Supply Chain has a New Sherriff: Third Party Logistics in DFW

Tweet

 

The Panama Canal Expansion Project has exponentially increased the amount of growth and development along the Atlantic and Gulf Coasts. Impacting everything from port and rail-line infrastructure, to warehousing and terminal development, the project’s completion (in 2014) will mark a dramatic change in U.S. supply chains and identify a new “epicenter” for distribution within the U.S.

For the industry, the canal’s expansion will allow vessels to double their capacity, while maintaining an all-water route to consumer markets along the U.S. Gulf, East Coast, and Midwest. Conditionally, in-midst of oil price volatility and growing port congestion along the West Coast, the prospective cost-savings of maximized rail and sea transport will make the “new” Panama Canal a “juggernaut” in the world of logistics.

According to the Journal of Commerce, West Coast ports currently handle 50 percent of the U.S. containerized trade, including 70 percent of U.S. imports from Asia. Going forward, the Panama expansion will allow for Asian imports to be much more prevalent on eastern ports. In-fact, according to projections by Trade Canada, the expanded system is expected to increase intermodal traffic by some 200 percent by 2025, versus a projected 90 percent increase without the expansion.

Cities along the Gulf and East Coasts are already investing in new transportation and supply chain infrastructure to accommodate the projected traffic. In fact, the ports of Savannah, Charleston, Jacksonville, Miami, Baltimore and Philadelphia have all announced plans to enlarge and deepen their channels to make way for larger ships.

While in-land cities, such as Atlanta, Chicago, and Columbus are expected to also benefit greatly from the import shift; the non-port city of Dallas-Fort Worth (DFW) will become a new “hotbed” for intermodal distribution throughout the U.S.

3 reasons to invest in the Dallas, TX Market:

1) Infrastructure

The city of DFW will have a great impact on how companies, with global supply chains, locate and distribute their products. Fortunately, the DFW Metroplex already boasts the nation’s most sophisticated transportation and logistics network that includes highways (I‐35, I‐30, I‐45), Transcom Railroad Corridor, DFW International Airport, Alliance Airport, and the Dallas Logistics Hub (DLH).

2) Centrality and Cost

As manufacturers and retailers aim to maximize ‘speed to market,’ while minimizing cost, the location of a company’s DC is critical in maintaining a competitive advantage. DFW’s proximity to the Port of Houston allows companies to utilize its advanced transportation and logistics networks to directly serve a large portion of the consuming U.S. population. Furthermore, according to the U.S. Department of Transportation, 93% of the U.S. population can be reached via truck within 48 hours. Conditionally, 37% can be reached within 24 hours of shipment from the DFW-area. From a cost standpoint, DFW also maintains the lowest distribution costs to the top 50 U.S. consumer markets of any region (CF Lynch & Associates).

3) A Strategic Edge

With the Panama Canal expansion expected to increase the flow of goods through the Port of Houston, it’s important to recognize that a combination of “larger ships and fewer trips,” doesn’t necessarily translate to lower costs. To develop a competitive edge, companies must see the Panama expansion as a “value-added route,” as opposed to a passage-way between the Pacific and Atlantic oceans. A 3PL model for warehousing and transportation management (TMS) enables companies to take advantage of “pauses” in their supply chain, and add value to their products as they await their next destination. Furthermore, the flexibility of a 3PL model will accommodate for inventory fluctuations, reduce capital expenditures, and mitigate risks.

Companies seeking to optimize distribution patterns throughout the region should consider third-party logistics services in the DFW-area. Due to its strategic cost and service advantages, and in midst of a revamped Panama Canal, DFW will soon be the hub for supply chain and logistics – both domestically and abroad.

How is your company planning to alter its product-flow in midst of the “new” Panama canal? What challenges are being faced in doing so?