By Tiffany Sukola, May 26, 2013, Columbia Basin Herald
Companies looking to build new distribution centers might give Grant County a closer look after a recent study listed Quincy as the most economical site for operating warehouses in the West.
The Boy Company, based in New Jersey, compared the cost of operating a distribution warehouse in 29 key intermodal cities in the Western United States and Western Canada.
Quincy had the lowest annual operating cost at $14.1 million, according to the study.
Los Angeles was the U.S. city with the highest annual operating cost at $20.7 million. Vancouver, British Columbia, had an annual operating cost of $23.6 million, making it the most expensive site in Canada.
John Boyd, of The Boyd Company, said the study ranked the 29 cities using the same factors companies use during their site selection process.
“The report documents all geographically-variable operating costs like labor, taxes and utilities.” he said. “Quincy did very well for various reasons.”
One of those reasons is the area’s green, hydro-generated power, he said.
Low utility costs is a major site selection driver, said Boyd. Distribution centers with large power requirements, like climate-controlled warehouses, will be attracted to Grant County’s low power rates, he said.
“The industrial kilowatt cost in the Quincy region is less that 3 cents per kilowatt hour,” he said. “A company will pay five times that in Seattle and even more in California.”
Rising fuel and trucking costs are also driving companies to locate their distribution centers near intermodal rail facilities, said Boyd.
“One of the big picture trends here with respect to major distribution facilities is access to intermodal rail.” he said. “That is what companies are concerned about right now because of the cost of diesel.”
Over-the-road trucking costs are expected to increase by about 5.6 percent this year. Siting distribution centers near rail ramps is a good hedge against rising fuel prices, according to the study.
Boyd said companies are also placing a high value on access to intermodal rail because it will help them reduce their carbon footprint.
“One gallon of diesel translates into 400 miles of rail at 60 percent less CO2 emission,” he said. “Above and beyond capital savings, companies want to brand themselves as being green friendly.”
AS a result, Boyd said companies are no longer even considering markets that don’t have access to intermodal rail for distribution projects.
That’s good news for Quincy, since it is now a designated intermodal facility, he said.
“With Quincy now being an official intermodal terminal listed on the Burlington Northern (Burlington Northern Santa Fe Railway) map, it is now affording Quincy to be compared to other terminals,” said Boyd.
He said a handful of intermodal terminals have successfully marketed their facilities in the past year and a half.
Pet Smart opened a distribution center in Reno, and Amazon recently located in Indianapolis, said Boyd. Salt Lake City was able to attract Albertsons and Nestle, which are both climate-controlled warehouses, he said.
“All those projects are within minutes of an intermodal facility,” he said. “We’re projecting that to happen in Quincy.”
Boyd said communities used to be hesitant to allow companies to build distrubution centers.
“There was a ‘not in my backyard’ attitude, but today it’s completely different,” he said. “Communities like Quincy want to attract warehouses.”
Companies pay a large amount in property taxes for large warehouses, said Boyd.
Other revenue streams generated by warehouses include sales, utility, fuel and income taxes, according to the study.
Boyd also said there is potential for a company to expand their warehouse operations.
“Often the first footprint a company will make is a brick and mortar warehouse,” he said. “Then they might bring in a back office function and maybe a customer service center or call center.”