BisNow: Shipping Giants are Furiously Building Warehouses Around a Handful of Inland Logistics Hubs
03/10/2020
BisNow / Cameron Sperance / March 9, 2020
As major U.S. companies seek to capitalize on international freight connectivity and industrial growth, many are zeroing in on Middle America over coastal gateway markets.
Millions of square feet of warehouses are under construction in Cincinnati, Fort Worth, Texas, and Memphis. What connects them? Airports with major cargo capabilities.
Amazon, FedEx and UPS have all announced multi-billion-dollar expansions in these and other inland markets to capitalize on existing transportation hubs that connect to the world. Developers and e-commerce companies are now following the freight, spurring an industrial boom across the American heartland.
“One of the reasons we see so much buildup around these inland ports is it cuts down on transportation time and transportation costs,” said James Breeze, CBRE senior director and global head of industrial and logistics research. “Transportation costs are the highest costs for a supply chain, and any way occupiers can find to cut down on that cost they will, including building up around distribution centers.”
Memphis, home to North America’s busiest cargo airport by volume, has been FedEx’s corporate hometown since 1973.
Fort Worth Alliance Airport opened in 1989, when it was billed as the world’s first industrial-only airport. Amazon has named Alliance, already home to a FedEx regional hub, as one of its Amazon Air regional air hubs.
Cincinnati/Northern Kentucky International Airport may have been built to accommodate a high volume of passenger traffic but, following a drawdown of service from Delta Air Lines over the last decade, the Kenton County Airport Board has leveraged the existing runway infrastructure to land new cargo hubs from air freight providers like DHL Express and Amazon Air.
Freight companies are attracted to the markets due to their central location and land availability to scale up international operations. The cargo connectivity is now having a spillover effect in the industrial sector. “We are seeing uniform demand increases around sites with compelling logistical qualities,” said Andrew Iglowski, the managing partner and co-founder of Boston-based industrial investment and development firm The Seyon Group. “Sites that are effectively junctions of product distribution are overtly strategic and less replaceable.”