DC Velocity - January 2012

In addition, the expansion of the Panama Canal, set for completion in 2014, is already affecting distribution warehouse site selection. Container shipments are projected to increase tremendously at U.S. East Coast ports, creating inland warehouse opportunities (not unlike California’s Inland Empire) for communities situated within a few hours’ drive by truck from deepwater ports in Miami and Jacksonville, Fla.; Savannah, Ga.; Charleston, S.C.; Norfolk, Va.; Baltimore, Md.; Wilmington, Del.; Newark/Elizabeth, N.J.; and Boston, Mass.

Airfreight growth also has been a positive force for a number of distribution projects, especially those

close to major hubs operated by UPS in Louisville, Ky., and FedEx in Memphis, Tenn. In addition, Minneapolis, Minn.; Chicago, Ill.; and St. Louis, Mo., have strong air-cargo service to and from China, a huge plus for a growing number of companies in those areas.

A WARM WELCOME While the weak economic recovery and rising costs have had some negative effects on the warehousing market, they have also resulted in at least one positive consequence. It used to be that many communities were resistant to new warehousing projects and viewed them with skepticism. Now, however, communities are actively courting logistics industries because the eco-

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nomic benefits are clear and compelling. Indeed, for cash-strapped municipalities, warehouses are a significant source of new jobs. Large warehouses on extensive acreages translate into huge property tax revenue. Other coveted revenue streams generated by a new warehouse or distribution center for the host municipality and state include sales taxes, personal property taxes, utility taxes, fuel taxes, telecommunications taxes, and personal and corporate income taxes.

As a result, state and local economic development organizations have been providing warehouse operators with access to millions of dollars in financial incentives, and communities have been warmly welcoming them. Additionally, residents of local communities are beginning to see distribution and warehouse facilities as an employer of choice. In years past, the typical warehouse labor force was dominated by lower-skilled and lower-paid material handling workers and a small clerical pool. Today’s highly automated and computer-driven warehouses, however, depend on a wide range of both blue-collar employees and well-compensated white-collar employees who manage such sophisticated technologies as radio-frequency identification technology (RFID), automated storage and retrieval systems (AS/RS), mobile robotics, inventory tracking, and software-driven pick-and-pack systems.

Warehouses and distribution centers should continue to be seen as employers of choice, in part because an increasing number of them are opting to relocate other value-added functions to the lower-cost warehouse environment. These functions typically include final assembly and quality control, customer service, accounting, call center operations, regional sales, information technology, and other “back office” functions that traditionally are carried out at the more expensive head office or regional office location. ;

Endnote

1. BizCosts is a registered trademark of The Boyd Company Inc.

www.bloapco.com 800.959.0880

PLEASE VISIT US AT MODEX 2012 BOOTH #4427

John Boyd Jr. ( jab@theboydcompany.com) is a principal with The Boyd Company Inc., which provides independent site selection counsel to U.S. and overseas corporations.