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Get the site Right
What’s a deal breaker for you in selecting a distribution center location? How would you describe your ideal location?
Chances are, you started your search with a network analysis that focused on an end result like reducing transit times to provide better customer service. You factored in the characteristics of your product, service requirements, and the physical and fiscal tolerances for transportation. But even the best number crunching won’t answer all of your questions.
Intuition or rough-cut analysis can point to a vicinity, but getting the final site right means digging for details. Logistics Today’s Logistics Quotient of American Cities can help you move from the broad to the specific. It is designed to take into account the factors most important to logistics network planning, and each of its 10 key categories address logistics needs.
The Logistics Quotient rolls up data from various sources to provide rankings for the communities listed among the 328 standard metropolitan statistical areas (SMSA), as defined by the U.S. Office of Management and Budget — put more simply, the biggest cities or metropolitan areas in the country. We’ve divided each city into regional groupings to match network planning needs — this month, for instance, we’re looking at the most logistics-friendly cities in the U.S. Northeast.
The numbers assigned to the cities under most categories represent a rank relative to the other 328 cities, with a rank of “1” being the highest grade possible.
Some categories, such as quality of Railroads, show little variation within a state, so rankings reflect a state position. For example, Akron, Ohio, and Columbus, Ohio, benefit roughly equally from the same rail infrastructure. Similarly, taxes and fees that apply to distribution operations (including things like inventory taxes) will be largely state-wide initiatives.
Proximity to a port or road density, congestion and safety are issues that have a decidedly metropolitan flavor. While Atlanta benefits from its relative proximity to the port of Savannah, its rank for Waterborne Commerce will drop if shipments must move by rail or highway to reach the port.
Air Cargo includes measures like presence and size of an air hub, volume of passenger service, and cargo volumes.
Beneath the surface of the Logistics Quotient categories lurks a wealth of logistics-specific detail. Workforce/Labor, for example, is more than a measure of the number of employment-age adults or education level. The logistics workforce includes warehouse workers and others employed in transportation and related fields. This can be influenced by the number of distribution operations already in the area, and it is a factor of the transportation and distribution industry operating in the area (listed as Logistics Industry). So, existing logistics talent — whether employed in warehouses, at third-party logistics companies or with carriers — is also reflected.
Many of the data points that feed into the Logistics Quotient are supplied by government organizations like the Federal Highway Administration. Groups like these can provide data on the number of highway miles within a region, highway miles per 1,000 population and highway spending per mile. (There’s even an index that measures the number of pot holes.)
Other private services like Reebie Associates provide data on volumes and types of freight originated in or bound for a metropolitan area.
The 10 categories are weighed equally to allow the user to determine how much value to place on any one measurement. Estimates are that 70% to 80% of freight moves by motor carriage, and the Logistics Quotient includes a number of measures that relate to motor carriage or the infrastructure used by trucks, so the natural transportation bias is accounted for.
This ranking of the Northeast region includes cities in the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, and West Virginia, as well as Washington, D.C.
A regional rank indicates how each city ranks among the other Northeast cities.
As you can see by the map (see “How to use the Logistics Quotient” below), only four cities in the Northeast rank in the country’s Top 50: Newark, New York, Philadelphia and Pittsburgh. The Logistics Quotient explains why major cities such as Baltimore, Boston and Washington weren’t able to crack the Top 50.
As you examine the Logistics Quotient and weigh your choices of new distribution sites — or validate your current choices — Logistics Today would like to hear about your experience. How are you using this tool? What can we do to improve it? Send your comments to [email protected]. LT
How to use the Logistics Quotient
Logistics Today’s Logistics Quotient of American Cities can answer broad questions and help narrow your site search. It won’t tell you the hourly wage or a warehouse worker in Albany, N.Y., but you can see that the Albany-Schenectady-Troy metropolitan area ranks 47th nationwide for logistics-related workforce and labor. Can you live with the high tax rate and fees (ranking Albany at almost dead-last — # 323 out of 328 nationally)?
Will Philadelphia’s # 3 Air Cargo rating and # 12 rank for Waterborne Commerce outweigh its # 265 rank for Road Conditions? If you’re flying in and trucking out, maybe not. If you’re shipping by rail to the port and exporting, you may consider adding Philadelphia to your short list.
Some areas have more to offer logistically than might appear at first glance. The Logistics Quotient is designed to be an objective source for weighing those options before you begin your due diligence. You’ll still need to dig into the many details that are important to your business and your strategy.
As one site planner puts it, the rough-cut computer programs can suggest a logical center, but that center could be in the middle of a desert or a lake. Even with a metropolitan area as a center, site planners will draw a reasonable radius around the area and examine other possibilities. Detailed research and site visits to the short list of prospects will tell you whether you should be looking at the north side of town or in another community altogether.