Navigating U.S. Site Selection

A regional guide to U.S. logistics and distribution hotspots.

For myriad reasons, companies are looking at their global footprints with a wandering eye: the threat of international hiccups that could impact production and supply chain flow; the demand for cheaper labor and manufacturing; and the potential for tapping new consumer markets.

But while businesses may be fickle about where they source product from, and outsource manufacturing to—often relying on third-party logistics providers to lead the way and avert unnecessary risk—they are increasingly resolute in how and where they move product to market on the U.S. front.

Transportation rates remain high, so squeezing out efficiencies and costs through well-tuned transshipment and distribution networks is essential. Businesses with well-designed, finely tuned inbound logistics strategies can flex with shifting volumes and unforeseen circumstances to ensure their supply chains remain fluid and customers stay satisfied.

What factors go into creating a favorable inbound distribution point? First, proximity to major cargo gateways is critical, either via air or ocean. Consumer demand, in concert with global sourcing locations, dictates the strategy consignees use to align their U.S. distribution networks (either regional or centralized distribution models), and where these logistics hotspots are.

Second, distribution pivot points should provide access to major north/south and east/west interstate networks as over-the-road remains the transportation mode of choice for last-mile deliveries.

Third, rail/intermodal capabilities are increasingly important in capacity- and congestion-constrained areas, as well as long-haul markets in areas such as the Midwest.

Lastly, businesses have to keep in mind where they will draw workers from, as well as the total costs—such as taxes and employee compensation—of operating and running a facility.

While secondary to location and customer demand, area demographics and cost of living are important factors because they may place a greater premium on renting a facility as opposed to buying one, purchasing an existing DC over building a new one, or outsourcing logistics and distribution responsibilities to a third party rather than bringing them in-house.

Inbound Logistics identified 16 U.S. sites and clusters that are fast becoming popular distribution destinations for logistics-minded companies. Not every location is appropriate for every customer, as markets in or near highly populated areas command premium prices.

Increasingly, second- and third-tier distribution locations, with more economical real estate prices and pro-business tax incentives, are luring small and medium-sized businesses. Areas with highly skilled logistics personnel, which many companies find near U.S. military bases, are also growing increasingly popular.

IL‘s site selection map is equally diverse, reflecting the varied needs of high-value, small-shipment shippers, as well as bulk- volume, big-box consignees.

Where are these inbound logistics hotspots? See below.


New York City Metro Area

At the heart of the country’s densest population area, the New York/New Jersey metro area’s well-educated and ethnically diverse labor market is a major boon to global-minded businesses willing to open their coffers for a captive consumer base.

The Port Authority of New York/New Jersey touts the largest port complex on the U.S. East Coast with convenient, albeit congested, surface transport access westward and north/south.

The Port Authority is currently investing $1.7 billion to revamp existing port terminals, deepen the harbor’s channels and berths, improve inland rail and barge capabilities, and make ongoing security enhancements.

Additionally, the Port, along with both public and private entities, is spearheading development of the Port Inland Distribution Network, a hub-and-spoke system that will reduce inland distribution costs, increase throughput capacity, and spur economic development at feeder ports in the surrounding region.

Airports: JFK International Airport, Newark Liberty International Airport, LaGuardia Airport

Port: Port Authority of New York and New Jersey

Road Access: I-95, I-80, I-78, I-87

Rail Carriers: Norfolk Southern, CSX

Workforce: 9.3 million

Per-Capita Income (2007 state rank): NJ #2; NY #5

State Business Tax Climate Rank: NJ #48; NY #47

Baltimore, Maryland

Baltimore’s strategic location—it straddles the Northeast and Mid-Atlantic regions and sits 200 miles closer to the Midwest than any other East Coast seaboard city—is advantageous for consignees bringing product into the United States via ocean or air.

The Port of Baltimore has strong break-bulk and Ro/Ro capabilities and is expanding its container facilities to meet growing East Coast demand. The city is also geographically close to three major airports—Dulles International Airport, Ronald Reagan Washington National Airport, and Baltimore Washington International Thurgood Marshall Airport.

In addition, I-95, the Northeast’s main north/south thoroughfare, runs directly through the city, offering companies overnight delivery options to two-thirds of the nation’s population.

Airports: Dulles International Airport, Ronald Reagan Washington National Airport, Baltimore Washington International Thurgood Marshall Airport

Port: Port of Baltimore

Road Access: I-95, I-83, I-70

Rail Carriers: CSX, Norfolk Southern

Workforce: 1.4 million

Per-Capita Income (2007 state rank): #4

State Business Tax Climate Rank: #29


While the southeast has endured hardship in the decline of traditionally strong agriculture, textile, and manufacturing activities, the opportunity to invest in and drive regional economic growth around logistics and distribution activity has brought welcome relief.

With the fastest-growing consumer market and the lowest per-capita income rate in the country, the Southeast draws stateside consignees proactively looking into expansion opportunities.

A favorable climate, congestion at West Coast ports, and the lingering effects of Katrina-affected Gulf Coast ports even has Asian-origin shippers and consignees strongly considering all-water routes to Southeastern ports.

Florida ranks among the top five friendliest states in terms of business taxation, while the rest of the region by and large follows the party line—middle of the road.

Jacksonville, Florida

At the heart of the United States’ fastest-growing consumer region, Jacksonville leverages strong marine logistics infrastructure with solid rail and road transportation capabilities.

The Jacksonville Port Authority, on the strength of its deepwater terminals, has long been one of the United States’ top Ro/Ro facilities, and is locally supported by a diverse number of carmakers and automotive parts companies.

With a well-educated labor market, supported by the city’s U.S. Naval presence, Jacksonville is tapping East Coast inbound container volume and an exploding consumer market to grow its economic development potential.

Airport: Jacksonville International Airport

Port: Jacksonville Port Authority

Road Access: I-95, I-10, I-75

Rail Carriers: CSX, Norfolk Southern, Florida East Coast

Workforce: 656,000

Per-Capita Income (2007 state rank): #20

State Business Tax Climate Rank: #5

Savannah, Georgia

As with other Southeastern cities, Savannah’s economic development potential is largely tied to increasing container volume at its port and interest from retailers looking to tap the burgeoning Florida market.

The Port of Savannah is ranked among the five largest container ports in the country and is the largest single terminal container facility on the East and Gulf coasts. From Savannah, companies can move product by rail overnight to Atlanta and to key inland hubs, including Charlotte, Chicago, Dallas, and Memphis, in less than three days.

Savannah’s per-capita income falls in the lower tier of the country, while its business tax climate sits at the top half.

Airport: Savannah/Hilton Head International Airport

Port: Port of Savannah

Road Access: I-95, I-16

Rail Carriers: CSX, Norfolk Southern, Georgia Central Railway

Workforce: 176,000

Per-Capita Income (2007 state rank): #38

State Business Tax Climate Rank: #19

Memphis, Tennessee

Memphis’ attraction as a formidable U.S. distribution hub lies dually in its location and well-developed transportation infrastructure. Situated at a major east/west, north/south crossroads, shippers can deliver product within a 48-hour window to nearly all the contiguous states as well as points in Canada and Mexico.

Central to the city’s logistics and distribution acumen is Memphis International Airport, routinely the busiest air cargo hub in the world thanks to the presence of FedEx’s global facility.

Not to be outdone, the Port of Memphis ranks as the country’s fourth-largest inland port and the city is the third-largest rail center in the nation.

Airport: Memphis International Airport

Port: Port of Memphis

Road Access: I-40, I-55

Rail Carriers: BNSF, CSX, Norfolk Southern, Union Pacific, Canadian National/Illinois Central

Workforce: 611,000

Per-Capita Income (2007 state rank): #35

State Business Tax Climate Rank: #18


Despite being largely landlocked and struggling to offset manufacturing and agricultural activity lost abroad, America’s heartland is making waves in the logistics and distribution sectors.

The importance of rail/intermodal is driving growth in areas such as Chicago and especially Kansas City, where the promise of a U.S.-Mexico trade corridor is near realization.

Elsewhere, strong air cargo capabilities (Columbus, Louisville, and Indianapolis) and inland port development (Indianapolis) are helping the region capitalize on its fabled work ethic and relatively low costs to make logistics and distribution a viable economic driver for the future.

Columbus, Ohio

Once the home of North American Aviation, a prominent aircraft manufacturer during World War II, Columbus has a pedigree for aviation. So it’s little surprise the city’s logistics strength is largely reliant on its air cargo capabilities. Rickenbacker International Airport is one of the top U.S. ports of entry for textiles, occupying 5,000 acres with an on-site Foreign-Trade Zone and industrial park.

Additionally, DHL-owned, all-cargo air carrier ABX Air operates out of Wilmington Airpark. With over-the-road deliveries to half the U.S. population in 24 hours, Columbus is an ideal option for shippers and consignees with Midwest aspirations. The one negative is Ohio’s less-than-appealing tax climate for businesses; it ranks next to last.

Airports: Wilmington Airpark, Rickenbacker International Airport

Road Access: I-70, I-71, I-75

Rail Carrier: Norfolk Southern

Workforce: 933,000

Per-Capita Income (2007 state rank): #29

State Business Tax Climate Rank: #49

Kansas City Metropolitan Area

Kansas City a global cargo hub? Plans underway to establish a Mexican customs office in the heart of America’s heartland may very well bring the city’s global potential to reality.

The customs facility, which would be operated by KC SmartPort, aims to create an intermodal link with the Mexican port at Lazaro Cardenas to facilitate inbound container shipments from Asia.

Already a major pivot point on the NAFTA trade corridor, Kansas City’s pedigree in the trucking sector—it is home to Yellow Transportation—and rank as the nation’s second-largest rail center in terms of tonnage, is sure to have stateside consignees champing at the bit for a piece of the Kansas City metro action.

Airport: Kansas City International Airport

Port: KC SmartPort

Road Access: I-70, I-35, I-29

Rail Carriers: Union Pacific, Norfolk Southern, BNSF, Canadian Pacific Rail System, Kansas City Southern

Workforce: 1 million

Per-Capita Income (2007 state rank): KS #21; MO #31

State Business Tax Climate Rank: KS #31; MO #15

Louisville, Kentucky

When UPS unveiled its $1.1-billion Worldport air cargo hub in 2002, it put Louisville on the map of major global distribution players—not that the 16th-largest city in the United States didn’t already boast an appealing resume.

Situated 600 miles from two-thirds of the U.S. population in the heart of the Midwest, Louisville International Airport is the 10th-largest cargo airport in the world in terms of tonnage.

In addition, convenient access to three interstate highways makes Louisville and its surrounding region one of the best areas in the United States for distribution and logistics activities.

Airports: Louisville International Airport, Northern Kentucky Cincinnati International Airport

Road Access: I-64, I-65, I-71

Rail Carriers: CSX, Norfolk Southern

Workforce: 630,000

Per-Capita Income (2007 state rank): #46

State Business Tax Climate Rank: #39

Indianapolis, Indiana

Indiana’s economy, traditionally strong in agriculture, has grown considerably more diversified in recent times, and distribution and logistics is one area of strength.

The second-largest FedEx hub in the world is located at Indianapolis International Airport, and a $1-billion project to build a new terminal and renovate existing facilities set for completion in 2008 will accommodate growing freight volume and raise the city’s prominence in logistics and distribution circles.

In terms of location, 75 percent of the U.S. and Canadian population can be reached within a one-day truck drive from the Indianapolis region, where four major interstate highways converge.

The Ports of Indiana, a group of three facilities, are also experiencing increasing ocean and barge volumes via the Great Lakes/St. Lawrence Seaway and Ohio River, respectively.

Airport: Indianapolis International Airport

Ports: Burns Harbor on Lake Michigan; Clark Maritime Center and Southwinds Maritime Center on the Ohio River

Road Access: I-70, I-74, I-65, I-69

Rail Carriers: CSX, Norfolk Southern, Indiana Railroad, Indiana Southern Railroad, Louisville and Indiana Railroad

Workforce: 895,000

Per-Capita Income (2007 state rank): #33

State Business Tax Climate Rank: #12

Chicago, Illinois

As the third most-populated city in the United States and the largest in the Midwest, Chicago is centrally located, houses a critical mass of consumers, and offers a favorable business tax climate—all appealing considerations for distribution- and logistics-minded companies.

As the leading rail hub in the United States—serving six Class I carriers—home to two international airports, and at the junction of seven interstate systems, Chicago provides transportation accessibility to shippers and consignees of all stripes.

Airports: Midway International Airport, O’Hare International Airport, Gary/Chicago International Airport

Road Access: I-90, I-94, I-57, I-290, I-55, I-88

Rail Carriers: BNSF, CSX, Kansas City Southern, Canadian National, Union Pacific, Norfolk Southern

Workforce: 4.9 million

Per-Capita Income (2007 state rank): #13

State Business Tax Climate Rank: #25


What hasn’t been said about the West Coast container cargo conundrum? Capacity and congestion are recurring concerns, and California ranks 45th in favorable business tax climate.

But while the bulk of Asian-origin volume continues to filter through Long Beach, Oakland, and L.A., businesses are still hedging supply chain risks with contingency tactics. Mexico keeps popping up in boardroom meetings as a potential circumvention for central California, which bodes well for San Diego, Houston, and Dallas.

Moving product all-water to the Gulf Coast is also a possibility, though some ports ravaged by Hurricane Katrina still suffer physical and psychological effects, including shipper wariness.

San Diego, California

A favorable climate isn’t the only thing San Diego has going for it; businesses find the local transportation and labor market equally inviting.

A strong military presence creates an attractive and skilled pool of employees when personnel enter civilian life, and the Port of San Diego is well-positioned for importers moving product from Asia.

On-dock rail service, access to three major interstates, and proximity to the Mexico border also are benefits for stateside shippers and consignees.

Airport: San Diego International Airport

Port: Port of San Diego

Road Access: I-5, I-15, I-8

Rail carrier: BNSF

Workforce: 1.5 million

Per-Capita Income (2007 state rank): #11

State Business Tax Climate Rank: #45

Dallas, Texas

With easy access to five interstates, ample rail service, intermodal facilities, and a capable cargo airport, the city is developing the Inland International Port of Dallas, which would greatly facilitate and expedite cargo flow to and from Mexico and Canada.

The city has already signed agreements with the Port of Houston, four Mexican ports, and the Panama Canal to explore and utilize its inland port resources when completed.

Airport: Dallas/Fort Worth International Airport

Port: Inland International Port of Dallas

Road Access: I-20, I-35E, I-45, I-30, I-635

Rail Carriers: BNSF, Southern Pacific, Union Pacific

Workforce: 3.1 million

Per-Capita Income (2007 state rank): #25

State Business Tax Climate Rank: #6

Houston, Texas

Things tend to be bigger than life in Texas, and Houston is no different when it comes to transportation capabilities. George Bush Intercontinental Airport is ranked as the 11th-largest international air-cargo gateway to the United States, while the Port of Houston is the world’s sixth-largest port and routinely ranks first in the United States in total volume of foreign tonnage.

And if shippers had any reservations about Houston’s surface transportation network, the state plans to spend more than $5 billion on area highway improvements by 2007. The city also lies near the I-69 NAFTA Superhighway, which, when completed, will offer direct over-the-road access between Canada, the United States, and Mexico.

Airport: George Bush Intercontinental Airport, William P. Hobby Airport

Port: Port of Houston

Road Access: I-10, I-45

Rail carriers: Union Pacific, BNSF

Workforce: 2.7 million

Per-Capita Income (2007 state rank): #25

State Business Tax Climate Rank: #6


Geographically closest to Asia, the Pacific Northwest has ample opportunity to steal some economic development thunder from its peers down the coast. Certainly Portland and Seattle-Tacoma present themselves as agreeable “just-in-case” locations for West Coast-destined cargo.

But growing congestion issues, coupled with the Northwest’s relative isolation from Midwest markets and the geographic bounds of the Rockies, might make efficient redistribution of product moving eastward challenging.

Relatively high personal income growth—the region ranks third (out of eight) in the country in per-capita income—countered by high unemployment means labor is available, but at a price, which might dissuade some smaller investors.

Anchorage, Alaska

Nine hours by air from 95 percent of the industrial world is the mantra of Anchorage’s economic development interests. FedEx and UPS have established transshipment operations at Ted Stephens International Airport, which in 2006 ranked third globally in terms of total landed cargo.

Air cargo remains the focal interest for stateside consignees, but the Port of Anchorage is trying to expand its global presence with a $350-million redevelopment project. Elmendorf Air Force brings a strong and skilled labor force to the area, specifically in aviation and logistics.

Despite a high cost of living, Alaska ranks third among states with the best business tax climates.

Airport: Ted Stephens International Airport

Port: Port of Anchorage

Rail Carrier: Alaska Railroad

Road Access: Alaska-Canadian Highway

Workforce: 343,000

Per-Capita Income (2007 state rank): #16

State Business Tax Climate Rank: #3

Portland, Oregon & Seattle-Tacoma, Washington

Savvy stateside consignees looking for favorable inbound points of entry can get three for the price of one in the Pacific Northwest—throw in Vancouver, and it’s a contingency quad.

Just 170 miles separate Portland and the Seattle-Tacoma area, and the cities’ proximity to Asia, coupled with continuing congestion further south along I-5, continue to magnify the Northwest’s economic development potential.

High quality of life and a well-educated population bode well for businesses that demand skilled labor.

Airports: Seattle-Tacoma International Airport, Portland International Airport

Ports: Port of Seattle, Port of Portland, Port of Tacoma

Road Access: I-5

Rail Carriers: Union Pacific, BNSF

Workforce: Portland, 1.1 million; Seattle-Tacoma, 1.8 million

Per-Capita Income (2007 state rank): OR #28; WA #14

State Business Tax Climate Rank: OR #10; WA #11

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