As commercial real estate prices continue to fluctuate, warehouse and logistics managers must keep a close eye on comparative costs as well as new market challenges. Distribution warehousing is a critical component of logistics, it provides lower cost structures and creates the option of same-day delivery for numerous logistics companies. Having the right warehousing infrastructure, costs, and location impacts effective logistics activities.

According to Supply Chain Quarterly, Chesterfield, Va., is a top warehousing hot spot in the South Atlantic region with annual variable operating costs only at $11,422,304. These operating costs are based on a newly constructed 500,000-square-foot facility for Chesterfield employing 125 workers and includes the annual costs for labor, taxes, real estate, construction, and utilities.

Compared to all top supply chain hot spots in the United States, Chesterfield ranked the 14th top warehousing location. Other important factors include the regions location being the north-most of all the top hot spots in the South Atlantic region – making it more accessible to both northern and southern regions including Washington D.C. With Chesterfield’s location and low annual operating costs in the South Atlantic region, many supply chain firms are deciding to bring their operations to the Greater Richmond area.

Local logistics firms named among top in U.S.

The influx of supply chain operations is increasing the need for the comprehensive logistics services offered by both the public and private sectors of Richmond. According to Inbound Logistics Magazine’s Top 100 truckers of 2019, two inbound logistics freight transportation companies on this year’s list are headquartered right here in the Greater Richmond region. Both Estes Express Lines and UPS Freight are headquartered in the City of Richmond and utilize a combined total of 14,400 drivers with a truck fleet size of 13,821. Their impressive equipment and extensive knowledge have made them leaders in the less-than-truckload (LTL) market.

The Top 100 Truckers is a list of the best logistics firms that range in a variety of specialty services that are best-suited to handle transportation services for advanced manufacturing, food & beverage and many other popular industries. Inbound Logistics’ 2019 Top 100 Truckers directory offers an in-depth review of many long-distance carriers that match shippers’ diverse and demanding needs.

Estes Express Lines

Estes Express Lines is the nation’s largest privately-owned freight transportation carrier and is a go-to provider of end-to-end transportation and custom logistic services. The freight firm has a truck fleet size of approximately 8,121, including both tractors and vans. They possess a trailer fleet size of 8,952 with a total of 6,000 drivers; all coordinating operations in the North America region. Their extensive network has generated nearly 7,000 next-day lanes that provide reliable next-day shipping as a standard transit time that’s often considered an expedite service to other carriers.

The full-service freight transportation provider has been owned and operated by the Estes family since 1931 and continues to thrive in Greater Richmond. The logistics firm was recently named CaroTrans’ LTL Carrier of the Year Award and was one of America’s Best Large Employers by Forbes for two consecutive years – making it the sixth highest-ranked transportation and logistics company as well as the number one trucking company on Forbes list.

UPS Freight

Based in Richmond, Va., UPS Freight is the LTL division of the United Parcel Service (UPS) that delivers all freight unsuitable for parcel shipping. The freight firm was founded in 2006 after UPS acquired Overnight Transportation and is now considered among the Top five best LTL freight companies in the nation. Last year, the freight firm generated $3.4 billion in revenue, accounting for roughly 10% of the LTL market. Similar to Estes, UPS Freight has many service options including same-day guaranteed delivery using their “day-definite” delivery service for LTL freight.

UPS Freight is both a unionized and non-union, publicly traded, firm with a truck fleet size of around 5,700, which includes both tractors and vans. In the North American region, the firm has built a trailer fleet size numbering 23,500 with a total of 8,400 drivers to handle extensive LTL services including “day-definite” deliveries.

 

More about Richmond's Logistics cluster

The Texas A&M Transportation Institute’s 2019 Urban Mobility Report highlights Greater Richmond, Va., remaining one of the nation’s least-congested large urban areas. The average commuter in Greater Richmond spends only 35 hours in traffic annually compared to the national average of 54 hours per year. Since 2014, the region has slightly increased from 34 to 35 hours per year in traffic and slid from the 77th most-congested area to the 90th.

How RVA traffic is saving you money

According to CNBC, traffic congestion cost the nation $87 million in lost productivity in 2018, around $1,348 per driver. With Richmond commuters spending only 35 rather than 54 hours per year in traffic, drivers in the region are saving approximately $430 annually compared to the normal commuter. Congestion costs for the average commuter totals $1,010 yearly with the 101 largest metro area’s growing even higher at $1,210. Richmond’s traffic costs commuters in the region only $580, meaning that driving in Greater Richmond is nearly half the cost of the U.S. average. Local drivers save on gasoline related to the extra time spent in traffic, spending approximately 43% less than the nation’s average commuter.

RVA vs D.C.

Richmond currently sits well below the national average for both annual traffic costs and hours spent in traffic. Unfortunately, Washington, D.C., doesn’t share this luxury. Time is money and Washington, D.C., drivers are losing immense amounts annually because the region is one of the nation’s top traffic congestion spots. Washington, D.C., commuters spend approximately 102 hours in traffic per year with costs reaching as high as $1,840, nearly double the national average. With Washington, D.C., ranked as the third most-congested large urban area, Richmond looks like the perfect place to do business since employees and delivery teams are spending less time and money sitting in traffic.

Greater Richmond’s access to Interstates 64, 85, and 95 provide the region with logistical advantages that enable firms to distribute products more quickly. In fact, Richmond is only a one day’s drive from 45% of the U.S. population – creating efficiency for supply chain operations.

Future Outlook

In metro areas across the country, the number of additional hours commuters spend delayed in traffic increased by 29% between 2014 to 2017, from 42 hours in 2014 to 54 hours in 2017. Although Greater Richmond’s population is growing by 200 net new residents per week, the Texas A&M Transportation Institute’s Urban Mobility Report depicts that the region is expected to retain a slow growth of hours spent in delayed traffic. This forecast is due to the region’s access to multiple interstates, which has eased the flow of traffic throughout the area, creating substantially lower commute times. In conclusion, Greater Richmond drivers are saving money yearly due to lower traffic congestion, leading to lower congestion costs compared to both the U.S. average and Washington D.C.

Read about the region's transportation options

Richmond International Airport (RIC) had its most productive 12 months to date, topping annual records set in 2018. More passengers passed through the airport than ever before, increasing on a near-monthly basis. In this wave of progress, the airport named Perry J. Miller, AAE, IAP, the new President and CEO to lead the Capital Region Airport Commission, succeeding Jon E. Mathiasen, AAE, who retired after 19 years at the helm. The Airport Commission directs the growth, operation, and business activities of RIC and is governed by 14 commissioners appointed by four Richmond-area jurisdictions including the City of Richmond and counties of Chesterfield, Hanover, and Henrico.

RIC served 4.268 million passengers in its 2019 fiscal year, an 11.5 percent increase over the previous fiscal year. It isn’t any surprise that FY19 was overall record-breaking since June 2019 was the 21st consecutive month at RIC that an all-time monthly passenger record was set. In the past two years alone, RIC’s passenger traffic rose more than 20 percent. Passenger growth may motivate carriers to provide more capacity and result in increased frequency or larger aircraft to in-demand locations — already a current trend at RIC.

Passengers aren’t the airport’s only area of growth since 2018:

  • Aircraft operations increased by 4.8 percent
  • Cargo shipping increased 2.5 percent for a total of 140 million pounds of cargo
  • Operating revenue reached $52.9 million, 12 percent higher than RIC’s FY19 budget
  • Fitch affirmed an “A” rating on approximately $72.6 million outstanding airport revenue bonds issued by the Airport Commission; Davenport & Company assisted the Commission in delivering an exemplary debt review for RIC bonds

Shipping nearly 140 million pounds of freight annually, goods distributed out of the Richmond region can be halfway around the world by air and reach up to 45 percent of the U.S. population by truck within a one-day drive. This makes RIC one of the best-situated air cargo facilities in the nation. Customers of FedEx, UPS, and DHL regularly benefit from RIC’s strategic position. RIC’s accessibility to top cargo carriers allows local businesses to ship products into domestic and international markets in one to three business days.

The airport is also a Foreign-Trade Zone (FTZ #207), defense production zone, and an enterprise zone. The FTZ is utilized as an ideal resource for international entities to limit the taxes on their cargo and to reach their markets. The defense production zone benefits businesses engaged in the development and production of materials, components, or equipment that meet the required needs of national defense. The airport is also a part of an enterprise zone that provides incentives, including rebates, limited taxes, and assistant grants, for qualified industrial and commercial organizations.

On peak days, there are nearly 180 flights coming and going from Richmond International Airport. To accommodate increases in air traffic — while encouraging the trend to continue — RIC committed nearly $70 million in expansion upgrades. Of that total, $28.5 million is dedicated to the Concourse A Expansion Project which is well underway and expected to be completed in May 2020.

Manufacturing, I.T. and supply chain companies keeping a close eye on their budget should be pleased to learn electric rates in Greater Richmond are well below state, Mid-Atlantic, and national averages.

Companies large and small could benefit from relocating to the region. According to the Edison Electric Institute, the typical industrial rate is 5.4 cents per kilowatt-hour for a company using 1,000 kilowatts and consuming 650,000 kilowatt-hours per month in Richmond as of July 2019. When compared to typical rates of 6.7 and 8.8 cents per kilowatt hour offered by Southeast utilities and the national average respectively, this is an advantageous price for advanced manufacturing, supply chain, and I.T. companies.

A major reason why Greater Richmond electric prices are lower than other regions is because of both generation and delivery. According to the EIA, there are several factors that go into being able to produce and deliver electricity, such as:

  • Reliable transmission and distribution systems. Maintenance and repair costs to these systems can increase overall electricity prices.
  • Multiple, accessible power plants in the region. Richmond is geographically close to many of Dominion Energy’s power plant, such as two nuclear power stations, and other generation sources, such as solar facilities.
  • Access to sufficient water, wind and daylight. These resources can lower electricity costs with harvestable energy from hydro plants and solar panels.
    • Dominion Energy publicly committed to have 3,000 megawatts of solar and wind energy “in operation or under development” by 2022. That’s enough to power 750,000 homes with clean, renewable energy.
    • According to the Solar Energy Industries Association, solar electricity prices in Virginia have fallen 34 percent in the past five years, and the state is ranked 7th for projected growth in the next five years.
    • Dominion Energy’s pilot offshore wind project began construction in July 2019 and will consist of two 6-megawatt turbines. Located off the coast of Virginia Beach, it’s the first offshore wind project in U.S. Federal waters.

Any company looking to relocate should consider a region that provides the lowest electric prices. Greater Richmond, Va., is a great option for any company on the East Coast, as its statistically low industrial electric bills shine when compared to its competitors.

Media coverage results from logistics familiarity tour

Chris Gullickson leads the invited press guests on a tour of the Richmond Marine Terminal.

Last month, the Greater Richmond Partnership (GRP) and the Virginia Economic Development Partnership (VEDP) hosted a media tour to explore the Richmond Region’s logistics sector. Following the tour, Joseph Keefe, Editor at Maritime Logistics Professional and MarineNews, authored an article on the Port of Virginia’s Richmond Marine Terminal, its burgeoning growth over the past 10 years, and its recent acceleration of productivity:

Lifting a port to prosperity

A Liebherr LHM 420 Crane is at the heart of a rapidly expanding shortsea shipping success story. Reliability is the key for a port that’s turned the corner, with nowhere to go but ‘up.’

Way back in January of 1996, I moved to Richmond, Virginia, from Houston, Texas. Still very much in the maritime business as a cargo surveyor and ship expeditor, the Port of Richmond intrigued me, every time I drove past it on I-95. Eventually, I got a tour of the struggling port, courtesy of then port director and retired USCG Captain Marty Moynihan. Moynihan, an energetic executive, was keen to expand the port’s horizons.

Back then, as much as half of the port’s meager business was tobacco shipping to and from Philip Morris, just across the street. Still, Moynihan persisted, and the port – later helped by Sean Connaughton, Virginia’s Secretary of Transportation from 2010 until 2014, and prior to that, the U.S. Maritime Administrator from 2006 until early 2009 – slowly came to life. Connaughton, then a huge supporter of shortsea shipping, put the muscle of those state and federal government positions to work, advancing the role of inland waterways in the nation’s intermodal equation.

Read the rest of the article here.

Growth of TEUs at the Port of Virginia

Down the James River from the Richmond Marine Terminal, the Port of Virginia’s shipment volumes are increasing and expected to rise through 2020. According to John F. Reinhart, CEO and executive director of the Virginia Port Authority, cargo container shipments have grown 15 percent since 2015 and shipments by barge are projected to surpass 34,200 this year and 41,200 by next year. By the end of the port’s current fiscal year, it predicts handling nearly 2.97 million 20-foot equivalent containers (TEUs). By FY 2020, the port predicts handling 3.25 million TEUs.

The Virginia Port Authority is investing in the port to prepare for this growth in shipments. The future of container delivery and port productivity at The Port of Virginia is its combination of technology, equipment, and people.

The future starts today

Four new ship-to-shore cranes—the largest in the Western Hemisphere—were delivered in January. The Port of Virginia now has 30 ship-to-shore cranes at work in the Norfolk Harbor and the ability to service the biggest container ships sailing the Atlantic Ocean, as well as even larger ships currently at work in Europe that will ultimately make their way to the U.S. That can lead to more volume for the Richmond Express barge service that sails three times per week to Greater Richmond.

“The big ships calling the port are only getting bigger and we are charting our course for the future to ensure we will be able to accommodate the larger capacities still to come,” said Reinhart. “Richmond is maturing into an important inland transit point for cargo and has become integral to our operation.”

Infrastructure investments

The Port of Virginia has made numerous corporate and equipment investments to manage growth and to increase usage at the Richmond Marine Terminal. In January of this year, Brother International Corp. relocated a distribution center near the Terminal developed by California-based Panattoni Development Co. Two months later in March, the Port added a second barge to the Richmond Express, allowing more shipments up the James River to the Terminal. Other Terminal investments include a $4.2 million mobile harbor crane that allows the port to move shipping containers on and off the barge quicker, safer, and more efficiently.

The port is one month from completing its $320 million expansion of Virginia International Gateway (VIG) that will expand the annual container throughput capacity to 1.2 million units. The project is one of two large-scale expansion projects that, when complete, will increase the port’s overall annual container capacity by 40 percent, or 1 million container units, by 2020.

Four cranes were recently ordered to the tune of $44.8 million for the Port, which was recently named #5 in CBRE’s Seaport & Logistics Index. The largest of their kind in the Western Hemisphere, these cranes will be able to handle the Ultra Large Container Vessels, or ULCVs, that are currently calling the port, as well as even larger vessels that plan to call in future years.

“What is unique about these cranes is their outreach, they will be able to reach across a vessel that is 26 containers wide, which is three-to-four containers wider than most cranes,” said Virginia Port Authority (VPA) Board Chairman John G. Milliken. “We anticipated needing this capacity (of the cranes) for the ships that will be coming to Virginia 10 years from now. When that day comes The Port of Virginia will be ready.”

Download the Supply Chain flyer

Did you know you can reach 55 percent of the U.S. population within a two days’ drive from Greater Richmond? The region’s central location connects companies to numerous markets and brings many benefits to those operating in Greater Richmond. Its proximity to interstates, the Richmond International Airport and the Richmond Marine Terminal provide companies with a multitude of distribution options.

Greater Richmond’s location on the American East Coast has made it a hub for several supply chain and logistics companies, including Riverside Logistics, C.H. Robinson and Orbit Logistics. FedEx and UPS Freight also operate regional distribution hubs in the area.

Greater Richmond is also home to many food and beverage companies, including Sabra Dipping Company, Mondelēz Global LLC and Ukrop’s Homestyle Foods. These food suppliers need quick access to the market and benefit from the Richmond Region’s network of transportation options.

E-commerce giant Amazon also operates multiple facilities in the region, including a warehouse in Chesterfield County and two distribution centers in Hanover and the City of Richmond. Greater Richmond is also home to one of Amazon’s Prime Now distribution hubs in Henrico County, fulfilling customers’ orders within the hour.

In addition to its prime location, Greater Richmond has an ideal workforce, comprising of over 680,000 individuals from more than 40 localities statewide.

Read more about the supply chain industry here and about the workforce in Greater Richmond here.

When most people consider incentives as part of an overall economic development incentive package, workforce development incentives typically aren’t top of mind. However, this can actually have a significant impact on a company’s bottom line, particularly when combined with other offerings from a state or region.

Here in the Richmond Region, the Capital Region Workforce Board proactively targets companies in the Advanced Manufacturing, Healthcare, Logistics, and Professional, Scientific & Technical Services — all of which happen to align with industry strengths in the region. This is no accident. The Board strategically aligns their focus and has an average of $4 million annually to assist companies with finding and training their workforce. In the fiscal year ending in June 2017, more than 28,000 job seekers received basic career services and more than 1,800 job seekers received individualized counseling and training assistance.

Employment and training programs in these and other areas are administered by 20 regional organizations that, together, form the Capital Region Workforce Network. Most network partners are state or local government groups, but others include community-based groups, non-profits, and economic development organizations like the Greater Richmond Partnership.

Richmond Marine Terminal invests in cargo-moving upgrades

More than two years after the Port of Virginia signed a 40-year operating lease, the Richmond Marine Terminal has plans for $17 million in upgrades in anticipation of increased docking of Panamax container ships at the Port of Virginia. The Port was recently named #5 in CBRE’s Seaport & Logistics Index.

The Terminal’s crown jewel, a new 124-ton capacity crane, debuted within the first six months which allows an increase in container transfers from advanced manufacturing and supply chain firms.

A custom 309-foot, $2 million barge was built to navigate up the James River from Norfolk, home of the Port of Virginia and its 50-foot natural channels – the deepest on the East Coast. Christened the “Richmond Express,” the barge can carry 125 40-foot shipping containers and runs three times per week between Norfolk and Richmond, Va.

The barge service, used by Altria, Lumber Liquidators, Honeywell, Scoular Grain and others, eliminates nearly 15,000 tractor-trailer trips between the two ports. Customers benefit from reduced travel costs as the barge service can save between $11 and $120 per container when compared to transport on Interstate 64.

Other recent upgrades include:

  • A 40-plug central power unit that can be mounted on the Richmond Express barge to be used for expanded refrigerated cargo capability. Virginia is the newest member of a program that is designed to import fresh fruit in refrigerated containers from South America.
  • A 52,000-lb. lift capacity forklift allows for overweight cargo business
  • A $600,000 top loader which moves containers on-and-off of the chassis used by motor carriers

 
Learn more about the region’s supply chain industry

Surging passenger traffic sparked a series of expansions at the Richmond International Airport (RIC) nearing $70 million. A $28.5 million addition to Concourse A is planned for early 2020 to support the airport’s 200+ daily flights.

RIC continues to set a new passenger traffic record each month since September 2017. Nearly 3.5 million passengers used the airport in its 2018 fiscal year thus far — up 5.7 percent since 2017. Direct flights to major cities are being added regularly to the airport’s roster to accommodate the increase.

Despite the rise in passenger traffic, the airport retains its easy access and convenience. RIC is considered one of the most efficient airports in North America and its central location is only 15 minutes from downtown Richmond. The airport attracts almost 3.5 million passengers traveling to and from Richmond, Washington D.C., Virginia Beach, Charlottesville, Williamsburg and Fredericksburg. A $35 million expansion to its North Garage is in the planning stages.

According to iFly.com, passengers rarely experience security checkpoint waits more than 20 minutes. RIC is planning to upgrade Concourse B’s checkpoint at a cost of $4 million, further decreasing line times.

In addition to passengers, RIC also handles an average of more than 100 million pounds of cargo annually by air carriers, including UPS and FedEx. Goods distributed out of the Richmond, Va., region can reach 50 percent of the U.S. population within 24 hours, making RIC one of the busiest air cargo facilities in the nation. RIC is also a designated Foreign-Trade Zone (FTZ #207), where foreign merchandise may be admitted into the airport without payment of U.S. Customs duties or government excise taxes for international commerce.

For private charters, the region offers an Executive Airport for businesspersons, corporate pilots, or general aviation. The airport is only 12 miles away from downtown Richmond and located near Interstate 95 – the main thoroughfare of the East Coast. Amenities include corporate hangar space, a corporate pilot’s lounge, conference rooms and transient crew quarters. Dominion Aviation also operates out of the Chesterfield County Executive Airport. Passengers are also able to charter planes through the Hanover County Airport in Ashland and through MartinAir, servicing out of RIC.

Learn more about the strong transportation infrastructure in the Richmond, Virginia, region.

Read about the region's transportation options