July 2020 | Commentary | EcoDev

Becoming the Next Leading Logistics Hub

Tags: Economic Development, Distribution, E-commerce

More and more consumers turned to e-commerce and online grocery sales for their purchases during the COVID-19 pandemic, adding pressure on the supply chain and making the location of distribution and fulfillment centers even more important.

Chris Gutierrez is President, KC SmartPort, 816-374-5680

As companies look to find new locations for distribution and e-commerce facilities, your region can become a logistics hotspot by following Kansas City's five-step blueprint.

1. Available real estate. Real estate economists project that every $1 billion of new e-commerce business created will drive an estimated need for 1.25 million square feet of new industrial space.

Kansas City's move-in-ready, existing building inventory and selection of vertical-ready sites enables e-commerce companies to secure their real estate and begin operations or development of their facility immediately. Locations seeking to replicate this must ensure ample real estate in response to soaring demand.

2. Skilled workforce. Appealing destinations for logistics facilities must offer ample—and trained—talent. Local institutions must also be prepared to expose students to supply chain principles at an early age, extending and developing the "pipeline."

Currently, several training programs in the Kansas City area are focused on preparing the labor force for current and upcoming jobs in transportation and logistics. Numerous education institutions around the Kansas City region have supply chain management programs in place, including high schools and technical schools.

3. Transportation infrastructure. A city's existing transportation infrastructure—and flexibility to expand—must also give the region a competitive edge. The Kansas City region provides a clear advantage to e-commerce operations, especially as approximately 75% of companies report supply chain disruptions due to coronavirus-related restrictions.

4. Central location. Geographic advantages are pivotal when it comes to logistics and distribution, as companies will want a favorable, central position to access nearby markets. Kansas City sits at the intersection of four major U.S. interstate highways and is served by five Class 1 rail lines. And a new terminal facility is under construction at the Kansas City International Airport.

Companies evaluating their supply chain to match current demands may reconsider inventory on hand, sourcing locations, and the need for safety stock. Numerous third-party logistics companies located in the Kansas City region provide an option for safety stock with flexible warehousing and other services.

Additionally, Foreign Trade Zones provide an option for safety stock and value-added production activities so that inventory is easily accessible.

5. Logistics resources. Many areas that continue to emerge as logistics "hubs" have been expanding and adding to their distribution portfolios in recent years. These locations typically boast ample infrastructure and transportation capacity to adapt to demand spikes in the wake of COVID-19.

In the past five years, the Kansas City region has attracted related companies pledging to create more than 7,000 jobs, invest $1.3 billion, and occupy 15 million square feet of industrial space. Kansas City's attraction pipeline includes 2.6 million square feet of active e-commerce prospects and 2.5 million square feet of active food-related prospects.

These five factors have played a part in transforming Kansas City into a logistics hotspot. Developing and leveraging these factors may help any region become attractive to large distributors.






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