NKyMR18: Billions of Dollars Pouring into the Asset-Based Logistics Scene

Greg Paeth | The Lane Report | Feb 07, 2018

The term “has it all” is the only thing appropriate when looking at Northern Kentucky’s logistics scene. It’s got it going on.

Shipping around the planet is within easy reach from the region. Amazon thinks so, too. The Seattle-based giant provided a $1.5 billion vote of confidence for the region last January, when the company that has reinvented how America shops said it would build its first shipping hub for its fleet of Prime Air cargo planes at the Cincinnati-Northern Kentucky International Airport and create upwards of 2,700 jobs for a company that already has about 10,000 employees in Kentucky.

Although construction on the project is a long way from completion, that hasn’t hampered Amazon from launching its massive package sorting operation at the airport. The company reached an agreement with another major force in the delivery business, longtime partner DHL Express of Germany, to share its sprawling CVG air freight facility while construction is underway.

With DHL Express, Amazon is sharing far more than a forklift and a couple of trucks.

DHL’s facility in Hebron is what it calls its Americas Hub, which serves North and South America and the Caribbean. The company has invested $280 million in that sorting facility since 2009 and announced plans shortly after Amazon made its announcement to add another 900 jobs. Those additional jobs would increase its workforce at the airport to about 3,300, the company said.

DHL’s other two hubs are in Hong Kong and in its corporate backyard in Leipzig, Germany.

Meanwhile, FedEx, the world’s largest shipper according to the annual “Freight 50” rankings by Air Cargo World, also has a substantial presence in Northern Kentucky, where it recently announced plans to spend $150 million to add 355,000 s.f. to its existing building in Independence. It already has 116 full-time employees and another 538 part-time worker there.

In October, FedEx said it intended to hire 1,100 seasonal workers in Independence and 50,000 worldwide for the 2017 holiday season.

The Kentucky Cabinet for Economic Development boasts that the state ranks third in the U.S. for air cargo shipments because of DHL and Amazon in Northern Kentucky and Louisville’s UPS World Port, which is the company’s largest sorting center. By itself, the Cincinnati-Northern Kentucky airport ranks as the eighth largest cargo airport in North America, and handled 818,000 tons of cargo in 2016.

But the presence of global shippers doesn’t tell the whole story about the logistics business in Northern Kentucky.

One vitally important element of the logistics economy in Northern Kentucky is barge traffic on the Ohio and Licking rivers inside of the Ports of Cincinnati and Northern Kentucky, which ranks as the largest inland port in the country when measured by the amount of cargo – nearly 45 million tons – it handled in 2015, the most recent year for which numbers are available. The port’s ranking shot up in 2015 after the U.S. Army Corps of Engineers expanded port boundaries that year from 26 miles to about 226 miles along the Ohio and Licking rivers.

A variety of industries in the region depend on the bulk shipping, almost 60 million tons annually, that comes down the river, said Central Ohio River Business Association Executive Director Eric Thomas with Benchmark Terminals, who has worked in the area’s maritime industry for nearly 20 years. This includes coal and petroleum products, as well as grains and construction materials.

And now clients can track those products easily, thanks to the newly unveiled Central Ohio River Information System or CORIS. A partnership between CORBA and the Ohio-Kentucky-Indiana Regional Council of Governments, CORIS is a long-awaited asset inventory and mapping system for the public.

Maritime logistics is the most environmentally friendly ways to ship bulk goods. A single river vessel can push an entire “tow,” which consists of eight barges, that can carry the equivalent of 250 rail cars or 2,100 trucks.

Covington-based Carlisle & Bray Enterprises – and its subsidiary companies, C&B Marine LLC and C&B Energy Services LLC – was established in March 2011 and is a full-service marine company providing a multitude of solutions to utility and aggregate customers in the Midwest and the South, including towing, fleeting, shifting and dredging.

President Donald Trump chose a site on the Ohio River shoreline in Cincinnati to deliver a policy address about investing in the nation’s infrastructure in June 2017. Eric Thomas, general manager of Benchmark River and Rail Terminals, said the president’s comments and a U.S. Department of Transportation study that examined the Cincinnati-Northern Kentucky ports focused attention on the importance of river traffic.

“It was a big deal for us to get that kind of prominent mention,” Thomas said.

Another major player in logistics in the region is the homegrown Verst Group Logistics, a family-owned business created in 1966 that is headquartered in Walton, not far from the airport. The company stresses that anything deliverable by truck it can “pick, pack and ship” to its destination inside of two days to 85 percent of the U.S. population.

Northern Kentucky sits at the juncture of Interstates 71 and 75, the latter being the nation’s primary route between Michigan and Florida. An additional 11-lane span at the Ohio River alongside the nearly 60-year-old Brent Spence Bridge is in the early planning stages to alleviate a significant north-south traffic bottleneck.

Kentucky is a one-day drive of two-thirds of the U.S. population with the state’s borders within 600 miles of that same huge customer base, so keeping traffic moving across the river is crucial.

And if you don’t need it in two days, Verst knows where to put it. The company has 5 million s.f. of warehouse space available.

Verst Group reported 2016 sales of $177 million and ranked 60th on the 2017 Deloitte Cincinnati USA 100, a list of the largest privately held companies in the region published every year by the Cincinnati/Kentucky Enquirer.

Atop the Deloitte list was Total Quality Logistics, which also ranks as the second largest freight broker in North America. TQL has locations in Northern Kentucky on the fringe of CVG and offices in Lexington and Louisville. For 2016, the most recent year available, the company reported revenues of $2.3 billion for a now 20-year-old company that was launched by two former employees of the Castellini Co., a produce, packaging and logistics company where they learned how to get a truckload of lettuce, for example, to grocery store shelves before the leaves began to turn brown. The Castellini Co. ranked second to TQL on the Deloitte Cincinnati USA list with revenues of $1.5 billion.

Cincinnati’s Kroger Co., which ranked No. 18 on the most recent Fortune 500 list with revenues of more than $115 billion, also demonstrated plenty of confidence in Northern Kentucky when it invested $60 million in a distribution center that the company’s largest grocery chain will use to as a “replenishment center” to keep shelves stocked. The company said the facility would focus on “…servicing Kroger’s direct-to-store distribution centers across the eastern half of the country.”