Susan Lacefield has been working for supply chain publications since 1999. Before joining DC VELOCITY, she was an associate editor for Supply Chain Management Review and wrote for Logistics Management magazine. She holds a master's degree in English.
If you knew next to nothing about the United States and were handed a map and asked to pick one state to locate a distribution center in, chances are you'd choose Missouri. That's because the state is close to the geographic center of the country. Simply put: It's in the middle of it all.
"It's just the perfect location," says Billy Cartwright, senior director of operations for Con-way Truckload, which has been located in Joplin, Mo., since 1951.
But it's not just about Missouri's central location. The state offers other logistics-related advantages as well. What follows are four additional reasons why companies should consider locating a DC in Missouri (and one reason why they might want to take a pass).
1. Kick-ass infrastructure. It's not enough for a distribution center to be centrally located. Companies must also be able to move goods in and out easily. "You have to have well-connected, high-quality infrastructure, preferably with multiple transportation modes," says Chris Chung, CEO of the economic development organization Missouri Partnership.
Missouri certainly has that. The state boasts one of the largest road systems in the U.S., containing no fewer than seven major interstates: I-70, I-64, I-55, I-44, I-35, I-25, and I-49. Trucks traveling those highways can reach their destinations quickly: The majority of the country is within a two- to three-day drive of Missouri, and 50 percent of the country's manufacturers are only a day's drive away.
Furthermore, the state is served by all seven Class I railroads, offers rail access to both the East and West coasts, and houses not one but two of the country's largest rail centers. According to the Association of American Railroads, Kansas City is the second largest rail center by number of railcars, and St. Louis is the third largest.
The state also offers robust intermodal connections—a plus for companies looking to broaden their transportation options beyond trucking. For example, there are two intermodal facilities near Kansas City that are currently undergoing expansion: a Norfolk Southern facility run by the Rockefeller Group and the CenterPoint-Kansas City Southern Intermodal Center.
As for air-freight options, both the Kansas City and St. Louis airports offer international service, and the Springfield airport has a U.S. Customs port of entry. From Missouri, air freight can reach most cities in the United States and Canada in three hours or less, according to Chung.
While the landlocked state has no seaports, its inland waterways are hard to match, as Missouri is served by both the Missouri and the Mississippi rivers. "Something not every state has," says Chung dryly.
The Port of Metropolitan St. Louis is the second largest inland port by tonnage and moves 33 million tons of mostly bulk commodities annually. The St. Louis port is also the northernmost "ice free" port on the Mississippi River.
"All four modes are here, with not only great physical infrastructure but also the services themselves to support the movement of a distribution center's freight in and out," says Chris Gutierrez, president of KC SmartPort, an economic development organization that focuses on the Kansas City area.
These services include not only offices and regional facilities for all major third-party logistics service providers, warehouse operators, and motor carriers but also the headquarters of several key logistics companies. For example, Joplin, Mo., is the home of Con-way Truckload; Kansas City Southern Railway is located in Kansas City; and the major 3PL Graybar is headquartered in St. Louis.
All of this adds up to what CNBC rates as the fifth best transportation infrastructure in the country.
2. A business-friendly environment. Missouri also boasts a tax environment that's favorable to business. The state has a low personal property tax and no inventory tax, according to Chung. Forbes magazine ranks Missouri as having the ninth-best business regulatory environment in the country, and the Tax Foundation rated the state seventh best in terms of corporate taxes. According to Pollina Corporate Real Estate Inc., which compiles an annual ranking of states based on how well they've positioned themselves to create and retain jobs, Missouri is the ninth most "pro-business" state in the country.
"The state aggressively rewards companies that invest in the state and create jobs," says Chung.
On top of that, the state has low energy costs. According to Chung, it offers some of the lowest industrial electricity prices in the country, which makes it particularly attractive to companies needing cold storage facilities.
The one area where Missouri can't match its Midwest neighbors is tax abatement. Illinois, for example, offers a property tax reduction or exemption to DCs that locate in one of the state's large distribution parks. There are few such facilities in Missouri where companies can receive similar breaks, says Geoffrey R. Orf, senior director for the industrial real estate firm Cushman & Wakefield in St. Louis.
3. A seasoned workforce. With its workforce of 3 million, Missouri has never had a problem providing the labor needed to staff distribution centers, according to Chung. "We are able to serve DCs that just need a dozen people and larger DCs that may need hundreds or thousands," he says.
Missouri's workforce not only has the numbers, but also the skills. Schools such as Missouri State, the University of Missouri, and St. Louis University all have bachelor's and in some cases, master's degree programs in logistics or supply chain management. The state also has 19 community colleges that work regularly with industry to develop the skills businesses seek, according to Chung.
There are even supply chain education programs that reach down into the high schools. KC SmartPort, for example, works with a program called Prep-KC to expose students, guidance counselors, and teachers to career opportunities in supply chain and logistics. Transportation and supply chain professionals are brought into the school to talk about the field, and students can take distribution and logistics classes at the high school for college credit.
On top of that, the Department of Economic Development runs a statewide training program known as Missouri Works. This incentive program is designed to provide training resources and assistance to businesses in order to help them cut training costs and boost productivity.
Occasionally, companies evaluating potential DC sites in Missouri will express concern about the state's strong union presence, says Orf. Those worries are misplaced, he says. Studies have found that worker productivity levels in Missouri tend to be higher than in states with a smaller union presence, according to Orf. "While the wage rate might be higher here than in other Midwest states," he says, "the productivity level of our warehousing and transportation workers is also higher."
Part of the explanation for those high productivity levels may be cultural. Many speak of Missouri's "Midwest work ethic," which can be seen not only in day-to-day operations but also in the face of disaster. As an example, Cartwright of Con-way Truckload cites the way the community of Joplin pulled together to rebuild the city after it was flattened by tornadoes in 2011. "I've been in a couple of tornadoes," says Cartwright. "It's always been interesting how the community bonds together and helps each other. I guess that's part of the feeling of Midwest fellowship."
4. Ability to serve diverse types of businesses. Unlike many other Midwestern states, Missouri's economy isn't dominated by a single industry—think Michigan and the automotive business or Kansas and aircraft manufacturing. Instead, Missouri serves a varied array of businesses. According to Chung, the state's mix of businesses puts it in the top five in the country where diversity is concerned. "As a result, we are able to respond to and accommodate the needs of many types of companies, from retail to industrial products to manufacturing to food companies," he says.
In addition, the state has a wide range of locations that can meet the needs of a distribution center. Kansas City and St. Louis, the state's two large urban areas, provide a large population base and extensive transportation infrastructure. But there are also "second-tier" locations (communities with populations of 20,000 or more) scattered across the state that can provide the staffing levels needed for a DC, says Chung. "All are located on top of at least one major interstate," he says.
As examples, he cites Springfield and Joplin, located in the southwest corner of the state; Columbia and Jefferson City in the middle of the state; Sikeston in the southeast; and Hannibal in the northeast along the Mississippi River.
"With a couple of minor exceptions, almost all communities in the state would be able to provide the workforce needed as well as access to the necessary physical infrastructure and transportation modes," says Chung.
MAIN DISADVANTAGE: BEING IN THE FLYOVER
It would be unrealistic to claim that every distribution network should have a facility in Missouri. Indeed, companies looking to locate close to the country's major population centers, particularly those on the East and West coasts, might want to look elsewhere.
KC SmartPort's Gutierrez puts it this way: Missouri works best for companies that operate a distribution network with an odd number of DCs. Think about it: If you plan to serve the entire continental U.S. from a single distribution center, it makes sense to locate it in the middle of the country. If you want to have two distribution centers, however, it makes more sense to locate one on each coast. If you raise that number to three, you're back to needing a DC in the middle of the country. Go up to four, and the equation once again shifts.
But if a central location is key to your distribution strategy, it's a good bet Missouri will wind up on your short list.
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.