Since the beginning of time, cities have come and gone based upon their proximity to a major transportation artery. In fact, nothing is quite so important to a region’s economy than the transportation infrastructure upon which it moves. Without a doubt, transportation is the foundation upon which all logistics is built.
Whether a company is setting up a manufacturing facility, distribution center, retail outlet or whatever, it is absolutely critical that the location it chooses be supported by a robust transportation infrastructure. Regardless of the specific type of facility, it will need to be able to quickly and economically move raw materials, supplies and finished products in and out.
Sure, it’s important to look closely at other factors, such as the local work force, business climate, taxes and real estate prices — to mention just a few. But all of those areas can be mitigated in some form or fashion. Not having the transportation infrastructure you require, however, will almost always get a location removed from your list of possibilities.
| The Logistics Quotient ranks metro areas according to 10 major categories, as described below. Together, they give a pretty comprehensive overview of a region’s logistics infrastructure. |
So important is this as a site location factor that, for the past five years, Expansion Management and Logistics Today magazines have teamed up to produce our annual Logistics Quotient™ ranking of the most logistics-friendly metros in the United States.
The study evaluates the overall logistics infrastructure of our nation’s 362 metropolitan statistical areas (MSAs) based upon 10 major categories, including the transportation and warehousing (T&W) industry, T&W work force, road infrastructure, road congestion, road conditions, interstate highway access, vehicle taxes and fees, railroad access, water port access, and air cargo access.
Topping this year’s list as the most logistics-friendly metro is the New York-Newark-Edison, N.Y., N.J., Pa., MSA, followed by Houston, Chicago, Cleveland and Detroit.
Rounding out the top 10 are St. Louis, Minneapolis-St. Paul, San Francisco-Oakland, Kansas City, and Jacksonville, Fla.
The 10 major categories
The Logistics Quotient ranks metro areas according to 10 major categories, as described below. Together, they give a pretty comprehensive overview of a region’s logistics infrastructure.
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Transportation and Warehousing Industry. This category attempts to get a feel for the depth and strength of the metrowide T&W industry and includes the number of companies in the metro area that are engaged in the transportation and warehousing (T&W) industry sector, along with the annual revenue generated by the T&W industry sector. Information comes from the U.S. Department of Commerce.
The top five metros in this category are Chicago, Los Angeles, New York, Houston and Miami.
Transportation and Warehousing Work Force. This category attempts to get a feel for the depth and cost of the metrowide T&W work force and includes the total annual payroll of companies in the T&W industry sector, the total number of employees, the average salary and the T&W revenue per employee. Information comes from the U.S. Department of Commerce.
The top five metros in this category are St. Louis, Louisville, Fayetteville, Ark., Miami, and El Paso, Texas.
Interstate Highway Access. This category focuses on the interstate highway infrastructure and includes the number of interstate highways that pass through the metro area, as well as the number of interstate auxiliary routes (i.e., beltways, bypasses, etc.). Information comes from the Federal Highway Administration.
The top five metros in this category are New York, Chicago, Baltimore, Dallas-Fort Worth and Cleveland.
Road Conditions. This category includes the average roughness of the metro area’s roads, as well as the percentage of bridges that are obsolete or structurally deficient, including five-year trends. Information comes from the Federal Highway Administration.
Road Congestion. Whether a metro area has adequate roads depends upon the amount of traffic using those roads. Clearly, what is considered an adequate infrastructure for Huntsville, Ala., is clearly insufficient for a city like Atlanta. This category includes such things as roadway miles per capita, total miles of freeways, average daily freeway traffic and average daily traffic per freeway lane. Information comes from the Federal Highway Administration.
Road Infrastructure. This category attempts to look into the future in terms of keeping up with an adequate road infrastructure. It includes public roads mileage, capital outlay for roads and bridges, highway maintenance per mile and spending for highway law enforcement. Information comes from the Federal Highway Administration.
Vehicle Taxes and Fees. This category includes highway user taxes and fees, as well as motor fuel excise taxes. Data on state and federal highway user taxes and fees was provided by the Wisconsin Motor Carriers Association, while data on motor fuel excise taxes was provided by the Federation of Tax Administrators.
Railroad Access. This category includes the number of railroad carriers that service a metro. The data came from ALK Technologies Inc. of Princeton, N.J.
The top five metros in this category are Chicago, New York, Philadelphia, Pittsburgh and St. Louis.
Water Port Access. This category includes total tonnage for all ports located within the confines of the metro area and comes from the U.S. Army Corps of Engineers’ Waterborne Commerce Statistics Center.
The top five metros in this category are New Orleans, Houston, New York, Los Angeles, and Beaumont, Texas.
Air Cargo Access. This category includes the number of air courier companies, as well as the total air cargo tonnage for the metro. The data comes from the Federal Aviation Administration, as well as from the Bureau of Transportation Statistics.
The top five metros in this category are New York, Los Angeles, Chicago, Washington, D.C., and Miami.
You probably noticed that road transportation factors have a heavy presence in these rankings. That is because most of our readers, as well as most of Logistics Today’s readers, are with companies that do most of their shipping by ground.
Finally, one of the standard features of Expansion Management’s various annual metro “Quotient” studies is the awarding of the “5-Star Metro” designation to the top 20 percent of the MSAs. Metros that earn this distinction can rightfully consider themselves to be among the elite cities when it comes to that particular category.
Metros that rank in the 21 to 40 percentile are designated as “4-Star Metros,” while those that rank in the middle (41 to 60 percentile) are awarded 3-Stars.
The bottom 40 percent are awarded 2-Stars and 1-Star respectively.
Some Perspective on the Results
It is important to remember that the overall rankings represent an MSA’s overall strength in all categories. However, for your company’s purposes, perhaps not every category is important as others.
For that reason, it is a good idea to look at a metro’s ranking in each category and assign your own weight to that category based upon its importance to you.
For example, if your company doesn’t use rail or water or air cargo, then those categories are obviously less important. Conversely, if your company does rely heavily on one or more of those means, then perhaps the ground transportation categories should be weighted less.
That is how the Logistics Quotient is designed to be used.
Along those lines, we’d like to say a few words about rankings in general.
Rankings are simply a reflection of how we as individuals make decisions — we gather data, evaluate it, prioritize it, and see what comes up.
The most important factor when looking at ratings is to understand the criteria upon which those ratings/rankings are based. If the initial set of criteria makes sense to you, then the results should make sense to you as well.
If it doesn’t, then you need to go back and re-examine your criteria. In other words, if you don’t like the results, don’t shoot the messenger.
With that in mind, we present this year’s most logistics-friendly metros.
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