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.
If you build it, they will come. The developers of the AllianceTexas distribution hub in North Fort Worth have already proved that. Since its founding in 1989, the 17,000-acre logistics complex has attracted more than 140 corporate tenants, including such heavy hitters as General Mills, Ford Motor Co., and Home Depot. Now, economic development officials in places like Dallas/Fort Worth and Kansas City are hoping that the Field of Dreams theory will hold up in their regions as well.
The "you" in this case are local development authorities and real estate developers—not just in Dallas and Kansas City, but also in San Antonio, Texas; Columbus, Ohio; and Nashville, Tenn. The "it," of course, are the vast logistics parks springing up in the nation's mid-section. And "they" are importers—manufacturers and big box retailers that are displaying an apparently limitless appetite for distribution space.
What's fueling the developers' dreams is the booming U.S.-Asian trade, which has altered the traditional economics of importing. In an earlier era, the notion of "inland ports"would have seemed almost preposterous. The majority of Asian imports were handled at the vast distribution centers that grew up around the ports of Los Angeles and Long Beach, through which most Asian goods entered the country. But mounting congestion problems at those ports have led big importers to seek alternatives. And more and more often, those alternatives include distribution hubs that are located far from any coast.
"The real driver is Asian trade," says Rob Harrison, deputy director at the University of Texas's Center for Transportation Research in Arlington. "As soon as that container growth started to occur, that offered the opportunity to develop a rail network of inland-based ports. We're seeing them in all shapes and sizes."
Texas two-step
Historically, North American logistics complexes have grown up around commercial airports. AllianceTexas, for example, sprang up on the acreage surrounding the all-cargo Fort Worth Alliance Airport, which opened in 1989. As global trade boomed, however, it became clear that the real draw was not easy air access, but the complex's considerable intermodal handling capabilities. Along with the industrial airport, the site today boasts access to two rail lines, an intermodal terminal, a Foreign Trade Zone, and an on-site customs station.
Taken together, AllianceTexas's facilities and its proximity to exploding population centers in the South and East proved irresistible to a number of national players. "The thing that really helped Alliance take off was when the boxes started to arrive from Asia and were processed at that site for a very large metropolitan area," says Harrison.
Most of the goods arriving at AllianceTexas today originate in Asia and enter the United States through Los Angeles-Long Beach, where they move by rail (via the Burlington Northern Santa Fe) to the intermodal yard at Alliance. From there, imports can be whisked to nearby DCs, many of which are located right on site. The intermodal yard currently handles about 600,000 lifts per year, but its capacity will be expanded to 1 million lifts within three years.
There were some growing pains in the early years. For example, as business boomed, a labor shortage developed. The complex's developer, Hillman, expanded the development to include affordable housing for workers employed at the site as well as retail stores to serve them. Today, AllianceTexas employs 24,000 full-time workers, and construction of additional housing is under way. The complex is currently only 40 percent built out, leaving plenty of room for expansion.
Cross-town rival
AllianceTexas is about to get some competition from the Dallas Logistics Hub, a 6,000-acre industrial park being developed by the Allen Group. The Dallas Logistics Hub, whose grand opening took place in April, touts itself as the newest and largest industrial logistics park in North America. It is situated adjacent to I-20, the major east-west trucking corridor in the southern United States.
Right now, the centerpiece of the hub is the Union Pacific's 360-acre intermodal facility. Opened in the fall of 2005, the yard currently has a capacity of 360,000 lifts per year, with plans for more. The facility expects to boost capacity to 600,000 lifts per year by the end of 2007.
But the UP may not have the business all to itself for long. Allen Group spokesman Jim Cross says that the Burlington Northern Santa Fe is evaluating the possibility of building an intermodal facility on the west side of the park, which would make the Dallas Logistics Hub the first logistics park in the world to boast two intermodal facilities.
Currently, the complex has just two spec buildings, which it hopes to have leased by the end of the year. At full buildout in 10 to 15 years, the complex is expected to swell to 60 million square feet of distribution, manufacturing, office, and retail space. Up to two-thirds of that total could be distribution centers.
Up to date
Meanwhile to the north,Kansas City is pushing ahead with plans to position itself as a distribution hub. The corridor between Houston and Kansas City is expected to see a population boom of nearly 40 percent in the coming years, which makes it a likely focus for companies seeking to establish DCs close to their customer base.
As with Dallas and Fort Worth, the booming U.S.-Asia trade is contributing to the area's growth. Kansas City officials estimate that more than $9 billion in foreign imports clear U.S. Customs in specialreport Kansas City each year.
The drive to make Kansas City a distribution mecca is already under way. For example, the Allen Group, developer of the Dallas Logistics Hub, has announced plans to build a similar complex in Gardner, Kan., 25 miles southwest of Kansas City. The 1,000-acre logistics complex, to be known as Logistics Park- Kansas City,will be located adjacent to the BNSF intermodal facility.
And KC SmartPort, a six-year-old economic development agency, seems to have been working overtime to attract big box retailers and consumer goods makers to the area. The agency's recent wins include Pacific Sunwear, which is building a 400,000-square-foot facility in Olathe, Kan., and Musician's Friend, which has signed a 10-year lease for a 702,000- square-foot DC in Kansas City. Kimberly Clark is also negotiating to lease a half-million- square-foot facility in the region.
In addition, at least one area developer is taking the "build it and they will come" route. Kessinger/Hunter will build the region's first spec distribution facility, which will measure just under 600,000 square feet, in nearby Olathe.
Shortage on the shores
For all the attention paid to the booming Asian trade, in the end, rising import volumes are only one factor in the growth of inland ports. A severe shortage of land near seaports is also contributing to the trend. In fact, none of the import warehouses being built today are closer than 150 miles to any seaport, according to Arnold Maltz of Arizona State University and Thomas Speh of Miami University in Ohio. Maltz and Speh are the authors of a new research report titled "Import-Driven Warehousing in North America: Challenges and Opportunities." They presented the results of their research at the Warehousing Education and Research Council's annual meeting in April.
Maltz and Speh interviewed managers of 19 warehouses located at 10 of the largest U.S. ports for their study. They found that the steady rise in import volumes has created a critical need for more warehouses at the nation's ports, but that harborside property is hard to come by.
"There's not a port [in the U.S.] with significant space on the waterfront for warehouse development," says Maltz.
Besides serving as storage centers, import warehouses play a vital role in transloading and in breaking down ocean-container loads for redistribution, usually by truck or rail. In some cases, port warehouses also provide value-added services, including repacking and labeling merchandise for final sale.
The researchers also reported that cargo handling efficiency varied dramatically from port to port. The process of offloading ocean cargo and transporting it to a warehouse involves multiple participants: steamship lines, stevedoring companies, freight forwarders, customs brokers, port authorities, terminal operators, longshoremen, drayage companies, warehouses, and rail and highway carriers. Import warehouses are highly dependent on the success of those relationships, all of which affect their ability to conduct business, the study noted. But communications often leave a lot to be desired. "Steamship lines often won't tell them what's coming into a warehouse until after it's off-loaded," says Maltz.
Sorting things out
Right now, the "inland ports" movement is still in the early stages. But if demand for their services starts to grow, importers are likely to begin calling for some changes to current operating procedures. In particular, they might start demanding adjustments in the way in which ships are loaded overseas, says Sara Clark, who wrote a thesis paper on inland ports and is now multimodal transportation planning team leader at Kansas City-based TranSystems, a transportation consulting company.
Today, products are typically loaded onto ships as quickly as possible and in no particular order. But if companies want to offload containers at the port of entry directly onto trains bound for Kansas City or Dallas, that practice will no longer suffice. Instead, the goods will have to be pre-sorted by geographic destination far back in the manufacturing stream.
"I don't know of any ocean liners doing that [pre-sorting] right now, but I think there could be a trend toward that in the future," says Clark. She notes that promoting the practice will be more a question of weaning service providers from entrenched habits than of resources. Labor is both inexpensive and plentiful in foreign ports, and the space is available to expand forwarding operations if pre-sorting becomes commonplace. What's needed now, she says, is for major shippers to step up their demands that products be staged to move directly to their DCs.
It’s getting a little easier to find warehouse space in the U.S., as the frantic construction pace of recent years declined to pre-pandemic levels in the fourth quarter of 2024, in line with rising vacancies, according to a report from real estate firm Colliers.
Those trends played out as the gap between new building supply and tenants’ demand narrowed during 2024, the firm said in its “U.S. Industrial Market Outlook Report / Q4 2024.” By the numbers, developers delivered 400 million square feet for the year, 34% below the record 607 million square feet completed in 2023. And net absorption, a key measure of demand, declined by 27%, to 168 million square feet.
Consequently, the U.S. industrial vacancy rate rose by 126 basis points, to 6.8%, as construction activity normalized at year-end to pre-pandemic levels of below 300 million square feet. With supply and demand nearing equilibrium in 2025, the vacancy rate is expected to peak at around 7% before starting to fall again.
Thanks to those market conditions, renters of warehouse space should begin to see some relief from the steep rent hikes they’re seen in recent years. According to Colliers, rent growth decelerated in 2024 after nine consecutive quarters of year-over-year increases surpassing 10%. Average warehouse and distribution rents rose by 5% to $10.12/SF triple net, and rents in some markets actually declined following a period of unprecedented growth when increases often exceeded 25% year-over-year. As the market adjusts, rents are projected to stabilize in 2025, rising between 2% and 5%, in line with historical averages.
In 2024, there were 125 new occupancies of 500,000 square feet or more, led by third-party logistics (3PL) providers, followed by manufacturing companies. Demand peaked in the fourth quarter at 53 million square feet, while the first quarter had the lowest activity at 28 million square feet — the lowest quarterly tally since 2012.
In its economic outlook for the future, Colliers said the U.S. economy remains strong by most measures; with low unemployment, consumer spending surpassing expectations, positive GDP growth, and signs of improvement in manufacturing. However businesses still face challenges including persistent inflation, the lowest hiring rate since 2010, and uncertainties surrounding tariffs, migration, and policies introduced by the new Trump Administration.
Both shippers and carriers feel growing urgency for the logistics industry to agree on a common standard for key performance indicators (KPIs), as the sector’s benchmarks have continued to evolve since the COVID-19 pandemic, according to research from freight brokerage RXO.
The feeling is nearly universal, with 87% of shippers and 90% of carriers agreeing that there should be set KPI industry standards, up from 78% and 74% respectively in 2022, according to results from “The Logistics Professional’s Guide to KPIs,” an RXO research study conducted in collaboration with third-party research firm Qualtrics.
"Managing supply chain data is incredibly important, but it’s not easy. What technology to use, which metrics to track, where to set benchmarks, how to leverage data to drive action – modern logistics professionals grapple with all these challenges,” Ben Steffes, VP of Solutions & Strategy at RXO, said in a release.
Additional results from the survey showed that shippers are more data-driven than they were in the past; 86% of shippers reference their logistics KPIs at least weekly (up from 79% in 2022), and 45% of shippers reference them daily (up from 32% in 2022).
Despite that sharpened focus, performance benchmarks have become slightly more lenient, the survey showed. Industry performance standards for core transportation KPIs—such as on-time performance, payables, and tender acceptance—are generally consistent with 2022, but the underlying data shows a tendency to be a bit more forgiving, RXO said.
One solution is to be a shipper-of-choice for your chosen carriers. That strategy can enable better rates and more capacity, as RXO found 95% of carriers said inefficient shipping practices impact the rates they give to shippers, and 99% of carriers take a shipper’s KPI expectations into account before agreeing to move a shipment.
“KPIs are essential for effective supply chain management and continuous improvement, and they’re always evolving,” Steffes said. “Shifts in consumer demand and an influx of technology are driving this change, in combination with the dynamic and fragmented nature of the freight market. To optimize performance, businesses need consistent measurement and reporting. We released this study to help shippers and carriers benchmark their standards against how their peers approach KPIs today.”
Supply chain technology firm Manhattan Associates, which is known for its “tier one” warehouse, transportation, and labor management software products, says that CEO Eddie Capel will retire tomorrow after 25 total years at the California company, including 12 as its top executive.
Capel originally joined Manhattan in 2000, and, after serving in various operations and technology roles, became its chief operating officer (COO) in 2011 and its president and CEO in 2013.
He will continue to serve Manhattan in the role of Executive Vice-Chairman of the Board, assisting with the CEO transition and special projects. Capel will be succeeded in the corner officer by Eric Clark, who has been serving as CEO of NTT Data North America, the U.S. arm of the Japan-based tech services firm.
Texas-based NTT Data North America says its services include business and technology consulting, data and artificial intelligence, and industry solutions, as well as the development, implementation and management of applications, infrastructure, and connectivity.
Clark comes to his new role after joining NTT in 2018 and becoming CEO in 2022. Earlier in his career, he had held senior leadership positions with ServiceNow, Dell, Hewlett Packard Enterprise, Arthur Andersen Business Consulting, Ernst & Young and Bank of America.
“This is an ideal time for a CEO transition,” Capel said in a release. “Our company is in an exceptionally strong position strategically, competitively, operationally and financially. I want to thank our management team and our entire workforce, which is second to none, for their hard work and dedication to our mission of advancing global commerce through advanced technology. I look forward to working closely with Eric and continuing to contribute to our product vision, interacting with our customers and partners, and ensuring the growth and success of Manhattan Associates.”
The Japanese logistics company SG Holdings today announced its acquisition of Morrison Express, a Taipei, Taiwan-based global freight forwarding and logistics service provider specializing in semiconductor and high-tech logistics.
The deal will “significantly” expand SG’s Asian market presence and strengthen its position in specialized logistics services, the Kyoto-based company said.
According to SG, there is minimal overlap between the two firms, as Morrison Express’ strength in air freight and high-tech verticals in its freight forwarding business will be complementary with SG’s freight forwarding arm, EFL Global, which focuses on ocean freight forwarding and commercial verticals like apparel and daily sundries.
In addition, the combined entity offers an expanded geographic reach, which will support closer proximity to customers and ensure more responsive support and service delivery. SG said its customers will benefit from end-to-end supply chain solutions spanning air, ocean, rail, and road freight, complemented by tailored solutions that leverage Morrison's strong supplier and partner relationships in the technology sector.
The growth of electric vehicles (EVs) is likely to stagnate in 2025 due to headwinds created by uncertainty about the future of federal EV incentives, possible tariffs on both EV and gasoline-powered vehicles, relaxed federal emissions and mileage standards, and ongoing challenges with the public charging network, according to a report from J.D. Power.
Specifically, J.D. Power projects that total EV retail share will hold steady in 2025 at 9.1% of the market, or 1.2 million vehicles sold. Longer term, the new forecast calls for the EV market to reach 26% retail share by 2030, which is approximately half of the market share the Biden administration targeted in its climate agenda.
A major reason for that flat result will be the Trump Administration’s intention to end the $7,500 federal Clean Vehicle Tax Credit, which has played a major role in incentivizing current EV owners to purchase or lease an EV, J.D. Power says.
Even as EV manufacturers and consumers adjust to those new dynamics, the electric car market will continue to change under their feet. Whereas the early days of the EV market were defined by premium segment vehicles, that growth trend has now shifted to the mass market segment where franchise EV sales rose 58% in 2024, reaching a total of 376,000 units. That success came after mainstream franchise EV sales accounted for just 0.8% of total EV market share in 2021. In 2024, that number rose to 2.9%, as EVs from the likes of Chevrolet, Ford, Honda, Hyundai and Kia surged in popularity, the report said.
This growth in the mass market segment—along with federal and state incentives—has also helped make EVs cheaper than comparable gas-powered vehicles, J.D. Power found. On average, at the end of 2024, the average cost of a battery-electric vehicle (BEV) was $44,400, which is $1,000 less than a comparable gas-powered vehicle, inclusive of hybrids and plugin hybrids. While that balance may change if federal tax incentives are removed, the trend toward EVs being a lower cost option has correlated with increases in sales, which will be an important factor for manufacturers to consider as they confront the current marketplace.