Business Trends

The Next Logistics Land Rush? by DC Velocity

File Type: Free Content, Article
Release Date: February 2014
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train with cargo containers

As intermodal traffic grows, more businesses are looking to locate their distribution centers (DCs) alongside rail facilities, reports an article in last month’s DC Velocity. “Of the 225 million square feet of DC space under development in the United States, about one-third is at or close to an intermodal facility,” notes Mark B. Solomon in “Siding Up to Intermodal.” That’s about “twice the ratio of several years ago.”

What’s driving the demand for intermodal DCs? The article cites three factors:

  • Canadian companies searching for bargains in U.S. real estate.
  • E-commerce players like Amazon.com, which operates a DC near a rail line in Tracy, Calif.
  • The rail industry’s success in promoting the environmental virtues of intermodal transportation.

Intermodal facilities only make sense for large-volume operators, the article points out, with the tipping point falling at about 1,000 40-foot-equivalent-unit containers a year. “Anything beyond that value threshold becomes gravy; anything below that may not work.” Distribution center operators also must consider other factors, including the local labor force, tax climate and economic incentives. But experts cited in the article say they believe that “industrial real estate powerhouses are catching on to the value of intermodal, and, perhaps more importantly, its staying power.”