John Johnson joined the DC Velocity team in March 2004. A veteran business journalist, John has over a dozen years of experience covering the supply chain field, including time as chief editor of Warehousing Management. In addition, he has covered the venture capital community and previously was a sports reporter covering professional and collegiate sports in the Boston area. John served as senior editor and chief editor of DC Velocity until April 2008.
Economic development executive Kathy Moellenberdt accepts that pitching Topeka, Kan., as a tourist mecca is a lost cause. "We can't talk about mountain views and oceans," she admits. But it's clear that she's ready to fight when it comes to bringing new business to the community.
Moellenberdt has set her sights on business in general, and distribution centers in particular. Topeka is ideally situated for distribution operations, she says. "[O]ur central location lends itself to a very strong network transportation system." She's also quick to point out that Topeka offers a large, welleducated labor force and that Kansas, which has spent more than a half billion dollars to improve its highways, now boasts some of the best roads in the country.
If Topeka strikes you as an unlikely source for a marketing pitch, welcome to the new world of site selection. The big industrial regions— Southern California's Inland Empire, Columbus, the Port of Houston, Indianapolis, Chicago, Memphis, the Greater Atlanta area—are no longer the only ones mounting aggressive marketing campaigns. They've been joined by a horde of lesser-known but nonetheless scrappy players—Topeka, Kan.; Anchorage, Alaska; Kalamazoo, Mich.; Scranton, Pa.; Little Rock, Ark.—all hungry for new business.
To appeal to a distribution audience, these newcomers typically promote themselves as logistics hubs, or logistics villages, as they're also known. They're emphasizing the features most likely to attract a logistics professional's eye—a central geographic location; easy access to rail, highway, ocean or air connections; cheap land; or a bountiful labor force. Some even offer ready-to-occupy space in multi-tenant complexes specifically designed for distribution, with on-site logistics services and, of course, easy access to multiple modes of transportation.
Their pitches may prove hard to resist. The smaller cities definitely have some selling points, says Cliff Lynch, principal of C.F. Lynch & Associates, a logistics consulting firm. "[S]maller cities often offer lower land and building prices, tax incentives, and better labor pools [than large metropolitan areas]. And carriers will respond to service requirements if there is enough volume involved."
the new hot spots
If you want to attract DC business to your area, it's no longer enough to be business friendly. Now, you have to be RFID friendly as well.
With the RFID revolution well under way, economic development agencies are actively pitching their regions' technological capabilities in hopes of attracting RFID-enabled DC operations. In fact, two of the more aggressive promoters—North Texas and North London (yes, in England)—took the unusual step of setting up exhibits at the RFID World conference and exhibition in Dallas earlier this year.
Officials from the North Texas region have branded the Dallas/Fort Worth area as an RFID Hub, and not without cause. The Dallas/Fort Worth region, where both Wal-Mart and Target carried out their initial RFID deployments, has become something of a hotbed for RFID activity. Today, the area is home to companies specializing in all facets of RFID, including chip makers, hardware companies, software developers, and consultants offering RFID implementation and integration services, according to the Metroplex Technology Business Council.
Meanwhile, the North England Inward Investment Agency (NEIIA) is out promoting the ready availability of RFID expertise in North London—an area that includes Manchester, Newcastle, Liverpool, Leeds and Sheffield. The region is home to the University of Hull's Logistics Institute, whose staff members have vast experience with RFID implementations, says David Allison, NEIIA's chairman. That resource alone, he says, makes North London the ideal base for RFID-enabled companies looking to penetrate the European market.
Not to be outdone, economic development officials from the Atlanta area are also promoting their region's RFID capabilities. While other parts of the nation are experiencing a shortage of RFID expertise, Atlanta has no such problems, they claim. Atlanta's hometown university, Georgia Tech, produces more RFID engineers than any other school in the country.
Won't you be my neighbor?
Ironically, it wasn't so long ago that communities actively worked to keep distribution centers out. The prevailing opinion was that DCs made bad neighbors, the kind that attracted big trucks that would clog local roads and foul the air. A DC might bring a few jobs to the area, but not enough to outweigh the inconveniences. "There was a time eight to 10 years ago that most ... regions ... did not want distribution because it took up a lot of land, and communities didn't feel like they got enough jobs to compensate for the lost land," says Gil Mayfield, vice president of distribution center services for real estate developer Carter and Burgess.
The tide of public opinion has turned, says Mayfield. Nowadays, instead of pulling up the welcome mats, many regions are actively courting DCs. No one brings up air quality issues anymore, he says. People have come to realize that DCs, which are typically situated near interstate highways, usually have little impact on local traffic. And for communities desperately seeking to replace lost manufacturing jobs, they represent new hope.
Take Midlink Business Park, for example. Located in Kalamazoo, Mich., this multi-tenant business park occupies a sprawling site that was once home to a General Motors stamping plant. In its heyday, the plant employed 4,500 workers. But in 1999, GM shuttered the facility.
The property was quickly snapped up by a real estate investment firm that recognized its potential as a distribution hub. What attracted the investor's attention were the site's existing rail lines and its strategic location. Kalamazoo is centrally located halfway between Chicago and Detroit, which makes it a more viable logistics hub than Chicago or St. Louis, according to Midland executives.
Before it opened the business park last year, the investment firm completely redeveloped and re-branded the property as a distribution complex. "Generations of families had worked here, so a lot of people had bad feelings about GM leaving," says David Smith, Midlink's president. "It became important to us to emphasize that this is not a GM facility anymore—it's a new day, with a new world business model—distribution." Today, four companies are using the site for distribution, and Midlink hopes to add more.
Let's make a deal
If Midlink's challenge has been to erase the site's associations with the old GM plant, Anchorage's struggle will be educating the public. "There are so many misconceptions about Anchorage," says Bob Poe, head of the Anchorage Economic Development Corp. "Geography teachers have always presented Alaska as being a little bigger than Hawaii and located in a box [on a map] off Baja California. But that's not the case. A lot of people don't realize you can get to London, Tokyo and New York from Anchorage in about the same amount of time."
In fact, Anchorage is nine hours away (by jet) from 95 percent of the industrialized world, making it an ideal gateway to international locations, says Poe. Air carriers have already discovered this. FedEx and Northwest Airlines have established sorting centers in Anchorage for processing Asia-bound cargo, and other carriers use it as a fueling and maintenance stop. Now the challenge will be to attract other types of distribution business.
To help draw that business, Anchorage is offering attractive incentive packages. And it's by no means alone. Virtually every economic development bureau—from Topeka and Kalamazoo to Alabama's Port of Huntsville and Seguin, Texas—stands ready to offer a variety of enticements if that's what it takes to seal the deal.
Some offer free land. Topeka, for example, gave Target 143 acres of land (valued at $1.6 million) as an inducement to build a 1.4 millionsquare-foot DC in the region.
Others offer hard cash. Officials in Seguin, Texas, a community located 35 miles east of San Antonio along I-10, will give $6,000 to new or expanding companies for each permanent job created. "Seguin officials take a direct cash-on-the-barrelhead approach to economic development," says Ramón Lozano, executive director of the Seguin Economic Development Corp. "If you can offer grants up front for hard costs, it makes it a lot easier to market your community."
Location, location, location
Though economic development agencies like to think otherwise, the reality is that companies rarely choose a specific region based on incentives. "We generally see incentives as being third or fourth on the [priority] list," says Mayfield. "First, the transportation, labor, and construction cost aspects have to be right."
It's more common for incentives to come into play after a company has settled on a region and is deciding among two or three finalists within that region. That was the case when recreation equipment retailer REI began searching for a site where it could build a new DC that would serve the East Coast. After looking at 80 sites in an area that stretched roughly from Tennessee to New Jersey, REI narrowed its search to 20 sites within a 200mile radius of Bedford, Pa.
At that point, the bidding wars began. "Within that Mid-Atlantic region, there was certainly some stiff competition," remarks Dave Presley, REI's vice president of distribution and logistics.
Among the bidders was Bedford County Business Park, which eventually emerged the winner. Bedford County offered REI both tax abatements and training allocations, though the retailer is quick to point out that other factors also entered into its decision. For example, Bedford County had already cleared the land, completed the environmental studies and taken care of infrastructure improvements like water support systems for the 39-acre parcel, which saved REI time and money.
And perhaps more to the point, the Bedford County Business Park lies in close proximity to the general transit corridor that REI had determined was best for its distribution needs. As appealing as the give-aways may be, says Presley, ultimately it's location that matters. "I can't stress enough the importance of considering your current customer and vendor base, and your plans for inbound logistics," he says. "All of that has to come together to define the region where your DC needs to be."
get ready for the pitch(es)
If you want to attract DC business to your area, it's no longer enough to be business friendly. Now, you have to be RFID friendly as well.
Starting a site search? It won't be long before economic development agencies are lining up to pitch you on their regions' attractions. Here are some of the locations you're likely to hear from:
Atlanta
Even road congestion hasn't stopped this region from booming. Atlanta, which aims to become the Silicon Valley of logistics, has benefited from the southward migration of the U.S. population, particularly to Florida, and the growing popularity of the Port of Savannah. DelMonte, PepsiCo, Solo Cup and Staples have all announced their intent to open DCs in Atlanta, which has become the nation's fourth largest center of transportation and logistics employment.
Columbus
Logistics has become big business for Columbus, employing nearly 40,000 people and contributing $2.6 billion to the local economy each year. And it's about to get bigger. The new Rickenbacker Intermodal Facility offers more than 20 million square feet of space for logistics operations, and a new 580,000-square-foot stateof-the-art DC is nearly complete. Columbus also stands to gain from the development of the Heartland Corridor, a series of intermodal projects stretching from Norfolk, Va., to Columbus.
Southern California (Inland Empire)
With its (relatively) affordable land and growing base of skilled workers, California's Inland Empire has become something of a distribution mecca. But its biggest asset is perhaps its location. The Inland Empire lies about 37 miles inland from the Pacific Ocean and east of Los Angeles. Every truck or rail shipment traveling from Southern California to points north or east (say, Las Vegas, Phoenix or Denver) passes through the area. Companies that have built DCs within the region include Target, Wal-Mart, Kohls, Home Depot and Walgreens.
Seguin, Texas
Situated 35 miles east of San Antonio along I-10 in central Texas, Seguin is banking on its strategic location to draw distribution business. Once construction of state highway 130 is completed, truckers will be able to avoid the congested I-35 by hopping onto 130 just north of Austin and heading south to Seguin, which serves as the interchange between 130 and I-10. But Seguin is not leaving anything to chance. It also offers a variety of incentives, from rent subsidies and tax abatements to loan assistance and grants.
Topeka, Kansas
Boasting a central location and proximity to major highways like I-70, I-470 and U.S. 75, Topeka hopes to become a major center for distribution. And because it's only an hour away from Kansas City, Topeka offers easy access to intermodal transportation as well. Retailers have begun to take notice. Payless ShoeSource and Ritz Camera/Boater's World have already opened national DCs here.
Anchorage, Alaska
Dubbed the "Crossroads of the World," Anchorage is second only to Memphis in the amount of landed cargo weight in the United States. Because Anchorage is just nine hours away (by jet) from most of the industrial world, boosters are touting it as the ideal location from which to distribute high-value and time-sensitive products or parts to Europe and Asia. In hopes of attracting more distribution and logistics business to the region, Anchorage has awarded a $150,000 grant to Commodity Forwarders Inc. for the development of a global logistics facility.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.