National Academies Press: OpenBook

Freight Facility Location Selection: A Guide for Public Officials (2001)

Chapter: Chapter 5: How Candidate Sites Are Evaluated

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Suggested Citation:"Chapter 5: How Candidate Sites Are Evaluated." National Academies of Sciences, Engineering, and Medicine. 2001. Freight Facility Location Selection: A Guide for Public Officials. Washington, DC: The National Academies Press. doi: 10.17226/14594.
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Suggested Citation:"Chapter 5: How Candidate Sites Are Evaluated." National Academies of Sciences, Engineering, and Medicine. 2001. Freight Facility Location Selection: A Guide for Public Officials. Washington, DC: The National Academies Press. doi: 10.17226/14594.
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Suggested Citation:"Chapter 5: How Candidate Sites Are Evaluated." National Academies of Sciences, Engineering, and Medicine. 2001. Freight Facility Location Selection: A Guide for Public Officials. Washington, DC: The National Academies Press. doi: 10.17226/14594.
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Suggested Citation:"Chapter 5: How Candidate Sites Are Evaluated." National Academies of Sciences, Engineering, and Medicine. 2001. Freight Facility Location Selection: A Guide for Public Officials. Washington, DC: The National Academies Press. doi: 10.17226/14594.
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Suggested Citation:"Chapter 5: How Candidate Sites Are Evaluated." National Academies of Sciences, Engineering, and Medicine. 2001. Freight Facility Location Selection: A Guide for Public Officials. Washington, DC: The National Academies Press. doi: 10.17226/14594.
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Suggested Citation:"Chapter 5: How Candidate Sites Are Evaluated." National Academies of Sciences, Engineering, and Medicine. 2001. Freight Facility Location Selection: A Guide for Public Officials. Washington, DC: The National Academies Press. doi: 10.17226/14594.
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Suggested Citation:"Chapter 5: How Candidate Sites Are Evaluated." National Academies of Sciences, Engineering, and Medicine. 2001. Freight Facility Location Selection: A Guide for Public Officials. Washington, DC: The National Academies Press. doi: 10.17226/14594.
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Suggested Citation:"Chapter 5: How Candidate Sites Are Evaluated." National Academies of Sciences, Engineering, and Medicine. 2001. Freight Facility Location Selection: A Guide for Public Officials. Washington, DC: The National Academies Press. doi: 10.17226/14594.
×
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Page 47
Suggested Citation:"Chapter 5: How Candidate Sites Are Evaluated." National Academies of Sciences, Engineering, and Medicine. 2001. Freight Facility Location Selection: A Guide for Public Officials. Washington, DC: The National Academies Press. doi: 10.17226/14594.
×
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Page 48
Suggested Citation:"Chapter 5: How Candidate Sites Are Evaluated." National Academies of Sciences, Engineering, and Medicine. 2001. Freight Facility Location Selection: A Guide for Public Officials. Washington, DC: The National Academies Press. doi: 10.17226/14594.
×
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Suggested Citation:"Chapter 5: How Candidate Sites Are Evaluated." National Academies of Sciences, Engineering, and Medicine. 2001. Freight Facility Location Selection: A Guide for Public Officials. Washington, DC: The National Academies Press. doi: 10.17226/14594.
×
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Suggested Citation:"Chapter 5: How Candidate Sites Are Evaluated." National Academies of Sciences, Engineering, and Medicine. 2001. Freight Facility Location Selection: A Guide for Public Officials. Washington, DC: The National Academies Press. doi: 10.17226/14594.
×
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Page 51
Suggested Citation:"Chapter 5: How Candidate Sites Are Evaluated." National Academies of Sciences, Engineering, and Medicine. 2001. Freight Facility Location Selection: A Guide for Public Officials. Washington, DC: The National Academies Press. doi: 10.17226/14594.
×
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Page 52
Suggested Citation:"Chapter 5: How Candidate Sites Are Evaluated." National Academies of Sciences, Engineering, and Medicine. 2001. Freight Facility Location Selection: A Guide for Public Officials. Washington, DC: The National Academies Press. doi: 10.17226/14594.
×
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Page 53
Suggested Citation:"Chapter 5: How Candidate Sites Are Evaluated." National Academies of Sciences, Engineering, and Medicine. 2001. Freight Facility Location Selection: A Guide for Public Officials. Washington, DC: The National Academies Press. doi: 10.17226/14594.
×
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Suggested Citation:"Chapter 5: How Candidate Sites Are Evaluated." National Academies of Sciences, Engineering, and Medicine. 2001. Freight Facility Location Selection: A Guide for Public Officials. Washington, DC: The National Academies Press. doi: 10.17226/14594.
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Freight Facility Location Selection: A Guide for Public Officials 39 Chapter 5: How Candidate Sites Are Evaluated Equallyimportanttoknowinghowcompaniesmakedecisionsis knowingthefactors thatdrivethosedecisions.Throughout the stagesoutlinedinthepreviouschapter,supplychainandoperations personnelevaluateeachoptionandlocationfor: • theabilitytoaccesskeymarkets. • interactionwiththetransportationnetwork. • modalchoice. • laborandworkforce. • totalcostenvironment. • utilities. • availabilityofsuitablefacilities. • permittingandregulation. • taxenvironment. • publicassistanceandincentives. • climateandnaturalhazards. Companiestypicallystatethatthefirstfivecriteriainthislist–access tomarkets,efficienttransportationwithmodalchoices,anampleand qualified workforce, and reasonable costs–aremorecriticalthantheothers inthelist.Furthermore,proximityand/ oraccesstomarkets,especiallysupply chain networks, is the single most important factor in determining the location of a freight facility. Most of theothersiteselectionfactorsareused to refine the site selection process to specific,sometimescompeting,sites. Proximity and/or access to markets, especially supply chain networks, is the single most important factor in determining the location of a freight facility. most of the other site selection factors are used to refine the site selection process to specific, sometimes competing, sites.

Freight Facility Location Selection: A Guide for Public Officials40 Ability to access key markets or customers Freightfacilitiesexisttofacilitatetheprocessingandmovementof goodsfromanorigintoadestination.Thepointoforiginmaybea sourceforrawmaterials,amanufacturingplant,oranintermediate point.Thedestinationmaybetheultimateconsumer,amanufacturing plant,orastagingpointalongtheway.Regardless,freightfacilities typicallychooselocationsthatallowthemtomostdirectlyand efficientlyaccesstheseoriginanddestinationpoints. Accessisexpectedtoaccomplishtwothings:1)deliveryservicewith speed, predictability, and precision that matches or exceeds the competitivestandardsinthemarketand2)coststhatareaslowas possible. Retail companies often establish their distribution networks on a conceptofoverlappingcircles,eachwitharadiusofapproximately 500miles.Beginningwiththefactory,thisbuildsasupplychainthat allowsforaone-daydrivetotheregionaldistributioncenter, then the local distribution center, andfinally to stores located inmajor consumptionareas. Distribution networks

Freight Facility Location Selection: A Guide for Public Officials 41 Theabilitytoserviceaparticularcustomerwithinaone-daydrive is a common service expectation and location consideration.  This requiresbothphysicalproximitytothecustomerandalocationwithin the transportation network which permits ready movement to the customer’sfacilities.Foracityterminalbeingoperatedforpickup and delivery by a truck fleet, customer proximity is substantially shorterand thedensityof customers in the regiongreater.  These facilitiesaresituatedtominimizetotalmileswithinafew-hourservice radiusandrequireaninvestmentintrucksaswellasterminals. Intermodalfacilitiesandrailfreightterminalsarealsolocatednear majorconsumptionzonesbut,duetotheirsizeandneedforaccess tomultiple customers, tend tobe locatedat theoutskirtsofmajor metropolitanareas.Additionally,thesefacilitiesneedtobelocated atpointswheretheycangeneratelargeloadsoffreightforlong- distanceshipping. For example, a rail freight terminal can require almost 100,000 carloadsannually travellingat least2,000miles tobefinancially viable.Onlythecombinationofvolumeanddistanceprovides the competitiveadvantageover othermodes. Intermodal facilities servicingcontainersandtrucktrailershavesimilarrequirements.In suchcases,thecarrierwillattempttobenearamarketthateither generates this volume or where they can collect freight from a relativelyshortdistancetocreatethevolumerequired.

Freight Facility Location Selection: A Guide for Public Officials42 Case Study Rickenbacker Intermodal Facility is strategically located in the Columbus, Ohio, metropolitan area and is within a one day drive of more than 50% of the population of north America, and over 60% of uS manufacturing production. The current rail operations at the facility include service by norfolk Southern (nS) and CSx (two Class I Railroads—see note below). The facility is also located in close proximity to several major highways in the Columbus area: Interstates 270, 71, and 70 as well as highways 23 and 33. Operated by nS, Rickenbacker Terminal opened in march 2008 and is located adjacent to Rickenbacker International Airport, approximately 15 miles south of Columbus. nS previously operated the Discovery Park intermodal facility nearby, but that facility had exceeded its capacity and a new site was deemed necessary to accommodate expected growth. Because it was operating above capacity, nS had to turn away domestic rail business, which at the time accounted for 20% of all traffic at the facility. This lack of capacity was detrimental to both nS and the Columbus region. Thus, a search for a new, larger location was undertaken, and nS selected the Rickenbacker site. A Class I railroad is a major railroad with annual carrier operating revenues of $250 million or more. There are seven Class I railroads in the uS and Canada: Burlington northern Santa Fe (BnSF) Railway, Canadian national (Cn), Canadian Pacific (CP), CSx, kansas City Southern (kCS), norfolk Southern (nS), and union Pacific (uP).

Freight Facility Location Selection: A Guide for Public Officials 43 Interaction with transportation networks Besides proximity and access to customers andmarkets, a freight facility needs to efficiently connect to the transportation network. Dependingonthefacilitytypeandthemarketstobeserved,accessto morethanonemodeoftransportationmayberequired.Companies lookingfor locationswillknowwhattheir transportationneedsare alongwiththeexpectedcosts.Communitiesthatsuccessfullyattract freightfacilitiesareabletoefficientlyconnectpointsofproduction orportsofentrytoconsumers.Freightfacilitiesarelocatednearkey transportationchannelssuchas: • Areasorsitesonmajorhighways. • Areaswheremultipleinterstatehighwaysconverge. • Railroad terminalsat theedgesof theirnetworkoratkey consumptionmarkets. • Majorseaandairports. However, a sitemight be set in precisely the right position in the transportationnetwork,butsiteorcommunityissuescanpreventor inhibiteffectiveuseof thesite.Distributioncentersusuallyneedto operateona24-hourbasis,yetacommunitymayhaveregulations that restrict hours of operation or prohibit truck traffic on a strategically located route. Decisions aboutwhatmode to use for goodsmovementareuniquetoeachshipper, receiver,andcarrier butgenerallyreflectdirecttransportationcosts,reliability,andtravel time.Thesefactorscanvary greatlybymodeandregion depending on transportation infrastructure,availablefreight carriers,sizeofthemarket, andqualityoffreightservice. Communities that successfully attract freight facilities are able to efficiently connect points of production or ports of entry to consumers. ... site or community issues can prevent or inhibit the effective use of the site.

Freight Facility Location Selection: A Guide for Public Officials44 How goods and materials are transported will vary widely dependingonthetypeofcompanyandthegoodsbeingshipped, butcanincludethefollowing: Road and Truck Full-load and long-haul trucking require quick access to major highways.Additionaltimeonlocalroads,withdelaysduetolocal congestionandtrafficsignals,addstologisticscostsandoperational difficultiesandmayincreaseconflictwithlocalcommunities.Asite within¼mileofahighwayandwithnotrafficsignalswillrepresent asignificantannual logisticscost savingswhencomparedtoasite twomiles fromahighway. Similarly, the less impeded theaccess toamajorarteryandthebetteritsconnectiontothemetropolitan network,thebetter.Companiesalsoconsiderwhethertheroadsthey willusehavetolls. Tollsrepresentadditionalcostbothintermsof directfeesandlosttimeontheroadandcanimpactoverallcostof operations. The Family Dollar distribution center in marianna, Florida, is serviced entirely by trucks for both inbound and outbound goods. As a result, Interstate highway access was a critical aspect of siting this facility. The facility provides a direct three-lane access road to an existing interchange on Interstate 10. Route 276 runs through the site, providing a north- south connection. Based on the local traffic experiences of some of their other distribution center facilities (such as Charlotte, nC), Family Dollar learned that a direct ramp to the Interstate can be a large benefit by eliminating local traffic concerns. Case Study

Freight Facility Location Selection: A Guide for Public Officials 45 Rail Companiesshippingbulkproductsorlargevolumesofgoodsover longerdistancesmaychoosetodosoviarail.Increasingly,thisalso includesproductsshippedbyintermodalcontainer.Theuseofrail variesregionallyastheshippingdistancepreferredbyrailwaysis somewhatshorterintheeasternUnitedStatesthaninthewest,due tofewermilesbetweencities.YetaccesstorailintheeasternUnited Statescanstillplayanimportantroleinsiteselection. Railroads seek to collect shipmentsatpointson their network that willallowforefficientuseoftheirequipmentandinfrastructure.As aresult,theywilltypicallynotallowunrestrictedaccessatallpoints onthenetwork,butwill insteadencouragecomplementaryusesat keynodestoallowformoreefficientuse.Forexample,acompany shippingconsumergoodstothePacificNorthwestmayattempttoco- run60-footboxcarswithalumbercompany,reloadthesecarswith paperatthedestination,andshipthisbacktotheoriginalsite.Rail isalsoanaturalsolutioninsupplychainsthatcombineaWestCoast portofentryandEastCoastconsumptionzones. Access to the rail network is concentrated at terminal facilities. Terminalfacilitiesthemselvesarelocatedatkeyoriginanddestination points for freightandareconstructedwith thecapability tomove bulk freight, intermodalcontainers, liquids,and/orothermaterials betweenmainlinerailandotherformsoftransportation. Theseterminalsaredesignedtoallowforthemostefficientinterface withmainline rail.Sucha facilitymight requireaminimumvolume of 150,000 to 200,000 lifts annually to approach financial and operatingfeasibility.Asaresult,railroadsattempttoencouragethe co-locationofrail-basedfreightusersatinterchangepointstoboth maximize efficiency and to generate critical freightmass. While themajorityoffreightintheUnitedStatesismovedbytrucktoday, accesstorailisbecomingmoreofaconsiderationasfuelpricesrise. While the majority of freight in the uS is moved by truck today, access to rail is becoming more of a consideration as fuel prices rise.

Freight Facility Location Selection: A Guide for Public Officials46 Case Study Case Study Access to a Class I railroad was considered the most important consideration in site selection by Savage Safe Handling, Inc., a full-service, bulk product transportation and chemical transloading/processing company that operates the largest rail-to-truck bulk transloading facilities in new England (Auburn, mE) and western Pennsylvania (new Stanton). In part, this decision to locate next to rail reflected the company’s preference for fuel-efficient transportation and its interest in keeping transportation costs down. A corporate decision was made in the 1980s by murphy Warehouses of the minneapolis- St. Paul, mn, region to obtain and preserve facilities with rail connections. The company believes intermodal access to be a competitive advantage. Consequently, rail has become a locating requirement for facilities. Each of their six rail-served facilities is served by Class I railroads including: BnSF Railway, Canadian national (Cn) Railways, union Pacific (uP) Railroad, and Canadian Pacific (CP) Railways. Rail facilities can accommodate up to 18 rail cars indoors at a single facility. Smaller facilities can house 12, six, or four rail cars indoors, with the remaining two rail facilities operating outdoors. PhotobySavageSafeHandling,Inc.

Freight Facility Location Selection: A Guide for Public Officials 47 Water High bulk goods, liquids, and containers moving internationally requirewateraccess.Portsmustprovidetheinfrastructuretoload andunloadshippingandhavetheabilitytotransferfreighttoother modesoftransport.Additionally,thefacilitywilllikelyrequirespace forsorting,storing,andassemblingshipments,andmayalsorequire customsandsafetyscreeningforinternationalshipments. Air Freightcarrierrequirementsforairtransportationonlytrulycomeinto playinsiteselectionwhenhigh-value,quickresponse,lowbulkitems areconsidered.Medicaldevices,somebiotechproducts,andsome electronicsaregoodcandidatesforairshipping.Airtransportcan alsobeaback-upaccesstohighspeedtransportationforcompanies carryingverylowinventories. Interestingly, however,many freight userswill include proximity to ahubairportasanevaluationcriterionforfreightfacilities.While the companymaynot shipanythingbyair, itmay still requireair accesstoaccommodatecompanymanagementorpartnerswhowish tovisitthefacility.Theremaynotbespecificdiscussionswithairports duringthesiteselectionprocess,butthecompanymayinvestigatethe carriersusingtheairportandexaminehowactivethefacilitiesare. Third-Party Shippers Insteadofco-locatingorlocatingnearspecificfreightinfrastructure, somefreightbusinesseswillrelyuponandperhapslocatenearthird- partyshippersorthird-partylogistics(3PL)companies.Forexample, largeretailerswhoshipmostoftheirownmerchandisethroughtheir distributioncentersmayalsorelyuponcommercialcarrierssuchas FedExorUPStoshipsmallpackages,suchasjewelry,directlyfrom centraldistributiontotheirstores.

Freight Facility Location Selection: A Guide for Public Officials48 Labor and workforce Everyfreightfacilityisdifferent,butlaborskills,costs,andtheoverall workforce environment can play a key role in location selection. Whilesomeformsoffreightfacilitiesarehighlyautomatedordonot havehighskillrequirements,othersinvolveassembly,manufacturing, value-addedprocessing,orotheroperationswheretheavailability ofatrainedtalentpoolmaybeasignificantrequirement. Freight facilities can require a wide variety of employee talents, depending upon theexact natureof the facility. Such skilled employeesmayincludeforkliftoperators,assemblers,truckdrivers, machinists,mechanics,technicians,materialhandlingspecialists,and engineersinadditiontounskilledlabor. Inevaluatinglocations,companiesmayfirstexaminedatafromthe Department of Labor and Department of Commerce regarding overall employment for a region or community.  This information indicatestheoveralllabormarkethealthofthecommunityandmay alsogiveindicationsastothegeneralleveloflaborcosts. Forexample,FamilyDollarpartially selectedadistributioncenter sitebasedontheworkforcecharacteristicsinandaroundMarianna, Florida.FamilyDollarreceivedover6,000applicationsforthe515 available jobs. Similarly, Old Dominion, a national trucking firm, choseasiteinMorristown,Tennessee,overaNashvillesiteprimarily becauseofthegreateravailabilityofworkforceinMorristown.The MorristownareaofTennesseehasastrongfurnituremanufacturing history,and,atthetimethatOldDominionwasconsideringdeveloping aregionalhub,furnituremanufacturingwasdecreasinginthearea andmovingoverseas.Thisleftalargepoolofformermanufacturing employeeswhowereavailableandtrainableforemploymentatthe newdistributioncenter. Companiesmayspeakdirectlywithpeercompaniesinthelocalmarket tobetterunderstandlocalsalarytrends,bestpracticesforattracting andretainingkeytalent,andtodetermineunionizationtrends.They mayalsoexaminetheeducationinfrastructuretodetermineoverall Freight facilities can require a wide variety of employee talents, depending upon the exact nature of the facility. Skills required may include forklift operators, assemblers, truck drivers, machinists, mechanics, technicians, material handling specialists, and engineers in addition to unskilled labor.

Freight Facility Location Selection: A Guide for Public Officials 49 educationlevelsofthepopulationandtheavailabilityoffollow-on trainingprogramstofillspecificrequirements. Some companies view the presence of a union as beneficial, as specificindustriesalreadyexpecttoworkwithunionizedlabor.Unions mayprovidetraining,supporttothelocallaborforce,andalsoact asaneasily identifiablepartywhocanreadilyrepresent labor in negotiations.Othercompaniesworkactivelytoavoidunionization andwillusetheirlocationaspartofanoverallstrategytolessenthe riskoflaborbecomingorganized. Total cost environment Companies develop cost models to evaluate the relative costs of doingbusinessineachcandidatelocationorscenario.Themodels will assess the sensitivity of each scenario’s relative feasibility to changes in factors suchas fuel costs,productmix, labor costs, tax exposure,productsourcing,orotherkeyinputs.Thecostmodelmay includeanyorallofthefollowing: $ Start-up costs • Landorfacilitypurchase(ifapplicable). • Constructionandfit-outcosts. • Recruiting,hiring,andtraining. • Relocationexpenses. • Equipmentandfurniturepurchases. • Salestax. $ Recurring costs • Ongoinginboundandoutboundtransportationcosts. • Transportationnetworkserviceperformance. • Rent(ifapplicable). • Buildingandequipmentdepreciation(ifapplicable). • Maintenance,repairs,andotheroccupancycosts. • Staffingandlaborcosts. • Benefitsandrecurringtraining. Some companies view the presence of a union as beneficial, as specific industries already expect to work with unionized labor.... Other companies work actively to avoid unionization and will use their location as part of an overall strategy to lessen the risk of labor becoming organized.

Freight Facility Location Selection: A Guide for Public Officials50 • Utilities. • Propertyandincometaxes. $ Exit costs The totalcostofdoingbusiness ineach locationnotonlyprovides informationtobebalancedagainstotheroperationalfactors,butalso informstheincentivenegotiationprocesswiththelocalgovernmentor economicdevelopmentagency. Availability and cost of suitable facilities Companieswillconsideragreatpropertyatagoodprice,butonly if the site satisfies other key strategic criteria.  For example, the availabilityofwell-plannedwarehousespaceataregionalairport mightallowforafasterdecisionifthatairportalsohasgoodhighway andrailaccessandisatalocationthatallowsunimpededservice toconsumptionareas.Conversely,thelackofsuitablefacilitieson landzonedforindustrialorcommercialusesnearkeyinfrastructure access points can impede progress or remove a community from consideration. It iscommonforcarrierssitingcityterminalstolimit theirsearchtoexistingindustrialfacilitiesbecauseofthecostofnew construction and fear of community resistance (which can result in delaycosts).Propertiesofthissortmaybehandedfromoperator tooperatorasleasesexpireandlessorsgrow,consolidate,orfail.  Theavailabilityofsuitablefacilitiescanbeayes/noscreeningissue forsomecompanies.Aspreviouslynoted,becauseoftheirexperience owning and operating many facilities, Murphy Warehouses has specificcriteriaforpotentialfacilitiestoacquire,includingaminimum sizerequirementof150,000squarefeetofwarehousing. The freight user will investigate the availability of buildings of a particular sizeenvelope, layout, ceiling height, numberof loading docks,floorloadinglimits,utilityfeeds,refrigeratedspace,purchase, rentandoperatingcosts,andotherattributesdependingupontheir specific requirements (e.g., warehouses with modern, automated material handling equipment are able to get more throughput from leases by adding capacity vertically – toward the ceiling – instead of horizontally, which adds to square footage and lease Companies will consider a great property at a good price, but only if the site satisfies other key strategic criteria.

Freight Facility Location Selection: A Guide for Public Officials 51 costs). Alternatively, companies may search for land near specific transportation points or other partners.  They will determine plot size, possible layouts, price, geology, soils, hydrology, and other requirementsandseekparcelsmeetingtheseneeds. Companieswillalsoinvestigatetheavailabilityofnearbyoperations tosupporttheirownfreightactivities.Operationssuchasbulkand transloadfacilitiesallowforconsolidationandaccess tomodesof transportationsuchasrailandportwherethesingleusers’activities arenotsufficienttosupportservice. Connection points to the transportation network, rail terminals, intermodal facilities, ports, etc., are valuable as they provide choiceas tohowtomovegoods. Integrated logisticscentersallow communitiestoprovideadequatelandandfacilitiesatapointwhich also concentrates freight movement away from other community activity. Initialdataonregionalcostsmaybeobtainedthroughreportsfrom nationalrealestateserviceproviders.Thecompanycanthenseek marketandbuildingspecificseitherfromtheirownrealestateservice firmorthroughthelocaleconomicdevelopmentagency. In addition to facilities, the availability of low-cost land and large parcels impacts location decisions, particularly for large intermodal facilities such as the Rickenbacker facility (mentioned earlier) and Alliance Global Logistics, an 11,600-acre integrated logistics center in north Fort Worth, Texas. The logistics center features an industrial airport, an intermodal terminal, access to two Class I railroads, highway access, a foreign trade zone, and logistics and industrial companies. In the case of Alliance, much of the area surrounding Fort Worth had been developed and the tract of land purchased for the logistics center was relatively inexpensive and not yet developed because the area was prone to unpleasant odors from prevailing winds and a long-defunct nearby livestock market. While the stockyards had long been gone, the stigma remained. This allowed for large parcels of inexpensive land to be purchased and utilized for industrial development. Case Study Integrated logistics centers allow communities to provide adequate land and facilities at a point which also concentrates freight movement away from other community activity.

Freight Facility Location Selection: A Guide for Public Officials52 Utilities Whenmakingalocationdecision,acompanywillwanttoknowthat reliable and cost-effective electric, water, sewer, and other utility capacityexist.Somefacilitiesaremoredependentonutilitycapacity than others. Electric, water, and sewer capacity is less critical to warehouse,distributioncenter,andintermodalfacilitylocationsthan itisfordatacenterandmanufacturinguse.However,refrigerated andautomatedwarehouseswillhaverequirementswithregardsto theamount,cost,andreliabilityofpower.Thiswillalsobethecase foranyfreightfacilities that incorporatemanufacturingaspartof theoperation. Somefacilities,suchasthoseusingheavyliftcapabilityorautomated warehouses (whichare highly reliant on computerizedmachinery), willpayevenmoreattentiontoutilitiesandmayevenuseaccessto uninterruptedpowerasago/no-goissuewhenevaluatingpotential sites.Freightfacilitiesoftenincludeassemblyorlightmanufacturing operations inaddition tofreightmovement.Utility requirementsof theseancillaryfunctionsmayimpactlocationneeds. Permitting and regulation Permittingandregulationimpacthowacompanycanimplementits plansforaparticularsiteandcanalsoimpactitstimeline.Knowledge thatacommunityisalreadyfamiliarwithindustrialandfreightfacility typesandhasaprocessinplacecanbeseenasalocationpositive. Contentandinterpretationoffirecodes,landuseregulations,traffic regulations,zoning,andhoursofoperationregulationscanallimpact thefeasibilityofafreightfacilitylocation. Tax environment Income, sales, real estate, and property taxes can all affect the costenvironmentforfreightfacilities.Realestatetaxescanbehigh on urban facilities, especially if the land could be used for other high-densitydevelopment suchas upscale condosand retail.High Income, sales, real estate, and property taxes can all affect the cost environment for freight facilities.

Freight Facility Location Selection: A Guide for Public Officials 53 realestatepropertytaxesmaydrivetheseparcelsintonon-freight developmentandpushfreightfacilities into theurbanfringe.High personalpropertytaxescanalsobeaconcernifinventoryistaxed aspersonalproperty. Public sector assistance and incentives Publicsectorassistanceintheformoftaxcredits,grants,low-costloans, trainingprograms, utilitydiscounts,and infrastructuredevelopment isoftenusedbyacommunitytogainadvantageoveracompetitor. Whencompetingsitesareratedrelativelyequal,incentivesoffered bythepublicsectormayhelpclosethedeal. Climate and natural hazards In order to understand business interruption risks, companies will collect data on the region’s climate, natural hazards, and historic information on how these have impacted business closures in past years.Fewareasarewithoutsomeformofnaturalhazardrisk,and companieswillsometimescompiledataonexcessiveheat,cold,rain, snowfall,earthquake,wildfire,tornado,hurricane,orotherrelevant datatodevelopappropriatemitigation(andrecovery)plans. Weighing site selection factors Thesiteselectionprocessandfactorsapplytoallformsoffreight facilities in some fashion. Still, how these are applied varies dependingonwhowillusethefacility.Forexample,theavailability oflaborisaveryimportantfactorforaportfacilitywhereastax incentivesgenerallyareoflessimportance,especiallyasmanyports arepubliclyowned.Likewise,thetransportationnetworkiscritically importanttoadistributioncenterbutpermittingandregulationsare farlessimportantthantheymightbetoatransloadcenterthatmay processhazardousmaterials. When competing sites are rated relatively equal, incentives offered by the public sector may help close the deal.

Freight Facility Location Selection: A Guide for Public Officials54 LOCATIOn CRITERIA TyPE OF LOGISTICS FACILITy Distribution Center Port Intermodal Terminal Transload Terminal ILC Hub Terminal City Terminal AbilitytoAccessKey MarketsorCustomers Interactionwith TransportationNetwork LaborandWorkforce TotalCostEnvironment AvailabilityandCostof SuitableFacilities Utilities Permittingand Regulation TaxEnvironment PublicSectorAssistance andIncentives ClimateandNatural Hazards key PriorityofCriteria:  PrimaryFactor   ImportantFactor  LesserFactor Table3belowidentifiestherelativeweightofvariousfactorsthat willdrivethesitelocationdecisionforeachtypeoffreightfacility. Publicofficialsshouldnote thatfactorsoverwhich theyhavesome control–permittingandregulations,thetaxenvironment,incentives andotherformsofassistance–aregenerallyalessimportantfactor than access to markets, transportation networks, and aworkforce whenlocationdecisionsarebeingmade. Table 3. Site Selection Criteria by Facility Type

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TRB’s National Freight Cooperative Research Program (NFCRP) Report 13: Freight Facility Location Selection: A Guide for Public Officials describes the key criteria that the private sector considers when making decisions on where to build new logistics facilities.

A final report that provides background material used in the development of NFCRP Report 13 has been published as NCFRP Web-Only Document 1: Background Research Material for Freight Facility Location Selection: A Guide for Public Officials (NCFRP Report 13)

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