All major transport modes join E-Commerce bandwagon

As Amazon continues its inexorable march toward distribution dominance, logistics managers are examining the opportunities all modal players are promising. As a consequence, the nation’s industrial warehousing network has been largely transformed.

According to a new report from CBRE Group, Inc., there’s been a proliferation of warehouses spanning 1 million sq. ft. or larger across the nation. And while “last mile” carriers receive most of the attention these days, the traditional heavyweights are behind much of this growth.

“The massive warehouses and distribution centers have sprouted from Southern California to Philadelphia, clustering around metro areas that provide the mix of road, rail and sea access that e-commerce users covet,” says David Egan, CBRE’s Head of Industrial & Logistics Research in the Americas.

To date, 117 such facilities were built across the U.S. from 2010 to 2016 for a total of 141.2 million sq. ft. – which shows an increase from the 99 facilities built between 2003 and 2009 – according to CBRE.

The markets in which the most big-box construction occurred over the past six years are led by Philadelphia, California’s Inland Empire and Dallas/Fort Worth.

By way of forecast, CBRE says the busiest markets for on-going construction of 1 million-sq.-ft. warehouses are led by the Inland Empire, Chicago, Philadelphia and Atlanta. Across the 10 busiest U.S. markets for this type of construction, 29 such facilities are now underway.

Egan maintains that this trend augurs several different things.

“The proliferation of big-box facilities underscores the rapid growth of e-commerce since these mega-facilities serve as the backbone of retailers’ fulfillment networks, distributing goods across multistate regions.”

Furthermore, he says, developers prefer to build these big boxes in industrial-powerhouse “metros” that offer the best combination of exceptional transportation access and close proximity to big populations favored by e-commerce users.

“While massive warehouses aren’t purely a phenomenon of e-commerce, the two are closely related,” says Egan. “E-commerce users typically need two to three times the amount of warehouse and distribution space that traditional users do.”

That’s mostly because e-commerce fulfillment requires more inventory, labor and automation.

Having logistics space closer to consumers can play a big role in reducing transportation costs and time to deliver, which is vital for the highly competitive e-commerce industry, says Chris Caton, the Senior Vice President, Global Head of Research for Prologis, a global leader in industrial logistics real estate across the Americas, Europe and Asia.

The impact on air cargo operations is already being felt by upstarts like Greater Cincinnati/Northern Kentucky International Airport (CVG), which will now serve as Amazon’s centralized hub for its newly-launched Prime Air Cargo service.

“Amazon advised us of several factors important to them, including site availability and available infrastructure,” says Candace S. McGraw, CEO of the CVG Airport. “CVG owns more than 7,500 acres of property, 4 runways, plenty of taxiways, and we are a cost-effective airport.”

CVG has committed to invest $5 million in infrastructure improvements that will assist the airport and the overall project,” adds McGraw.

“The Commonwealth of Kentucky will provide $40 million in incentives to be used for infrastructure improvements for roadway and utility work,” she says.