RENO, Nev. — To legions of kids around the world, Santa Claus arrives on Christmas Eve.
For the players who make northern Nevada’s logistics and distribution sector go ’round, however, Old Saint Nick arrives much earlier.
“Here in the airport, Santa Claus comes every night for three to four weeks straight before Christmas,” said Brian Kulpin, spokesman for the Reno-Tahoe International Airport. “We get excited when we see big aircraft coming in that are bigger than the ones we typically see.”
Last year, 156.4 million pounds of cargo came through Reno’s airport, an all-time record for the facility.
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The airport isn’t the only player in the region that is seeing its shipping traffic take off. An improving economy combined with the increasing adoption of e-commerce is helping fuel an increase in the number of new warehouses and distribution centers in the area since the recession. Add a growing manufacturing base that produces items ranging from cheese and pet food to electric batteries, and northern Nevada continues its transformation as a key player in the storage and transportation of goods to and from the western United States.
Did you recently order coconut oil from natural retailer Thrive Market? If you live on the West Coast, it’s highly likely that it came from the company’s distribution center located east of Reno-Sparks.
Have you bought an oversized item from Amazon in the last couple of years? There’s a good chance the product came from Amazon’s Reno facility, which specializes in large and bulk goods and has been described as a mini-city.
That paperback copy of “Murder on the Orient Express” from Barnes & Noble? The Reno warehouse is the company’s only major distribution center in the western U.S. and one of only two in the country in addition to the retailer’s New Jersey facility.
With the worst recession in the region’s history still fresh in some people’s minds, northern Nevada’s growing list of logistics operations is part of the area’s ongoing success story of recovery and remarkable growth. Northern Nevada saw its number of logistics firms grow from 486 in 2009 to 531 in 2015, an increase of more than 9 percent, according to the Center for Applied Logistics Management at Truckee Meadows Community College.
The facilities stretch across the region from Reno-Sparks and Carson City all the way to Humboldt and Elko, said Brian Addington, director of the TMCC program.
During the same period, the number of workers employed in the sector, as well as total wages paid, saw a significant increase, according to the Nevada Department of Employment, Training and Rehabilitation.
Logistics staffing in northern Nevada — which includes warehousing, trucking, air service and courier operations such as FedEx and UPS — grew by nearly 46 percent from 10,238 employees in 2009 to 14,908 employees in 2015. Total wages paid rose by nearly 50 percent from $438 million to $656.4 million.
When breaking down the region’s rise as a player in the logistics space, its success is often attributed to three things: location, location, location.
“You can reach 11 western states within one day with ground transportation,” said Mike Kazmierski, president and CEO of the Economic Development Authority of Western Nevada. “This makes us unique and attractive, especially as consumers’ expectations for shorter delivery times continue to accelerate.”
Although being able to reach more than 60 million consumers within a day is a huge advantage, however, northern Nevada’s growing reputation as an ideal place for warehousing and shipping is also something that is nearly three-quarters of a century in the making.
To see what kick started the rise of logistics in the region, one first needs to read a certain document called the Nevada Constitution.
A 70-YEAR DELIVERY
As the Second World War was coming to a close, Edwin Bender was busy starting a new chapter in his life. Armed with a 60,000-square-foot warehouse and a few trucks, the Reno-Sparks entrepreneur launched his own company, Bender Moving and Warehouse, in 1945.
Just four years later, Bender was one of the driving forces in the creation and passage of a law that would change Nevada’s warehousing industry. The 1949 Freeport Law allowed the state’s warehouses to store goods tax-free if they were going to be shipped or sold outside of Nevada. Legislators doubled down two years later by passing another law — one that allowed goods that were assembled in certain areas of the state and eventually sent out of Nevada to be tax-free as well.
Frank Bender, Edwin’s son, would pick up the torch after his father’s death in 1952 by helping convince state legislators to make the warehousing law part of the Nevada Constitution. The amendment passed in 1957 and was approved by Nevada voters in 1960.
At a time when Sparks’ railroad sector was in the throes of a steep decline as steam locomotives fell out of favor, the law’s timing could not have been better.
Paul Enos, CEO of the Nevada Trucking Association, described the Benders’ efforts as a stroke of genius. The law helped lay the foundation for the state’s warehousing industry, allowing its influence to stretch far beyond Nevada’s borders.
“That law really gave Nevada a leg up on warehousing,” Enos said. “That law helped create a lot of jobs.”
The law continues to pay dividends for the state today, especially when paired with Nevada’s regulatory environment, which is not as strict as California’s. The combination has allowed Reno — as well as Las Vegas — to benefit from its proximity to the Golden State by serving as a more cost-effective staging area between its neighboring economic powerhouse and the rest of the country.
Despite the significant growth seen in northern Nevada’s logistics and distribution sector in recent years, several challenges are threatening to place a speed bump in the industry’s path.
One is manpower.
Trucking, which accounts for a big chunk of the logistics sector for the region, is in the midst of a driver shortage. The industry is short 50,000 drivers nationwide, said Enos of the Nevada Trucking Association.
Northern Nevada is no exception.
“If we were given 20 to 30 drivers right now, we could have them out on the road next week,” said Dingman of ITS Logistics. “From delayed production, to idled unloading crews, to parked trucks, few have been spared from the current driver shortage.”
Technology, meanwhile, is turning logistics and distribution from a blue-collar job to a gray-collar job that goes beyond simply handling packages, Kazmierski said. Logistics in northern Nevada used to be at the lower end of the pay scale at around $10 per hour. Today, logistics employers need to pay $18 per hour to remain competitive, Kazmierski said.
Infrastructure is another issue that could serve as a bottleneck for the area’s growing logistics sector.
The Reno Tahoe Airport Authority is in the midst of finalizing a master plan for the next 20 years, which includes runway and facility improvement to accommodate more growth and traffic. None of that will matter as much, however, if the nearby interchange between Interstates 80 and 580 as well as U.S. Highway 395 — also known as the “Spaghetti Bowl” — remains a traffic-clogging mess. Originally constructed from1969 to 1971 to accommodate a population of 130,000 people, Washoe County has since grown to more than 400,000 residents, according to the Nevada Department of Transportation. The interchange has seen some expansion work but still needs improvements.
“We don’t have control over what goes on with the road network,” said Reno-Tahoe International Airport’s Kulpin. “I’m looking at the Spaghetti Bowl now, which for us is a vital way in and out of the airport, and it’s important for it to be kept quick and unencumbered because time is money in the logistics business.”
One positive development for northern Nevada’s logistics sector is the recent completion of the $75.9 million USA Parkway extension project, which connects I-80 with U.S. Highway 50. The “Infinity Highway” is especially vital for the Tahoe Reno Industrial Center, which is where the Gigafactory is located and has transformed into a major hub for logistics and manufacturing.
Discussions are also in the works for improving the region’s multi-modal transport capabilities, including improved rail service to make the area more conducive to large-scale manufacturing. Northern Nevada is primarily a trucking region and is more of a pass-through market for rail.
One bright side for northern Nevada is that its infrastructure issues are not as severe as some other areas, according to Kazmierksi.
“Every community has challenges with infrastructure but ours has more to do with the need for additional infrastructure and not with failing infrastructure,” Kazmierski said. “We clearly have transportation issues but we’re looking at partners we can work with in order to address that.”
Information from: Reno Gazette-Journal, http://www.rgj.com