The Council of Supply Chain Management Professionals’ (CSCMP) released its 26th Annual State of Logistics (SoL) Report® in June 2015. Presented by Penske Logistics and authored by transportation consultant, Rosalyn Wilson, senior business analyst at Parsons Corporation, the report tracks and measures all costs associated with moving freight through the U.S. supply chain.
According to SoL, U.S. businesses spent approximately $1.39 trillion dollars on logistics in 2013, a 2.3 percent increase over 2012. The overall cost of the logistics industry rose another 3.1 percent in 2014 to $1.45 trillion. While costs increased, this is a slight drop in the percentage of gross domestic product (GDP), which was 8.4 percent in 2013 and 8.3 percent in 2014.
The transportation sector of the logistics industry grew by 3.6 percent in 2014 due to stronger shipment volumes and inventory carrying charges that were up 2.1 percent. In addition, consistent job creation, increasing household net worth, lower rates of inflation and a reduction in the cost of gas prices allowed consumers to drive the economy again. The less money that is needed to spend on gas and other work-related travel, the more money that can be spent on everything else.
“In 2014, consumers began to drive the economy once again as consumer confidence measures soared,” said Wilson. “And it was freight transportation helping to drive that consumer spending in the most efficient manner possible.”
Freight shipment volumes started 2014 at or below 2013 levels, rose through the spring, dropped al little during summer, peaked during August and September, and finally fell close to where they started at the beginning of the year.
Trucking is the largest component of freight transportation costs. While still faced with a driver shortage and high driver turnover, total trucking costs rose 3 percent in 2014 to $702 billion. Intercity trucking rose 2.7 percent to $488 billion, and local delivery was up 3.7 percent to $216 billion. Trucking also closed in on 100 percent utilization. Capacity constraints affected truck rates and in May 2014 freight payments were 11.2 percent higher than the same time in 2013.
The report saw rail transportation costs rising 6.5 percent to $80 billion in 2014. Class 1 freight revenue was 4.054 cents per ton-mile, a 0.1 percent increase from 3.961 cents in 2013. Overall rail traffic was up 4.5 percent—3.9 percent for carloads and 5.2 percent for intermodal. To meet demand, rails increased capacity with 1,300 new and rebuilt locomotives; 3,800 freight car purchases; and 700 new leased freight carts.
Costs for water transportation rose 8.9 percent in 2014. The SoL reported domestic costs for movement of freight in and out of the U.S. through its deep water ports was $31 billion and $9 billion for domestic lake and coastwise moves.
However or wherever you decide to locate your business, the “state of logistics” should definitely be a factor. Read ahead to find some of the best logistics locations available.
Located within a day’s drive of two-thirds of the U.S. markets, Brunswick County offers thousands of acres of prime land for industry. The picturesque rural setting recently welcomed a $1.3 billion investment by Dominion Virginia Power, which constructed a cutting-edge technology power plant. The county’s rich natural resources attract a number of industries such as Redland Brick that uses robotics to manufacture some of the highest quality bricks that are shipped to markets all along the east coast and beyond. The rich timber resources make it home to Virginia-Carolina Wood Products that supplies both domestic and international markets with Class A lumber.
Reaching international markets is convenient. The Port of Virginia is only 90 miles east of Brunswick County. With I-85 dissecting the county running north-south, US Route 58 dissecting the county running east-west and I-95 about five miles east of the county, transportation is accessible and efficient.
It is well known that Virginia is one of the best locations for business in the U.S. because of its strong pro-business environment. And those pro-business factors are evident in Brunswick County with low operating costs, exceptional transportation and utility infrastructure, a strong commitment to education and workforce development and the commitment to work in partnership with business. This commitment is shown via a broad range of incentives available to industry.
Through the Enterprise Zones Program business and industry can realize state incentives such as Job Creation Grants and Real Property Investment Grants, while also realizing a number of local tax and other incentives. In addition, Brunswick County is one of the localities that receive economic development support from the Tobacco Region Revitalization Commission. Among a number of benefits, this allows Brunswick County to provide industries fully developed shovel-ready sites at low or no cost.
Brunswick County is located in southern Virginia about an hour’s drive from Richmond to the north and Raleigh/Durham, North Carolina to the south. It is a rural area steeped in American history—one of the outposts settled shortly after Jamestown. On the historic Meherrin River many find canoeing and kayaking relaxing. Lake Gaston is where other boaters and water sports enthusiast like to relax. Whatever your recreational preference you will find it here or within a short drive.
Once dependent on a successful tobacco farming economy, Brunswick County is working to grow a diversified, growth oriented economic base—one in which technology innovation is used to produce more efficiently, one in which there are job opportunities for those who live here or wish to locate here and one in which business and industry find what they need to grow and be successful.
THE DUPAGE COUNTY, ILLINOIS ADVANTAGE
By nearly any measure, DuPage County’s economy is thriving. Home to nearly 40,000 businesses and 700,000 jobs, it is a formidable economic force in the region. As a result, DuPage enjoys some very important and meaningful economic advantages. When the issues that weigh on businesses everywhere (not just DuPage) are considered—such as the cost of doing business and the ability to recruit and retain top talent—it is these advantages that make the difference for businesses.
Location is among one of DuPage County’s most valuable, inherent advantages. Its proximity to O’Hare International Airport means that residents and businesses alike have direct, non-stop access to 200 destinations worldwide through 1,400 daily departures.
DuPage is in the midst of six interstate highways, making drive time to major markets convenient and cost-effective—with less than a six-hour drive to major Midwest cities. DuPage County also enjoys the benefits of an extensive multi-modal transportation network. Chicago is the nation’s rail hub that connects six of the seven class one railroads.
DuPage has a highly skilled and educated workforce and is first in the state in educational attainment. Nearly half the residents over the age of 25 have a bachelor’s degree or higher, and over 90 percent are high school graduates.
DuPage County has a business-friendly environment. Under the leadership of Chairman Cronin, it operates an accountable, efficient and transparent government—with a balanced and responsible budget. Unlike many other places, here you will find public and private sector leaders working together to grow and expand the economy.
And finally, as its nearly one million residents know, DuPage County’s quality of life is unmatched. This can be attributed to an emphasis on education, culture and environmental preservation. DuPage has some of the best schools in the nation, including 19 accredited colleges and universities. It offers a wealth of opportunities to experience arts and culture, and residents and visitors alike can enjoy open spaces, tree-lined streets and lush wooded areas that characterize the landscape.
At Choose DuPage, the economic development alliance for DuPage County, this is called the DuPage Difference. It is what has allowed the organization to attract the variety of businesses that make up their diverse economy—from technology to manufacturing, retail, warehousing, healthcare and more.
These advantages, the DuPage Difference, have led to over 100 economic development projects in the last year. That’s 3,792 jobs, 6.35 million square-feet of development and $571 million invested into DuPage County.
Among these projects was Shorr Packaging Corp.’s new corporate headquarters and warehouse expansion in Aurora, DuPage County. The 100% employee-owned enterprise will bring more than 100 additional jobs within the next seven years. Without applying for, or accepting any tax incentives, Shorr Packaging chose a location on Ferry Road between Route 59 and Eola Road.
DuPage County also is well positioned for continued success with the Western Access O’Hare project which will change the way business moves, on a global scale. In an increasingly global economy, enhanced access to national and global markets is the ultimate competitive advantage. Now, that advantage is arriving in DuPage.
DuPage County’s Western Access O’Hare Project will create unprecedented access to O’Hare International Airport from the west. Just outside of Chicago, and with unparalleled proximity to the airport, I-90, I-294 and I-290, businesses looking to locate in the newly available developments will be taking advantage of transportation gateways to the rest of the world. In a market where transportation, logistics and warehousing is thriving, the Western Access O’Hare project provides enough land for businesses to build big, and for goods, people and information to flow efficiently on a domestic and international scale.
I-69 KEEPS ROLLING ALONG IN SOUTHERN INDIANA
Interstate 69 runs north-south through the Midwest United States. Sometimes called the NAFTA Superhighway, the interstate starts at Port Huron, Michigan and is envisioned to run south into Texas with the goal of being the primary economic north/south route in the United States.
Indiana completed the 156-mile northern route of I-69 in 1971. Since its groundbreaking in 2007 construction along the southern sections of I-69 has rolled along steadily. The route was divided into six sections of construction starting with Section 1 near Evansville and proceeding north until Section 6 connects to I-465 in Indianapolis. Four sections are now open to travelers. Currently, I-69 connects to State Route 37, so businesses have four-lane access to downtown Indianapolis and beyond. Section 5, currently under construction, goes to the edge of Martinsville and upgrades the route to interstate standards. Section 5 is scheduled to be finished by June 2017. Section 6 will join with I-465 in the years to follow. But as I-69 construction rolls along, Southern Indiana and the communities that stand to most benefit are investing in their infrastructure with the assistance of Hoosier Energy’s member electric cooperatives to take full advantage of these future logistics opportunities.
Location advantage: The completed southern expansion will span 114 miles from Evansville and I-64 to Indianapolis and Interstates 65, 70 and 74. Southern Indiana offers commuters easy access to two international airports, which house the major hubs of two air package delivery services: FEDEX in Indianapolis and UPS in Louisville. In addition to the air transportation advantages, 65 percent of the United States is within a one-day drive of the I-69 corridor.
Defining ideal logistics: Tim Feemster, the managing principal of Foremost Quality Logistics with over 40 years of experience as a business site advisor, explained what he looks for when considering sites for logistics companies: “My rule is ‘five to 55’— trucks should be going 55 miles an hour within five minutes of departing.” Other important factors include an abundance of certifiable “shovel ready” sites and an infrastructure with a low risk of power interruptions. The numerous interchanges tying into the I-69 project in southern Indiana open up a variety of new opportunities to hit “five to 55.”
I-69 is a couple of years from direct freeway access from Evansville to Indianapolis. However, Feemster points out, “if a company invested in a brand-new site today, allowing for 18 months of construction, the freeway will be close to completion by the time they open.”
Washington, IN invests in infrastructure: Jeff Quyle, President & Chief Operating Officer of Radius Indiana, observed that the opening of I-69 has helped many businesses near Washington, Indiana. “Grain Processing Corporation (GPC), a processing plant of ethanol-based alcoholic beverages just outside of Washington, is located a short drive from I-69. The freeway provides a benefit to GPC, both for receiving raw materials and for shipping finished product. The interstate also comes to the front door of Naval Support Activity Crane, a weapons production and development facility with over 5,500 employees.”
Westgate, a new technology park adjacent to Crane, is developing several new commercial business sites. “Both Westgate and Washington are taking advantage of the opportunity that I-69 offers. They are investing in a quality industrial, commercial and retail development on several hundred acres of land right off the interstate, with rail access and a shell building already under construction.” Thanks in part to infrastructure investments by Hoosier Energy, these sites will come pre-wired and power-ready. And the local electric distribution cooperative has offered zero-interest loans to assist in upgrading infrastructure.
Bloomington plans for growth: Bloomington is the site of Indiana University’s main campus and several local medical, life sciences and technology companies that ship their goods primarily by truck. “Since I-69 opened, the local workforce has a dramatically faster and safer commute,” said Lynn Coyne, President & Chief Executive Officer of the Bloomington Economic Development Corporation. “Once Section 5 is completed, Indianapolis will have easy access to Bloomington, which will enhance the educational opportunities for students and visitors.” Coyne credits Hoosier Energy for proactively preparing shovel ready sites and for marketing those sites.
“It’s still early,” said Anne Bono, Executive Director of Hoosier Voices for I-69, “but the potential is clear. When I-69 is complete, trucks will drive from Indianapolis to Bloomington in 38 minutes (about half the time of the current commute).”
Petersburg Invests in the Future: Fifty million people live within a 500-mile radius around Petersburg in Pike County, including Nashville, Atlanta, St. Louis, Indianapolis and Detroit—significant markets that I-69 will bring closer. “We are developing a mega-site of 8,000 acres, starting with 340 acres about a mile from the interchange and are working to get those sites shovel ready,” said Ashley Willis, Executive Director of the Pike County Economic Development Corporation. “We’re positioning ourselves to be an attractive location for agribusiness, logistics and manufacturing industries. We’re investing to be a significant competitor in the future. Utility partners like Hoosier Energy are helping Petersburg take steps so that its available sites have water and electrical infrastructure to support the demand.”
As I-69 rolls along, Hoosier Energy and its partner rural electric cooperatives will help their business communities develop sites that best take advantage of the economic opportunities of tomorrow. For more information, contact Jeff Quyle, President & COO of Radius Indiana at firstname.lastname@example.org; Ashley Willis, Executive Director of Pike County Economic Development Corp. at email@example.com; Lynn Coyne, President & CEO of Bloomington Economic Development Corp. at firstname.lastname@example.org; Anne Bono, Director of Advocacy/Public Policy at Greater Bloomington Chamber of Commerce at email@example.com; or Mr. Tim Feemster, Managing Principal of Foremost Quality Logistics at firstname.lastname@example.org.
BAY COUNTY, MI: HUB FOR MULTI-MODAL TRANSPORTATION
Bay County is located in East-Central Michigan, in what is regionally called The Great Lakes Bay Region. Bay County’s advantages for the Logistics and Distribution industry are vast.
Situated along Lake Huron, the third largest freshwater lake on Earth, Bay County, Michigan is a hub for multi-modal forms of transportation. Whether it be by vessel through numerous ports along the Saginaw River, by plane (or sea-plane) accessing the local municipal airport (James Clements Airport) or International Airport (MBS), by rail car serving all of the Midwest, or by road, it can transport you.
Bay County is positioned along I-75, a major interstate running from Miami, Florida to Sault Ste. Marie in the Upper Peninsula of Michigan. It spans 1,786.47 miles and is connected to the U.S., Canada and Mexico, while its access to over the road transportation is apparent. Bay County offers proximity to major markets, including Grand Rapids, Detroit, Chicago, Toronto, Cleveland and the Midwest.
Bay County is a world leader in silicone solutions, products and R&D. Business friendly communities offer local abatements and infrastructure grants, with the foundational and fiscal support of state incentives providing grants and loans for business development. An online property database shows available land and buildings, identifying shovel ready properties and large sites. A robust energy infrastructure also is in place.
Bay County consistently is one of the most affordable communities in the U.S. A skilled labor force provides generations of manufacturing expertise with 12 educational institutions in the region and training closely aligned with labor demand. It also is home to five major hospital networks that provide a wide array of advanced medical services and procedures.
Residents in Bay County, MI see an excellent quality of life with more than 3,200 acres of natural terrain; more than 100 parks; more than 20 miles of trails; eight public and private golf courses; and recreational opportunities on the Saginaw River, Kawkawlin River and Saginaw Bay.
SOUTHWEST LOUISIANA IS BOOMING, WITH PLENTY OF ROOM TO GROW
CEOs, developers, governmental officials and entrepreneurs are astounded by the “BOOM” that is heard around the globe that emanates from Southwest Louisiana.
Lake Charles and Sulphur anchor the five parish (county) area that is boarded by Southeast Texas and the Gulf of Mexico. At this moment, companies from the United States, Europe, Africa and Asia have all decided to stake a claim here in an industrial growth expansion that totals $97 billion.
“Our people and companies are making history,” said George Swift, President and CEO of the Southwest Louisiana Economic Development Alliance. “Each day that passes, companies from across the globe are calling to learn about development and expansion possibilities while others call about the tens of thousands of temporary and permanent jobs that are going to be generated by industrial expansion.”
Southwest Louisiana is moving towards laying claim to the title of “Clean Energy Capital of the World” with the rise of liquefied natural gas import and export terminals, gas-to-liquid fuel facilities, and other petro-chemical projects that add to an industrial hub that rivals any in the world.
Access to water, interstate, railway, pipe and air cargo services make Southwest Louisiana an enticing locale.
Port of Lake Charles: The Calcasieu River Ship Channel was formed by channelization of the Calcasieu River from Lake Charles to the Gulf of Mexico—36 miles—and an additional 32 miles out into the Gulf. The channel was created to provide deep water access for maritime commerce. A look at the channel today reinforces the theory of “build it and they will come”; dozens of industrial plants now line the channel, primarily refineries and petrochemical companies, bringing raw materials in, and shipping products out via the channel.
Bill Rase, the port’s Executive Director, notes that the facility and its administration are action oriented.
“The Port is active every day, moving cargo in and out. It’s ranked the 11th-busiest port in the U.S.—and recent developments point to it becoming even busier in the months and years to come,” he said. “The Port is active—I should say proactive—in soliciting new customers and new cargo. We work hard to make sure our facilities and our services make economic sense for companies wanting to move cargo through an efficient transportation hub on the U.S. Gulf Coast.”
Chennault International Airport: Home to Northrop Grumman and AAR Aircraft Services, the airport can support aircraft manufacturing facility needs. The airport’s Part 139 airfield features a 200-foot-wide by 10,700-foot-long runway with 17-inch pavement capable of accommodating aircraft ranging in size from a small business jet to wide-body commercial airliners. Chennault is incorporated into Foreign Trade Zone 87 and features 13 million-square-feet of concrete and over 1.5 million square-feet of hangar, office and warehouse space.
Other noteworthy incentives are five large, certified development sites which provide future tenants a range of development opportunities. Four of the sites have rail frontage and all provide direct access to the airport’s runway facilities. Conveniently located on Interstate 10 between Houston and New Orleans, Chennault International Airport provides connectivity to Interstates 10 and 210, rail lines and the deep-water Port of Lake Charles.
Developers and companies interested in such as site should know a substation is on the property with plans being developed for enhanced dual feed service.
“The airport also offers approximately 300 acres of prime land for suppliers in an established industrial park owned by the Port of Lake Charles. There are no wetlands and all the acreage we have is available for development which can service agriculture, aviation or recreation,” Robb said.
Lake Charles Regional Airport: The airport has commercial service to serve the needs of over 200,000 regional residents. Air service is provided by United Airlines and American Airlines. United provides service to their Houston hub which has connecting flights to virtually any place on the globe. United Airlines alone flies to more worldwide destinations than any other airline. American provides service to their Dallas/Fort Worth hub which has connecting flights worldwide.
“The airport, in conjunction with our fixed base operator (Freeman Jet Center) is currently undertaking a $600,000 renovation which will provide first class facilities for corporate and private aircraft visiting our airport,” said airport executive director Heath Allen. “We just completed an expansion of our north apron designated to allow for additional hangars to be constructed. And the airport is currently in negotiations with a company wishing to construct a 10,000 square foot hangar to house a corporate flight department on the south apron.”
Lake Charles Regional is home to 32 tenants with Era Helicopters as the longest customer housing 150 helicopters operating out of its company site. Era supports offshore oil and gas transportation, air medical services, search and rescue operations, firefighting, flight seeing and disaster relief efforts.
Allen notes that the airport is primed for more growth. “Much of the airport’s property is zoned for commercial and light industrial uses and is served by public utilities. Our parish (country) government recently bid a project that will bring public waste water disposal to the airport. This project will be very beneficial moving forward as the airport’s system is over 50 years old and at capacity.”
Interstate: Interstate 10 and 210 service a combined 100,000 motorists a day. Interstate 10 is a logistics headliner as the roadway offers a complete route between America’s Pacific and Atlantic Coast. In Southwest Louisiana, the interstate gives access to all local airports, waterways and railways.
Rail: An extensive rail network makes its way through Southwest Louisiana with Union Pacific and Kansas City Southern servicing the area. The majority of the region’s industrial parks and its ports are furnished with rail access, a strong advantage in the distribution industry.