The St. Louis Region: Big Developments, Bright Future
An abundant, skilled workforce, outstanding multimodal transportation options, and plenty of space for expansion all fuel growth in the area's logistics sector.
For many years, the St. Louis region has offered outstanding logistics advantages to companies that located on the Missouri or Illinois side of the Mississippi River. With a wealth of multimodal transportation options, plenty of available real estate, and a position within one day's drive of 30 percent of the U.S. population, the bi-state area has drawn interest from manufacturers, distributors, and retailers who need efficient access to domestic and international markets.
Recent developments in the area are ramping up the excitement level. In particular, the past 12 months have been a defining period in the St. Louis region's quest to become a premier freight logistics gateway and multimodal hub, as Amazon entered the market and absorbed 1.4 million square feet of speculative space with two facilities in Edwardsville, Ill.
A few key factors drive location decisions for the company's fulfillment centers, notes Nina Akerley Lindsey, with Amazon corporate communications. Company officials want to be as close to their customers as possible to facilitate fast local and regional delivery, but they also look at local workforce. What Amazon has found in the St. Louis region has been great.
"We've been so pleased with the talent we found in the region," says Lindsey. "We're thrilled to be able to provide local jobs to avail ourselves of the abundance of exceptional talent. We're seeing great interest in the positions we have to offer, and both buildings are doing great."
The buildings are doing so great, in fact, that employment numbers have soared past original projections when Amazon announced the facilities in the St. Louis region, stating they would create more than 1,000 full-time jobs.
"Since opening the facilities, we have grown and added more full-time jobs," notes Lindsey. "Amazon currently has more than 1,500 full-time employees in Edwardsville."
While Lindsey does not comment on future expansion plans in the St. Louis region, she does reaffirm that Amazon is growing rapidly. She points to the recent announcement that Amazon will create 100,000 new full-time jobs across the company over the next 18 months, many of them in states such as Kentucky, Florida, and Illinois. "We're definitely seeing growth in Illinois right now," Lindsey says.
Mark Branstetter, a partner at Panattoni Development Company, which developed the Lakeview Commerce Center spec building that Amazon occupies, highlights the significance of the region's ability to deliver the workforce Amazon needs.
"Location matters, but employment matters just as much when it comes to attracting users such as Amazon," says Branstetter. "Amazon coming here, and growing here, proves we have the labor needed."
Another key ingredient in attracting e-commerce giants such as Amazon is having the available space they need, when they need it, adds Tim Convy, principal with the St. Louis office of commercial real estate services firm Avison Young.
"As a broker working for an international company, we know that if we don't have product, our customers will move on," Convy says. "Panattoni has had the confidence to build spec facilities in the St. Louis region and, therefore, we've been able to attract companies such as Amazon."
Such industry giants are not the only companies turning to the St. Louis region; the other spec facilities recently completed at Panattoni's Aviator Park in Hazelwood, Mo., have attracted manufacturers and consumer products companies. In addition, various third-party logistics firms have recently leased space in the nearby Hazelwood Logistics Park.
While that mix is healthy for the region, Convy says it is Amazon's decision to enter the St. Louis market that will drive future growth, following a record-setting year for the region with more than 6 million square feet of new industrial construction.
"There's a herd mentality in the industry," says Convy. "Amazon's presence validates the region."
That is exciting news for the St. Louis Regional Freightway, which is tasked with optimizing the region's freight transportation infrastructure and advancing its position as a world-class distribution hub.
Officially launched in April 2016, The Freightway is already playing a critical role in the growth of manufacturing and fulfillment centers within the bi-state region. Through a unified bi-state regional collaboration, including both public and private sector leaders, The Freightway is partnering with other freight transportation hubs, starting with the recent signing of a memorandum of understanding (MOU) with the Port of New Orleans.
"This partnership will help create opportunities for St. Louis regional ports and river terminals to capitalize on the recent growth in container-on-barge operations at the Port of New Orleans and the 500 million tons of cargo that annually move through the lower Mississippi River," says Mary Lamie, executive director of The Freightway. "The St. Louis region is integrating supply chains with regions such as New Orleans and others throughout the country."
Building a Bridge
The Freightway is also accomplishing its mission by setting multimodal transportation priorities with regional public and private sector leaders. One of the region's highest priority projects is the 128-year-old Merchants Bridge over the Mississippi River, owned and operated by the Terminal Railroad Association of St. Louis (TRRA). Carrying six Class 1 railroads and Amtrak, this structure serves the nation's third-largest rail hub and is considered a model for public-private partnerships.
TRRA is willing to cover a significant portion of the $220-million project to replace the bridge, and estimates that a new span that can handle two modern freight trains simultaneously could create more than $456 million in economic activity over 20 years—nearly double the impact TRRA generates today.
The Merchants Bridge is not only capturing the attention of The Freightway and the railroad industry, it is also very much on the barge industry's radar.
"While enhancements to the nation's locks and dams are a top priority, we consider the Merchants Rail Bridge to be the number-one infrastructure priority for the St. Louis region," notes Tim Power, president of SEACOR Inland River Services/SCF Marine Inc. "Competitive barge rates are contingent to competitive rail rates."
Such agreement among various stakeholders on the region's priorities will improve The Freightway's ability to coordinate with industry and government to ensure the region's infrastructure can handle the growth as they work to enhance and increase the $6 billion in goods traveling through the St. Louis region by rail, road, river, and runway.
Branstetter sees The Freightway as the region's first concerted regional effort to pursue logistics and freight as a focus area, and he remains bullish on the region's potential for continued growth. "I don't think the growth we saw in the past 18 months is a one-time thing," he notes. "The future in the St. Louis region looks very bright."
Roads, Rail, and River
The initiatives leading to that bright future in the St. Louis region build upon a well-established foundation of logistics assets. Take the four interstate highways that converge there. I-44 provides a direct link to St. Louis, Tulsa, and Oklahoma City; I-55 to Chicago, Memphis, and New Orleans; I-64 to Missouri, Kentucky, West Virginia, and Virginia; and I-70 to Denver, Kansas City, Indianapolis, Columbus, and Baltimore. Those highways put much of the Midwest with one day's drive and offer two-day access to multiple East Coast and Gulf ports.
To keep freight and other traffic flowing, communities in the St. Louis metropolitan area have recently completed several important highway infrastructure projects. One is the Stan Musial Veteran Memorial Bridge across the Mississippi, a $670-million project that connects St. Louis and southwestern Illinois via I-70.
Another initiative has rebuilt the Daniel Boone Bridge to extend I-64 across the Missouri River. The Illinois Department of Transportation has made improvements to the Martin Luther King Bridge, while the Missouri Department of Transportation is doing work on the Poplar Street Bridge in St. Louis.
The history of rail transportation in the region dates back to 1852, when the first leg of the Pacific Railroad opened in St. Louis. Today, the region is the third-largest rail hub in the United States. Six of North America's seven Class I railroads serve St. Louis, providing freight transportation throughout the continent without need for interchange.
Connection to the World
These rail lines connect the region not only with major markets in the United States, Canada, and Mexico, but with the world, via ocean ports on the East and West Coasts and the Gulf of Mexico. Several shortline railroads add to the number of options available to companies that ship by rail.
Six intermodal yards accommodate freight moving into and out of the St. Louis region:
- BNSF's St. Louis Intermodal Terminal, St. Louis. Located near I-44, this facility processes about 60,000 lifts annually. Close by, BNSF has bought 111 acres of developable land at the Fenton Logistics Park.
- Terminal Railroad Association Rail Yard, Madison County, Ill. The region's largest rail switching facility, this terminal handles about 30,000 cars per month. The yard's 80 tracks provide enough capacity to hold 2,200 cars at one time.
- Norfolk Southern Luther Intermodal Yard, St. Louis. Located on more than 30 acres, this facility offers quick access to I-70.
- CSX East St. Louis Intermodal Terminal (aka Rose Lake Yard), Fairmont City and Washington Park, Ill. This facility, part of CSX's Southeastern Corridor, handles both domestic and intermodal freight, with an average of 60,000 to 70,000 lifts per year.
- Union Pacific Dupo Intermodal Terminal, Dupo, Ill. Thirteen intermodal trains originate at this facility each week, with service to Dallas, Los Angeles, and Seattle. The yard is situated conveniently close to I-255 and Illinois Route 3.
- Kansas City Southern Valley Junction Yard, East St. Louis, Ill. Three Terminal Railroad Association lines converge in this yard, bringing it several dozen trains each day.
As the recent partnership with the Port of New Orleans illustrates, river transportation also plays a prominent role in the St. Louis region's portfolio of transportation options. Each year, 105 million tons of cargo pass, arrive, or depart by water, benefiting from the region's status as the northernmost port on the Mississippi where there is no need to contend with locks or ice.
Major commodities loaded on and off barges in the region include fertilizer, steel, manufactured products, coal, petroleum products, and agricultural crops.
Local facilities include:
- America's Central Port, Granite City, Ill. This facility handles dry bulk, liquid bulk, general cargo, roll on/roll off (Ro/Ro) cargo, and container on barge.
- St. Louis Port District. The third-largest inland port in the United States, it offers services for dry bulk, liquid bulk, general cargo and Ro/Ro. The Port District includes 19 miles of riverfront and more than 6,000 acres available for industrial use.
- Kaskaskia Regional Port District 1, New Athens, Ill. This facility includes a bulk terminal, a Ro/Ro ramp that handles oversized equipment, a barge with a hydraulic track-hoe and conveyor for loading trains, and a train loop that can handle up to 125 units.
- Kaskaskia Regional Port District 2, Baldwin, Ill. This port handles steel, general cargo, bulk products, and container on barge. Facilities include a 50-ton overhead electric crane and 30,000 square feet of warehouse space, with temperature and humidity controls.
For shippers that use America's Central Port, one of the major attractions is the assortment of transportation options there—river, rail and road. Lock #27, the southernmost lock on the Mississippi, sits between the port's two harbors, giving barges access to the free-flowing river from the port all the way to the Gulf of Mexico. The Port District's new Madison Harbor actually sits below the lock, providing the opportunity for uninterrupted movement. America's Central Port opened the $50-million Madison Harbor in February 2016.
"That harbor opened a lot of new opportunities," says Dennis Wilmsmeyer, executive director at America's Central Port. "We're now gearing up for general cargo movements. Our operators have been moving dry bulk products through there on barges for a full year."
One of the region's six Class I railroads, Norfolk Southern, provides service at America's Central Port. Two Class III carriers, Terminal Railroad and Port Harbor Railroad, also serve Madison Harbor. "The Class I railroads own Terminal Railroad, so shippers have access to all the Class I railroads through their switching setup," Wilmsmeyer says.
In addition, the port provides easy access to the interstate systems, with a connection to I-70 just two miles south of the property.
That rich mix of transportation modes offers benefits even to companies near the port that stay with a single transportation mode.
"We've had companies say they wanted to move here because of the rail, but they've never used it," Wilmsmeyer says. Rather, they employ the rail as a bargaining chip. "Every time a trucking company tries to raise its rates, the companies say they need to get some quotes from the rail line." That prospect of competition is enough to persuade the trucker not to change its rates.
A Win-Win Situation
Thanks to The Freightway's MOU with the Port of New Orleans, America's Central Port could be handling even more volume in the future than it does today, especially container on barge. "That MOU allows us to market the Port of New Orleans as ours, and for them to market America's Central Port as theirs," Wilmsmeyer says. Container on barge will add a new, cost-effective intermodal option for shippers moving goods into or out of the Midwest.
To better handle that and other cargo, America's Central Port recently improved its facilities. "In December 2016, we finished about 4.25 miles of new track construction on the property," Wilmsmeyer says. "We made new roadway improvements at the same time."
In addition, the port has been adding to the properties available for lease on its 1,200 acres, about two square miles. "We have two new warehouse buildings—one a 126,000-square-foot chemical manufacturing facility, and the other a 26,000-square-foot dry bulk storage building," Wilmsmeyer says.
Companies that currently operate facilities at the port include ethanol producer Green Plains, Phillips 66, Apex Oil, Cargill Steel, and U.S. Steel.
But the port's own property represents just a fraction of the territory available to companies that want to take advantage of this riverside transportation hub. "More than 13 local communities, all situated along the Mississippi River, have opportunities for commercial or industrial development," Wilmsmeyer says. That territory covers about 200 square miles. Port officials and community leaders collaborate to identify the best location for each company that wants to move into the region.
"We ask many questions, we find out a lot about the company, and we get all the players in the room who can answer their questions," Wilmsmeyer says. "If it makes more sense for that company to locate in one of those communities, we work just as hard, if not harder, to get them to locate there as we would to get them onto our own property."
For shippers that employ air transportation, the St. Louis region provides a choice of two international airports that offer air cargo services: St. Louis Lambert Airport in St. Louis County and MidAmerica St. Louis Airport in St. Clair County, Ill.
St. Louis Lambert handled 70.5 million tons of cargo in 2016, and operators at the airport include three all-cargo carriers. Adjacent to Foreign Trade Zone #102, St. Louis Lambert's cargo facility space includes bonded storage and secured warehouses.
Co-located with Scott Air Force Base, MidAmerica St. Louis offers, among other amenities, a 17-acre air cargo facility next door to a 60,000-square-foot air cargo terminal designed for perishables. "We have one-stop shopping here that allows for a cargo carrier to consolidate and upload or download and distribute into or out of the region through a warehouse that is the largest perishable center north of Alabama on an aircraft parking ramp," says Tim Cantwell, airport director at MidAmerica.
North Bay Produce of Traverse City, Mich., owns and operates the facility in partnership with the airport, which uses the warehouse as part of its own supply chain and also offers service to other shippers. The airport provides the ground services and labor for loading and unloading; North Bay provides services such as forced air cooling, short- and long-term storage, and USDA-approved cold treatment and fumigation services. "With one phone call, shippers can coordinate everything," Cantwell says.
The MidAmerica Advantage
North Bay Produce chose MidAmerica St. Louis for its central U.S. distribution site because of the airport's relationship with Ningbo Lishe International Airport in China. "Ningbo, with our coordination, developed what is currently the only perishable center on an aircraft ramp in China," Cantwell says. North Bay hopes to take advantage of that relationship in its own operations, he adds.
While offering special facilities for perishables, MidAmerica also handles many other kinds of cargo. "We do a lot of specialized charters," Cantwell says, citing a flight that recently transported a helicopter to Jordan. "We're convenient, with low traffic and two runways."
Because the Air Force operates air traffic control for the facility, planes can take off from and land at MidAmerica 24 hours a day, seven days a week. The U.S. Customs office at the airport, located on the cargo apron, also operates 24/7, he says.
The relationship with Scott Air Force base offers other advantages as well. "They provide 24/7 snow removal, so there's never a closure here during inclement weather," Cantwell says. Also, because the airport shares services with the Air Force, keeping overhead low, MidAmerica offers unusually low fees to carriers that operate at the airport.
For companies that locate distribution centers or other facilities near MidAmerica, Scott Air Force Base offers another advantage. A major supply chain hub for the Air Force, Scott employs large numbers of logistics professionals who, when they leave the Air Force, could lend their talents to companies in the region. "The average retirement age of a military member is between 43 and 47," Cantwell says. "So you've got a lot of experience that could walk across the street and make an immediate impact on the civilian front."
Shippers will also find plenty of land ripe for development when a new exit on Interstate 64, adjacent to the airport, opens in summer 2017. "That intersection will open up 2,500 acres of developable warehousing, light assembly and manufacturing land on the airport, with direct access to the highway," Cantwell says.
That land is authorized to operate as part of Foreign Trade Zone #31 and also benefits from a local tax incentive program. "As soon as that opens, I expect a lot of opportunities for people who want to warehouse in a convenient place for both road and air access for their goods," he adds.
Ample real estate and multiple transportation modes are among the biggest benefits that companies enjoy when they locate facilities in the St. Louis region, according to Dan McClain, director of business development at McClain and Associates in Maryland Heights, Mo.
"There are lots of opportunities for growth," McClain says. "For example, we've seen Amazon, World Wide Technology and other companies locate their warehouses in the Southern Illinois area."
Anywhere You Want to Go
The local transportation network offers numerous ways to connect with all points in the United States and beyond. "The Interstates can take you north, west, east or south," he adds. "We have multiple airports. We have six Class 1 railroads, and the river system provides a big advantage for moving shipments north and south."
The Missouri Department of Transportation (MoDOT) has been particularly good about soliciting recommendations from local companies when prioritizing their transportation investments. "They're using input from people in the region to motivate how they improve the infrastructure," says McClain.
As a non-asset-based 3PL, McClain and Associates provides transportation services for truckload, less-than-truckload, and intermodal shipments, using a proprietary transportation management system. For truckload moves, the company can provide flatbed and oversized equipment as well as dry van and temperature controlled trailers. The company manages intermodal moves using 53-foot containers and 40- or 45-foot containers owned by steamship lines.
Although McClain and Associates serves shippers throughout the continental United States, its customers in the St. Louis region may gain some extra benefit due to the volume of intermodal traffic that moves through the area.
"A lot of 45-foot steamship line equipment resides in St. Louis. And there's a daily plethora of domestic equipment in St. Louis that we can load for trips to the East and West Coasts," McClain says. "For one client, we were able to convert a lot of flatbed business to intermodal for movements into the Western U.S. and into Canada." McClain and Associates promotes such money-saving opportunities to shippers and also urges some of its carrier partners to take advantage of this abundant capacity.
Central Location, Large Network
McClain and Associates' location in the St. Louis region provides another advantage to its customers, no matter where they are based. "We're able to expand our network," McClain says. "Because we're right in the middle of the country, that gives us access to carriers everywhere, on all coasts, and moving in all directions. We can be more competitive with our rates, because our network is larger."
Healthy competition—which keeps rates in check—also arises from the fact that St. Louis, itself a hub for manufacturing and logistics, is located close to two other major hubs, Kansas City and Chicago. "That's a positive thing for manufacturers and distributors, or anyone else locating here," says McClain. "It also ensures that everyone is honest and up to date."
Like Amazon in Edwardsville, a company that locates in the St. Louis region will have no trouble finding employees with the knowledge and skills to fill positions in logistics and supply chain management. Six universities in the region offer degree programs and certificates in those disciplines. They include:
- Fontbonne University. Certificate and MS in supply chain management, undergraduate minor in transportation
- Lindenwood University. MBA in supply chain management
- Maryville University. MBA with a concentration in supply chain management/logistics
- St. Louis University. Certificate in integrated supply chain management, MBA in supply chain management
- University of Missouri, St. Louis. Undergraduate minor in transportation studies, BSBA in logistics and operations management, MBA in logistics and supply chain or operations management, PhD in logistics and supply chain management
- Washington University. Undergraduate minor, BSBA or MBA in operations and supply chain management, MS in supply chain management
Filling the Talent Pool
Companies in the St. Louis region that need to fill supply chain and logistics positions will find enthusiastic allies at the University of Missouri, St. Louis (UMSL). "The number one thing that companies are interested in is the talent pool. Our goal is to fill their talent pipeline," says James Campbell, professor and chair of the Supply Chain and Analytics Department in UMSL's College of Business Administration.
Many businesses in the region maintain productive relationships with the program. "Our big theme is Connecting with Business," Campbell says. "We provide an opportunity for our students to start great careers in supply chain and logistics, and then we provide the companies the talent they need."
As an example, Campbell points to a recent undergraduate student who was triple-majoring in French, International Business, and Logistics and Supply Chain Management. "At one of our student engagement events last fall, she met some folks from Anheuser-Busch (AB InBev), who just happened to need someone to work on exports to Canada." Upon graduation, that student took a job as senior analyst II, logistics exports with the beverage firm.
AB InBev is one of a distinguished list of companies in the St. Louis region that serves on the Supply Chain and Analytics Department's Advisory Board. The board also includes Boeing, Graybar, Unyson Logistics, Ameren, Monsanto, Express Scripts, World Wide Technology, Nidec and others.
Students aiming for careers in supply chain and logistics management connect with professionals from those and other companies at on-campus events that combine presentations by industry speakers with networking opportunities. Some Advisory Board members also form mentoring relationships with the program's most promising students.
In addition, companies seeking supply chain and logistics talent benefit from UMSL's strong internship program. One notable example is Unyson Logistics.
"We've had an unofficial partnership with Unyson for 25 years, where we feed them interns who then become employees," Campbell says. Boeing receives many interns from across the entire College of Business. "Even if they start in accounting, finance, or marketing, many find their way into a great career in supply chain," he says.
Faculty in the Supply Chain and Analytics Department have long collaborated on applied research with companies around the world. Now, they're ramping up efforts to focus more of that work in the St. Louis region.
In one current project, UMSL researchers are working with a local nonprofit, Operation Food Search, on a more efficient way to route trucks that pick up food items that are then directed to needy residents. "We're going to do a summer pilot project looking at improving the truck routing, which we then hope will grow into a larger-scale implementation across the entire region," he says.
Campbell and a colleague also recently worked with a St. Louis-based omnichannel sporting goods retailer that needed help expanding its fulfillment network. "They had a single warehouse in St. Louis and wanted to add something on the East Coast to deal with expansion and all their e-commerce," Campbell says. "We did a project for them, which we're working on getting published, that looked at how to design their network and locate e-commerce warehouses."
Another local company that has benefitted greatly from supply chain and logistics programs at universities in the region is St. Louis-based Sunset Transportation. "We have a huge labor pool entering the workplace with a strong foundation of supply chain knowledge," says Lindsey Graves, vice president, operations at Sunset.
Sunset Transportation serves customers throughout the United States with logistics management and freight audit and payment services. It also offers a suite of cloud-based technology solutions for functions such as rating, routing, tracking and bid management.
Although Sunset's customers belong to a broad range of industries, the company does a great deal of work for mid-market food and animal feed businesses. In addition, it manages a lot of industrial material and manufacturing freight, including shipments requiring specialized equipment.
Top-quality service is a particular concern for those customers. The stream of qualified candidates graduating from logistics and supply chain programs in the region offers a particular advantage to high-service freight.
"There's talent with passion for our industry, which makes it easier for us to hire, develop, and keep good people," Graves says. "Passion for our business and our customers sets us apart and helps us continue to improve and grow."
Growing Job Market
Shippers that locate in the St. Louis region enjoy a similar advantage when they hire for internal logistics and supply chain positions. "Not only do they gain access to a deep pool of talent, but the lower cost of living in the area makes for a growing job market," Graves says. "We have a lot of trouble hiring for our Chicago office, in comparison."
Amazon's decision to locate its two facilities in Edwardsville further demonstrates the region's attraction. "They have the strategic resources to know where the next generation of distribution will set up shop," Graves notes. "It speaks volumes for doing business in the St. Louis region."
Nathan Chew, president of St. Louis-based Range Logistics, also sings the praises of the logistics and supply chain programs at the region's institutions of higher learning, particularly St. Louis University and Washington University.
"I graduated from St. Louis University years ago, and I couldn't have told you what logistics meant if you'd asked me back then," he says. Now that school and Washington University both run widely acclaimed programs in that discipline.
"We've attended job fairs at both locations," Chew says. "We've recruited some of our employees from those programs."
A non-asset-based third-party logistics company, Range Logistics provides a single point of contact for managing transportation throughout North America and around the world, by any mode.
"We have the ability to courier a package locally—same day, five miles down the road, with a guy on a bicycle," Chew says. "On the flip side, we're able to coordinate ocean containers, for example, to the Department of Defense military bases in Guam and Japan."
While Range Logistics does a lot of work with shippers in the food and beverage and consumer products industries, it serves a wide range of companies.
"One large client makes plastic bottles in which other companies put products such as peanut butter and mayonnaise," Chew says. "We ship those finished plastic bottles to distribution centers across the United States."
Aside from its workforce, the St. Louis region offers several other advantages, Chew says. One is unparalleled access to multimodal shipping options, including transportation by highway, rail, air, and barge. Thanks to those diverse shipping options, Range's customers located close to the 3PL's headquarters gain even greater efficiencies than the company can offer in other parts of the country. "Being in St. Louis increases our ability to optimize the modes," he says.
Low rates of traffic congestion in the St. Louis region compound that advantage. "When measured against 25 other metropolitan areas in the United States, St. Louis is consistently near the bottom in terms of congestion," Chew says.
Between the free-flowing traffic and central location, shippers in and around St. Louis gain a speed to market that provides a significant edge in today's commercial environment. "Everybody is moving more toward 'I need that product yesterday,'" Chew says. "The ability to put your warehouse or distribution center in a region that has extremely low congestion, so your products can move with ease, and where you have a large number of consumers within a day's travel, is big."
In fact, everything about the logistics opportunities in the St. Louis region is big—and with all the new initiatives in progress, those advantages will only continue to expand.