Are you spending too much to run your warehouse?

Using Logistics Today's Site Selector index of America's 50 Most Logistics-Friendly Cities, location consulting firm The Boyd Company (www.bizcosts.com) has developed a comparative cost model that identifies how much it costs, on average, to operate a warehouse in those 50 cities.

Boyd's BizCosts Report bases its operations cost model on some assumptions, scaling operating costs to a hypothetical 350,000 square foot warehouse employing 150 non-exempt workers. Boyd also hyptothesized national market coverage that would move product over-theroad to 10 market destination cities.

According to Boyd, total annual operating costs for a warehouse constructed in New York City, the country's most expensive market, were estimated at $15.8 million. The lowest-cost construction market was Mobile, Ala., at $10.4 million. Cities in the middle of the list include Toledo, Ohio, Milwaukee and New Orleans.

For those who prefer leasing, the most expensive market for the hypothetical warehouse is San Francisco at $14.5 million. Mobile, on the other hand, was also the lowest cost location for a leased warehouse at $9.0 million per year in total operating costs. Middle positions for a leased facility include Milwaukee, Minneapolis and Cleveland.

What does it cost to reach a national market from the various cities? Boyd identifies a network of 10 cities that would serve a nationwide consumer market. It assumes a volume of freight in 30,000-pound truckload shipments costing $1.46 per mile to move. When all of the numbers are computed, it costs the most to reach the nation from Portland, Oregon ($4.1 million) and the least to serve the consumer market from St. Louis ($2.4 million). In the middle of the list are Mobile, Youngstown, Ohio, and New Orleans.

Site selection decisions in fact have many facets. Warehouse and distribution center operations need access to transportation infrastructure as well as a trained workforce. Road congestion, poor rail service or a lack of air cargo capacity can knock an otherwise desirable location right off the map for a logistics professional. We'll look at how a logistics professional can properly weigh all these various factors in the Site Selector.

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