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."
Robots are revolutionizing factories, warehouses, and distribution centers (DCs) around the world, thanks largely to heavy investments in the technology between 2019 and 2021. And although investment has slowed since then, the long-term outlook calls for steady growth over the next four years. According to data from research and consulting firm Interact Analysis, revenues from shipments of industrial robots are forecast to grow nearly 4% per year, on average, between 2024 and 2028 (see Exhibit 1).
EXHIBIT 1: Market forecast for industrial robots - revenuesInteract Analysis
Material handling is among the top applications for all those robots, accounting for one-third of overall robot market revenues in 2023, according to the research. That puts warehouses and DCs on the cutting edge of robotic innovation, with projects that are helping companies reduce costs, optimize labor, and improve productivity throughout their facilities. Here’s a look at two recent projects that demonstrate the kinds of gains companies have achieved by investing in robotic equipment.
FASTER, MORE ACCURATE CYCLE COUNTS
When leaders at MSI Surfaces wanted to get a better handle on their vast inventory of flooring, countertops, tile, and hardscape materials, they turned to warehouse inventory drone provider Corvus Robotics. The seven-year-old company offers a warehouse drone system, called Corvus One, that can be installed and deployed quickly—in what MSI leaders describe as a “plug and play” process. Corvus Robotics’ drones are fully autonomous—they require no external infrastructure, such as beacons or stickers for positioning and navigation, and no human operators. Essentially, all you need is the drone and a landing pad, and you’re in business.
The drones use computer vision and generative AI (artificial intelligence) to “understand” their environment, flying autonomously in both very narrow aisles—passageways as narrow as 50 inches—and in very wide aisles. The Corvus One system relies on obstacle detection to operate safely in warehouses and uses barcode scanning technology to count inventory; the advanced system can read any barcode symbol in any orientation placed anywhere on the front of a carton or pallet.
The system was the perfect answer to the inventory challenges MSI was facing. Its annual physical inventory counts required two to four dedicated warehouse associates, who would manually scan inventory to determine the amount of stock on hand. The process was both time-consuming and error-prone, and often led to inaccuracies. And it created a chain reaction of issues and problems. Fulfillment speed is one example: Lost or misplaced inventory would delay customer deliveries, resulting in dissatisfaction, returns, and unmet expectations. Productivity was also an issue: Workers were often pulled from fulfillment tasks to locate material, slowing overall operations.
MSI Surfaces began using the Corvus One system in 2021, deploying a small number of drones for daily inventory counts at its 300,000-square-foot distribution center (DC) in Orange, California. It quickly scaled up, adding more drones in Orange and expanding the system to three other DCs: in Houston; Savannah, Georgia; and Edison, New Jersey. The company plans to add more drones to the existing sites and expand the system to some of its smaller DCs as well, according to Corvus Robotics spokesperson Andrew Burer.
Those expansion plans are based on solid results: MSI’s inventory accuracy was about 80% prior to the drone implementation, but it quickly jumped to the high 90s—ultimately reaching 99%—after the company initiated the daily drone counts, according to Burer.
“We actually had an incident early on where one of the forklift drivers ran into the landing pad, rendering it inoperable for about a week while the Corvus team fixed it,” Burer recalls. “When we restarted the system, we noticed MSI’s inventory accuracy had dropped down to the 80s. But after flights resumed, accuracy quickly improved back to near perfect.” He adds that such collisions are rare as Corvus mounts landing pads high off the floor to avoid impacts but that accidents can still happen.
Overall, the system has helped speed warehouse operations in two key ways: First, the accuracy improvement means that associates no longer waste time searching for missing material in the warehouse. And second, the associates who used to conduct the physical inventory counts have been reallocated to picking and replenishment—creating a more efficient, and optimized, workforce.
A SAFER, MORE EFFICIENT WAREHOUSE
Robot maker Boston Dynamics is well-known for its Stretch and Spot industrial robots, both of which are at work in warehouses and DCs around the world. Earlier this year, Stretch made its debut in Europe, teaming up with Spot at a fulfillment center run by German retail company Otto Group. The deployment marks the first time Stretch and Spot are being used together—in a partnership designed to improve Otto Group’s warehousing operations by increasing efficiency and making warehouse work safer and more attractive to workers.
The partnership is part of a two-year project in which Boston Dynamics will deploy dozens of its warehouse robots in Otto Group’s European DCs. The first location is a fulfillment site operated by Hermes, the company’s parcel delivery subsidiary, in Haldensleben, Germany—a facility that handles as many as 40,000 cartons of goods on peak days.
At the site, Stretch—which is a mobile case-handling robot—autonomously unloads ocean containers and trailers, using its advanced perception system to pick and place boxes onto a telescoping conveyor inside the container or trailer. Spot—a quadruped robot—helps with predictive maintenance by collecting thermal data and performing acoustic and visual detection tasks throughout the facility to reduce unplanned downtime and energy costs. One of Spot’s jobs is to detect air leaks in the facility’s warehouse automation systems; future duties may include conveyor vibration detection, according to leaders at Otto Group.
Both Stretch and Spot will help the Haldensleben facility run more efficiently, especially during fall peak season when volume increases and work intensifies. The addition of Stretch addresses safety and comfort issues as well: Trailer unloading—a process that entails repeatedly lifting and moving heavy boxes inside a trailer, which can be dark, dirty, cold, and/or hot, depending on the weather—tends to be unappealing to workers. Along with reducing the amount of labor required, automating these tasks will have the added benefit for European facilities of helping them comply with EU (European Union) regulations limiting the amount of time workers can spend in those conditions.
Essentially, the robots are making life easier on the warehouse floor and for the company at large.
“Stretch is going to have a ton of benefits for customers here in the EU,” Andrew Brueckner, of Boston Dynamics, said in a recent case study on the project.
The trucking industry faces a range of challenges these days, particularly when it comes to load planning—a resource-intensive task that often results in suboptimal decisions, unnecessary empty miles, late deliveries, and inefficient asset utilization. What’s more, delays in decision-making due to a lack of real-time insights can hinder operational efficiency, making cost management a constant struggle.
Truckload carrier Paper Transport Inc. (PTI) experienced this firsthand when the company sought to expand its over the-road (OTR), intermodal, and brokerage offerings to include dedicated fleet services for high-volume shippers—adding a layer of complexity to the business. The additional personnel required for such a move would be extremely costly, leading PTI to investigate technology solutions that could help close the gap.
Enter Freight Science and its intelligent decision-recommendation and automation platform.
PTI implemented Freight Science’s artificial intelligence (AI)-driven load planning optimization solution earlier this year, giving the carrier a high-tech advantage as it launched the new service.
“As PTI tried to diversify … we found that we needed a technological solution that would allow us to process [information] faster,” explains Jared Stedl, chief commercial officer for PTI, emphasizing the high volume of outbound shipments and unique freight characteristics of its targeted dedicated-fleet customers.
The Freight Science platform allowed PTI to apply its signature high-quality service to those needs, all while handling the daily challenges of managing drivers and navigating route disruptions.
STREAMLINING PROCESSES
Dedicated fleets face challenges that evolve from day to day and minute to minute, including truck breakdowns, drivers calling in sick, and rescheduled appointment times. PTI needed a tool that allowed for a real-time view of the fleet, ultimately enabling its team to adjust truck and driver allocation to meet those challenges.
The Freight Science solution filled the bill. The platform uses advanced analytics and algorithms to give carriers better visibility into operations while automating the decision-making process. By combining streaming data, a carrier’s transportation management system (TMS), machine learning, and decision science, the solution allows carriers to deploy their fleets more efficiently while accurately forecasting future needs, according to Freight Science.
In PTI’s case, Freight Science’s software integrates with the carrier’s TMS, real-time electronic logging device (ELD) data, and other external data, feeding an AI model that generates an optimized load plan for the planner.
“We’re an integrated data analytics company for trucking companies,” explains Matt Foster, Freight Science’s president and CEO. “We’re talking about AI.”
The benefits of the real-time data are difficult to overstate.
“We’ve been able to execute in the toughest of situations because we’ve got real, live data on how long each event is actually going to take and a system to aid and even automate the decision-making process,” says Chad Borley, PTI’s operations manager. “From what traffic patterns we are battling in the morning and evening with rush hour and things like that, to the impact of additional miles to a route, or even location-specific dwell times, it’s been a huge differentiator for us.”
REALIZING RESULTS
A case in point: the collapse of Baltimore’s Francis Scott Key Bridge in March. PTI was scheduled to go live with a new dedicated account in the area just days after the collapse, which would mean rerouting and the potential for longer transit times. Instead of recalculating based on assumptions or latent data, PTI was able to reroute freight based on real-time information and analytics to give the customer timely updates.
“With the bridge going out, that changed our ability to make as many turns a day as the customer would expect,” Stedl explains. “But one of the things Freight Science could do [was to] quickly [assess] how much of an impact that traffic would have [and] what the turns [would] be based on what’s happening on the ground.
“So we were able to go back to the customer and readjust expectations in a real way that made sense, using data. Now expectations can be reset¾we’re not asking for forgiveness when there’s no reason for it.”
The system’s advanced algorithms make load planning more cost-effective and scalable as well. The platform allows PTI to monitor trucks, trailers, and driver hours in real time, recommending additional loads with remaining driver hours that would otherwise be wasted.
And they’re doing it all with much less. Stedl says tasks that used to require five people and hours of work can now be accomplished by one person in mere minutes, improving productivity and profitability while reducing labor and operational costs.
Terms of the deal were not disclosed, but Aptean said the move will add new capabilities to its warehouse management and supply chain management offerings for manufacturers, wholesalers, distributors, retailers, and 3PLs. Aptean currently provides enterprise resource planning (ERP), transportation management systems (TMS), and product lifecycle management (PLM) platforms.
Founded in 1980 and headquartered in Durham, U.K., Indigo Software provides software designed for mid-market organizations, giving users real-time visibility and management from the initial receipt of stock all the way through to final dispatch of the finished product. That enables organizations to optimize an array of warehouse operations including receiving, storage, picking, packing, and shipping, the firm says.
Specific sectors served by Indigo Software include the food and beverage, fashion and apparel, fast moving consumer goods, automotive, manufacturing, 3PL, chemicals, and wholesale / distribution verticals.
Online merchants should consider seven key factors about American consumers in order to optimize their sales and operations this holiday season, according to a report from DHL eCommerce.
First, many of the most powerful sales platforms are marketplaces. With nearly universal appeal, 99% of U.S. shoppers buy from marketplaces, ranked in popularity from Amazon (92%) to Walmart (68%), eBay (47%), Temu (32%), Etsy (28%), and Shein (21%).
Second, they use them often, with 61% of American shoppers buying online at least once a week. Among the most popular items are online clothing and footwear (63%), followed by consumer electronics (33%) and health supplements (30%).
Third, delivery is a crucial aspect of making the sale. Fully 94% of U.S. shoppers say delivery options influence where they shop online, and 45% of consumers abandon their baskets if their preferred delivery option is not offered.
That finding meshes with another report released this week, as a white paper from FedEx Corp. and Morning Consult said that 75% of consumers prioritize free shipping over fast shipping. Over half of those surveyed (57%) prioritize free shipping when making an online purchase, even more than finding the best prices (54%). In fact, 81% of shoppers are willing to increase their spending to meet a retailer’s free shipping threshold, FedEx said.
In additional findings from DHL, the Weston, Florida-based company found:
43% of Americans have an online shopping subscription, with pet food subscriptions being particularly popular (44% compared to 25% globally). Social Media Influence:
61% of shoppers use social media for shopping inspiration, and 26% have made a purchase directly on a social platform.
37% of Americans buy from online retailers in other countries, with 70% doing so at least once a month. Of the 49% of Americans who buy from abroad, most shop from China (64%), followed by the U.K. (29%), France (23%), Canada (15%), and Germany (13%).
While 58% of shoppers say sustainability is important, they are not necessarily willing to pay more for sustainable delivery options.
Schneider says its FreightPower platform now offers owner-operators significantly more access to Schneider’s range of freight options. That can help drivers to generate revenue and strengthen their business through: increased access to freight, high drop and hook rates of over 95% of loads, and a trip planning feature that calculates road miles.
“Collaborating with owner-operators is an important component in the success of our business and the reliable service we can provide customers, which is why the network has grown tremendously in the last 25 years,” Schneider Senior Vice President and General Manager of Truckload and Mexico John Bozec said in a release. "We want to invest in tools that support owner-operators in running and growing their businesses. With Schneider FreightPower, they gain access to better load management, increasing their productivity and revenue potential.”