rush. It takes time to gather and cleanse the data. Then you’ve got to develop economic models where you’re moving the levers.”

Minimizing or, worse, skipping any of these critical steps is likely to lead to a negative outcome.

“Imagine if you were a kid and you had 100 Lego blocks but the sizes don’t fit together,” Wulfraat says. “You need Lego blocks where the dimensions all make sense.”

How well or how poorly you assemble the various pieces will either construct an expressway to a DC destination you can depend on for years to come—or an outdated road filled with potholes that will impede your company’s progress at some point along the way.

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Because of this, regionalization has emerged as a top priority for most companies. Nearly 90% of senior supply chain executives responding to a November 2022 McKinsey study said they expect to pursue some degree of regionalization during the next three years.

A Site Selectors Guild survey published in 2022 supported that concept as the world’s top site selectors revealed that site selection studies for manufacturing operations are pressing on full steam.

As the United States is one of the world’s largest demand markets for both consumer and industrial products, we’re seeing a massive shift to more regional production—nearshoring and reshoring—in North America. Seven out of 10 U.S.-based manufacturing companies are planning to invest in new production capacity closer to their home bases as a result of the global upheavals of recent years, according to a June 2022 Industry Week article.

Companies want to shift production to reduce inefficiencies, supply chain shortages, and transportation costs. This is driven by risk mitigation but made possible by technological advancements replacing low-skill manual jobs with automation.

Despite the strong case for U.S. manufacturing investment, several current dynamic economic variables could disrupt this trend:

• Inflation. The Consumer Price Index (CPI) is the highest in four decades. Meanwhile, many input costs for manufacturers have been rising by a much wider margin.

Construction costs are also significantly higher (a recent quote a client received was twice the cost to build a manufacturing plant when compared with the recent past, primarily due to materials costs). Increasing interest rates could also derail some investment plans.

• Labor shortages. Manufacturing is critically short of the labor it needs. Even if every skilled worker in America were employed, there would still be 35% more unfilled job openings in the durable goods manufacturing sector than skilled workers capable of filling them, according to a U.S. Chamber of Commerce report.

• Energy. Increased automation in manufacturing facilities creates a higher demand for electric power at a time when the United States is attempting to transition to new types of generation. Despite increased demand for renewable energy for many plants, available and reliable electric power capacity and costs will be important drivers for continued new investment.

And with new manufacturing investment activity in the market, it is becoming more challenging to find sites ready for development, with utility infrastructure and an available skilled workforce. This, combined with tight timelines for projects to get up and running, has made site selection searches more complex.

Despite the challenges, regionalization remains a priority for most companies in the coming year. Although global site selection has always been challenging and strategic, it is more important than ever that companies work closely with professional site selection consultants to assist in location strategies and decision-making.

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“The critical location factors for manufacturing, warehousing, and distribution are different and will become more so as integrated digital manufacturing operations technologies develop and as warehousing and distribution activities become close to fully automated,” says Edward (Ned) Hill, professor of economic development and senior research associate for the Ohio Manufacturing Institute at Ohio State University.

“Critical location factors are financial and resource considerations that dominate location searches,” adds Hill, who has done extensive research on best practices in site selection as well as issues involving state and local economic development.

Sharpening Your Focus

When choosing the ideal spot for your logistics facility, the individuals and teams leading the charge must be prepared to sharpen their pencils.

“Locating a facility remains a data-driven financial spreadsheet exercise subject to a series of must-have site-specific factors,” Hill says. “Locational decisions often take on a North American focus, rather than a purely U.S. focus.

“Since the population centers of Canada are stretched along the border, many distributors are including those markets in their analysis,” he adds. “Similarly, companies that service manufacturing operations in Mexico need to consider how those customers will be served.”

Geography, workforce quality, and regional educational assets as well as the advantages—and sometimes incentives—offered by government and local utilities all play a part in the decision-making.

If the task is to relocate an existing facility, companies can benchmark prospective locations against the current site.

“The team can see how marginal investments in current sites can recalibrate the benchmark,” Hill says. “It does not surprise me that marginal investments in either the current site or current market area can outperform new sites because the comparison is between marginal cost investments versus total cost.

“The exceptions are expansions to accommodate new growth or when the existing site has become toxic for some reason,” he adds.

Who’s in Charge?

As in all aspects of business, a key consideration in site selection is leadership: Has the company put together its site-location team and who will head it?

“Often the search is influenced by the job of the person who heads the effort,” Hill says. “Not surprisingly, chief financial officers pay more attention to rates of return, while those with production responsibilities focus on resource availability and the current pain points in operations.”

Regardless of functional bias, the journey begins in the same place. “You start with data—lots and lots of data,” Hill says. And questions—lots and lots of questions. (See sidebar below.)

General critical location factors include whether the new site is shovel-ready or close to move-in ready.

It’s also important to determine if the state or economic development authority serving the area has a certified site program to ensure the site meets requirements such as whether it is in an updated flood zone; has the appropriate zoning; utilities are in place; there is room for expansion; and whether the area enjoys business-friendly public officials, building inspectors, and approval processes.

Funneling Information

“Site selection is a funnel,” Hill notes. “Think of the search process as taking part in three phases. The first phase is internal with the search team, possibly aided by a consultant. At this stage, information is sifted with the goal of identifying the regions that the search will focus on.”

In this phase, the team defines the elements of success and the critical location factors to be considered.

The second phase, he says, is outward-focused. The team begins to search commercial real estate and economic-development organization data to identify potential sites. The third phase is site analysis, where the team conducts comparative site-specific cost analyses and investigates the feasibility of specific sites.

In the logistics field, Hill says, “location, location, location” boils down to “access, access, access—then operating cost.”
Some long-established sites and services stand ready to help in that analysis, and electrify your search for the ideal location.

Hoosier Energy: Power to Succeed

Eager to help companies find their sweet spot amid the galaxy of logistics stars in Hoosier Country is Hoosier Energy, an electric generation and transmission (G&T) cooperative based in Bloomington, Indiana.

Owned by 18 Rural Electric Member Cooperatives (REMCs), Hoosier Energy serves 760,000 member consumers in 59 Indiana counties in central and southern Indiana and southeast Illinois.

The region is crisscrossed by five interstate highways (I-70, I-64, I-65, I-69, I-74) with direct access to the FedEx hub in Indianapolis and the UPS hub in Louisville. The territory also includes extensive railroad transportation options and access to multiple inland ports.

“The Hoosier Energy Economic Development Team works with individual companies to develop custom solutions to meet their current and future electric needs should they be facility or transportation-related,” says Hoosier Energy Economic Development Manager Jeremy Sowders, who is a certified economic developer (CEcD).

The economic development team works with and supports state, regional, and local economic development organizations to identify and develop new potential sites near logistics assets.

In addition, Hoosier Energy assists companies in their exploration of power-related methods to economize and improve their operations, such as the use of electric vehicles (EVs).

“As EVs become increasingly important, we work with the consumer to identify the most appropriate way for them to meet their transportation goals,” Sowders says.

“As a nonprofit cooperative, our rate structures allow us flexibility to quickly and efficiently make decisions related to large projects with tight timelines,” Sowders adds. “This flexibility includes developing special contracts for specific projects that meet a company’s corporate carbon goals, including providing up to 100% of their energy needs through renewable resources.”

Meeting Evolving Needs

Together with member systems, Hoosier Energy provides reliable and affordable energy and member-driven services to meet evolving and different needs safely and sustainably, guided by cooperative principles that include democratic member control and commitment to environmental and community concerns.

“As part of Hoosier Energy’s long-range resource plan, we are going through a major power production transition with the proposed sale of our 1,000-megawatt coal-fired Merom Generating Station in 2022,” Sowders says.

“Upon completion, this will dramatically change our energy portfolio and decrease our carbon footprint by shifting toward more renewable energy resources, purchased power, and a variety of natural gas generation,” he says.

The organization’s 2021 annual report included an environmental, social, and corporate governance (ESG) update. ESG is a framework designed to be integrated into an organization’s strategy. It creates enterprise value by expanding organizational objectives to include identifying, assessing, and managing sustainability-related risks and opportunities for all stakeholders and the environment.

“We work every day to make a better life for our member communities,” Sowders says. “As the energy transition evolves, we will continue to seek innovative ways to provide economical, reliable, and socially responsible electricity that meets the energy needs of end consumers.”

CLX Logistics: Taking a Worldview

CLX Logistics has a truly global perspective on great logistics sites and services. “We ship all over the world and we import from all over the world,” says Stephen Hamilton, Jr., vice president of ChemLogix Global, a subsidiary of CLX Logistics.

CLX is a global third-party logistics (3PL) and fourth-party logistics (4PL) provider of chemical transportation management solutions, supply chain consulting, and intermodal transportation. In addition to locations in Philadelphia and Chicago, CLX maintains a European presence with offices in the Netherlands. The company also plans to open a new office in Houston by the end of 2022.

Hamilton’s personal expertise lies in intermodal logistics. “That’s where I’ve spent my life,” he says, adding that he previously worked for both Conrail and Norfolk Southern.

“Intermodal is my bailiwick,” he adds. “As I like to say, I’ve been working for, with, and against the railroads for the past 30 years.”

In the intermodal arena, CLX primarily serves North America—Canada, Mexico, and the continental United States as well as Alaska, Hawaii, and Puerto Rico.
Asked to name the most important factor businesses should consider in choosing a location for a manufacturing facility, warehouse, or distribution center, Hamilton cites accessibility to rail lines. “That’s critical,” he says.

This is especially true during periods when rail and/or truck capacity is limited. “Over these past 18 months, truck capacity has been a real problem,” he says. “And the way we’ve been able to mitigate that for customers is by providing intermodal service. It’s a lot easier to send drivers to a local dray than it is to find drivers who are willing to drive a few thousand miles and be away from their family for a few weeks.”

Creating Economic Value

CLX prides itself on providing superior service and cost efficiencies. “We create economic value through people, process, and technology,” Hamilton says.

An important part of that formula is the deployment of a global transportation management system (TMS) designed for chemical shippers. “The mantra we use is that whenever we talk about customers, we try to bring economic value and look for continuous improvement opportunities,” he notes.

Toward that end, the company’s involvement abroad has been instructive.

“Logistics in Europe, Asia, and South America are extremely different from what we deal with in the United States,” he says. “It’s important to understand when it’s appropriate to bring what we’ve learned in the United States to these places, and also when it’s appropriate to recognize that what we do in the United States will not work in Germany or Korea, for example.”

Many of these international differences are regulatory, but Hamilton cites cultural differences as well, such as differences in the way truck drivers are treated.

It’s an important lesson that has carried over into the company’s operations in the United States. “Our approach has to be different in every region as we find efficiencies and savings for our customers,” he says.

Regardless of locale, CLX is known for providing white-glove service. “We provide all our services in a white-glove fashion,” Hamilton says. “We’re a fairly flat organization, so customers get a lot of exposure to upper management, including the CEO.”

Watson Land Company: Choice Properties

Location and choice serve as the hallmarks of Watson Land Company, a developer, owner, and manager of industrial properties throughout Southern California and the East Coast.

With more than 23 million square feet of warehouse and distribution facilities throughout the South Bay of Los Angeles, the Inland Empire (a metropolitan region that lies adjacent to Los Angeles), and the East Coast, Watson’s buildings are designed and located to improve companies’ supply chains as well as their distribution and warehousing operations.

Watson’s properties include 13 master-planned communities in California, Pennsylvania, and New Jersey. Sites are positioned for proximity to seaports, airports, highway systems, and rail lines. Many feature Class A industrial buildings and cross-dock warehouse distribution amenities.

Watson’s Inland Empire sites are specifically designed to accommodate the needs of companies and logistics operations that are drawn to the region as it further develops into the industrial location of choice.

Watson Center, Redlands, for example, lies in the heart of an area dedicated to industrial use and is ideally positioned along Interstate 10.

The site provides an abundance of prime access to the 210 and 215 freeways as well as additional transportation centers including San Bernardino International Airport, Ontario Airport, Los Angeles International Airport, and the ports of Los Angeles and Long Beach. In addition, there is easy access to the Burlington Northern Santa Fe and Union Pacific rail lines.

Meanwhile, Watson Commerce Center, Fontana, features 652,174 square feet of industrial space on 32 acres within San Bernardino County, a distribution magnet in Southern California. With private parking lots exclusively for tenants, Watson Commerce Center, Fontana, fronts Interstate 10 and is close to the 15, 210, and 215 freeways. The site is within 50 miles of the Los Angeles and Long Beach seaports and the Burlington Northern Santa Fe and Union Pacific.

Taking the LEED

Totaling 3,680,000 square feet within 60 acres, Watson Commerce Center, Chino, is the first industrial project in Southern California to target LEED® certification, and four of its buildings have been certified Gold for New Construction.

The site features Class A offices and mezzanines with abundant clerestory glass and skylights for maximum natural light as well as 36-foot minimum clear heights, large fenced concrete truck yards, and 7-inch reinforced floor slab.

In Lehigh Valley, Pennsylvania, West Hills Business Center boasts two Watson-owned buildings that feature an abundance of sustainable warehouse space. The site offers proximity to several large metropolitan cities including New York, Philadelphia, Washington D.C., and Baltimore.

As part of its ongoing East Coast expansion, Watson has announced its latest acquisition in New Jersey. Located in East Greenwich Township, this logistics center offers two warehouse buildings totaling 535,790 square feet, including Class A design features, clear heights of 36 feet, and abundant dock high positions.

Strategically positioned within the Northeast Distribution Corridor, this state-of-the-art industrial park offers easy access to the Ports of New York, New Jersey, and Philadelphia, as well as the Newark Liberty International Airport and Philadelphia International Airport.

Port Tampa Bay: Smooth Sailing

Fundamental to site selection for logistics purposes is access to transportation routes, not only of the air and land variety, but also sea. Case in point: Port Tampa Bay, which offers the added advantage of easy transfers from one transportation mode to another.

“Port Tampa Bay is perfectly positioned to serve not only as the most efficient gateway to the huge and expanding Florida market, but to also reach customers throughout the Southeast and beyond by taking advantage of attractive northbound backhaul trucking rates,” says Raul Alfonso, the port’s executive vice president and chief commercial officer.

As the closest port to the growing Tampa/Orlando I-4 Corridor, Port Tampa Bay’s location allows for multiple round-trip deliveries per day from roadway to waterway. “This capability reduces trucking costs and empty trucks on the road, providing numerous economic and environmental benefits,” Alfonso says.
Port Tampa Bay also serves as the closest port to Florida’s hub for the grocery and food and beverage sector.

“Our partner Port Logistics Refrigerated Services developed a state-of-the-art 135,000-square-foot cold storage warehouse, with 148 reefer plugs, and fumigation services, as well as an adjacent berth served by two dedicated mobile harbor cranes,” Alfonso says.

Moreover, the port’s ideal location provides shippers all the logistics assets of Florida’s Distribution Hub with more than 400 million square feet of distribution center capacity.

Florida now has the 15th largest economy in the world and is one of the fastest-growing states in the country. The state’s rapidly expanding population has overtaken New York, making it the third-largest state in the United States.

“Importers and exporters who support this huge consumer market are demanding a Florida-first supply chain strategy with expanded direct ocean container services,” Alfonso says.

Hot Market With Ample Room For Growth

Home to nearly half of the state’s 22 million residents and welcoming most of the state’s more than 125 million visitors each year, the Central Florida region is one of the hottest industrial real estate markets in the country.

Of particular interest to site-selection teams is the region’s room for growth.

“Port Tampa Bay is blessed to have plenty of land for expansion and stands ready to welcome new business and serve as a supply chain alternative and solution,” Alfonso says. Port Tampa Bay’s container volume has increased by 18% over the past year, he adds.

“Our port has easily accommodated this growth by staying ahead of the curve thanks to our terminal build-out program and working closely with our terminal operator partner Ports America by aggressively expanding capacity,” he reports.

As a result, berth calls at Port Tampa Bay are smooth and efficient.

“Importers and exporters experience no waiting or congestion,” Alfonso says. “Together with Ports America, the port has recently doubled its paved storage area, constructing a new gate complex. And we expect to receive three additional container gantry cranes later in 2022.”

The new cranes will be operational by early 2023. The port also will soon break ground on a new on-dock transload warehouse, he reports.

Site Search Checklist

Jolt your location quest by answering these questions, says Ohio State University Prof. Edward (Ned) Hill:

• Is your company using a site-location consultant or is the search being done in-house?
• How does your company account for real estate and does it want fixed assets on its books or not? If the company is privately held, how are the firm’s real estate holdings structured?
• Is the search strategic or tactical? If it is a “fire drill” to solve an immediate production or space problem, the company runs a greater risk of “sub-optimizing” (a polite term for making the wrong choice). If it is strategic, make sure the entire team understands the goals.
• Has your company implemented lean management across the organization and is the search part of lean optimization?
• Is your company clear on the purposes of the proposed facility? Or another way of asking this question is: What is the problem that will be solved or the opportunity that is being addressed? The use determines the search, and clarity on the use will save time and money.
• Is your company currently using outsourced providers to fulfill the function? Should the function be reintegrated? If the function is integrated, does it provide some form of competitive advantage? If so, what is it?

Once you identify potential locations, explore these three critical areas:

• Taxes. How expensive are the taxes to your company and to its employees? What are the services provided in return? How important are those services to the company or to its employees?
• Quality of life. Does the location have the quality-of-life attributes your company seeks? Specific quality-of-life factors are important to specific demographic groups who are target employees. These can include housing availability and cost, education, recreation, childcare, and other social services.
• Business services. Does the region have service providers that are critical to the firm’s operations?

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