Author: DCC Marketing

My father was always fond of saying, “There is a lot of growing up between ‘it fell’, and ‘I dropped it.’” It’s a statement of personal responsibility and owning the outcome of your actions and choices. Not only is it an essential aspect of individual character but hopefully the collective character of a responsible organization.

However, it is possible to do everything right and still fall victim to circumstances beyond your control. One such situation is emerging in the intermodal shipping industry as of late. Due to shipping back logs, increased pandemic regulations, logistics and transportation labor shortages, and the general confusion of not knowing what tomorrow may bring, companies (often through no fault of their own) are paying more for their international shipping operations. This is mainly due to a common fee that has never presented itself as a problem in the past: a demurrage fee.

In the trade, transportation and logistics industries, a demurrage fee is incurred when a company fails to collect their container at the point of entry within a specified timeframe. It’s not an overly common fee as most businesses require their goods at ever increasing speeds to maintain their own stock or raw materials, especially in a just-in-time (JIT) production model. At face value, and in times of normal operations, this is a good thing. Demurrage fees at best incentivize smooth and efficient operations within shipping ports which benefits everyone, and at worst, they disincentivize companies from using dock space as de facto warehouses for their goods. However, these are not normal times.

Large, traditional ports of entry for international goods have always faced congestion problems. It’s simply a known reality within the logistics industry. However, this reality coupled with the complications of the global pandemic have resulted in a situation where drayage service providers are finding their trucks idling outside of the port gates rather than getting their payloads on the road. It is becoming increasingly common for companies to hit the demurrage deadline as their trucks wait in line.

How do companies avoid this situation? Simple. Ship your intermodal goods through an uncongested ramp. With the growth of international trade over the last forty years, and its reliance on the standardized 20’ or 40’ shipping container, intermodal ramps in less dense sub-markets have sprung to life to not only meet the need of a far higher volume than in the past but an increasingly decentralized manufacturing environment. One such facility is the ADM intermodal ramp in Decatur, Illinois which has no wait time and just a 25-minute turn time until you’re back on the highway. The ADM intermodal ramp also charges no demurrage fees.

If the last mile of your goods is not actually located within a major city, there is no reason your container must get stuck in one. This only costs your company time and money.

Written by Andrew Taylor, EDC’s Economic Development Officer

Parke Warehouses is a multi-generational family business and premier 3PL corporation serving the manufacturers of the Midwest. Gavin Stoddard is the 6^th generation President of Parke, with roots in Decatur dating back to 1854. Parke specializes in warehousing, food and bulk material logistics and toll processing.

Parke has interacted with the Economic Development Corporation for decades, and Stoddard decided to join the Board of Directors in 2019.

“I am active with the EDC for two reasons. First, Decatur’s prosperity benefits everyone. It is important to me and our family to be a leader and help drive growth in our community. Being able to work alongside other great corporations and leaders gives our county an edge to move quickly, share insights and provide powerful action. Serving on the Board brings great awareness to growth opportunities for our community. To sit at the table alongside major influencers and engage with our business leaders is an honor I do not take lightly. Together, we have an opportunity to activate and leverage growth.”

For the last decade, Parke has been part of a supply chain industry association that has helped guide the FDA’s warehousing food safety regulations. Today, they are working to shape the next generation of policies that will impact food tracing and tracking in the years to come. With the upward trends in the food sector and many health-related concerns, it becomes particularly important to their growth in toll processing. Parke is a trusted source for re-packing, blending and transferring of goods and plays a critical role in the safety and delivery of bulk food ingredients.

Stoddard understands the importance of economic development in our region. “Our business is here in Macon County. We are committed to our local businesses and to our community – we believe it is part of our corporate social responsibility to help attract and grow business and support our workforce locally.”

If you take a quick look around your home or office, you will likely find that you are surrounded by hundreds if not thousands of finished consumable goods; each object a singular monument to the concept of a value-added, production economy. However, we often hail the hands that work the craft and overlook the hands that move the essential materials into place and the finished goods out to market. Our wonders of production could never be if their raw materials and final products could not be brought to bear at the right time for the right price.

At face value, logistics doesn’t seem all that complex. You simply take item X, made by individual Y from point A to point B and give it to individual Z; easy right? However, when dealing with trillions of transactions a year between billions of producers and consumers across hundreds of nations, one can’t simply slow-walk every knick-knack in the market to its final user. You must use mass goods transit options such as cargo ships, planes, trains and trucks. But ultimately, you do have to get that knick-knack into the final hands of the individual who needs it. This is often referred to as Last Mile Logistics and it can be the costliest aspect of goods distribution.

The realities of Last Mile distribution can seem somewhat counterintuitive. Most finished production goods often travel over ten thousand miles to reach their end user. How can the last few miles of delivery often constitute as much as 30% of the total delivery overhead? The answer comes down to the mathematics of distribution. Most production units start at the same location: the factory. However, the ultimate destination of each unit (or quite often groups of units) go all over the world. Consider that it’s about 11,500 miles from Shanghai to Decatur, IL. A cargo ship can get a production run of a million units 90% of the way there relatively cheaply by landing the entire shipment in a Western U.S. port. This is an economy of scale dealing with one transit provider. The real cost comes into play once the shipment is divided for distribution. Every time a shipment is split, it requires more man-hours, trucks, trains, fuel, insurance, etc. all to move the exact same number of units. Additionally, often these services are carried out piecemeal by third party logistics firms, all who have their own overhead and profit margins to be maintained. By the time those one million units reach the “Last Mile” of their delivery, they might be in the hands of tens of thousands of individuals (or even hundreds of thousands) in the age of home delivery, all of whom need to be paid.

This is the core advantage of a one-stop shop, maker-to-user logistics option like the ADM intermodal ramp: an uncongested, quick turn distribution point owned and operated by one provider. While ADM is correctly known worldwide as the leader in mass food production, it is also a world class logistics company maintaining a transportation infrastructure that secures an unending river of raw materials into their production facilities and finished products out to market 365 days a year to all corners of the globe. By utilizing ADM logistics, your raw materials and finished products can ride those currents from their first mile to their last.

 

In the ever-evolving world of durable and non-durable goods manufacturing, a few aspects and requirements of production remain constant and unchanging; a clean, reliable, abundant and professionally managed water source is as central to their success as an experienced executive staff, a skilled workforce, and stable logistic supply and distribution lines.

A site selector’s ability to know that a property’s production facility can meet the water requirements without interruption and delay is a key aspect of nearly all industrial site selections. The United States’ manufacturing sector utilizes approximately 18 billion gallons of water a day for its operational needs, or about 25% of all fresh water draws according to a 2015 study by the Census Bureau. For perspective, that is about 56 gallons of water for every man, woman and child in the United States per day (20,400 a year).

Lake Decatur boasts a reservoir reserve of nine billion gallons of water locally, which is a 30% increase over previous years due to the recent dredging project that was completed in 2019. This volume which is continually replenished by our regional watershed is equal to approximately 86,500 gallons of fresh water for every person living in Macon County. Decatur certainly has the water to spare.

Manufacturers in the United States have a great need of a readily available, abundant, and reliable water supply, and they will naturally seek out the communities that can supply that need, not only for a day or a year, but for generations. Decatur is such a community.

On Friday, September 25th, the Midwest Inland Port and the Economic Development Corporation of Decatur-Macon County were proud to host over 300 local business and community leaders at Richland Community College for the much anticipated marketing launch of the Midwest Inland Port.

The keynote speakers included Governor Bruce Rauner who spoke of his vision for continued economic development in Central Illinois and Decatur in particular; and Mr. Juan Luciano, President/CEO of ADM who reiterated his commitment to Decatur’s future prosperity with the announcement of a $2 million local investment into National Foodworks Services and their new state-of-the-art food product incubator.

Additional speakers included representatives of the Midwest Inland Port Strategic Development Coalition on their commitment and contribution to the future of Decatur’s economic development:

• Scott Fredericksen, President of Transportation – Archer Daniels Midland
• Ron Pate, Senior Vice President, Operations and Technical Services – Ameren Illinois Company,
• Kevin McKenna, Executive Vice President – Clayco
• Ken Smithmier, President and Chief Executive Officer – Illinois Health and Science (Parent of Decatur Memorial Hospital)
• Jim Schultz, Director – State of Illinois Department of Commerce and Economic Opportunity
• Kevin Shuba, CEO – OmniTRAX, Inc.

For additional coverage of the event, visit Now Decatur, The Herald & Review, WAND TV and WCIA. 

 

The Business Development Resource Center provides customized facilitation and support for businesses seeking to develop or expand their operations in the Decatur area.