The location of choice for companies seeking to distribute
their products nationwide is one that addresses both present and future transportation
needs.
Many locations provide excellent transportation networks. But then there's the
added ingredient when suppliers and manufacturers desire to be near customers, particularly
for just-in-time (JIT) manufacturing environments. Tax issues enter in, as does the
availability of labor, its cost, and the cost of real estate.
With deregulation making transportation (trucking, rail, air and ocean services)
more cost competitive, more companies are opting to have fewer distribution centers
since they can still guarantee customers a certain level of logistics performance.
Among the consolidations that are occurring around the country, here are some
hot spots worth considering and why.
The Southeast
For many companies, seaport access is a primary concern. The Port of Charleston
influenced Fibron International Corp. to open a 34,000 square foot manufacturing
and distribution facility in Dorchester County, S.C. The company will import raw
materials from Europe -- primarily Germany -- through the port.
Last year, Mikasa Inc., a designer, developer and marketer of tabletop products
in the United States and select international markets, chose to build a $60 million,
580,000 square foot distribution center in Charleston.
Jacksonville, Fla., has an impressive record in attracting distribution companies.
Among them are General Motors, Coach Leatherwear, Pilot Pens, Michael's Stores, Sally
Beauty Products, General Electric Consumer Products Group, and Portion Pack-Inc.
"We've seen 3 million square feet come on-line in just the past three years,"
says Jerry Mallot, executive vice president of the Jacksonville Chamber of Commerce.
"Most select
our area to do large projects because of the tremendous intermodal system here."
Jacksonville not only offers a deep water port, it is at the intersection of three
major railroads, three interstates and a rapidly expanding airport.
"We are also farther west than any other East Coast distribution city,"
he adds. "In fact, we are [due] south of Cleveland, Ohio."
Georgia's ports have been instrumental in attracting distributors. Home Depot
chose Savannah over other southeastern locations because of Georgia Ports Authority
investments to improve the Port of Savannah. Its distribution center is located near
the port adjacent to I-95 and Savannah International Airport. Its site is serviced
by both CSX and Norfolk Southern railroads. Additional acreage at the port is also
used exclusively by Home Depot to marshal containers on port.
Atlanta, with its access to I-75, I-20 and I-85, and its booming Hartsfield International
Airport, is big for distribution. Goodyear and UPS operate major distribution centers.
Hartsfield is one of the country's biggest and most efficient airports. Considered
competition for Houston and Miami, Hartsfield is capable of providing rapid overnight
distribution to 80 percent of U.S. consumers. Besides an impressive list of all-cargo
carriers that service Hartsfield, rail access is available, and the port of Savannah
is just hours away.
Nearby, the 260-acre Atlanta Tradeport, a designated foreign trade zone (FTZ),
provides offices, warehouse/distribution, commercial and light industrial facilities
for shippers, forwarders, brokers, and other related businesses.
Louisiana and its Big Easy compete with other southern cities to attract
distribution. What sets New Orleans and the state apart from all others is the mighty
Mississippi River.
The state has six deepwater ports that handle 400 million tons of cargo annually.
The Port of South Louisiana's Globalplex Terminal, a new 205-acre intermodal facility,
offers assets that include a foreign trade zone, public deepwater docking facilities,
and container unloading facilities. Direct service to the Kansas
City Southern and Illinois Central railroads is also available.
Last year Office Depot opened a new office product distribution center that will
serve the southeastern United States.
The Midwest
Since 1993, more air freight has moved through Kansas City International Airport
(KCI) than any other airport in the six-state region.
Last year KCI was alone among the region's top five airports in enjoying double-digit
growth, further expanding KCI's lead over St. Louis in both air freight and annual
U.S. Customs import entries.
With FedEx opening a new 85,000 square foot warehouse and 500,000 square foot
apron in November 1997, KCI's role as the region's primary cargo airport should be
solidified. In addition, DHL and Burlington use KCI to consolidate freight gathered
from a large multi-state area. Given the industrial expansions by a number of multinational
corporations with time-sensitive cargo -- Hoechst and Bayer among them -- airport
officials hope to support direct international cargo flights in the near future.
Interstate 75, which runs north and south through Cincinnati, Dayton, and Toledo
has a major impact on transportation and distribution in Ohio as does I-70, which
runs east and west.Best Buy Co., Inc., for example, located a 780,000 square foot
regional distribution center along I-75 in Findlay.
Columbus meets many of the critical factors for distribution: markets; transportation
networks; available labor; a tax structure favorable to shippers; and overall favorable
business costs. Greater Columbus encompasses a region of 1.4 million people, and
is within a 10-hour drive of over 50 percent of the U.S. and Canadian populations.
I-71 and I-70 converge at Columbus. The area is served by some 130 trucking companies,
offers rail links to every U.S. port, and provides air links via its Port Columbus
International Airport and Rickenbacker International Airport. The Limited alone accounts
for nearly half of the business at Rickenbacker.
"Columbus has effectively developed multimodal transportation systems, making
it the logical choice for companies looking to service the United States and Canadian
markets from a single distribution, manufacturing or assembly operation," says
C. Lee Johnson, president, Limited Distribution Services.
Rickenbacker brings together air cargo and intermodal facilities, U.S. Customs,
transportation, foreign trade zone, warehouse and support administrative service.
Rickenbacker's 5,000-plus acres comprise over 6.5 million square feet of warehouse/distribution
space to such companies as Spiegel/Eddie Bauer, Whirlpool, Sun TV, Landair, Southern
Air Transport, Dorey International, Kubota Tractor Corp., Borden's Wallcovering,
AmeriSource (a pharmaceuticals manufacturer), Lucent Technologies and Circuit City.
Chicago remains a major distribution center of choice. Its Central time zone offers
an advantage to servicing businesses in Eastern and Western time zones. Chicago offers
air links to virtually every major city on the globe via O'Hare International Airport,
the world's busiest. It also offers rail links to all corners of the country.
Supervalu Inc., a Minneapolis-based food distribution company, recently broke
ground on a $37.5 million regional distribution center in Oglesby, LaSalle County.
From the 308,000 square foot facility it will distribute to over 11,400 general merchandise
and health and beauty care items to 1,500 stores in 12 states.
Wal-Mart Stores Inc. is building a Midwestern Distribution Center in Olney, creating
up to 250 new jobs when it opens this spring.
Memphis, widely known as "America's Distribution Center," is a major
national hub for transportation and distribution related companies. Some 200 trucking
companies, six major railroads, an inland waterway system operating on the Mississippi
River, and superb airport facilities offer distribution networks from Memphis. As
a result, companies such as Williams-Sonoma, Square D, Cleo Inc., Nike, Reebok, Asics,
Baxter Healthcare, Troll Publishing, and The Disney Company have chosen to locate
there.
Memphis' shining star is Federal Express, which uses the city's International
Airport as its major hub. With some 18,000 employees, FedEx is not only the city's
largest private employer; it is a major magnet for attracting major distribution
operations.
Iowa, which offers more miles of roads than do 39 other states in the country,
is becoming a major distribution state. Within a 500-mile radius from Des Moines,
which is intersected by I-35 and I-80, manufacturers can reach 56 million people
or 23 percent of the total U.S. population. Over 70 firms provide trucking and motor
freight services there. Yellow Freight System, Inc., operates a terminal in Des Moines
and a national customer service center in Urbandale.
United Parcel Services (UPS) uses Des Moines International Airport as a hub for
its second day service. Other air couriers calling at Des Moines are Emery Worldwide,
Airborne Express, DHL, and Federal Express.
Lennox Industries, Inc., recently relocated to a new 350,000 square foot distribution
center in Urbandale, just outside of Des Moines.
"We handle all of Lennox Industries' international shipments to the Caribbean,
South America, Australia, the Far East, and most anywhere in the world," says
Earl Lewis, Lennox North American Parts Center (NAPC) manager. Up to 1,100 orders
are processed and shipped daily from the Lennox NAPC.
Circuit City Stores Inc., also is building a $4 million distribution center in
Ankeny to support an aggressive expansion of superstores. The 200,000 square foot
distribution center will supply new stores in Minneapolis and Kansas City and other
new stores in the Upper Midwest.
Glenn Grambo, Circuit City distribution planning manager, says the company was
attracted to Iowa because the state does not have an inventory tax. Nordstrom and
American Honda Motor Co. have also recently located distribution centers in Iowa.
West Coast
Portland offers all the necessary ingredients for distribution and warehousing:
sea, air, rail and highway connections.
The Port of Portland, which oversees the area's seaport, airport, and several
industrial parks, has been making substantial investments to improve distribution
networks. Portland International Airport (PDX) is currently undergoing the largest
construction project in its history to expand the airport terminal and improve access.
PDX already offers 400,000 square feet of warehousing space.
The seaport offers advantages in that it is one to two days closer to east Asia
than are California ports. The harbor facilities are well served by the area's rail
and highway transportation network. Portland is also the western terminus for the
east-west rail corridor which runs along the Columbia River. Double-stack train service
is available to Seattle and Chicago.
Boise Cascade Corp. has agreed to lease a 225,000 square foot warehouse at the
port's 2,800 acre Rivergate Industrial District.
"This new facility will enable us to greatly increase the size of our warehousing
operation and improve our channels of distribution," says Larry Barrett, manager
of Boise Cascade's Northwest Regional ServiCenter.
Nevada has been cited as a top distribution and manufacturing location for companies
seeking easy, cost-effective access to major markets in the western United States
and the Pacific Rim. California, the world's sixth largest marketplace, is literally
minutes away.
With two international airports, a broad network of major interstate highways
and a grid of cross-country rail lines allowing quick access to a market of 52 million,
Nevada is home to the West's fastest-growing warehousing and distribution centers.
The high cost of doing business at the major gateways and increasing competition
are causing many air carriers, freight forwarders, and shippers to look at Las Vegas's
McCarran International Airport as a gateway where their freight can be handled more
cost effectively. Consequently, more and more companies are opening distribution
centers in the area so they can fly their products into Las Vegas on one of the 850
flights that land at McCarran per day. From there, they can then redistribute their
products via truck to a variety of destinations such as Los Angeles, Phoenix, San
Diego and Mexico.
William-Sonoma operates a distri-bution center there as does Levi Strauss. Its
800,000 square foot distribution facility is the largest of its three nationwide.
Southwest
Many manufacturers taking advantage of the North American Free Trade Agreement
(NAFTA) are locating their distribution facilities in Texas. Dallas/ Fort Worth International
(DFW) and Alliance Airport in Fort Worth are major draws for distribution companies.
"From DFW, every major city in North America can be reached in four hours'
flying time or less; 98 percent of the population of the U.S. can be reached within
48 hours by truck or rail," says Franco Guevara, DFW manager of Cargo and Trade
Development.
Fort Worth's Alliance Airport is a major draw for distribution companies. Federal
Express plans to open its $300 million Southwest sort and hub facility there in September
1997 to divert cargo from its Memphis facility. Also located there is Burlington/Santa
Fe's 575-acre railyard and intermodal facility.
Corp.s already located in the Alliance industrial park include Texas Instruments,
JC Penney, Zenith Electronics Corp., Intel, Maytag Corp., Food Lion, Nestle Distribution
Company, and Nokia Mobile Phones.
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