Companies seeking a new distribution center site will find a lot to love about Virginia, including a deepwater port and its location in the middle of the Eastern Seaboard.
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.
For 45 years, Virginia has been proclaiming to the world: "Virginia is for lovers." The state's travel and tourism ad campaigns have also declared at various times that "Virginia is for history lovers," "Virginia is for beach lovers," and "Virginia is for mountain lovers." State economic development groups might like to add one more slogan: "Virginia is for logistics lovers."
With a deepwater port capable of receiving the giant post-Panamax megacontainerships and with a location in the center of the Eastern Seaboard, Virginia has attracted companies like Amazon.com, Lumber Liquidators, and Ace Hardware, all of which have opened "big box" distribution centers (those larger than 300,000 square feet) in the state. In addition, industrial real estate developer CenterPoint Properties recently opened an intermodal center near the port that includes 5.8 million square feet of large and desirable Class A distribution and warehouse space.
Why is the commonwealth generating all this logistics love? Here are a few reasons.
YOU CAN GET THERE FROM HERE
If you're looking to locate a single distribution center on the East Coast, Virginia makes a lot of sense. The state lies between the major consumer markets of New York/New Jersey and Atlanta and northern Florida. It also provides easy access to Midwest markets.
"We typically tell folks that from central Virginia, you can access about 40 percent of the U.S. population within a day's drive," says Rob McClintock, director of research for the Virginia Economic Development Partnership. "That's a big chunk of the market right there. And if you just draw a radius of 750 miles, you hit 55 percent of the population. So you can get there from here. And you can get your stuff there from here."
By "there," McClintock doesn't just mean the domestic U.S. market. "We like to think of Virginia as really a gateway for the rest of the world," he says.
The Port of Virginia serves as the state's point of entry for international commerce, offering connections to about 200 countries, according to McClintock. The port's core asset is Hampton Roads Harbor, which, at 50 feet of depth, shares with Baltimore the distinction of having the deepest water of any East Coast port. The water depth is expected to make Hampton Roads inviting to super post-Panamax vessels, which many experts believe will increasingly be used to serve the East Coast once the expanded Panama Canal opens.
Another attractive feature of the port, according to Russell Held, the port's vice president of economic development, is that it has room to grow. The Port of Virginia is the only port on the East Coast with congressional authorization to deepen its channels to 55 feet, and the rivers that serve the port are free of obstructions such as bridges, rail crossings, or power lines that would restrict large vessels from entering the port. Furthermore, the port will be looking to expand its Virginia International Gateway Terminal within the next five years and is "roughing out" a possible 600-acre expansion site for a marine terminal on Craney Island in the harbor.
"We are possibly the only port in the U.S. that can show how it can expand not only next year but also 30 years in the future," says Held.
Business at the port is driving an increase in warehouse and DC development along the I-64 corridor from Hampton Roads to Richmond, according to Mark Levy, managing director and the mid-Atlantic logistics and industrial practice group leader for the commercial real estate firm JLL. Most of the DCs near the Hampton Roads port are used for transloading and breakbulk services. Because Hampton Roads lacks a large population base, it doesn't have many big box distribution centers, Levy says. Instead, companies like Amazon are locating their million-square-foot mega-DCs near the state capital in Richmond, which is situated halfway between the port and the major consumer market of Northern Virginia, which surrounds Washington, D.C., says Levy.
Vitamin Shoppe, a health and wellness retailer, last year opened a 311,740-square-foot distribution center in Ashland, Va., about 19 miles from Richmond. After an exhaustive site selection process, the company chose Ashland over other sites in Virginia and North Carolina. "It is a great location situated right off I-95. The proximity to a major highway serves us well in getting shipments out quickly, as we move most of our freight by truck," says Rich Tannenbaum, Vitamin's Shoppe's senior vice president, supply chain and information technology.
Virginia's infrastructure enables it to support other modes of transportation. For example, Virginia has the third-largest state-maintained highway system in the country, with six major interstates. Two Class 1 railroads serve the port: Norfolk Southern and CSX, both of which are headquartered in the state. Currently, 34 percent of the port's cargo arrives and departs by rail, the largest percentage of any U.S. East Coast port.
In Northern Virginia, Dulles International Airport serves as a major hub for both passenger traffic and cargo. According to McClintock, there is enough available space around Dulles that the airport could expand its capacity by a few hundred acres.
Virginia's maritime traffic is not limited to oceangoing vessels. Two and a half years ago, the port established a barge service from Hampton Roads to the Port of Richmond on the James River. Barge traffic has grown to the point where service is now offered three times a week, according to McClintock.
VIRGINIA IS READY TO WORK
Companies like Vitamin Shoppe are finding that Virginia doesn't just offer the physical infrastructure to support a distribution center; it can also provide the workers needed to staff that DC. "The Ashland area has been very welcoming ... and we have been able to find many skilled, qualified candidates to join our team," reports Tannenbaum.
Overall, the labor force in Virginia is growing at a rate that's twice the national average, according to the Virginia Economic Development Partnership. In the logistics and distribution sector alone, Virginia employs 68,500 people.
Every region of Virginia is served by community colleges, some of which offer truck driving schools, forklift driving academies, and warehouse management system training. In addition, Virginia boasts a network of universities that provide logistics-focused research and education. Old Dominion University, located in Norfolk, is known for its Maritime Institute, which provides maritime, port, and logistics management education, training, and research. The recently formed Commonwealth Center for Advanced Logistics Systems connects local businesses seeking help resolving logistics problems with students and professors at the University of Virginia, Virginia Commonwealth University, Virginia State University, and Longwood University.
The labor market also benefits from the strong military presence in the state. According to McClintock, 23,000 people a year are being discharged from the military and are looking for work in industry. Many of these veterans possess significant logistics skills because Fort Lee in central Virginia is the Army Sustainment Center of Excellence, a focused training base for military supply, subsistence, maintenance, munitions, and transportation. In addition, the base is home to the U.S. Army Logistics University and the U.S. Army Transportation School. "The military is a constant feeder to our labor force of educated, highly skilled, highly disciplined people who are ready to go to work," says Held.
On top of that, Virginia is the northernmost right-to-work state on the East Coast, meaning that workers cannot be required to join a labor union in order to be employed, and its Jobs Investment Program provides companies with state-funded grants for job training.
A RECEPTIVE BUSINESS CLIMATE
The jobs training program and right-to-work status reflect the state's business-friendly environment. "It's very easy to do business in Virginia in terms of dealing with elected officials, getting economic incentive packages approved, and getting permits fast-tracked," says JLL's Levy. "Virginia has a very pro-business approach."
The state also offers a competitive tax structure, McClintock says. "We'll never be the lowest, but our taxes will always be consistent," he says. This stability enables companies to accurately forecast their costs from one year to the next, he adds.
Certainly, no state has the perfect business recipe, and Virginia has its share of challenges. Companies struggle with the fierce road congestion in the northern part of the state. Unlike the Port of New York/New Jersey or the Port of Miami, the Port of Virginia lacks proximity to a major consumer base.
Furthermore, Virginia has to compete against the more aggressive incentive packages developed by its southern neighbors. "It's a very competitive market," says Levy. "There are states that will provide very attractive incentives to the point where they will provide free land, they will provide all sorts of tax credits, and they will provide, in some cases, cash and, in a few cases, even build the facility for you." In spite of these challenges, Levy says, Virginia holds its own because of its innate advantages in geographic location, infrastructure, and labor.
"Our population is continuing to grow, and our economy is continuing to grow," says McClintock of the state's Economic Development Partnership. "That shows the environment is still conducive to business and development, and therefore, we are still considered vibrant and relevant."
Progress in generative AI (GenAI) is poised to impact business procurement processes through advancements in three areas—agentic reasoning, multimodality, and AI agents—according to Gartner Inc.
Those functions will redefine how procurement operates and significantly impact the agendas of chief procurement officers (CPOs). And 72% of procurement leaders are already prioritizing the integration of GenAI into their strategies, thus highlighting the recognition of its potential to drive significant improvements in efficiency and effectiveness, Gartner found in a survey conducted in July, 2024, with 258 global respondents.
Gartner defined the new functions as follows:
Agentic reasoning in GenAI allows for advanced decision-making processes that mimic human-like cognition. This capability will enable procurement functions to leverage GenAI to analyze complex scenarios and make informed decisions with greater accuracy and speed.
Multimodality refers to the ability of GenAI to process and integrate multiple forms of data, such as text, images, and audio. This will make GenAI more intuitively consumable to users and enhance procurement's ability to gather and analyze diverse information sources, leading to more comprehensive insights and better-informed strategies.
AI agents are autonomous systems that can perform tasks and make decisions on behalf of human operators. In procurement, these agents will automate procurement tasks and activities, freeing up human resources to focus on strategic initiatives, complex problem-solving and edge cases.
As CPOs look to maximize the value of GenAI in procurement, the study recommended three starting points: double down on data governance, develop and incorporate privacy standards into contracts, and increase procurement thresholds.
“These advancements will usher procurement into an era where the distance between ideas, insights, and actions will shorten rapidly,” Ryan Polk, senior director analyst in Gartner’s Supply Chain practice, said in a release. "Procurement leaders who build their foundation now through a focus on data quality, privacy and risk management have the potential to reap new levels of productivity and strategic value from the technology."
Businesses are cautiously optimistic as peak holiday shipping season draws near, with many anticipating year-over-year sales increases as they continue to battle challenging supply chain conditions.
That’s according to the DHL 2024 Peak Season Shipping Survey, released today by express shipping service provider DHL Express U.S. The company surveyed small and medium-sized enterprises (SMEs) to gauge their holiday business outlook compared to last year and found that a mix of optimism and “strategic caution” prevail ahead of this year’s peak.
Nearly half (48%) of the SMEs surveyed said they expect higher holiday sales compared to 2023, while 44% said they expect sales to remain on par with last year, and just 8% said they foresee a decline. Respondents said the main challenges to hitting those goals are supply chain problems (35%), inflation and fluctuating consumer demand (34%), staffing (16%), and inventory challenges (14%).
But respondents said they have strategies in place to tackle those issues. Many said they began preparing for holiday season earlier this year—with 45% saying they started planning in Q2 or earlier, up from 39% last year. Other strategies include expanding into international markets (35%) and leveraging holiday discounts (32%).
Sixty percent of respondents said they will prioritize personalized customer service as a way to enhance customer interactions and loyalty this year. Still others said they will invest in enhanced web and mobile experiences (23%) and eco-friendly practices (13%) to draw customers this holiday season.
That challenge is one of the reasons that fewer shoppers overall are satisfied with their shopping experiences lately, Lincolnshire, Illinois-based Zebra said in its “17th Annual Global Shopper Study.”th Annual Global Shopper Study.” While 85% of shoppers last year were satisfied with both the in-store and online experiences, only 81% in 2024 are satisfied with the in-store experience and just 79% with online shopping.
In response, most retailers (78%) say they are investing in technology tools that can help both frontline workers and those watching operations from behind the scenes to minimize theft and loss, Zebra said.
Just 38% of retailers currently use AI-based prescriptive analytics for loss prevention, but a much larger 50% say they plan to use it in the next 1-3 years. That was followed by self-checkout cameras and sensors (45%), computer vision (46%), and RFID tags and readers (42%) that are planned for use within the next three years, specifically for loss prevention.
Those strategies could help improve the brick and mortar shopping experience, since 78% of shoppers say it’s annoying when products are locked up or secured within cases. Adding to that frustration is that it’s hard to find an associate while shopping in stores these days, according to 70% of consumers. In response, some just walk out; one in five shoppers has left a store without getting what they needed because a retail associate wasn’t available to help, an increase over the past two years.
The survey also identified additional frustrations faced by retailers and associates:
challenges with offering easy options for click-and-collect or returns, despite high shopper demand for them
the struggle to confirm current inventory and pricing
lingering labor shortages and increasing loss incidents, even as shoppers return to stores
“Many retailers are laying the groundwork to build a modern store experience,” Matt Guiste, Global Retail Technology Strategist, Zebra Technologies, said in a release. “They are investing in mobile and intelligent automation technologies to help inform operational decisions and enable associates to do the things that keep shoppers happy.”
The survey was administered online by Azure Knowledge Corporation and included 4,200 adult shoppers (age 18+), decision-makers, and associates, who replied to questions about the topics of shopper experience, device and technology usage, and delivery and fulfillment in store and online.
An eight-year veteran of the Georgia company, Hakala will begin his new role on January 1, when the current CEO, Tero Peltomäki, will retire after a long and noteworthy career, continuing as a member of the board of directors, Cimcorp said.
According to Hakala, automation is an inevitable course in Cimcorp’s core sectors, and the company’s end-to-end capabilities will be crucial for clients’ success. In the past, both the tire and grocery retail industries have automated individual machines and parts of their operations. In recent years, automation has spread throughout the facilities, as companies want to be able to see their entire operation with one look, utilize analytics, optimize processes, and lead with data.
“Cimcorp has always grown by starting small in the new business segments. We’ve created one solution first, and as we’ve gained more knowledge of our clients’ challenges, we have been able to expand,” Hakala said in a release. “In every phase, we aim to bring our experience to the table and even challenge the client’s initial perspective. We are interested in what our client does and how it could be done better and more efficiently.”
Although many shoppers will
return to physical stores this holiday season, online shopping remains a driving force behind peak-season shipping challenges, especially when it comes to the last mile. Consumers still want fast, free shipping if they can get it—without any delays or disruptions to their holiday deliveries.
One disruptor that gets a lot of headlines this time of year is package theft—committed by so-called “porch pirates.” These are thieves who snatch parcels from front stairs, side porches, and driveways in neighborhoods across the country. The problem adds up to billions of dollars in stolen merchandise each year—not to mention headaches for shippers, parcel delivery companies, and, of course, consumers.
Given the scope of the problem, it’s no wonder online shoppers are worried about it—especially during holiday season. In its annual report on package theft trends, released in October, the
security-focused research and product review firm Security.org found that:
17% of Americans had a package stolen in the past three months, with the typical stolen parcel worth about $50. Some 44% said they’d had a package taken at some point in their life.
Package thieves poached more than $8 billion in merchandise over the past year.
18% of adults said they’d had a package stolen that contained a gift for someone else.
Ahead of the holiday season, 88% of adults said they were worried about theft of online purchases, with more than a quarter saying they were “extremely” or “very” concerned.
But it doesn’t have to be that way. There are some low-tech steps consumers can take to help guard against porch piracy along with some high-tech logistics-focused innovations in the pipeline that can protect deliveries in the last mile. First, some common-sense advice on avoiding package theft from the Security.org research:
Install a doorbell camera, which is a relatively low-cost deterrent.
Bring packages inside promptly or arrange to have them delivered to a secure location if no one will be at home.
Consider using click-and-collect options when possible.
If the retailer allows you to specify delivery-time windows, consider doing so to avoid having packages sit outside for extended periods.
These steps may sound basic, but they are by no means a given: Fewer than half of Americans consider the timing of deliveries, less than a third have a doorbell camera, and nearly one-fifth take no precautions to prevent package theft, according to the research.
Tech vendors are stepping up to help. One example is
Arrive AI, which develops smart mailboxes for last-mile delivery and pickup. The company says its Mailbox-as-a-Service (MaaS) platform will revolutionize the last mile by building a network of parcel-storage boxes that can be accessed by people, drones, or robots. In a nutshell: Packages are placed into a weatherproof box via drone, robot, driverless carrier, or traditional delivery method—and no one other than the rightful owner can access it.
Although the platform is still in development, the company already offers solutions for business clients looking to secure high-value deliveries and sensitive shipments. The health-care industry is one example: Arrive AI offers secure drone delivery of medical supplies, prescriptions, lab samples, and the like to hospitals and other health-care facilities. The platform provides real-time tracking, chain-of-custody controls, and theft-prevention features. Arrive is conducting short-term deployments between logistics companies and health-care partners now, according to a company spokesperson.
The MaaS solution has a pretty high cool factor. And the common-sense best practices just seem like solid advice. Maybe combining both is the key to a more secure last mile—during peak shipping season and throughout the year as well.