WAREHOUSING
specialreport
The right site,
at the right price
Rising fuel and shipping costs, coupled with a weak
economy, have companies searching for distribution
sites that will help cut operating costs. They’re finding some attractive opportunities.
This story first appeared in the 2011 special bonus issue of CSCMP’s Supply Chain
Quarterly, a journal of thought leadership for the supply chain management profession and a sister publication to AGiLE Business Media’s DC VELOCITY. Readers can
obtain a subscription by joining the Council of Supply Chain Management
Professionals (whose membership includes the Quarterly’s subscription fee).
Subscriptions are also available to non-members for $89 a year. For more information, visit www.SupplyChainQuarterly.com.
IN TODAY’S UNCERTAIN DOMESTIC ECONOMY AND WITH INCREASING
global cost pressures, many companies are finding the best way to improve the
bottom line for their warehouses and distribution centers is to focus on the cost
side of the ledger, not on the revenue side.
With fuel and shipping rates projected to rise significantly in 2012 and
beyond, comparative costs in areas like labor, property taxes, energy, and real
estate are under the site selection microscope like never before. With the exception of shipping rates, which are often negotiable, most operating costs facing
the distribution warehouse planner are fixed. For many, a less-than-optimum
operating cost structure for their warehouses can compromise their competitive
position for years.
That’s one reason why many companies are considering relocating warehouses
and distribution centers right now. Those that are searching for sites that will help
cut operating costs now and in the future are finding attractive opportunities.
LOCATION MATTERS
Exhibit 1 shows the annual BizCosts.com comparative cost ranking of U.S. cities
based on their housing a hypothetical 150-worker distribution center occupying
450,000 square feet and serving a national market with over-the-road truckload
shipments. 1 Total costs include labor, land, construction, taxes, utilities, and shipping. They can range from a high of $24.5 million per year in San Francisco to a
low of $13.1 million in Greenville/Spartanburg, S.C.
