FTZ #138 drives economic growth in Columbus

Air, intermodal freight, distribution center development all booming The Columbus region has grown as a hub for importing and exporting goods in a relative short time, and you can bet your bottom dollar that Free Trade Zone #138 has a lot to do with it. The zone, operated by the Columbus Regional Airport Authority, includes Rickenbacker International Airport, a cargo-dedicated facility, and the Rickenbacker Inland Port, which includes the airport, intermodal facilities, warehousing and distribution capacity, and proximity to interstate highways.  Rickenbacker International Airport has been growing its freight volumes by leaps and bounds in recent years. Cargo imports and exports at Rickenbacker rose 21 percent in the first half of 2017, bolstered by increased service from Etihad Airways, Trinity Logistics, and Emirates.

Columbus also has the advantage by being located at the crossroads of Interstates 71 and 70 and is home to CSX and Norfolk Southern intermodal yards. Norfolk Southern’s Heartland Corridor service carries double-stack containers between the Port of Norfolk and Chicago via the Rickenbacker Inland Port. Columbus is a one-day drive to 47% of the U.S. population and 47% of the country’s manufacturing capacity.  Columbus’ strategic location, combined with the availability of large tracts of available land, has spurred local industrial real estate development growth, according to a recent report from Colliers International. Over six-million square feet of new logistics and distribution space was added in the Columbus region in 2016, making last year a record breaking year for Columbus in terms of new supply from construction. Inland Port “The Rickenbacker Inland Port serves as a hub for importing and exporting freight via air and rail, positioning Columbus to take advantage of future increases in shipping to East Coast ports,” the report noted. Foreign-Trade Zone #138 consistently ranks among the top ten FTZs in the nation and has grown its volumes by double digits in recent years. In 2015, nearly $8 billion of goods moved through the zone, up 37 percent from 2014. FTZ #138 is also tops in the nation for the total value of textiles and footwear imported into the United States. In 2015, it moved over $6.2 billion out of the nation’s total $8.9 billion in that category. “We expect this trend to continue for the foreseeable future as more distribution centers will become active within FTZ #138 in the next few years,” said David Whitaker, vice president of business development and communications at Columbus Regional Airport Authority.  FTZ #138 serves 25 counties in Central Ohio and—like other FTZs—allows companies to increase their competitiveness and profits by lowering costs associated with importing merchandise. FTZ benefits include deferred, reduced, or eliminated U.S. Customs import duties; reduced processing fees; quicker movement of goods from the port of entry; supply chain predictability; strong inventory control; and best practice relative to cargo security. Earlier this year Trinity Logistics USA and Etihad Cargo signed an agreement valued at $40 million that added a second weekly wide-body freighter flight to Rickenbacker. The increased capacity was introduced to move apparel manufactured in Sri Lanka to retailers in the U.S. and to support U.S. export growth to Europe, the Middle East, and Asia.  What made the additional service possible, according to Whitaker, was securing two new exporting major customers—Raytheon and Lockheed Martin—who are exporting aviation components through Rickenbacker. Victoria’s Secret, GAP, Nike, Tommy Hilfiger, Speedo, and Abercrombie & Fitch are among the brands importing fashion from the Indian sub-continent. “The partnership with Trinity and Etihad has proven to be very valuable,” said Elaine Roberts, president and CEO of the Columbus Regional Airport Authority. “Central Ohio and the surrounding region is truly a hub for the logistics industry, making Rickenbacker an ideal global gateway for both imports and exports.”  Emirates Airlines also increased the frequency of its flights in and out of Rickenbacker, tripling them from one to three in a matter of a year. Emirates began scheduled import service to Rickenbacker in May 2015, flying a single weekly freighter frequency, and within a few months increased the service to twice weekly. By May 2016, the carrier added a third weekly flight. In order to keep up with demand, Emirates often operates additional frequencies each month.  “We saw a lot of potential in working with Rickenbacker after flying several charters there for apparel shippers and auto manufacturers during the West Coast port strike in early 2015,” said Arthur Brown, Emirates SkyCargo’s Regional Manager for the Central U.S. “Our forwarders and shippers in the region are extremely satisfied with the service and speed to market. SkyCargo will expand in Rickenbacker with export development from the Ohio Valley.” E-comm E-commerce and third-party logistics providers are driving industrial real-estate development in the Columbus region, according to the Colliers International report. Amazon recently completed two fulfillment centers totaling 1.9 million square feet in the area. The warehouse vacancy rate in the Columbus area, after peaking at 15.0 percent in mid-2010, has since dropped to 5.4% at the end of 2016. “Robust demand skyrocketed overall net absorption in 2016 to 8.7 million square feet—by far the most absorption on record in Columbus,” said the Colliers report. “This amount of absorption is also nearing numbers posted only in core industrial markets throughout the country.” Since 2010, Columbus has seen a gain in occupancy of 26 million square feet, while only 19 million square feet of new inventory has been added in that time. “This combination of factors has contributed to tightening market conditions and the surge in construction activity over the past three years,” according to the report. Nonetheless, rental rates for space remain “economical,” according to Colliers, at $3.36 per square foot per year at the end of last year, a fact that “will be a driving force for activity in the coming year.”