VOL. 127 | NO. 253 | Friday, December 28, 2012
‘Banner Year’ for Logistics Industry
By MICHAEL WADDELL
Positive momentum far outweighed the negative in the local logistics and distribution industry during 2012, as city officials and business leaders continued elevating Memphis’s status as world logistics hub.
“A total of seven plants have geared up here in the past 12 to 18 months that all use our transportation network,” said Dexter Muller, senior vice president of community development at the Greater Memphis Chamber.
Riviana Foods, the largest rice producer in the world, geared up production in South Memphis, and Kruger’s KTG USA, the producer of White Cloud bathroom tissue, announced a $316 million investment in new equipment at its facility north of Downtown.
Construction continued on new manufacturing plants for Electrolux and Mitsubishi Electric Power Products Inc. at Frank C. Pidgeon Industrial Park, and operations are expected to start at both facilities next year.
Nike recently won approval from the industrial development board to add 1.8 million square feet of industrial space to its distribution center. The expansion will take the Nike hub to a total of 3 million square feet, making it the largest distribution center in the Mid-South and possibly the entire Southern U.S.
Another highlight of 2012 was the quietly explosive growth of specialized manufacturing company Jabil, which has hired more than 1,000 new employees in the past 18 months.
Low Mississippi River water levels endangered local barge traffic due to the worst drought in decades, but it resulted in increased activity for area rail yards.
“I would say 2012 was a very significant year for railroads,” Muller said. “Norfolk Southern got under way in Fayette County, and (Piperton Hills developer) William Adair has promoted the development of the major industrial park adjoining it. I think that area will really start to bear fruit in 2013.”
Norfolk Southern opened its new $112 million Memphis Regional Intermodal Facility in Rossville in July. The yard is a key anchor for the railroad’s 2,500-mile Crescent Corridor.
“I would say 2012 was a very significant year for railroads.”
Senior VP of community development, Greater Memphis Chamber
“It’s going to give us much better intermodal service from the East Coast than we’ve had in the past,” said Clifford Lynch, principal at logistics consulting firm C. F. Lynch & Associates.
He expects to see more traffic coming to Memphis once the new, larger Panama Canal is opened in 2015. “I think we will see more traffic coming into Memphis off the East Coast, and the major railroad serving the East Coast will be Norfolk Southern. I think it is going to be a significant contribution to the logistics arena here.”
With future expansion, the Rossville terminal will cover more than 400 acres, with six loading tracks and 2,200 parking spaces. Rossville is the first of four anchors Norfolk Southern is building to move freight between the Gulf Coast and Atlantic ports in New Jersey and New York.
In other rail news, Montreal-based Canadian National Railway Co. executed an option on 800 acres of land next to Pidgeon Industrial Park with intentions to develop it as a logistics park. The park would border the jointly owned CN-CSX Intermodal Gateway-Memphis in Southwest Memphis, which represents a $41 million investment by CN.
Rail wasn’t the only mode that enjoyed a positive 2012.
“It was a banner year as far as road projects,” said Muller, who feels the most important was the approval of $34 million for the first phase of the improvement of Lamar Avenue running from Shelby Drive to the Tennessee-Mississippi state line. “In 2012 we are hoping to see the acquisition of right-of-way property, which will total about $25 million.”
Money was also budgeted during 2012 for the revamping of the under-designed I-240/Airways exchange that leads to the airport.
Work progressed on the I-269 loop around the city, which will be completed by next year, as well as at I-55 and Mallory Road, the gateway into Frank C. Pidgeon Industrial Park. That intersection should also be completed next year.
“Having this interchange opened up next year will make a smooth entrance to be able to really showcase Pidgeon Industrial Park,” Muller said.
Unfortunately, it wasn’t all good news for the region. At Memphis International Airport, airport officials dealt with the challenge of Delta continuing to slash flights here.
Delta also announced a refleeting plan that will phase out many of the 50-seat regional jets used for connecting and regional service. One local fallout from that plan was the recent elimination of Delta flights from Memphis to Birmingham, Ala.
“I think we are going to have to be content being a second-tier passenger hub from here on out, and MEM will be one of the nicest ones in the country,” said Lynch, who cited the many recent first-class improvements at the airport including the upcoming opening of the new ground transportation hub early next year.
Construction has nearly wrapped up on the new ground transportation center, which is on track to open in February, and a newly renovated security checkpoint B was unveiled in November.
This year, the city hired design consultants to work on the master plan for the aerotropolis project that surrounds the airport.
“The aerotropolis really is the economic engine of our region,” Muller said. “Of our $60 billion local economy, that area can be attributed with about half of the gross metro product.”
Late in the year, FedEx announced a voluntary buyout program that will start next February and running through 2015. The decision was prompted by slumping numbers from FedEx Express. The company hopes the reorganization strategy will increase profitability by $1.7 billion next year and eliminate redundant systems and processes in what began as a labor-intensive sorting process in the 1970s.
Also, Pinnacle Airlines Corp. filed in federal bankruptcy court and outlined a plan for a smaller footprint coming out of that reorganization.