June 8, 2018

C.H. Robinson executive tosses cold water on

High costs, tight space, tough competition from other types of development create major headwinds, company's chief commercial officer says.

By DC Velocity Staff

The forecast that fulfillment and distribution centers will proliferate in urban areas is the most "overblown prediction" in the U.S. logistics industry, according to a top executive at freight broker and third-party logistics (3PL) provider C.H. Robinson Worldwide Inc.

Speaking at an industry conference yesterday in Atlanta, Chris O'Brien, chief commercial officer of Eden Prairie, Minn.-based Robinson, said DCs located in densely populated cities offer little bang for the logistics buck. Urban land is costly, the tight available space constrains efficiency and flexibility, and there is much competition from retail, residential, commercial, and other industrial offerings, O'Brien said.

By contrast, DCs and fulfillment facilities situated in suburban areas offer more space at lower cost, and don't face the same degree of competition from other types of development, O'Brien said. Yet they are still close enough to urban pockets to allow providers to hit their delivery commitments.

"There's only so close you need to be to serve a market within a two-hour delivery window," O'Brien said at the conference, which was managed by Eye for Transport, a U.K.-based concern. Only a small quantity of deliveries will demand such tight delivery windows as to justify a full-blown urban fulfillment and delivery node, he said.

O'Brien's comments are in stark contrast to the conventional wisdom that modern-day consumers' heightened delivery expectations will require producers, retailers, and their logistics providers to plant their fulfillment and distribution flags in congested, space-constrained cities to be near their delivery base.

Interest in the concept has been so strong that the group that puts on the successful "Home Delivery World" trade show each April has created a conference called "CityFreight," scheduled for late September in New York.

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