You say you don't have a distribution facility in Texas? Texas boosters may think you're crazy, but they'll still welcome you with open arms should you have a change of heart.
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.
In his country and western song from the '90s, Lyle Lovett opens by teasing those listeners who are not from Texas: "You say you're not from Texas/ Man, as if I couldn't tell/ You think you wear your hat right/ and pull your boots on so well." Lovett goes on in the chorus to affirm three times, "That's right, you're not from Texas," but then ends by reassuring the listener: "Texas wants you anyway."
If industrial real estate experts and state business development officials are to be believed, that sentiment also holds true for companies seeking a location for their next distribution facility. The state welcomes new business with open arms, relatively low costs, and a favorable tax environment.
Or as Mabrie Johnson from the economic development organization North Texas Commission bluntly puts it: "The only reason why you wouldn't want to come to Texas is you're crazy."
CENTRAL LOCATION
So just what does Texas have going for it? Where industrial site selection is concerned, quite a lot, says Tom Sanderson, CEO of the Dallas-based third-party logistics service provider Transplace. When companies go to choose a DC location, they typically concentrate on such factors as geography, transportation infrastructure, labor supply and costs, and business environment, Sanderson says. "The great thing about Texas," he adds, "is you can check off almost every box."
The first "box" that Sanderson (and most location experts) check off is location. Texas's central location makes it relatively easy to reach consumer markets all across the country. On top of that, the state has a large and growing consumer market of its own. Six of the country's 20 most populous cities are in Texas: Houston, San Antonio, Dallas, Austin, Fort Worth, and El Paso. Four of those cities—Austin, Houston, San Antonio, and Dallas—also rank in the top 10 fastest-growing major cities in the United States, according to Forbes magazine.
Texas also has undeniable geographic advantages for companies engaged in international trade, particularly with Mexico. Mexico has been benefiting from the growth of "nearshoring," as more and more companies bring manufacturing back from Asia and closer to consumer markets in North America, reports Marcel Johnson, vice president of business development at industrial developer Port San Antonio. That, in turn, has benefited Texas. Many of the goods being manufactured in Mexico, particularly automotive components, are then brought into Texas for distribution to the rest of the United States or are being partially made in Mexico and partially in Texas, Johnson says.
For this reason, the border towns of Laredo and El Paso have increasingly become hotbeds of logistics and distribution center activity. Growth in trade with Mexico has also sparked a boomlet in the DC market in Dallas-Fort Worth, as the metropolis has proved to be an attractive consolidation point for Mexican-made goods heading north on I-20 or east/west on I-35.
It's important to note that Texas's international trade is not one-sided. According to the state's Office for Economic Development & Tourism, Texas is the country's top exporting state, with more than $297.7 billion in exports. Texas's top export partners are Mexico, Canada, Brazil, China, and the Netherlands; its principal exports include petroleum and coal, chemicals, computers, nonelectrical machinery, and transportation equipment.
ROBUST INFRASTRUCTURE
In addition to being centrally located, Texas also boasts one of the strongest transportation networks in the U.S. "From a pure logistics standpoint, you can 'get there from here,'" says Terry Darrow, managing director of industrial real estate firm Jones Lang LaSalle's Dallas office.
For example, Texas has over 3,000 miles of highways, more than any other state. "We also do a fairly good job of overbuilding our roadways," says Will Condrey, associate director for the Houston office of Cushman & Wakefield, an industrial real estate firm. "We do not have, like a lot of other markets, heavy-haul corridors, and as result of that, trucks are welcome on all major thoroughfares."
Texas is also home to the second-longest rail system in the country and is served by three Class I railroads: the Union Pacific, the Kansas City Southern, and the Fort Worth-based BNSF Railway. The rail system connects Texas to both coasts as well as to Mexico. Rail service is supported by a network of intermodal facilities across the state, including two—the Alliance Global Logistics Hub in the Dallas/Fort Worth area and Port San Antonio—that boast high-capacity industrial airports, Class I rail terminals, and direct access to interstate highways.
The state also has excellent short-line rail service, which can bring freight right to a company's doorstep, according to Darrow.
For oceangoing freight, the state is home to the 12th-busiest port in the world: the Port of Houston. Historically, the port has been associated with exports, particularly of petroleum and petroleum products. But lately, a growing population base has created strong demand for imports. As a result, says John Moseley, the port's senior director of trade development, imports and exports are fairly well balanced.
The state also provides excellent aircargo service. The Dallas/Fort Worth International Airport (DFW) alone handles more than $50 billion worth of cargo annually, mostly high-value items like semiconductors, cell phones, and aircraft parts. According to Mabrie Johnson, you can reach anywhere in the continental United States in approximately four hours by air from DFW, which has been recognized as the best cargo airport in North America by Air Cargo World magazine. The state is also served by Alliance Airport, the first purely industrial airport in the world.
A BUSINESS-FRIENDLY CLIMATE
Texas also has a well-deserved reputation for being business-friendly and possesses a pro-business government structure. The state does not have a corporate or individual income tax, and many county, city, and local authorities offer generous tax abatement programs to encourage job creation. The state also offers healthy industrial development incentive programs, such as the Texas Enterprise Fund, which is the largest "deal-closing" fund of its kind in the nation, and The Texas Skills Development Fund, which provides financing for customized job training programs.
Texas also has a strong supply of labor, with a civilian work force of more than 13 million people, the second largest (and one of the youngest) in the country. Furthermore, Texas is a "right to work" state, meaning that workers cannot be required to join a labor union in order to be employed, and overall union participation is relatively low.
Beyond all that, the state can offer companies space to grow. Unlike California, New York, or New Jersey, there is still land available for greenfield distribution sites near major cities. As a result, land costs and occupancy costs are reasonable compared with prices in metropolitan areas of a similar size. "We still have relatively cheap dirt," says Condrey of Cushman & Wakefield.
THE PROMISED LAND?
Yet Texas is not without its flaws. Many of the state's boosters tout the job-training programs created by government agencies, local community colleges, and business. However, the picture is not so bright when it comes to the school system in the state, according to a report by the Texas Legislative Study Group, Texas on the Brink. The 2013 report found that Texas ranks 50th in the percentage of its citizens who have graduated from high school and 44th in high school graduation rates. Additionally, the study reports that Texas has the highest percentage of uninsured adults in the nation and generates the most hazardous waste and carbon dioxide emissions.
But considering the state's central location, robust infrastructure, low land costs, and access to available labor, industrial site selection experts can perhaps be forgiven for overlooking these weaknesses. Or as Lovett sings: "So pardon me my laughter/ 'Cause I sure do understand/ Even Moses got excited/ When he saw the promised land."
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 U.S. manufacturing sector has become an engine of new job creation over the past four years, thanks to a combination of federal incentives and mega-trends like nearshoring and the clean energy boom, according to the industrial real estate firm Savills.
While those manufacturing announcements have softened slightly from their 2022 high point, they remain historically elevated. And the sector’s growth outlook remains strong, regardless of the results of the November U.S. presidential election, the company said in its September “Savills Manufacturing Report.”
From 2021 to 2024, over 995,000 new U.S. manufacturing jobs were announced, with two thirds in advanced sectors like electric vehicles (EVs) and batteries, semiconductors, clean energy, and biomanufacturing. After peaking at 350,000 news jobs in 2022, the growth pace has slowed, with 2024 expected to see just over half that number.
But the ingredients are in place to sustain the hot temperature of American manufacturing expansion in 2025 and beyond, the company said. According to Savills, that’s because the U.S. manufacturing revival is fueled by $910 billion in federal incentives—including the Inflation Reduction Act, CHIPS and Science Act, and Infrastructure Investment and Jobs Act—much of which has not yet been spent. Domestic production is also expected to be boosted by new tariffs, including a planned rise in semiconductor tariffs to 50% in 2025 and an increase in tariffs on Chinese EVs from 25% to 100%.
Certain geographical regions will see greater manufacturing growth than others, since just eight states account for 47% of new manufacturing jobs and over 6.3 billion square feet of industrial space, with 197 million more square feet under development. They are: Arizona, Georgia, Michigan, Ohio, North Carolina, South Carolina, Texas, and Tennessee.
Across the border, Mexico’s manufacturing sector has also seen “revolutionary” growth driven by nearshoring strategies targeting U.S. markets and offering lower-cost labor, with a workforce that is now even cheaper than in China. Over the past four years, that country has launched 27 new plants, each creating over 500 jobs. Unlike the U.S. focus on tech manufacturing, Mexico focuses on traditional sectors such as automative parts, appliances, and consumer goods.
Looking at the future, the U.S. manufacturing sector’s growth outlook remains strong, regardless of the results of November’s presidential election, Savills said. That’s because both candidates favor protectionist trade policies, and since significant change to federal incentives would require a single party to control both the legislative and executive branches. Rather than relying on changes in political leadership, future growth of U.S. manufacturing now hinges on finding affordable, reliable power amid increasing competition between manufacturing sites and data centers, Savills said.
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.