OM in the News: Georgia’s Massive Distribution Centers
Hidden behind the green curtain of Georgia pine forests that surround the Port of Savannah (the nation’s 4th largest container port) are 45.3 million square feet of logistics, storage and distribution centers. Run by some of the most recognizable brands in the country — Walmart, Ikea, Home Depot, Target and Pier 1 Imports — the immense buildings are essential links in the flow of farm, construction and manufactured products streaming out of or into the country through the port, one of the country’s most modern maritime transport installations.
“Traffic, which includes everything from containers of frozen Georgia chicken parts heading to Asia and stuffed dog beds coming in from China, is about evenly divided between exports and imports,” writes The New York Times (March 25, 2015). (Incidentally, companies in the region are leery about opening the interior of their buildings to public view, partly because of the proprietary nature of some of the newer equipment used to move and ship products. Even the systems for storing freight and organizational warehousing techniques are tightly held, a reflection of steep competition).
The largest distribution center is the 2.5-million-square-foot facility owned by Schneider Logistics. Walmart operates a 2-million-square-foot center. Both are expansive enough to completely enclose two typical suburban shopping malls, or all the businesses in Savannah’s historic downtown. Demand for new warehouse and distribution space is intensifying with the economic recovery.
Another significant factor behind the flurry of activity is the expansion of the Panama Canal, a $6 billion project to add a third set of much larger locks to enable bigger container ships to navigate the maritime shortcut across the isthmus. The canal expansion, which is scheduled to open for commercial traffic in 2016, is expected to double the volume of goods making the 50-mile crossing each year to 660 million metric tons.
Classroom discussion questions:
1. Why are these firms building massive distribution centers and warehouses near Savannah?
2. What is the impact of the Panama Canal expansion?