Location, Infrastructure Land Distributors
Published Apr 08, 2001
More and more customers are discovering that, with a click or two at the computer, shopping online can be a breeze. But all of this electronic commerce – or e-commerce – has kept dot-com companies hopping, setting complex fulfillment and warehousing systems into action.
These businesses require efficient and cost-effective distribution operations to meet their fulfillment needs. And for many, Tennessee has played a major role in getting business done and boosting the bottom line.
When Barnes and Noble launched its own online services in 1997, it was one of the first major “bricks and mortar corporations” to make a big play via the Internet, notes Bill Duffy, vice president of operations for BarnesandNoble.com. Last year, the online bookseller opened a major distribution fulfillment center in Memphis, joining other facilities for the company in New Jersey and Nevada.
“The 385,000-square-foot Memphis facility is one of our main distribution fulfillment centers for the company’s business,” Duffy says. “It’s a major site for us that will continue to grow with the company.”
When BarnesandNoble.com reviewed its distribution network and possible locations for a new fulfillment center, Memphis quickly popped up as one of the top sites perfect for further consideration, Duffy adds.
Its central location gave the bookseller an advantage to reaching both coasts in a relatively short shipping time. And, since BarnesandNoble.com packages are shipped directly to consumers – often the next day – the strong presence of FedEx, UPS and the United States Postal Service in the Memphis region offered attractive distribution options to the company. In fact, FedEx operates its worldwide headquarters and world hub in Memphis, while UPS has hub/sort facilities there.
“The state and county’s pro-business attitudes, extended through economic incentives and programs, encouraged our company to invest in our infrastructure, facilities and equipment,” Duffy says.
With such ringing endorsements, it’s no wonder that Memphis is known as North America’s distribution center. The Memphis International Airport has been cited as the world’s busiest cargo airport for five consecutive years by Airports Council International in Geneva, Switzerland. Home to more than 15 airfreight carriers, it handles more than 1.7 million metric tons of cargo annually. Memphis also offers a railroad system second only to Chicago and a river port that handles more than 12 million tons of cargo each year.
Still, Tennessee’s logistical advantages are in no way limited to the Memphis area. Tennessee is within one day’s delivery service of 76 percent of the nation’s major markets. Transportation connections are abundant, including:
* Six major interstate highways and eight interstate spurs.
* Three major railroad lines.
* Five major regional airports, with international service from Nashville and Memphis.
* Major metropolitan areas served by barge traffic.
* Five foreign-trade zones and seven sub-zones.
Distribution companies in Middle Tennessee will receive a boost later this year with the completion of another leg of state route 840 that will connect Interstate 24 to Interstate 65 in Williamson County. A four-lane, limited-access highway that connects interstates 24 and 40 east of Nashville, it is hoped that Route 840 will eventually provide a complete loop around the Music City – with the southern loop completed first.
Randy Brewer, Rutherford County economic development director, says that 840’s completion “will open up all the compass points on the dial for us. Economic development follows roads – it’s just a fact of life. When you have easy access to markets, business follows. Our distribution arteries were already good – 840 made them great.”
The region’s ample labor pool is another draw, according to local distributors. When Hollywood Video opened its 100,000-square-foot distribution center in La Vergne in August 2000, the company hired 83 workers from a pool of more than 1,000 applicants.
Labor availability was a key consideration for Panattoni Development Co., which is developing a huge distribution complex off I-24 in Rutherford County. The company, which is based in Sacramento, Calif., develops, owns and leases commercial space in 45 cities throughout the nation and developed about 16 million square feet of space in the United States last year.
Panattoni already owns two buildings at the 150-acre site. When the company completes construction on a third building later this year, there will be 1.5 million square feet of warehousing/distribution space. According to Ron Colter, a local Panattoni partner, more than 1 million square feet is already leased to three clients, including Nissan North America Inc. These three companies collectively employ 500 workers.
Colter says the Rutherford County site had everything Panattoni looks for – “a great interstate site with great workforce availability.”
As with the rest of the state, the East Tennessee region has its own strong logistical advantages, says Scott Niswonger, president, chairman and CEO of Landair Services Inc., based in Greeneville, Tenn.
“The demographics for East Tennessee are very similar, except we can hit the East Coast about seven hours quicker,” he says.
Forward Air, a Landair subsidiary, is a high service level contractor to the air cargo industry providing time-definite service in the United States and Canada. The company contracts with 87 of the world’s airlines, picking up and delivering international freight from airports in gateway cities such as Los Angeles and Miami. A third Landair company – Warehouse Logistics – was started due to the strength of the region for distribution. Niswonger says the company uses Landair trucks and distributes John Deere lawn mowers from its 800,000-square-foot warehouse.
Niswonger notes that with the growth of the automotive industry in the Southeast, Tennessee has proved to be logistically valuable. A total of $2.5 billion in investments earmarked for Tennessee includes Nissan North America Inc., which plans to invest $1 billion to expand its Decherd, Tenn., engine operations and maximize its vehicle production capacity utilization in Smyrna, Tenn., over the next three years. Saturn plans $1.5 billion in improvements by 2003, which includes a new $500 million engine factory and an expansion to prepare for the debut of the 2002-model sport utility vehicle.
“When you see large capital investments made by Fortune 500 companies in the Southeast, those are not investments that are short-term in nature,” says Niswonger.
And with its central location, comprehensive transportation network and business-friendly climate, you can bet that Tennessee’s growth as a distribution hub will not be short-term either.
Story by Sharyn Matthews
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