South Carolina: A growing distribution center destination

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By Cathy Roberson

Over the years, South Carolina has transformed itself from an agriculture-based economy to one of the leading locations for textile mills. As much of the textile industry left the state during the 1980s and 1990s because of logistics outsourcing trends ironically it’s this same logistics outsourcing trend that South Carolina is benefiting from today. Beginning with Germany’s BMW building its first U.S. manufacturing facility in South Carolina in the 1990s, the state has since welcomed more than 1,000 international firms in addition to many domestic firms to the Palmetto State.

How did this happen? The state government became more active in attracting businesses to the state. Among the attractions include a large labor pool and enticing business incentives. In addition, investments in infrastructure, including its jewel, the Port of Charleston, and its Inland Port have been among the reasons why companies such as Boeing and Volvo locate to South Carolina.

Investments in infrastructure are indeed paying off for South Carolina as more and more companies opt to locate not only manufacturing facilities but also distribution centers to the state. According to CRBE, as of June 2016, more than 6 million square feet of warehouse space was under construction in the Greenville–Spartanburg region alone.

Among the recent distribution facilities to open or scheduled soon to open in South Carolina include:

  • Rite Aid’s 900,000-square-foot facility located in Spartanburg County is designed to move its products to 1,000 stores in the Southeast quicker and efficiently.
  • Dollar Tree’s facility, scheduled to open in 2017, will be located in Cherokee County and will be one of Dollar Tree’s regional centers to serve the Southeast.
  • Husqvarna plans to expand its Orangeburg manufacturing site with a 513,000-square-foot distribution center which will serve as warehousing, staging and storage of items.

In addition Amazon has two facilities, which they refer to as fulfillment centers, located in Lexington and Spartanburg counties.

Infrastructure

Aggressive infrastructure investments have definitely set the stage for South Carolina as a leading logistics hub. One of the largest East Coast ports, Charleston, under the management of the South Carolina Ports Authority, is expected to spend a reported $1 billion through the end of the decade on dredging and other capital improvements at the Port of Charleston. Another $4.5 billion will be spent on a new container terminal in Jasper County, S.C., adjacent to the Port of Savannah. With the widening of the Panama Canal, expectations for more containers as well as larger ships are spurring much of this investment.

In addition, the port authority has also invested in facilities to encourage cold chain freight growth. An estimated $18.5 million is being spent to upgrade on-site refrigerated cargo facilities as well as a new refrigerated cargo yard and more electric outlets for refrigerated boxes. Specialized logistics providers such as New Orleans Cold Storage and the country’s second largest cold storage provider, Lineage Logistics, have both invested in new cold chain facilities near the port.

Besides investing in cold chain specialties, the Port of Charleston’s offerings and capabilities are credited among the reasons such companies as Husqvarna expand into the state.

The inland port is also attracting new businesses into South Carolina. Stephen White, Dollar Tree’s chief logistics officer, cited the South Carolina Port Authority’s inland port in Greer as one of the reasons the retailer chose to locate in the Upstate. Imports coming through the Port of Charleston can be loaded onto a train and taken directly to the inland port, about 30 miles from the distribution center. Besides Dollar Tree, other companies that credit the inland port as a reason for locating or expanding here include Toray, Eastman Chemical, Adidas, Rite-Aid, BMW, and Michelin.

To further enhance the inland port’s presence, in March of this year, the South Carolina Ports Authority announced an expanded international intermodal rail service between the Port of Charleston and the Charlotte Regional Intermodal Facility at the Charlotte Douglas International Airport. The two-day Norfolk Southern service would run five days per week connecting Charleston and Charlotte using existing dedicated intermodal trains.

As Norfolk Southern was expanding its intermodal service through to Charlotte, the South Carolina Port Authority announced plans for a second inland port along Interstate 95 in Dillon. According to a Senior Vice President with SunTrust Bank, adding a facility in Dillon could help the Port of Charleston capture cargo business moving out of North Carolina along CSX rail lines that might otherwise go to the Port of Savannah.

Geography

A number of businesses, including Rite Aid and Dollar Tree, note South Carolina’s geographic location as a benefit. According to Dollar Tree officials, its South Carolina warehouse will be within 500 miles of 93 million U.S. consumers. In addition, the state itself has five interstate highways running through it; as such the state is within 1,000 miles of 75 percent of the U.S. population according to state government estimates. “South Carolina’s north-east-south-west capability puts us in a great place geographically,” says G. Clifton Parker, president of G&P Trucking. “We can deliver product anywhere east of the Mississippi River within one day.” In addition two major Class I railroads, Norfolk Southern and CSX, travel through the state.

What’s Next?

South Carolina is certainly benefitting from economic global and domestic shifts. Its port and inland port network has spurred a number of distribution center announcements particularly in the upstate. This trend will likely continue along the I-95 corridor with a second planned inland port opening in the near future. In addition, the area surrounding Charleston is another popular location for distribution centers thanks to the port.

For example, a North American division of European conglomerate ThyssenKrupp AG plans to open a distribution center in North Charleston. The facility will operate within a Foreign Trade Zone. ThyssenKrupp Industrial Services, which specializes in warehousing and transporting goods to and from the Port of Charleston as well as export packaging, also has a large distribution center in the Greenville-Spartanburg region. According to the company’s president, “Charleston is the logical next step in our partnership with South Carolina. Designating a Foreign Trade Zone and providing fast and responsive, value-added logistics services will benefit smaller customers with a competitive advantage and larger customers with a platform for strategic change.”

As the warehouse and transportation network is built out further and further in South Carolina, the ability to link its networks to neighboring states will further add value not only for South Carolina but states involved. It will certain prove an attractive selling point for companies looking to expand into the US Southeast as well as help existing companies lower their logistics costs.

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