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Big Freight: Behind the Deals in KC's Freight-Based Development

by Ashlie Hand | May 01, 2017
Kansas City is called a “strategic supply chain location” and has become a hot spot for new distribution centers and manufacturing operations. In the last five years, there has been nearly 25 million sq. ft. of spec development in the industrial space, with close to three million sq. ft. of build to suit space for distribution or manufacturing.

In 2016, Kansas City had more industrial construction completions than any other market in the U.S., except Chicago, making it clear that Kansas City is a leader in big freight development.

KC SmartPort's sixth annual industry briefing centered on this growing market and went "behind the deals" evaluating freight based investment across the country.

Conversation Highlights

This year’s keynote speaker was Jim Della Valle, senior director for supply chain transformation and outbound transportation for CVS/pharmacy.
CVS will open a new $110 million, 762,0000 sq. ft. distribution center near Kansas City International Airport in 2018, that will service 370 CVS stores and bring 360 new jobs to the region.
In his speech, Della Valle revealed how large distribution supply chains like CVS select new locations. “CVS is a purpose-driven company. This is key to CVS [which] uses its purpose and values to make decisions and drive our strategies. By identifying gaps between our capacity and our needs we develop a business case for future growth opportunities.” He says considerations for creating a Midwest distribution center includes store growth in the market, capacity constraints, and transportation distances.
According to Della Valle, the benefits of creating a Midwest distribution center include:
- Increased capacity in the middle of the country
- Reduced delivery distances leading to improved customer service and transportation savings
- Flexibility for next phase network optimization opportunities
CVS picked Kansas City based on key decision criteria including affordable high quality labor, proximity to key road systems, business cost, business friendliness, and options for expansion.

Della Valle’s speech was followed by a panel of site location and workforce experts who discussed the growth of big freight in Kansas City. Here are some excerpts:
Jim Roy, QPS Employment, is actively involved in the opportunities around workforce and what’s happening around the KC region. “Workforce, workforce, workforce … that’s the question I’m asked nearly everywhere I go. Companies must understand where they are positioned in the marketplace, invest in training and development and working on public transportation to get people from where they live to where the jobs are.”

Greg Kindle, Wyandotte Economic Development, is working with a team of local organizations in his community on an innovative workforce development plan to maximize the impact of a brand new Amazon fulfillment operation opening in Wyandotte County in July of 2018. “How do we use a project like [Amazon] to change the dynamic in the community and truly and deliberately connect people to the jobs being created? We have to find that talent. By reaching out to the working poor, those working multiple jobs but still finding themselves at the poverty level, and making them aware of the resources available to train up for other positions in the community, we can make a direct impact on the residents of Wyandotte County.”

Kris Bjorsen, JLL, touched on urban logistics, a trend so new it’s not yet being implemented in the United States but has become popular in large cities in India. “Urban logistics hasn’t come to the U.S. yet, but we need to be preparing for it. We are at the very, very beginning in the United States of trying to make it work [because of] a giant trend of large mega cities that can’t be served.”

Chris Gutierrez, president of KC SmartPort, wrapped up by addressing the audience, “Way before we get involved as economic developers there’s a life to the project that we don’t see. We heard today about transportation and inventory costs, real estate, incentives, and the critical important of workforce. Kansas City is doing a great job staying ahead of that to win deals but we can’t stop.”

See a recap of the full event through the eyes of social media using #BigFreightKC. 

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