MIDDLE AMERICA AND LOGISTICS\\\ Issue 8 2020 - FBJNA >> 8


Logistics Park Kansas City in


Edgerton, Kansas, recorded a 10% dip in North American intermodal volumes in the second quarter and an 8% drop year-to-date, according to


Tom Williams, Group


Vice President, Consumer Products. “In May and June, we


started to see a strong recovery in those volumes as an increase in e-commerce sales drove demand for parcel and truckload intermodal services on our network,” he says. Perhaps that’s why BNSF,


after hitting its lowest levels in the spring, saw intermodal volumes


since jump 30%,


Williams says. Meanwhile, Kathryn


Farmer, who took over the Berkshire Hathaway-owned company last January as the first woman to lead


At BNSF, Williams also


remarks that as key hubs began to see volumes rising to peak levels, the annual seasonal burst kicked in. So much so, he says, BNSF’s


At KC SmartPort, Gutierrez


is also noticing an increase in so-called safety stock: items retailers, manufacturers and other suppliers hold back to reduce the risk of inventory shortfalls. The result, he says: “A


single-digit percentage growth in and safety stock was another 500 million square feet of industrial space that we needed in the U.S. And that’s crazy.”


Warehousing Upsurge


An OmniTRAX train plows through the snow in Oswego, Illinois. (Photo by Kevin Vahey, courtesy of OmniTRAX.)


a major North American


railway, oversees continued investment. BNSF’s Southern TransCon, the primary route for the


customers now face another problem: replenishing inventories the pandemic has depleted.


railway’s


intermodal franchise stretching from Southern California to Chicago, is nearly 100% double-tracked to accommodate high-velocity trains; in some areas, Williams, says, the route is triple- and quadruple-tracked. “Our network is in the best


condition it has ever been,” he says.


Other rail lines operating in


the Kansas City area include Kansas


City Southern and


Norfolk Southern, which, over the last 20 years, Luebbers says, has “strategically deployed capital towards enhancing our capacity to handle the growth in the intermodal market.”


Remarkable, too, is the ongoing upsurge in warehousing space and DCs’ facilities—along with marquee companies lining up to fill them. At the same time, though, Gutierrez and others


say


many online retailers haven’t fully implemented an efficient distribution network. “You’re seeing more growth in third-party logistics firms


“Warehousing projects are moving


at an accelerated rate to match these companies’ sharp e-commerce growth trajectories.” -- Jon Stephens, Port KC


taking that on,” Gutierrez says. “I think you’re going to see an even greater increase in e-commerce distribution, 3PL distribution, that Kansas City will benefit from.” Among KC SmartPort’s


biggest gets this year: Chewy, the PetSmart-owned online pet-food retailer, and Urban Outfitters—and both deals were completed virtually, both within about six months: “Pretty exciting to work a


whole project in this new environment,” he says. Ken


Ryan, Director of


Cargo at Chicago Rockford International Airport, had already experienced a similar rush, as e-commerce was becoming a click-‘n’-ship reality.


In 2016, the same year


UPS plans to quadruple its ramp space at Kansas City International Airport. (Photo courtesy of Kansas City Aviation Dept.)


then-Amazon Prime Air (now simply Amazon Air) started and years before the health crisis demanded lightning- speed urgency, Air Transport Services Group sought out airports with more space to accommodate the online behemoth’s new air-freight wing. At RFD, a 72,000-square- foot cargo building, practically in new condition and with ramp access, suddenly, fortuitously, became available. “It took less than 40 days


from the first phone call from ATSG around July 28 to the opening of the Amazon facility in RFD and the first flight on Sept. 7,” says Ryan, whose airport also happens to house UPS’ second-largest air operation in North America. Like Ryan and Gutierrez,


Jon Stephens, president and CEO of Port KC, underscores the need to increase DCs and warehouse capacity more quickly. “Warehouses must open


and begin operations at an unprecedented pace,” he says. “Warehousing projects are moving at an accelerated rate to match these companies’ sharp e-commerce growth trajectories.” Which helps explain how


KC SmartPort, which stretches across 18 counties in the bi-state Kansas City region, added what will amount to some 17 million square feet this year. That beats the average of up to 10 million square feet added during each of the last five years, Gutierrez says. Another big catch this


year: At KCI Intermodal BusinessCentre, Pure Fishing Inc. entered a lease on Oct. 1 at the 690-acre campus just off I-29, an 8-minute drive from Kansas City International Airport. The global retailer of recreational angling gear operates a 542,640-square- foot cross-dock distribution center, the fifth Class A industrial building at the site, which, when built out, would comprise more than 4 million


square feet. Taking to the Skies


In the heartland, air freight is also starting to take to the skies again. Justin Meyer, Deputy


Director of Aviation, Marketing and Air Service Development Kansas City Aviation


Dept., says UPS announced in August that the marquee freight forwarder—already a


huge player there—will


quadruple its ramp space at KCI. In


addition to the


534 , 000-squar e-f oo t increase, which will be able


“They essentially life-flighted it up to Detroit from our ramp in Columbus, Ohio.”


-- Bryan Schreiber, Columbus Regional Airport Authority.


to accommodate five air freighters, up from two, UPS is installing new sorting equipment capable of handling 5,000 packages per hour, up from 1,500. Luebbers, at Norfolk


Southern, offers another insight: the rising costs of trucking. “Intermodal is the


more cost-effective and environmentally friendly means to meet the needs of the supply chain,” he says. “We are very bullish on the future of intermodal.” And new issues will arise.


Gutierrez, for instance, notes Americans are altering their food habits—“how we buy what we eat, where it comes from, as well as the food


storage temperatures. “I have been beating the


drum over the last year and a half that somebody in our market needs to build a spec temperature-controlled or temperature-ready, cold- storage-ready Gutierrez says,


building,” noting that


those are on the way. “We need them here.” KC Port’s Stephens offers a


broader outlook: “The industry needs to


maintain focus beyond immediate economic cycles. The industry understands the needs of 2030 will be different than those of 2019. The market will


expect


industry to undergo significant modernization to meet future demands.”


9


companies changing in the COVID environment.” Another challenge on


the horizon: transporting a coronavirus vaccine that requires minus-70-degree


the intermodal


A Kansas City Southern train departs Salinas Victoria intermodal facility, just north of Monterrey, Nuevo Leon, Mexico, on KCSM’s B line. (Photo by Jacobo Parra. Courtesy KCS.)


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20