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Tim Feemster                                                                                 Sr. Vice President           ...
©Grubb & Ellis Company Confidential5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis....
Agenda• Introductory Questions• Understanding Trends in Global Logistics   – Origin Points   – Sea Ports   – Intermodal & ...
Questions• How many of you work for   –   Manufacturer   –   Consultant   –   3PL Provider/Corporate Logistician/Transport...
Cross that Bridge When We Come To It                       ©Grubb & Ellis Company Confidential5430 LBJ Freeway, Suite 1400...
NASCAR Hans Device Prototype                       ©Grubb & Ellis Company Confidential5430 LBJ Freeway, Suite 1400 | Dalla...
Critical Parts Distribution                       ©Grubb & Ellis Company Confidential5430 LBJ Freeway, Suite 1400 | Dallas...
Ultimate in Green PowerSource: Tim Feemster                                              ©Grubb & Ellis Company Confidenti...
Trends in Logistics                                                              Supply Chain Response                    ...
Relative Cost for Goods Movement                                                                                      Air ...
Global Port Rankings- 2010 Data                          (TEUs) % Change from 2009  14.1%         Shanghai- China        1...
Panama Canal- post expansion                                                                      14,000 TEU’s            ...
NA Port Volumes- 2010 ActualVs.2010 16.0% 23.6% 16.0% 36.8% 19.9%                                                         ...
Weekly US Diesel Prices- Average all            Types per Gallon thru 10/24/2011         July 14, 2008$3.819              ...
Fuel Impact on Warehouse NetworkSource: Dr. David Simchi-Levi, MIT, March 2008                                        ©Gru...
Port Volume Shift- 2006 thru July 2011                          East                                                      ...
US Population- W 23%; E 77%                                                                         23%             77%200...
International Containers 2011- thru         week 42, 10/22/2011Source: TTX Company         ©Grubb & Ellis Company Confiden...
Logistics Cost Breakdown    60%                         50.3%    50%    40%    30%                                        ...
Project Soccer- 1,000,000 sq ft site• Continental officials say South Carolina won the plant  because of it is a right-to-...
Intermodal• A system with a combination of various modes of transport  on a single shipment                              ©...
Let’s Work Together on This                       ©Grubb & Ellis Company Confidential5430 LBJ Freeway, Suite 1400 | Dallas...
Why do We Care about Inland Ports• As Economic/Real Estate Development, Distribution, and  Real Estate professionals, unde...
Alliance, TX in the BeginningSource: Hillwood Properties                                            ©Grubb & Ellis Company...
Alliance Today- 30,000,000 sq ft of   industrial                                                              Source: Hill...
Intermodal Zones of Savings                                                                   Two Distribution Centers Und...
Don’t forget- Alternative Site Format           FTZ Example        3,000 receipts inbound        per yr. MPF $ 945,000    ...
Top 10 Site Selection Criteria1. Transportation costs – both inbound and outbound2. Logistics infrastructure – highways, i...
What does the Future Hold?• Transportation & port infrastructures will be more gridlocked• Fuel prices will remain volatil...
Your Container is “On the Water”                                                                                   Tim Fee...
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Logistsics Trends & Network Strategies

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Presentation at the Chief Supply Chain Officer Summit in Chicago, 2011.

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Logistsics Trends & Network Strategies

  1. 1. Tim Feemster Sr. Vice President Director of Global Logistics Grubb & Ellis Company 972-450-3225 O 214-693-7689 C tim.feemster@grubb-ellis.com Logistics Trends and Their Impact on DC Network Strategies ©Grubb & Ellis Company Confidential5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com
  2. 2. ©Grubb & Ellis Company Confidential5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com 2
  3. 3. Agenda• Introductory Questions• Understanding Trends in Global Logistics – Origin Points – Sea Ports – Intermodal & Inland Ports  What are they  Why are they important• Why do You Care- What is the Supply Chain Network Impact for your DC Network – Cost Drivers for Site Location• Q&A throughout ©Grubb & Ellis Company Confidential 5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com 3
  4. 4. Questions• How many of you work for – Manufacturer – Consultant – 3PL Provider/Corporate Logistician/Transportation Provider – Economic Development Agency – Industrial Brokers or Developer – Student or Professor – Press – Don’t know?• How many of you live within 150 miles of a Port city?• Who has visited a Port or Intermodal Hub?• What are the major challenges to Global Trade today and in the future? ©Grubb & Ellis Company Confidential 5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com 4
  5. 5. Cross that Bridge When We Come To It ©Grubb & Ellis Company Confidential5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com 5
  6. 6. NASCAR Hans Device Prototype ©Grubb & Ellis Company Confidential5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com 6
  7. 7. Critical Parts Distribution ©Grubb & Ellis Company Confidential5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com 7
  8. 8. Ultimate in Green PowerSource: Tim Feemster ©Grubb & Ellis Company Confidential 5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com 8
  9. 9. Trends in Logistics Supply Chain Response • Move closer to local markets and portsSupply Chain Challenges • Reduce transportation costs- Bid• Volatile Energy Costs transportation rates, Increase• Transport Capacity- trucks & drivers reliance on less expensive water and rail intermodal• Government Regulation- black box • Maximize supply chain efficiency• Chassis Changes and mitigate interruption risk• International Competition & Sourcing • Outsource to third-party providers• Sustainability • Optimize warehouse operations• Tepid Consumer Spending in US • Update Rent vs. Own calculations• Challenging Global Economy• Credit • Utilize cost-saving technology and energy practices• Slower speeds to market • Green initiatives- LEED,• Lease Accounting Rules sustainability, SmartWay carriers • Blend & extend leases • Communicate & Collaborate ©Grubb & Ellis Company Confidential 5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com 9
  10. 10. Relative Cost for Goods Movement Air $$$$$$ International Supply ChainShip Rail Truckload Less than Parcel $ $$ $$$ Truckload $$$$$ $$$$ ©Grubb & Ellis Company Confidential 5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com 10
  11. 11. Global Port Rankings- 2010 Data (TEUs) % Change from 2009 14.1% Shanghai- China 1. 4.3% Singapore- Singapore 2. 17.1% Hong Kong- China 3. 12.2% Shenzhen- China 4. 8.1% LA/LB- US 5. 25.1% Ningbo- China 6. 19.3% Busan- S Korea 7. 23.3% Guangzhou- China 8. 12.6% Qingdao- China 9. 12.4% Dubai- UAE 10. 13.7% Rotterdam- Netherlands 11.Source: Kaiji Press ©Grubb & Ellis Company Confidential 5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com 11
  12. 12. Panama Canal- post expansion 14,000 TEU’s ©Grubb & Ellis Company Confidential5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com 12
  13. 13. NA Port Volumes- 2010 ActualVs.2010 16.0% 23.6% 16.0% 36.8% 19.9% West Coast 16.8% 13.6% East Coast 0.8% 8.6% 15.5% -0.4% 7.3% 11.7% 27.2% Source: Grubb & Ellis Research & American Association of Port Authorities 29.5%Down Vs. 2009 Up Vs. 2009 ©Grubb & Ellis Company Confidential 5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com 13
  14. 14. Weekly US Diesel Prices- Average all Types per Gallon thru 10/24/2011 July 14, 2008$3.819 $2.017 $2.949 $3.892 $4.764 $4.124 Source: Energy Information Administration 2011 YTD Avg. $3.828 ©Grubb & Ellis Company Confidential 2008 Avg. $3.803 5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com 14
  15. 15. Fuel Impact on Warehouse NetworkSource: Dr. David Simchi-Levi, MIT, March 2008 ©Grubb & Ellis Company Confidential 5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com 15
  16. 16. Port Volume Shift- 2006 thru July 2011 East West GulfSource: Grubb & Ellis Research & American Association of Port Authorities; July 2011 actual ©Grubb & Ellis Company Confidential 5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com 16
  17. 17. US Population- W 23%; E 77% 23% 77%2009 Population Population PercentPacific 58,684,030 19%Mountain 12,884,051 4% EastTexas/Great Plains 43,539,381 14% 77% Grubb & Ellis Global Logistics CoverageGreat Lakes/Ohio Valley 56,080,995 18%Mid-Atlantic/Northeast 64,287,713 21% WestSoutheast 71,530,380 23% 23%US 307,006,550 ©Grubb & Ellis Company Confidential 5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com 17
  18. 18. International Containers 2011- thru week 42, 10/22/2011Source: TTX Company ©Grubb & Ellis Company Confidential 5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com 18
  19. 19. Logistics Cost Breakdown 60% 50.3% 50% 40% 30% 21.8% 20% 17.3% 9.5% 7.8% 4.3% 10% 2.7% 2.2% 1.2% 0% Transportation Inventory Labor Customer Rent Admin Supplies Other ServiceSource: Establish, Inc/HWD & Grubb & Ellis Global Logistics ©Grubb & Ellis Company Confidential 5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com 19
  20. 20. Project Soccer- 1,000,000 sq ft site• Continental officials say South Carolina won the plant because of it is a right-to-work state, making unionization more difficult; has lower labor costs; and that the Sumter site offered excellent access to the port of Charleston, rail and highway grids.• “The two most significant factors are labor and logistics,” said Tim Rogers, chief financial officer for Continental Tire of the Americas, in an interview with The State, South Carolina’s largest newspaper. “Those are the two biggest costs.”• The site will employ 1,600 people when in full operation. ©Grubb & Ellis Company Confidential 5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com 20
  21. 21. Intermodal• A system with a combination of various modes of transport on a single shipment ©Grubb & Ellis Company Confidential 5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com 21
  22. 22. Let’s Work Together on This ©Grubb & Ellis Company Confidential5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com 22
  23. 23. Why do We Care about Inland Ports• As Economic/Real Estate Development, Distribution, and Real Estate professionals, understanding the Global Supply Chain is “fun” but we need to know – Where does the container come to rest  Local destination- at or near the Port  Non-local destination- via rail or truck to the inland Port – This is where vertical happens- at the end of the “land bridge” ©Grubb & Ellis Company Confidential 5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com 23
  24. 24. Alliance, TX in the BeginningSource: Hillwood Properties ©Grubb & Ellis Company Confidential 5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com 24
  25. 25. Alliance Today- 30,000,000 sq ft of industrial Source: Hillwood Properties ©Grubb & Ellis Company Confidential5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com 25
  26. 26. Intermodal Zones of Savings Two Distribution Centers Under Consideration: Site A Site A – Within 5 miles of hub Hub Site B -- 20 miles from hub Annual inbound intermodal shipments: 2,000 Site B x Difference in drayage costs per unit (A-B): $90 Annual inbound savings when located closer to Intermodal hub: $180,000, $1.80/sq ft on 100,000 ftSource: Grubb & Ellis Company Global Logistics ©Grubb & Ellis Company Confidential 5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com 26
  27. 27. Don’t forget- Alternative Site Format FTZ Example 3,000 receipts inbound per yr. MPF $ 945,000 Pre-Foreign-Trade Zone Shipments into Site Assumptions:In a single year an FTZ importer can 1. 1,000 international containers a year into the facility per year save $ 919,780 MPF Fees 2 Container value $450,000 3 3 BOLs per container; $150,000 value per BOL One entry filed at End of week. MPF $485 or $25,220 per yr. Foreign-Trade ZoneShipments into commerce with weekly entry. ©Grubb & Ellis Company Confidential 5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com 27
  28. 28. Top 10 Site Selection Criteria1. Transportation costs – both inbound and outbound2. Logistics infrastructure – highways, intermodal, rail, FTZ3. Labor costs4. Labor availability5. Business climate- is there love6. Rent /lease terms/ownership7. Taxes & incentives8. Utility rates9. CAM charges10. Access to public transportation ©Grubb & Ellis Company Confidential 5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com 28
  29. 29. What does the Future Hold?• Transportation & port infrastructures will be more gridlocked• Fuel prices will remain volatile & but on average increasing• Customers will expect faster and more predictable lead times• Global trade activity will grow, but so will its costs and complexities• There will be more sources of financial and operational risk• The rules for lease accounting may change the Rent vs. Buy decision in some companies• Sustainability initiatives will have greater influence on supply chain networks and facility construction• Ageing populations will create labor constraints in Logistics• Mobile commerce will explode ©Grubb & Ellis Company Confidential 5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com 29
  30. 30. Your Container is “On the Water” Tim Feemster Sr. Vice President Director of Global Logistics Grubb & Ellis Company 972-450-3225 O 214-693-7689 C tim.feemster@grubb-ellis.com ©Grubb & Ellis Company Confidential5430 LBJ Freeway, Suite 1400 | Dallas, TX 75240 | 972-450-3225 (tel) | www.grubb-ellis.com

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