Today's DC site selection teams want to know about a site's access to highways, and most of these teams are more concerned about labor supply and tax incentives than about transportation rates and availability.
Forty years ago, when you wanted to expand your distribution network and build a new DC, you didn't call an industrial real estate broker; you called a railroad. Most large companies shipped their product—whether it was boxes of cereal or rolls of carpet—by rail, which meant they needed access to a rail siding. The nation's railroads owned plenty of raw land, much of it located along the rail rights of way, thanks to government land grants handed out in the mid 1800s to encourage development in the nation's heartland. And the railroads were only too eager to sell off plots for nominal amounts in exchange for a contractual promise of so many carloads of freight. Some even threw in extras like extended rail sidings, rate discounts and extra services to snag a desirable account.
But those days have vanished with the steam locomotive. Today's DC site selection teams want to know about a site's access to highways, not railroads; very few distribution centers today even have rail sidings. And most of these teams are more concerned about labor supply and tax incentives than about transportation rates and availability. Unless they have experienced transportation professionals aboard, they're likely to see "transportation access" as just another entry on an extensive A to Z site-selection checklist that runs the gamut from "availability of labor" to "zoning requirements" (see sidebar).
site selection from A to Z
Your team thinks it's found a great DC location. But is it the right site for you? Here are some factors to consider:
Availability and cost of labor
Availability of industrial support services
Availability of special financing; i.e., industrial revenue bonds
Building restrictions, if any; i.e., height, setbacks, landscape requirements
Availability of community services; i.e., commercial, churches, medical
Educational facilities
EPA requirements; i.e., water retention
Fire codes/protection
Land or building availability and cost
Location and volume of customers to be served
Origin of products and materials flowing into warehouse
That would be a mistake. "Transportation access" is about much more than the distance to the nearest interstate highway, and a potential site's transportation profile deserves careful review. For most corporations, transportation still remains a big budget item—freight bills account for anywhere from 70 to 85 cents of every dollar spent on logistics, depending on the product mix.
With that kind of money at stake, you don't want to stumble. Yet all too often, that's what happens. Many times, for example, companies compare the pros and cons of potential locations by running a sophisticated network analysis model using current transportation rates to and from the sites. Sounds like a reasonable place to start, but there's one problem: Although the model will crank out a fairly accurate analysis of the situation as it stands today, it tells them nothing about how things will look in the future. For that, logistics and DC managers need to do some digging. Once they've gotten to the shortlist stage, managers should arrange to meet with the carriers serving the cities under consideration. Those meetings often yield some unexpected information and may even result in price breaks. It's important to keep in mind that almost any traffic lane represents some trucker's backhaul, and your ability to fill those empty trailers could prove a powerful bargaining chip.
Another trap for inexperienced site selection teams is failure to consider transportation equipment availability. Even cities that are widely considered to be major distribution points and boast service from a large number of carriers may be plagued by equipment shortages. That's particularly true if the local DCs handle large volumes of products that originate offshore and are hauled to the cities in ocean containers rather than trailers, creating an imbalance between the number of trucks going out and the number coming in. Analyzing the market dynamics in advance could keep you from signing a contract you'll live to regret. It could also give you more clout when negotiating rates if you can demonstrate that your inbound traffic will help correct that imbalance.
In the end, of course, the decision will hinge on more than transportation. Real estate, environmental, labor, community and other site location factors must be brought to bear on the choice. And it would be foolhardy not to investigate tax structures and zoning regulations. But keep in mind that in the final analysis, it's all about getting your products into the facility and then on out to your customers.
States across the Southeast woke up today to find that the immediate weather impacts from Hurricane Helene are done, but the impacts to people, businesses, and the supply chain continue to be a major headache, according to Everstream Analytics.
The primary problem is the collection of massive power outages caused by the storm’s punishing winds and rainfall, now affecting some 2 million customers across the Southeast region of the U.S.
One organization working to rush help to affected regions since the storm hit Florida’s western coast on Thursday night is the American Logistics Aid Network (ALAN). As it does after most serious storms, the group continues to marshal donated resources from supply chain service providers in order to store, stage, and deliver help where it’s needed.
Support for recovery efforts is coming from a massive injection of federal aid, since the White House declared states of emergency last week for Alabama, Florida, Georgia, North Carolina, and South Carolina. Affected states are also supporting the rush of materials to needed zones by suspending transportation requirement such as certain licensing agreements, fuel taxes, weight restrictions, and hours of service caps, ALAN said.
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
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.
As the hours tick down toward a “seemingly imminent” strike by East Coast and Gulf Coast dockworkers, experts are warning that the impacts of that move would mushroom well-beyond the actual strike locations, causing prevalent shipping delays, container ship congestion, port congestion on West coast ports, and stranded freight.
However, a strike now seems “nearly unavoidable,” as no bargaining sessions are scheduled prior to the September 30 contract expiration between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) in their negotiations over wages and automation, according to the transportation law firm Scopelitis, Garvin, Light, Hanson & Feary.
The facilities affected would include some 45,000 port workers at 36 locations, including high-volume U.S. ports from Boston, New York / New Jersey, and Norfolk, to Savannah and Charleston, and down to New Orleans and Houston. With such widespread geography, a strike would likely lead to congestion from diverted traffic, as well as knock-on effects include the potential risk of increased freight rates and costly charges such as demurrage, detention, per diem, and dwell time fees on containers that may be slowed due to the congestion, according to an analysis by another transportation and logistics sector law firm, Benesch.
The weight of those combined blows means that many companies are already planning ways to minimize damage and recover quickly from the event. According to Scopelitis’ advice, mitigation measures could include: preparing for congestion on West coast ports, taking advantage of intermodal ground transportation where possible, looking for alternatives including air transport when necessary for urgent delivery, delaying shipping from East and Gulf coast ports until after the strike, and budgeting for increased freight and container fees.
Additional advice on softening the blow of a potential coastwide strike came from John Donigian, senior director of supply chain strategy at Moody’s. In a statement, he named six supply chain strategies for companies to consider: expedite certain shipments, reallocate existing inventory strategically, lock in alternative capacity with trucking and rail providers , communicate transparently with stakeholders to set realistic expectations for delivery timelines, shift sourcing to regional suppliers if possible, and utilize drop shipping to maintain sales.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.