David Maloney has been a journalist for more than 35 years and is currently the group editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.
One of the promotional slogans the state of Ohio has used over the years is "Ohio, the heart of it all." Although it might not be quite what the sloganeers had in mind, the motto seems particularly apt from a logistics perspective. Centrally located in the nation's heartland, Ohio offers easy access to virtually all major markets on the eastern half of the continent.
"From a supply chain perspective, Ohio is ideally situated to reach the majority of the U.S. population and its businesses," says Art van Bodegraven, president of the Columbus-area supply chain consulting firm Van Bodegraven Associates. "Ohio also has a very business-friendly government structure," he adds.
Ohio's government has become more business-friendly than ever over the past six years. During his 2007-2011 term in office, former Gov. Ted Strickland eliminated over 250 state business regulations and revised another 1,800 in a bid to attract industry. He also streamlined business taxes, eliminating the corporate franchise and inventory taxes. On top of that, the governor used $100 million in federal stimulus money to invest in infrastructure, including a new intermodal hub in North Baltimore, Ohio, to handle goods moving via rail to and from Mid-Atlantic ports. The initiative is expected to save Ohio $70 million in highway maintenance and reduce logistics costs for Ohio companies by $350 million.
Under Strickland's leadership, Ohio's business climate jumped in the rankings from 38th in the nation to number 11. Those efforts have continued under Gov. John Kasich, who was sworn into office last year.
JOB ONE
Ohio's efforts to attract business have gone beyond regulatory and tax reform. The state has also made job creation a priority. To that end, it established JobsOhio early last year. (JobsOhio was privatized as a nonprofit entity in July of that year.) The agency has been given power by the state to negotiate incentives, grants, and other enticements to lure new business and to encourage growth in existing operations.
Significantly for the transportation and supply chain community, one area of focus is logistics. "The state government identified nine industry clusters that it felt was important to growth, and logistics is one of the nine," says Mark Patton, general manager of bio/health, information services, and logistics at JobsOhio. He says that manufacturing and logistics are tightly coupled in Ohio, and many companies are moving their operations back from China to Ohio as automation has reduced China's labor cost advantage. "They are finding it is more expensive to move products a long distance than to manufacture it here," Patton explains.
To meet expected growth in manufacturing, transportation, and distribution, the state has committed to supporting logistics infrastructure in several key areas. One of those areas is its extensive interstate highway system, which allows easy reach to both U.S. and Canadian commercial and population centers. Some 60 percent of U.S. citizens and 50 percent of Canadians live within a 600-mile radius of the state.
Ohio also offers easy rail access. Containers arriving at the Port of Norfolk (Virginia) can reach Ohio within a day by rail. The state also boasts 13 intermodal terminals. That compares favorably with California, which has 10 intermodal terminals in a much larger geographic region. In addition to rail, shippers of bulk products have the option of moving goods via Lake Erie to the north and along the Ohio River, which makes up the state's southern border.
As for air service, cargo handling facilities are available at the state's commercial airports as well as the Rickenbacker Inland Port in Columbus, a freight-only airpark. And the field is about to get bigger: The former DHL hub in Wilmington, Ohio, is now being redeveloped as a logistics air hub. After DHL pulled out in January 2009, the company donated the airport and adjacent buildings to the Clinton County Port Authority. Last year, the county hired real estate services firm Jones Lang LaSalle to develop a master plan for its use.
"The plan calls for the airpark to become a multi-use, aviation-based business park. Among the uses is as an international air freight center," says David Lotterer, a senior associate with Jones Lang LaSalle. "If you're going to bring in products by air and then distribute by land, it is an excellent site."
HOME GROWN
Just as Ohio is a convenient location for logistics and distribution, it is well situated for businesses that serve the supply chain community. For example, Intelligrated, one of the world's largest automated material handling systems manufacturers, is located in Mason, Ohio, just a stone's throw from Cincinnati. Company officials say the Midwest location makes it easy to ship products to the majority of its customers as well as to visit their sites.
"Clearly, having many of our customers nearby is a great advantage," says Chris Cole, Intelligrated's CEO. Key Intelligrated customers in Ohio include Anheuser-Busch, Big Lots, Cardinal Health, Georgia Pacific, Kraft, PepsiCo, Procter & Gamble, and Staples, to name just a few.
In 2009, Intelligrated partnered with the Ohio Department of Development and JobsOhio, receiving a $24 million incentive package to help the company expand. In return, Intelligrated promised to increase its workforce from 537 to 804 by the end of 2012. The company actually surpassed that goal in 2011, and it continues to open new slots, many of which are high-paying engineering and technical positions.
This past January, Intelligrated broke ground on a new 108,000-square-foot facility at its Mason headquarters to accommodate its engineering, customer service, research and development, and testing facilities - in all, 450 workers will be housed there.
"The state has been great to work with, including the various port authorities. And the city of Mason has also been a tremendous partner in helping our company to grow," says Cole. "We have seen that in an era when many have doubted America's manufacturing abilities, we have proven that a quality product can be made right here at home."
Among the reasons why companies like Intelligrated choose to locate or expand in Ohio is the region's talent pool.
"We have a very well-educated workforce with a strong work ethic," says Van Bodegraven. "Ohio is good at developing job skills. People can start learning about logistics in high school and end up with a Ph.D. in logistics at Ohio State."
John Ness, president of ODW Logistics, concurs. "People here have a Midwestern work ethic that is to 'promise your best, and deliver [on] your promise,'" he says.
ODW, a Columbus-based third-party logistics service provider, operates from 16 locations in nine states, with half of its operations in Ohio. Ness cites Ohio's labor pool, available and affordable real estate, low labor costs, freight access, and favorable business climate as major reasons why logistics has a strong foothold in the state.
In addition to his duties at ODW, Ness serves as co-chair of the Columbus Regional Logistics Council, a group formed to promote growth in the region's logistics capabilities. Recently, the council has been working with Columbus State Community College to retrain dislocated workers for jobs in logistics. Administered through the Central Ohio Workforce Commission, the training program has utilized a federal grant of $4.6 million to graduate over 600 logistics students over the past two years. It also has a 74-percent job placement rate for its grads.
DEEP ROOTS IN THE BUCKEYE STATE
Another material handling equipment maker with deep roots in the Buckeye State is Crown Equipment Corp. Since 1956, Crown has shipped lift trucks made at its facilities in New Bremen, north of Dayton, to customers worldwide.
Like Intelligrated, Crown has partnered with the state on a number of initiatives. Jim Mozer, Crown's senior vice president, points to fuel cell development as an example. Ohio has awarded Crown Equipment two $1 million grants for the development and testing of fuel cell-powered forklifts, he says. With these funds, Crown has built more than 500 new fuel cell forklifts and reconfigured many of its existing vehicles to operate with fuel cells.
During the past three years, Crown has also received more than $250,000 in training grants from the state. In return, Crown has purchased and revitalized empty facilities within Ohio. Last year, it acquired a vacant 75,000-square-foot facility in Minster to house its wire harness assembly operations. Crown also revitalized the former Huffy bicycle manufacturing site in Celina, turning it into a vibrant 850,000-square-foot manufacturing facility for lift truck products.
"Ohio has been a key part of Crown's growth as a global material handling company, and I hope that state officials would say the same thing about Crown's role in Ohio's emergence as an international logistics hub," says Mozer. "The supply chain and logistics community in the state has provided a valuable ecosystem of resources for our customers. We've found that Ohio is an excellent place for us to do business."
Jeremy Van Puffelen grew up in a family-owned contract warehousing business and is now president of that firm, Prism Logistics. As a third-party logistics service provider (3PL), Prism operates a network of more than 2 million square feet of warehouse space in Northern California, serving clients in the consumer packaged goods (CPG), food and beverage, retail, and manufacturing sectors.
During his 21 years working at the family firm, Van Puffelen has taken on many of the jobs that are part of running a warehousing business, including custodial functions, operations, facilities management, business development, customer service, executive leadership, and team building. Since 2021, he has also served on the board of directors of the International Warehouse Logistics Association (IWLA), a trade organization for contract warehousing and logistics service providers.
Q: How would you describe the current state of the contract warehouse industry?
A: I think the current state of the industry is strong. For those that have been focused on building good client relationships over the years, I think it’s a really exciting time. Coming out of all the challenges of the past few years, I think there’s a lot of opportunity for growth and deeper partnerships. It’s fun to see the automation and AI (artificial intelligence) integration starting to evolve [in a way that’s] similar to what we saw with WMS (warehouse management systems) in the early 2000s.
Q: You are now president of your family firm. Is it an advantage having grown up in the business as opposed to working elsewhere?
A: I definitely believe it was an advantage growing up in the business. Whether it’s working with family or someone else in the industry, there’s always an advantage when you have mentors[to guide] you. I’ve been blessed to have several mentors, some in the industry, others just in life, and I’m thankful that they were willing to mentor me and that I was willing to listen to them.
Q: What are the biggest challenges currently facing 3PLs, and how are you addressing them?
A: Labor and legislation are both tough right now. The two seem to have a lot to do with each other, and it can make it tough to find and retain people. So I think we’ll see more and more automation of processes industrywide.
Q: Third-party service providers often must handle a wide variety of products for a lot of different clients. Does this variety make it difficult to invest in automation and other new technologies?
A: It can make things more difficult when looking at certain automation, but it’s in the “difficult” that a lot of opportunities lie. It would be tough to find a single solution that fits every client’s needs, but there are always opportunities to improve in certain areas. It just takes a bit of vision and commitment, and a willingness to invest in your own long-term success.
Q: As a 3PL, what do you look for when selecting the clients you work with?
A: Quality relationships that will last a long time. When both parties are happy and working together in the same direction, everyone wins.
Q: You’ve been a board member of the International Warehouse Logistics Association since 2021. Why is your involvement with this organization important to you?
A: I think it’s important to understand what’s happening in the industry. IWLA is a great resource for staying up to date and getting a solid education when it comes to the latest logistics trends. I also think it’s important to give back and pass along what we’ve learned to those just getting started in the business. As important as it is to have a mentor, it’s just as important to mentor and help others.
“While there have been some signs of tightening in consumer spending, September’s numbers show consumers are willing to spend where they see value,” NRF Chief Economist Jack Kleinhenz said in a release. “September sales come amid the recent trend of payroll gains and other positive economic signs. Clearly, consumers continue to carry the economy, and conditions for the retail sector remain favorable as we move into the holiday season.”
The Census Bureau said overall retail sales in September were up 0.4% seasonally adjusted month over month and up 1.7% unadjusted year over year. That compared with increases of 0.1% month over month and 2.2% year over year in August.
Likewise, September’s core retail sales as defined by NRF — based on the Census data but excluding automobile dealers, gasoline stations and restaurants — were up 0.7% seasonally adjusted month over month and up 2.4% unadjusted year over year. NRF is now forecasting that 2024 holiday sales will increase between 2.5% and 3.5% over the same time last year.
Despite those upward trends, consumer resilience isn’t a free pass for retailers to underinvest in their stores by overlooking labor, customer experience tech, or digital transformation, several analysts warned.
"The 2024 holiday season offers more ‘normalcy’ for retailers with inflation cooling. Still, there is no doubt that consumers continue to seek value. Promotions in general will play a larger role in the 2024 holiday season. Retailers are dealing with shrinking shopper loyalties, a larger number of competitors across more channels – and, of course, a more dynamic landscape where prices are shifting more frequently to win over consumers who are looking for great deals,” Matt Pavich, senior director of strategy & innovation at pricing optimization solutions provider Revionics, said in an email.
Nikki Baird, VP of strategy & product at retail technology company Aptos, likewise said that retailers need to keep their focus on improving their value proposition and customer experience. “Retailers aren’t just competing with other retailers when it comes to consumers’ discretionary spending. If consumers feel like the shopping experience isn’t worth their time and effort, they are going to spend their money elsewhere. A trip to Italy, a dinner out, catching the latest Blake Lively and Ryan Reynolds films — there is no shortage of ways that consumers can spend their discretionary dollars,” she said.
Editor's note:This article was revised on October 18 to correct the attribution for a quote to Matt Pavich instead of Nikki Baird.
The market for environmentally friendly logistics services is expected to grow by nearly 8% between now and 2033, reaching a value of $2.8 billion, according to research from Custom Market Insights (CMI), released earlier this year.
The “green logistics services market” encompasses environmentally sustainable logistics practices aimed at reducing carbon emissions, minimizing waste, and improving energy efficiency throughout the supply chain, according to CMI. The market involves the use of eco-friendly transportation methods—such as electric and hybrid vehicles—as well as renewable energy-powered warehouses, and advanced technologies such as the Internet of Things (IoT) and artificial intelligence (AI) for optimizing logistics operations.
“Key components include transportation, warehousing, freight management, and supply chain solutions designed to meet regulatory standards and consumer demand for sustainability,” according to the report. “The market is driven by corporate social responsibility, technological advancements, and the increasing emphasis on achieving carbon neutrality in logistics operations.”
Major industry players include DHL Supply Chain, UPS, FedEx Corp., CEVA Logistics, XPO Logistics, Inc., and others focused on developing more sustainable logistics operations, according to the report.
The research measures the current market value of green logistics services at $1.4 billion, which is projected to rise at a compound annual growth rate (CAGR) of 7.8% through 2033.
The report highlights six underlying factors driving growth:
Regulatory Compliance: Governments worldwide are enforcing stricter environmental regulations, compelling companies to adopt green logistics practices to reduce carbon emissions and meet legal requirements.
Technological Advancements: Innovations in technology, such as IoT, AI, and blockchain, enhance the efficiency and sustainability of logistics operations. These technologies enable better tracking, optimization, and reduced energy consumption.
Consumer Demand for Sustainability: Increasing consumer awareness and preference for eco-friendly products drive companies to implement green logistics to align with market expectations and enhance their brand image.
Corporate Social Responsibility (CSR): Companies are prioritizing sustainability in their CSR strategies, leading to investments in green logistics solutions to reduce environmental impact and fulfill stakeholder expectations.
Expansion into Emerging Markets: There is significant potential for growth in emerging markets where the adoption of green logistics practices is still developing. Companies can capitalize on this by introducing sustainable solutions and technologies.
Development of Renewable Energy Solutions: Investing in renewable energy sources, such as solar-powered warehouses and electric vehicle fleets, presents an opportunity for companies to reduce operational costs and enhance sustainability, driving further market growth.
A real-time business is one that uses trusted, real-time data to enable people and systems to make real-time decisions, Peter Weill, the chairman of MIT’s Center for Information Systems Research (CISR), said at the “IFS Unleashed” show in Orlando.
By adopting that strategy, they gain three major capabilities, he said in a session titled “Becoming a Real-Time Business: Unlocking the Transformative Power of Digital, Data, and AI.” They are:
business model agility without needing a change management program to implement it
seamless digital customer journeys via self-service, automated, or assisted multi-product, multichannel experiences
thoughtful employee experiences enabled by technology empowered teams
And according to Weill, MIT’s studies show that adopting that real-time data stance is not restricted just to digital or tech-native businesses. Rather, it can produce successful results for companies in any sector that are able to apply the approach better than their immediate competitors.
“ExxonMobil is uniquely placed to understand the biggest opportunities in improving energy supply chains, from more accurate sales and operations planning, increased agility in field operations, effective management of enormous transportation networks and adapting quickly to complex regulatory environments,” John Sicard, Kinaxis CEO, said in a release.
Specifically, Kinaxis and ExxonMobil said they will focus on a supply and demand planning solution for the complicated fuel commodities market which has no industry-wide standard and which relies heavily on spreadsheets and other manual methods. The solution will enable integrated refinery-to-customer planning with timely data for the most accurate supply/demand planning, balancing and signaling.
The benefits of that approach could include automated data visibility, improved inventory management and terminal replenishment, and enhanced supply scenario planning that are expected to enable arbitrage opportunities and decrease supply costs.
And in the chemicals and lubricants space, the companies are developing an advanced planning solution that provides manufacturing and logistics constraints management coupled with scenario modelling and evaluation.
“Last year, we brought together all ExxonMobil supply chain activities and expertise into one centralized organization, creating one of the largest supply chain operations in the world, and through this identified critical solution gaps to enable our businesses to capture additional value,” said Staale Gjervik, supply chain president, ExxonMobil Global Services Company. “Collaborating with Kinaxis, a leading supply chain technology provider, is instrumental in providing solutions for a large and complex business like ours.”