Warehouse Operating Cost Study Released

The annual report prepared by The Boyd Companies takes a hypothetical 350,000-square-foot warehouse as its basis for comparison and then examines major operating costs in each of 78 metropolitan areas. In its third year, the BizCosts report uses Logistics Today's Logistics Quotient as the source for the top logistics-friendly cities in the US.

For each of the last three years, the developer, Jack Boyd, has taken the 50 most logistics friendly cities from the Logistics Quotient, adding cities as they make the list and retaining most of the previous cities that may have dropped below 50 in the ranking. This has left the report with 78 cities in 2008.

The analysis includes a full workforce, utilities, and other operating costs. It examines the difference between an owned and a leased facility in each market. And it also models transportation costs by building an assumption on a single distribution center serving the top retail consumer markets across the country, establishes a simple freight mix, and then applies transportation costs.

With all of the data pulled together, it's not a surprise to find that New York City and adjacent metros, and Oakland, CA (and other California metros) are at the top of the list. Denver is near the middle and Atlanta is in the lower third. At the bottom of the cost curve are Jackson, MS and Little Rock, AR.

With a weighted average labor cost of $16.47 per hour in New York and $16.42 in Oakland, the two coastal cities are at least $1.50 per hour ahead of mid-ranked Denver and about $4.00 per hour more expensive than Little Rock.

Power costs in Oakland are nearly double Denver's $314,208 per year for electricity. New York is even higher. Add natural gas, property taxes, shipping costs, etc. and owning the BizCosts model DC in New York can cost $24,456,430 per year. Compare this to $19,279,659 in Oakland, $16,283,237 in Denver, $13,660,410 in Atlanta or $12,380,216 in Little Rock. Leasing costs tend to run somewhat lower.

The BizCosts analysis focuses on those key geographically variable cost elements considered to be most pivotal within the warehouse site selection process, explains Boyd. Other cost factors that do not vary significantly with geography were not considered. The projected operating costs are for comparative purposes. (www.bizcosts.com)

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