By Karen E. Thuermer, AJOTToday’s economy is changing the way everyone looks at warehousing and distribution. In fact, according to the 2010 15th Annual Third-Party Logistics Study published by Georgia Institute of Technology, published in conjunction with Capgemini, Panalpina and eyefortransport, significant uncertainly about the global economy continues to impact logistics spending and use of third party logistics operators (3PLs). Over all, the study states, shippers regard logistics and supply chain management as key to their success, and many credit 3PLs with helping them to achieve critical service, cost, and customer satisfaction goals. Rail Access Increasingly Important Distribution centers (DCs) factor in widely in supply chain management. When it comes to influencing where DCs are to be located and utilized, however, Tim Feemster, senior vice president and director of Global Logistics for the Dallas, Texas office of Grubb & Ellis Co. tells AJOT that rail access—both freight and intermodal, is increasingly more important, especially for sophisticated shippers trying to drive cost and carbon emissions out of their supply chains.  “Rail access makes site selection more specific within a geography and reduces the number of building options for the shippers,” Feemster states. Rail access is adding a new paradigm to DC requirements. In fact, Rene Circ, national director of Industrial Research for Grubb & Ellis, points out that the trend for mega distribution centers peaked in the 2000s. “During that decade, 124 million-plus buildings were built across the United States, adding nearly 160 million square feet to total logistics inventory,” Circ says.  “This was a 300 percent increase from the previous decade.” While Grubb & Ellis maintains that these large buildings will continue to be built in key logistics markets of Southern California, Dallas, Atlanta, Chicago and New Jersey, researchers there do expect a slowdown in some Midwestern markets that work well in a 1-2 node model, but no longer appear when the distributor shifts to 5 or 6 nodes. Feemster contends that he expects the hub and spoke DC model to be modified over time to include more market centered, smaller DCs as the price of fuel drives up transportation costs. “The delivery costs per unit for small shipments will increase faster than ship, rail or truckload costs,” he says. “Since transportation costs are over 50 percent of overall supply chain costs and labor is just under 20 percent, they become the drivers of geographical location.” He further explains that once the general geography is understood, then the specific building site selection becomes paramount. “ Interior column spacing, ceiling height, sprinkler systems, rail or intermodal access, highway access, congestion, labor access, foreign trade zones, utility costs/sustainability, and incentives all come into play with the shipper as they continue to strive for operations efficiency within the building,” he says. While intermodal remains all the buzz, Feemster sees non-intermodal rail served sites continuing to work best for the bulk industry. “Even consumer goods manufacturers are looking at boxcar rail as a potential to reduce supply chain costs and at the same time, carbon emissions but they are finding it hard to locate suitable sites in many markets,” he adds. Horizontal Collaboration Another factor that could influence DCs and their locations is horizontal collaboration—the pooling of logistics activities and consolidation of supply chains between two manufacturers (non-competitors or semi/direct competitors) for mutual benefit. While not new, this concept is gaining momentum as companies are increasingly under pressure to become leaner and more efficient. “Horizontal collaboration has the opportunity to reduce transportation costs, drive inventory out of the system, raise item fill rates, and improve turnover rates,” Feemster says. “Over time this will tend to reduce the space requ