2

Agenda

• Introductory Questions
• Understanding Trends in Global Logistics
– Origin Points
– Sea Ports
– Intermodal & Inland Ports
 What are they
 Why are they important
• Why do You Care- What is the Supply Chain Network
Impact for your DC Network
– Cost Drivers for Site Location
• Q&A throughout

3

Questions

• How many of you work for
– Manufacturer
– Consultant
– 3PL Provider/Corporate Logistician/Transportation Provider
– Economic Development Agency
– Industrial Brokers or Developer
– Student or Professor
– Press
– Don’t know?
• How many of you live within 150 miles of a Port city?
• Who has visited a Port or Intermodal Hub?
• What are the major challenges to Global Trade today and in
the future?
4

Cross that Bridge When We Come To It

5

NASCAR Hans Device Prototype

6

Critical Parts Distribution

7

Ultimate in Green Power

Source: Tim Feemster

8

Trends in Logistics

Supply Chain Response
• Move closer to local markets and
ports
Supply Chain Challenges • Reduce transportation costs- Bid
• Volatile Energy Costs transportation rates, Increase
• Transport Capacity- trucks & drivers reliance on less expensive water
and rail intermodal
• Government Regulation- black box
• Maximize supply chain efficiency
• Chassis Changes and mitigate interruption risk
• International Competition & Sourcing • Outsource to third-party providers
• Sustainability
• Optimize warehouse operations
• Tepid Consumer Spending in US
• Update Rent vs. Own calculations
• Challenging Global Economy
• Credit
• Utilize cost-saving technology and
energy practices
• Slower speeds to market
• Green initiatives- LEED,
• Lease Accounting Rules sustainability, SmartWay carriers
• Blend & extend leases
• Communicate & Collaborate

9

Relative Cost for Goods Movement

Air
$$$$$$

International Supply Chain

Ship Rail Truckload Less than Parcel
$ $$ $$$ Truckload $$$$$
$$$$

10

Global Port Rankings- 2010 Data
(TEUs)
% Change
from 2009

14.1% Shanghai- China 1.
4.3% Singapore- Singapore 2.
17.1% Hong Kong- China 3.
12.2% Shenzhen- China 4.
8.1% LA/LB- US 5.
25.1% Ningbo- China 6.
19.3% Busan- S Korea 7.
23.3% Guangzhou- China 8.
12.6% Qingdao- China 9.
12.4% Dubai- UAE 10.
13.7% Rotterdam- Netherlands 11.
Source: Kaiji Press

11

Panama Canal- post expansion

14,000 TEU’s
12

NA Port Volumes- 2010 Actual

Vs.2010
16.0%

23.6%

16.0%

36.8%

19.9% West Coast

16.8%

13.6%
East Coast
0.8%

8.6%

15.5%

-0.4%

7.3%

11.7%

27.2% Source: Grubb & Ellis Research &
American Association of Port Authorities
29.5%

Down Vs. 2009

Up Vs. 2009

13

Weekly US Diesel Prices- Average all
Types per Gallon thru 10/24/2011
July 14, 2008
$3.819 $2.017 $2.949 $3.892
$4.764

$4.124

Source: Energy Information Administration 2011 YTD Avg. $3.828
©Grubb & Ellis Company Confidential 2008 Avg. $3.803
14

Fuel Impact on Warehouse Network

Source: Dr. David Simchi-Levi, MIT, March 2008
15

Port Volume Shift- 2006 thru July 2011

East
West

Gulf

Source: Grubb & Ellis Research & American Association of Port Authorities; July 2011 actual

16

US Population- W 23%; E 77%

23% 77%

2009 Population Population Percent
Pacific 58,684,030 19%
Mountain 12,884,051 4% East
Texas/Great Plains 43,539,381 14% 77% Grubb & Ellis Global Logistics Coverage
Great Lakes/Ohio Valley 56,080,995 18%
Mid-Atlantic/Northeast 64,287,713 21% West
Southeast 71,530,380 23% 23%
US 307,006,550 ©Grubb & Ellis Company Confidential
17

International Containers 2011- thru
week 42, 10/22/2011

Source: TTX Company ©Grubb & Ellis Company Confidential
18

Logistics Cost Breakdown

60%
50.3%
50%

40%

30% 21.8%

20% 17.3%
9.5% 7.8% 4.3%
10% 2.7% 2.2% 1.2%

0%
Transportation Inventory Labor Customer Rent Admin Supplies Other
Service
Source: Establish, Inc/HWD & Grubb & Ellis Global Logistics
19

Project Soccer- 1,000,000 sq ft site

• Continental officials say South Carolina won the plant
because of it is a right-to-work state, making unionization
more difficult; has lower labor costs; and that the Sumter
site offered excellent access to the port of Charleston, rail
and highway grids.
• “The two most significant factors are labor and logistics,”
said Tim Rogers, chief financial officer for Continental Tire
of the Americas, in an interview with The State, South
Carolina’s largest newspaper. “Those are the two biggest
costs.”
• The site will employ 1,600 people when in full operation.

20

Intermodal

• A system with a combination of various modes of transport
on a single shipment

21

Let’s Work Together on This

22

Why do We Care about Inland Ports

• As Economic/Real Estate Development, Distribution, and
Real Estate professionals, understanding the Global Supply
Chain is “fun” but we need to know
– Where does the container come to rest
 Local destination- at or near the Port
 Non-local destination- via rail or truck to the inland Port
– This is where vertical happens- at the end of the “land bridge”

23

Alliance, TX in the Beginning

Source: Hillwood Properties

24

Alliance Today- 30,000,000 sq ft of
industrial

Source: Hillwood Properties

25

Intermodal Zones of Savings

Two Distribution Centers Under
Consideration:
Site A Site A – Within 5 miles of hub
Hub Site B -- 20 miles from hub
Annual inbound intermodal shipments:
2,000
Site B
x Difference in drayage costs per unit
(A-B): $90
Annual inbound savings when located
closer to Intermodal hub:
$180,000, $1.80/sq ft on 100,000 ft

Source: Grubb & Ellis Company Global Logistics
26

Don’t forget- Alternative Site Format
FTZ Example

3,000 receipts inbound
per yr. MPF $ 945,000
Pre-Foreign-Trade Zone
Shipments into Site Assumptions:

In a single year an FTZ importer can 1. 1,000 international containers a year into the
facility per year
save $ 919,780 MPF Fees 2 Container value $450,000
3 3 BOLs per container; $150,000 value per BOL
One entry filed at
End of week. MPF $485
or $25,220 per yr.

Foreign-Trade Zone
Shipments into commerce with weekly entry.
27

Top 10 Site Selection Criteria

1. Transportation costs – both inbound and outbound
2. Logistics infrastructure – highways, intermodal, rail,
FTZ
3. Labor costs
4. Labor availability
5. Business climate- is there love
6. Rent /lease terms/ownership
7. Taxes & incentives
8. Utility rates
9. CAM charges
10. Access to public transportation
28

What does the Future Hold?

• Transportation & port infrastructures will be more gridlocked
• Fuel prices will remain volatile & but on average increasing
• Customers will expect faster and more predictable lead
times
• Global trade activity will grow, but so will its costs and
complexities
• There will be more sources of financial and operational risk
• The rules for lease accounting may change the
Rent vs. Buy decision in some companies
• Sustainability initiatives will have greater influence on
supply chain networks and facility construction
• Ageing populations will create labor constraints in Logistics
• Mobile commerce will explode
29

Your Container is “On the Water”

Tim Feemster
Sr. Vice President
Director of Global Logistics
Grubb & Ellis Company
972-450-3225 O
214-693-7689 C
tim.feemster@grubb-ellis.com


Logistsics Trends & Network Strategies

More Related Content

Featured (20)

Logistsics Trends & Network Strategies