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September 3 2018

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September 3 2018 | The Journal of Commerce 49 www.joc.com Surface Transportation metrics show trains are running faster, and container dwell times are less than a year ago. Union Pacific Railroad CEO Lance Fritz highlighted the 225 graduates in July and 250 more going into the field in August and September, along with larger locomotives, to improve the experience of shippers. "As service improves, we will continue to optimize our network cent in Los Angeles, 2.6 percent in Central New Jersey, 0.6 percent in Savannah, 3.9 percent in Hampton Roads, Virginia, and 3.9 percent in Seattle. By contrast, some major inland hubs exceeded the average national vacancy rate, with Atlanta at 8.2 percent, Chicago at 6.3 percent, and Dallas-Fort Worth at 6.4 percent. Developers are responding to the tight market conditions by ramping up con- struction of new warehouses and distri- bution centers, with much of the building occurring on speculation. Construction starts in the second quarter increased 8.1 percent from the first quarter. Cur- rently, construction is underway on 267.2 million square feet of industrial space, of which 178.3 million square feet is on spec. That is 70 percent higher than the five-year historical average of 104.9 million square feet, the report stated. The steady growth of online shopping has created strong demand for e-com- merce fulfillment space in urban locations. Because options in many large cities tend to be confined to older, smaller properties, the sub-250,000-square-foot sector is ex- and adjust resources accordingly. Our goal is to generate solid productivity savings and operational efficiencies that provide an excellent service experience for our customers, while driving margin improvement," he said on a July 19 earnings call. Canadian National Railway hired more than 800 conductors through June and another 1,000 will be added before the end of the year. It has placed 130 leased locomotives into service, and another 60 will be added this year; it also has an extensive rebuilding program. This is all evidence that they care about their shippers and customer service, CN said. The relationship between rail shippers and railroads has always been tenuous. The latest wave of discontent began when the late E. Hunter Har- rison became CSX CEO in April 2017. He immediately flipped the network on its head by installing his precision scheduled railroading, but disruptions sent shippers to the Surface Transpor- tation Board. Harrison apologized in an October 2017 hearing. Winter service was substandard to Chicago, Dallas, Atlanta, and periencing a second life. "Space options re- main particularly tight in the 100,000-to- 250,000-square-foot segment where new supply has lagged and leasing demand has popped," the report stated. Ben Conwell, senior managing director and eCommerce Advisory Group leader, told a recent Cushman & Wakefield webinar that Amazon started e-commerce fulfillment by establishing large facilities outside of the urban cores. "Today we see a consistent push to locate smaller logistics assets deeper into urban areas," he said. The push includes older Memphis, Tennessee. Shippers complained about the fragility of the rail network. In May, CSX an- nounced it would shutter domestic intermodal service to Detroit. In August, CSX told customers it would cease interline service with UP on 197 origin and destination lanes beginning Sept. 17. This is the first step for Foote to complete the work Harrison left behind. "Our intermodal network needs a ton of work in order to become the efficient part of our system," Foote said on a July 17 earnings call. "We will do this very methodically, and logically, and appropriately, and do it being fully aware of the fact that we are looking at a peak season this year, which everybody is indicating to us is going to be very strong. So, we're not going to do anything that's going to screw up the railroads." Will new conductors, locomo- tives, and track work yield reliability and consistency? Will train speeds remain below 30 miles per hour? Key questions, no answers. JOC email: ari.ashe@ihsmarkit.com twitter: @ariashe_joc facilities that are adapted for e-commerce fulfillment, as well as construction of "cut- ting-edge" facilities. Nevertheless, online shopping has become so pervasive throughout the United States, with much of the merchandise sourced overseas, that e-commerce fulfill- ment is also driving demand for facilities larger than 250,000 square feet located out- side of the urban cores, said Garrick Brown, vice president and head of retail research, Americas, at Cushman & Wakefield. As logistics facilities become more automated, and real estate costlier, devel- opers are constructing warehouses with higher ceilings to accommodate the higher stacking of merchandise and the retrieval of the products with the use of robotics. This trend is intended to achieve greater land-use efficiencies amid higher land costs. Users of industrial properties today are measuring the utility of a facility in terms of its cubic capacity rather than its square footage, Conwell said. JOC email: bill.mongelluzzo@ihsmarkit.com twitter: @billmongelluzzo "Our intermodal network needs a ton of work in order to become the efficient part of our system." Shutterstock.com Shutterstock.com

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