WAREHOUSING & DISTRIBUTION 2006 - Retailers drive distribution needs; Seaport activity abounds

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By Karen E. Thuermer, AJOTThe warehousing and distribution business is soaring. According to a recent survey by the International Warehouse Logistics Association (IWLA), IWLA members dramatically increased staff, square footage and temporary workforce payrolls in 2005. The trend is expected to continue in 2006 with 55% of IWLA members adding warehouse space, including 23% who plan to increase capacity by 10% or more.
Much of the demand is the result of imports from China, most of which are arriving by sea. Consequently, seaports that accommodate large containerships are attractive for distribution center (DC) development. Requiring that these DCs be built are steamship line customers: mega retailers like Wal-Mart, Target, Home Depot and Lowes that continue to develop import distribution centers near key seaports.
“The need for import distribution centers started at Los Angles/Long Beach and New York/New Jersey, locations long established for imports,” says Steve Callaway, senior vice president and director of customer development for AMB Property Corp. “But after 9/11 and the longshoreman’s strike on the West Coast several years ago, the strategy has moved to diversify at other locations such as Houston, Savannah, Jacksonville, and Norfolk.”
The reason: companies that import goods in bulk need a distribution center close to the port for when containers land. If particular ports are challenged by terrorism attacks or labor strikes, a slow down in import flows can severely impact keeping retail stores stocked with merchandise, and ultimately dramatically effect the corporation’s bottom line.
“Fast In, Fast Out”Since time is money, retailers are also interested in developing DCs in locations that can quickly accommodate their needs. The most attractive are those with ready-to-develop sites and a close proximity to a deep-water seaport that also offers superb truck and rail access.
Commissioners at the Port of Savannah have worked hard to position the port to meet these needs. As a result, Savannah has earned the title: “America’s Retail Port.”
Savannah offers numerous affordable, construction-ready sites, and two interstate highways located close to port facilities. Over 100 trucking companies call the port. The port is also served by Two Class I railroads. Most significant, 41 ocean carriers with 14 weekly services include Savannah in their port rotations. Many of the services focus heavily on China and they choose Savannah as their “first-in” port on the US East Coast.
These and additional reasons led Swedish Retailer IKEA to locate its Southeastern Distribution Center in Savannah in December. The 1.7 million-square-foot facility is expected to be operational by summer 2007.
“As one of the fastest growing ports in the country, Savannah offers the long-term capacity, infrastructure and geography that we were seeking to complement our distribution presence in North America,” says Keith Keller, IKEA North America’s Distribution Services president. “A Savannah-based distribution center will help IKEA ensure our stores continue to offer well designed and functional home furnishings at affordable prices.”
The center will serve IKEA stores in Atlanta, GA.; Frisco, Texas; and Houston, Texas, with a future store under construction in Round Rock, Texas.
In September, Target also announced that it would locate its new two million-square-foot import warehouse in Savannah with a scheduled completion in Summer 2007.
The Port of Houston, the 6th largest port in the world, and one that is mostly associated with the petrochemical industry, is also experiencing an explosion of container traffic. The growth should continue as Phase I of construction of its Bayport Container and Cruise Terminal is completed in mid-2006.
Driving much of the container growth is Wal-Mart’s huge four-million square foot distribution center complex located in the Houston Ship Channel area in Chambers County—one of the largest import centers in the country. The Wal-Mart Distribution

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American Journal of Transportation