MidAmerica Industrial Park recently completed a logistics network study to determine cost and delivery times from a supply-chain management viewpoint.
The goals of the study were threefold:
- To determine market penetration to 305 metropolitan areas over 100,000 population with given drive times.
- To determine the market penetration for total population, households and businesses with next day (1.5 days) service.
- To develop regional and nationwide logistics cost comparisons including: transportation cost data for truckload (TL) and less than truckload (LTL) freight, facility and infrastructure.
The study included Pryor Creek (the site of MidAmerica — near Tulsa, OK), Oklahoma City, OK and Ardmore, OK as distribution points of origin. Also, the analysis did not reflect logistic costs where the location would be part of a network.
The research was conducted by Ian Wright of Nuvecta, a firm based in Cleveland, Ohio. Wright is a seasoned supply chain and logistics professional with over 21 years of experience. During his career, he has held several senior level management roles at major companies including Castrol (now part of BP), Exel Logistics, Caliber Logistics, and FedEx Logistics where he was responsible for strategy, services development, consulting services, and customer solutions design. In addition, he has worked in industry and consulting, building and improving logistics for many companies, including major corporations around the world.
According to Wright, the research yielded several positive results for MidAmerica and the Pryor area in general. "In geographic terms, MidAmerica is at the center of things," Wright said. "It is a good location to serve many of the nation's major markets in one or two days and has a real logistics advantage for serving destinations in the upper midwest."
Market Penetration by Service Days
According to the study, the total estimated 2005 population for metropolitan areas over 100,000 is 224,772,225. Within 1-day service of MidAmerica, 13.8% of this population can be reached while 11.4% can be reached from Oklahoma City and 12.1% from Ardmore. In other words, from a MidAmerica location over 5.4 million more people can be reached than from an Oklahoma City location and over 3.8 million more people than from an Ardmore location.
Within 3-day service of MidAmerica, a total of 89.4% of the population can be reached while 88.0% can be reached from Oklahoma City and only 81.5% from Ardmore. Thus, MidAmerica still has over a 3.2 million people advantage over Oklahoma City and over a 17.7 million people advantage over Ardmore.
Market Penetration — Next Day Service
For next day service, the study looked at estimates of the 2005 population for the lower 48 states along with households and businesses within 1.5 days or next day service from MidAmerica. The total population of this area is estimated to be 64,384,407 people. The total estimated households of this area are 24,330,365 and the total estimated businesses for the area are 2,641,788.
Of the total population, 22.7% can be reached "next day" from a MidAmerica location or over 64.3 million people. Only 17.0% can be reached from Oklahoma City and 18.9% from Ardmore. Over 16.3 million more people can be reached from a MidAmerica location than from an Oklahoma City location and over 10.8 million more people than from an Ardmore location.
In summary, 23% of the population, households and businesses can be penetrated from a MidAmerica location as opposed to less than 19% for locations in Oklahoma City or Ardmore — a significant advantage for MidAmerica.
Weighted Average Miles
In a fuel-cost sensitive environment where trucking companies survive in a low single digit profit margin, mileage can become an extremely important issue. The weighted average miles to metropolitan areas with 100,000 plus population within a 1-day service area was only 531 miles from MidAmerica as compared to 579 miles from Oklahoma City and 602 miles from Ardmore, a savings of 9.0% over Oklahoma City and 13.4% over Ardmore.
The weighted average mileage within 2-day service was 652 miles for MidAmerica; 715 miles for Oklahoma City and 749 miles for Ardmore. Again the savings were substantial — a savings of 9.6% over Oklahoma City and 14.9% over Ardmore.
MidAmerica Average TL (Truck Load) Costs
6.9% — 12.7% (or $51.75 — $114.52) less than Ardmore & Oklahoma City for one or two day service.
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MidAmerica Average LTL (Less than Truck Load) Costs Per Cwt (Hundred Weight)
2.4% – 6.5% (or $0.18 per 100 lbs – $0.52 per 100 lbs) less than Ardmore & Oklahoma City for one or two day service.
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Summary
The study statistically and geographically displays that MidAmerica's location has a competitive advantage in terms of market penetration weighted average miles, labor, and transportation costs, over Oklahoma City and Ardmore. MidAmerica is closer to major markets and transportation costs are significantly lower, based on proximity to markets.
"If a manufacturing company just had to pick one location (in the US) for their operations, this (MidAmerica) would be a good one," said Wright. "In other words, MidAmerica is ideally located for those firms with a limited number of distribution centers or manufacturing facilities due to proximity to population centers."
Other manufacturing and / or distribution center locations would likely diminish the logistics advantages of the park according to the study.
"The site also holds appeal for firms engaged in reverse logistics that are looking for a way to reduce transportation costs to ship electronics or appliances to a plant for warranty repair or reconditioning and then ship the product back to the consumer," Wright said.
"MidAmerica should also be attractive to companies that must supply Wal-Mart and other "big box" stores in the region on a one-day basis. The park would also be a good site for Tier One and Tier Two auto component suppliers that must deliver goods to a collection of auto assembly manufacturers in what may be described as MidAmerica's "just-in-time" zone," he said.
For a copy of the MidAmerica Logistics Study, please contact MidAmerica Marketing Director Don Berger.
