Choose Your Own Adventure
When it comes to logistics, Memphis offers business what few other cities can: flexibility.
For decades Memphis has been known as America’s Distribution Center. But during the past few years the city has picked up a new moniker: “America’s Aerotropolis, Where Runway, Road, Rail, and River Merge.” As logistics capabilities continue to expand in all the “Four Rs,” savvy businesspeople are realizing the myriad advantages of doing business in Memphis.
“Memphis is a transportation juggernaut,” says Arnold Perl, chairman of the Memphis-Shelby County Airport Authority. “It has the most significant logistics infrastructure in the United States. The city offers unparalleled connectivity between the four modes of transport.”
That translates to a boon for the local economy that benefits individuals as well as businesses. With multimodal capabilities, Memphis offers a unique combination that provides customers the advantages of speed, cost, flexibility, and carbon reduction.
Choose the Runway
Just the fact that the daily shipment deadlines are later in Memphis than in most other cities is a draw for many companies. Memphis enjoys this distinction because it is home to the colossal FedEx World Hub. “You have the latest possible ship time, giving companies the advantage of having more time to assemble, package, and ship materials for next day delivery,” says Perl, who also heads the steering committee for the Aerotropolis.
That late shipping time can also be a make-or-break issue when getting products to customers is of an urgent nature. Medical device manufacturers and those producing pharmaceuticals may need the extra time to put together a last-minute request from a doctor or hospital across the country. “By being located in Memphis, companies are able to achieve operational efficiencies they would not be able to achieve anywhere else in the United States,” Perl says.
Memphis International Airport, the largest cargo airport in North America, is in the midst of a massive renovation that will increase efficiency even more. For 18 consecutive years, from 1992 to 2009, Memphis held the top spot as the largest cargo airport in the world.
The airport generates an annual economic impact for the metropolitan service area of $28.6 billion — the second-largest economic impact of any airport in America.
Choose the Road
State officials have developed a strategy to amplify the volume of business opportunities in Memphis. “Logistics is one of the key sectors we are targeting in our strategic plan,” says Ted Townsend, regional director for the Tennessee Department of Economic and Community Development (TDECD).
“The infrastructure in Memphis has laid the groundwork for most of the successful relocations of industry,” he says. Part of that infrastructure includes the interstate highways that converge in Memphis.
Memphis is accessible to numerous interstates leading across the U.S., including I-40, the country’s third longest east-west expressway, stretching from North Carolina to California; I-55, a north-south roadway connecting Chicago to New Orleans; and the nearby I-20, another major east-west roadway.
When the new I-69 expressway is completed, it will stretch from Canada to Mexico and run through Memphis.
With some 700 trucking companies operating in Memphis, there are plenty of choices. One of those is Intermodal Cartage Company (IMCG), which was founded in Memphis by Tennessean Mark George with just one truck.
“Memphis is our largest operation,” says Joel Henry, president of Intermodal Cartage, which now operates in 23 cities across the U.S. The Memphis headquarters provides savings for the company. “What allows us to save money is the ability to do more with less,” Henry says. IMCG has consolidated all its customer service and administrative operations to Memphis.
On its 125-acre Memphis depot, IMCG is able to store 2,800 to 3,000 containers, and it collects storage fees on some of them from ocean-liner clients that want to have empty containers available to export products quickly when they get an order.
“It provides an income stream,” Henry says. About 1,200 to 1,500 containers pass through the Memphis facility each week and products are shipped to locations around the Southeast.
Choose the Rail
Three of the five Class I Railways that intersect in Memphis have invested hundreds of millions of dollars to expand their operations here; or, in the case of Norfolk Southern, to build a mammoth new rail yard in Fayette County, just minutes from the Shelby County line. Construction began in the second quarter of 2011 on its $105 million Memphis Regional Intermodal Facility, which is scheduled to open in late 2012.
In 2010, BNSF completed a $200 million expansion of its rail yard. “Memphis is one of the premiere distribution centers in the U.S.,” says Vann Cunningham, assistant vice president for economic development at BNSF. “If you’re only looking at a facility to serve one market in the U.S. or you’re only going to have one facility, you’re going to look at Memphis.”
Cooperation from state and local governments and the Greater Memphis Chamber not only influenced the railway’s decision to expand but also has been helpful in bringing BNSF new business. “Memphis has a very pro-business attitude, a very effective chamber, very effective economic development organizations, and very effective local government,” Cunningham says. “I have no doubt that if I bring a prospect to Memphis that I will get the support of the city and county mayors.”
Jim Stock, a private economic development consultant, says rail plays a much bigger part in logistics than most people think. “We sometimes forget that all a lot of Memphians know about railroads is that they block traffic when drivers are trying to get across Poplar. But they’re a key element to our community.”
Stock, who worked as regional manager for Illinois Central Railroad for 10 years before starting a 25-year career at Belz Enterprises, says Norfolk Southern’s commitment to build its new facility in Memphis is a statement in itself about the city.
For years, Stock has made many trips around the country with groups from the chamber and the state to help draw industrial businesses to Memphis. The ease of shipping is something that has always been one of the most attractive things to company officials who are considering opening a business in Memphis, he says. “Logistics has virtually everything to do with it.
Choose the River
Memphis has the fourth-largest inland port in the U.S., with about 14 million tons of product — much of it materials like food products, construction aggregates, and petroleum — coming in annually, according to Randy Richardson, executive director of the Port of Memphis. “It’s far reaching,” Richardson says. “We are tied to a lot of different cities.”
River commerce works in two ways, Richardson says. Companies come to Memphis to import specific products, while others have a need for transportation development. About 90 percent of the traffic at the Memphis port comes from imported products.
The TDCED’s Townsend says interest from foreign countries looking to expand their businesses has increased. With the option of river transport in Memphis, many companies take advantage to grow their international business.
Jeff Rott, commercial operations manager at Cargill, says 21 years ago, when he started with the company, it had almost no international customers. That has since changed dramatically. Products such as sweet feed for livestock, which is coated in corn syrup, is still shipped by barge, but the vast majority of Cargill’s products are transported by rail.
Cargill moved all its international shipping business to Memphis because of the low cost of shipping. The company has about 60 to 100 shipping containers passing through the property each day, sending out approximately 50 of those out by truck.
“We have a direct connection to ports in Southern California, so Memphis is a very effective inland port location for us,” Rott says. “One of the biggest benefits of Memphis is its logistics capabilities. Memphis logistics have helped us grow.”
Memphis is one of the top 15 metro areas with interest from European countries. “Memphis is seen internationally as an area of choice,” Townsend says. According to data from the Foreign Trade Division of the U.S. Census Bureau, freight totaling more than $5.6 billion was imported to Memphis in 2010.
Memphis has always been a river town. That does not appear to be changing any time soon.
Choose the Reduction
A distinct advantage of river transit is it produces very little pollution, and rail transport also saves a significant amount of gasoline over other modes of transport. Trains get 450 miles to the gallon.
BNSF has customers who demand environmentally friendly transport as those companies attempt to operate in a more sustainable way. “They are looking to us to help them do that,” Cunningham says.
When BNSF expanded its Memphis yard, it also installed an automated gate system for trucks entering and exiting the facility. A digital camera at the gate takes pictures of containers, chassis, and tractors. Drivers are identified using a biometric system rather than by a guard, which has reduced truck idling, and therefore emissions, by 50 percent.
BNSF offers a carbon calculator on its website, bnsf.com, to help customers determine the impact of shipping specifically to the location where their products are going. The wide-span cranes installed as part of the massive expansion are electric, Cunningham says, and the railway is moving toward natural gas-powered hostlers.
Norfolk Southern also is committed to reducing emissions and therefore its carbon footprint. According to the railway’s 2011 Sustainability Report, it has made significant progress in reducing carbon emissions. Also, the company launched a $5.6 million initiative to plant more than 6 million native trees on 10,000 acres in the Mississippi Alluvial Valley.
FedEx, which handles 90 percent of the cargo at Memphis International, also has made strides in reducing carbon emissions from its aviation fleet. The company’s plans to reduce carbon emissions by 20 percent by 2020 and already has done so by 13.7 percent.
Across the board, logistics in Memphis is a staple drawing new companies to the city and the reason many manufacturing giants are locating and expanding in the area. The steady rise in expansion tells a tale all its own.
“It’s a key indicator of future growth,” Townsend says. “We are doing everything we can, not only to support the existing build-outs of the logistics that are here but also on new projects that are in the queue to help enhance what we already have.”