Boasting prime locations near efficient transportation infrastructures, Central New Jersey and Pennsylvania's Lehigh Valley were born to run distribution centers.
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.
As delivery windows get tighter and transportation costs soar, it becomes increasingly important to maintain a distribution center or warehouse close to your customers. For this reason, more and more companies are finding it necessary to establish a distribution center in the densely populated Northeast.
For the past year, DC Velocity has been looking at logistics hubs or "clusters"—those cities or regions that attract both logistics service providers and the logistics operations of manufacturers, retailers, and distributors. The past two articles have focused on emerging logistics hubs, locations that are growing in importance but may not be as well known as, say, Memphis, Tenn.; California's Inland Empire; or Columbus, Ohio. Identifying emerging logistics hubs for the Northeast region, however, is problematic. After all, the Northeast has been a center of logistics and trade for centuries.
Despite the long history, two areas in particular are showing significant growth in logistics-related development, and any company evaluating distribution and logistics facilities in the Northeast should consider them: Central New Jersey and Pennsylvania's Lehigh Valley.
CENTRAL NEW JERSEY
New Jersey suffers from a bit of an image problem. Known for high labor costs, red tape, and an unfavorable tax climate, New Jersey has a reputation for being unfriendly to business. CNBC's 2013 list of the most business-friendly states, for example, ranked New Jersey an unimpressive 42nd.
But Tracye McDaniel, president and CEO of the nonprofit economic development corporation Choose New Jersey, argues that when you consider New Jersey, you have to think about the total value proposition, which includes its location, infrastructure, and people.
It's hard to deny that Central New Jersey is, in McDaniel's words, "perfectly located." New Jersey is within a day's drive of more than 130 million consumers with a total disposable income of $3 trillion.
The central part of the state also provides easy access to all the major modes of transportation: road, rail, air, and ocean. Major highways include I-95, I-76, I-78, and I-80. The Port of New York & New Jersey is the largest port on the East Coast of North America and the third-largest in the nation, behind only Los Angeles and Long Beach, Calif. Newark Airport is the nation's 14th busiest airport, handling 80,000 tons of cargo a year. The state also has 1,000 miles of rail freight lines.
Significant investments continue to be made in that infrastructure, particularly at the ports. For example, the Port of New York & New Jersey is in the midst of a major redevelopment effort to deepen the harbor, improve terminals, and strengthen inland access. A case in point is the $600 million ExpressRail System program, which has created dedicated rail facilities, additional support track, and rail yards for each of the port's major container terminals. An additional $1.3 billion is being spent to raise the Bayonne Bridge, which connects Bayonne, N.J., to Staten Island. Raising the bridge to 215 feet over the high-tide level from 155 feet will allow larger containerships to reach Port Newark and Port Elizabeth. Additionally, a new breakbulk facility, the Port of Paulsboro, is under construction on the Delaware River.
The state also has a readily available, highly skilled work force, according to McDaniel. To make it easier for companies to find qualified logistics and distribution professionals, the state has created a Transportation, Logistics, and Distribution Talent Network to address workforce needs and connect potential employers and employees.
For these reasons, many **ital{Fortune} 500 companies, such as Home Depot, Barnes & Noble, and Toys R Us, have distribution facilities in the state. And more are coming, says McDaniel. For example, Amazon.com announced that it is building a 1 million-square-foot DC in Robbinsville, N.J. Industrial real estate company Prologis is building a 900,000-square-foot distribution center in Jersey City, which will be shared by online grocer Peapod and Imperial Bag and Paper Co. Subaru has begun construction on a 526,050-square-foot parts distribution center and training facility in Florence, N.J. In total, there are between 1,800 and 1,900 distribution centers in Central New Jersey, according to McDaniel.
Finally, McDaniel stresses the progress that Gov. Chris Christie and the current legislature have made to make the state more welcoming to business. As examples she cites the recently passed Economic Opportunity Act, which overhauls the state's incentive program, and the establishment of the Red Tape Review Commission, which works to reduce cumbersome regulations and make them less costly for business.
LEHIGH VALLEY, PA.
Located 80 miles from New York City and 60 miles from Philadelphia, Pennsylvania's Lehigh Valley sits at a sweet spot in the Northeast Corridor. "From this location, companies can reach 65 percent of the customers in the U.S. in a day's drive out and back," says Don Cunningham, CEO of the Lehigh Valley Economic Development Corp. (LVED). "And for the most part, we offer a lower-cost alternative [to] the larger metropolitan areas of North Jersey and New York."
Indeed, this section of Eastern Pennsylvania offers labor rates and land taxes that are lower than the more urban areas of the Eastern Seaboard. Additionally, transportation costs are quite favorable, as the area has strong rail service and a good road network, including I-78, which provides a direct route into New York City, Newark, and the surrounding ports. The area also has more land available than the congested regions around the major metropolitan areas and the ports.
All of these factors have contributed to an explosion in DC growth in the region during the past 15 years. According to LVED, the Lehigh Valley has gone from having 16 million square feet of total distribution space in 1997-1998 to the current total of 41 million square feet. Companies with distribution centers in the region include BMW, Amazon, and Walgreens. Additionally, National Freight Industries (NFI) is constructing a 980,000-square-foot warehousing and distribution facility that it will operate on behalf of Ocean Spray.
Interest in the region is still flourishing, as evidenced by an industrial vacancy rate of just 6 percent and the fact that real estate firm Liberty Property Trust recently spent $60 million on spec for a 1.2 million-square-foot warehouse. Development is not limited to distribution. According to Cunningham, more and more companies are also moving their production facilities into the region to take advantage of cost efficiencies from producing and distributing from the same spot.
That development will not be slowing anytime soon. "We expect to remain hot for several years," says Jarrett Witt, vice president of economic development for LVED. "The issue becomes when and if the region runs out of the land desired by larger distributors."
In fact, Witt and Cunningham say the region's biggest competition is not New Jersey, New York, or Maryland but other, more rural areas of Pennsylvania where land is still plentiful and prices are lower.
Where the Lehigh Valley has an advantage over these rural areas in South and Central Pennsylvania is its labor pool. "Our work force is bigger and better qualified," says Cunningham.
Due to the area's roots in heavy manufacturing—Bethlehem Steel was located there and Mack Trucks still operates a plant there—the community colleges in the Lehigh Valley have strong vocational and technical training programs. In addition, Lehigh University, located in South Bethlehem, has a well-known supply chain management program at both the graduate and undergraduate level.
Coming up: In the December issue, DC Velocity will look at emerging logistics hubs in the U.S. West.
For more information ...
Want to learn more about the logistics clusters mentioned in this article? Here's where to find more information:
New Jersey
Choose New Jersey: This independent, nonprofit economic development organization offers a wealth of information about New Jersey on its website, with sections on demographics, top industries, and site selection.
Port of New York & New Jersey: The port authority's website outlines the port's services and redevelopment initiatives.
New Jersey Transportation, Logistics, and Distribution Talent Network: Funded by the New Jersey Department of Labor and Workforce Development, this organization seeks to help educational institutions develop programs to fulfill employers' needs, provide networking opportunities, and raise awareness about jobs in the field.
Lehigh Valley, Pa.
Lehigh Valley Economic Development Corp.: This organization helps companies relocate to the Lehigh Valley. Its website includes information on demographics and incentive programs as well as site selection data.
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.