Customer Location Central to DC Choices, Shippers Say

Customer Location Central to DC Choices, Shippers Say

Locating close to customers often is more important than tax and financial incentives in choosing distribution facilities, shippers told The Journal of Commerce Inland Ports conference in Chicago this week.

The Apparel Group chose Dallas as the site for its main import distribution center because of its central location of the country. Dallas offers rail and highway connectivity, and the airport is a foreign trade zone site, said Brad Campbell, director of transportation and logistics.

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Although tax incentives were part of the attraction, the main focus is to get shipments to customers on time, Campbell said. The Apparel Group can pay a charge-back of as much as 10 percent of the invoice if a shipment is a day late, Campbell said.

As fuel costs rise, Hallmark Cards has considered near-shoring in countries like Mexico for the paper products, ornaments and figurines that it imports. However, most of Hallmark’s imports are still sourced in Asia, said Larry Faitz, international transportation manager.

According to Faitz, Kansas City offers attractive labor costs and is a growing rail logistics hub. The inland port status is convenient for receiving imports from Asia, and Kansas City’s central location helps to reduce inventory carrying costs for outbound shipments to stores, he said.

The Scoular Company exports grain products in containers from transload facilities in the Chicago area, Minnesota and Southern California. “We are a back-haul shipper,” said Doug Grennan, senior manager of the international container trade group.

One of Scoular’s main objectives is the cost-effective repositioning of empty containers to its transload facilities, especially those in the Midwest where much of the nation’s grain is sourced, Grennan said. Grain exports are more price-sensitive than transit-time sensitive.

Scoular, therefore, transloads more than 50 percent of its grain shipments in the Chicago area where import distribution centers generally offer an adequate supply of empty containers.

If rail rates for shipping grain in hopper cars to the West Coast were more attractive, and cost-effective transload facilities were established in Southern California, it would be the “Holy Grain” for containerized grain exports because the region always has a surplus of empty containers, Grennan said.

--Contact Bill Mongelluzzo at bmongelluzzo@joc.com.