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3 Overlooked Locales for a Distribution Center

A recently published study of the costs of operating a distribution warehouse in the United States identified several of the best equipped, lowest cost locations, and you may not recognize any of them.

The Boyd Company, a site-selection consultant, gathered data on 25 U.S. locations that are well positioned to attract new investment this year, based on input from its Fortune 500 customers. All the locations have strong linkages to global distribution through Class 1 intermodal rail terminals and deep water container port operations.

The survey compared operating costs for a hypothetical 500,000-square-foot distribution center employing 150 hourly workers. The analysis included all major geographically-variable costs, such as labor, real estate, construction, taxes, utilities and shipping. Total annual operating costs ranged from a high of $15 million in Stoughton, MA, to a low of $11.2 in Chesterfield, VA.

The study also identified several drivers of today's distribution industry, said John Boyd Jr., principal at the company. First is the rise of same-day delivery, increasing the importance of last-mile distribution links in major metro areas. Amazon is at the forefront of this trend, having rapidly expanded its warehouse footprint over the past 12 months, he says. Second is that the growth in U.S. exports to Asia, which Boyd predicts will shift the distribution center of gravity to warehouses in low-cost markets in the Pacific Northwest over the next three to four years. The explosion of the Asian middle class is creating huge demand for U.S.-branded food and consumer goods, he said. “We expect companies to begin reconfiguring their supply-chain operations to look at low-cost markets in the Pacific Northwest and the Western states that have intermodal rail and low-cost land and power costs,” he added.

In addition to identifying 25 lowest-cost locations throughout the country, the study also highlighted the best locations in the East, West and Gulf Coast regions. Click on the image below to see a slideshow of the top little-known locations that would be perfect for an electronics distribution center.

Where, Oh Where, Should We Put Our Distribution Center

Where are you looking to add distribution centers? Let us know what you think in the comments section below.

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