Columbus Report Summary and Opportunities

Steve SchellenbergIMS Worldwide, Inc.

IMSW 2011 Market Study• Verify Population coverage from Columbus• Verify Columbus is retaining competitive edge• Identify other regions threats to Columbus• IMC rate proof, or identify gaps on rates• Transportation/infrastructure corridor issues• Review of rail and truck services• Government/EDC initiatives review• Present a logistics “value proposition”

– This is what we did

Report • Report Summary and Key Findings• From a Logistics POV, Columbus is Perfectly

Placed• Comparative Zone of Coverage Maps • The Real Columbus Value Proposition• Import and Export Market Share• Real Estate Market Overview• Rail Logistics Marketing• E-Commerce Opportunities• Final Take Away

Columbus (500 Mile Radius)

Miles Population % of US Population500 142,100,000 46.02%

Miles Population % of US & Canadian

500 150,100,000 44.11%

Columbus (300 Mile Radius)

Miles Population % of US Population300 53,700,000 17.38%

Miles Population % of US & Canadian300 59,100,000 17.36%

Market Population Reach

Market300 Mile Reach

% of US Population

500 Mile Reach

% of US Population

Chicago 50,100,000 16.23% 82,900,000 26.87%

Columbus 53,700,000 17.38% 142,100,000 46.02%

Harrisburg 70,300,000 22.77% 112,200,000 36.35%

Indianapolis 54,100,000 17.52% 111,200,000 36.03%

Kansas City 19,100,000 6.18% 67,300,000 21.81%

Columbus Value PropositionMarket Analysis Ranking

(5 Represents Best Use/Cost Advantage)

Chicago Columbus Harrisburg Indianapolis LouisvilleRanking Level 1-5 1-5 1-5 1-5 1-5Population Reach 300 Miles 3 4 5 4 4

Population Reach 500 Miles 1 5 3 3 2

Cost of Labor 2 4 3 5 3Cost of Occupancy 2 4 3 1 5Logistics Cost East Coast vs. West Coast Inbound

5 4 3 4 2

Total 13 21 17 17 16

Regional Market Real Estate Analysis

Market Statistics Columbus Chicago Indianapolis Louisville Central PARentable Area (SF) 205,891,574 1,184,605,187 236,704,434 97,124,883 148,681,066

Vacancy Rate 13.8% 9.2% 8.5% 8.0% 11.7%

Net Absorption (SF) -1,104,356 6,239,271 3,541,406 521,250 1,056,168

Under Construction (SF) 1,862,035 2,795,480 492,000 186,000 0

Average Lease Rate $3.22 $3.98 $4.32 $2.88 $3.51

Source: CB Richard Ellis

Report Findings

What we found: Columbus can gain important advantages over other freight communities by delivering a freight network that is predictable (Maersk Daily Service 9/2011: “absolute reliability, its predictable, its boring and its right on time”)

Predictability in the Supply Chain Delivered by the Columbus Region

Nine Recommendations

1. Marketing message/value proposition received by all Columbus Region members

2. Harmonize web contents so that all members are consistent in site selection, links to Columbus Region

3. Create a roster of Class A buildings to demonstrate Columbus Region’s advantage with this product type

4. Establish a working group to accelerate development at Rickenbacker Rail Served Logistics Park

5. Identify new sites that can be ready for Jobs Ready Sites

Predictability in the Supply Chain Delivered by the Columbus Region

Nine Recommendations

6. Retail sites supported by retail distribution centers not in Columbus

7. Review, analyze Georgia’s Innovation and Logistics Center, attributes that may benefit the CRLC

8. Forum for manufacturers and distributors on HOS and CSA-issues which impact drivers services and capabilities

Predictability in the Supply Chain Delivered by the Columbus Region

Nine Recommendations

9. Determine an e-commerce strategy for the Region in order to capture new distribution in this sector

Predictability in the Supply Chain Delivered by the Columbus Region

Nine Recommendations

Rail Served Logistics Parks

Rickenbacker Global Logistics Park

EE--Commerce OverviewCommerce Overview

Types of New Commerce

• E-Commerce = Electronic Commerce (Computer, Laptop, Desktop)

• M-Commerce = Mobile Commerce (Phone, tablets, readers etc.)

• S-Commerce = Social Commerce (Derived from Social Networks such as Facebook, Twitter, Groupon, etc.

What Retail Tells Us• National Retail Federation: retail growth for

2012 should be 3.4%, down from 4.7% growth in 2011 (GDP growth 2.1%-2.4%)

• Amazon growth in 2010 was 39.5%, revenue of $34.2 Billion– 52 Distribution Centers exist– 28 overseas order processing, fulfillment DC’s– 17 Distribution Centers proposed/planned– 1/5/2012, Two new DC sites announced in VA,

one in TN; 1/24/2012, new DC site announced in SC

E-Commerce Leaders• Next to Amazon, e-commerce leaders are:

– Staples, $10.2b, 4.1% growth in 2010– Apple, $5.2b, 23.0% growth in 2010– Dell, $4.8b, 6.0% growth in 2010– Office Depot, $4.1b, 0.0% growth in 2010– Walmart, $4.0b, 17% growth in 2010

• (internetretailer.com, Top 500 List, 12/2011)

Projected Impact of E-Commerce

• By 2025 it has been estimated that Ecommerce will represent 30% of all Retail Sales and account from 2.7 trillion in total sales (Source: Dematic)

• Within 5 years, the percentage of sales closed at physical stores vs. alternative sales channels (E-Commerce, M- Commerce and S-Commerce) will drop from 91% (today) to 76% (Deloitte Study)

Shipping’s Role in E-Commerce

• Fulfillment “promise” stipulates site selection and access to transportation networks and hubs

• “Free shipping” retains transactions (3/4 of consumers abandon shopping at checkout if shipping is not free)– Shipping solutions include “retail shipping clubs

based on purchase thresholds, linking free shipping to minimum orders or certain products (higher margins), customized delivery or providing free shipping on two or three day delivery solutions

Why Does all this Matter?• The logistics systems must continue to evolve

to support this new commerce channel,– Buildings, building configurations, processing

systems– Truck-load, less-than-truck load distances– Zone-skipping– Multiple air hubs – Truck Hubs– Customized deliver, disposal of products– And new job opportunities (WSJ: wanted e-

commerce chiefs: salary ranges $300k-500k according to top recruiters (11/15/2011)

How Are They Making It Work?

• Single DC supports national store replenishment and e-commerce order fulfillment

• Stand alone DC(s) for store replenishment and stand alone e-commerce fulfillment centers (in different locations)

• Third-party sourcing for all aspects of fulfillment and transaction support

• Third-party sourcing for selected goods to enhance product launch, seasonal products

QUESTIONS ?QUESTIONS ?

Steve SchellenbergIMS Worldwide, Inc.www.imsw.com

Thank You