Wednesday, May 18, 2005

Wal-Mart elevates Houston's status as a logistics hub

The Houston Business Journal has an eye-opening feature this week about Wal-Mart's new distribution center in Baytown. There's also a second article with the story of how they were attracted here. Some random excerpts from the first one:

A massive Wal-Mart Stores Inc. distribution complex opening this month in Baytown will give a gigantic jolt to the Houston economy and could even dictate future trade patterns throughout the United States. With a total of 4 million square feet, the largest Wal-Mart complex of its kind in the country has nearly 92 acres indoors. That is big enough to hold 30 downtown city blocks or 70 football fields.

The president of IMS Worldwide, a Houston-based logistics and imports consultant, sees the coming of Wal-Mart as a local milestone of historic significance. "Wal-Mart's decision to come to Houston is as big of an event as us deciding to build Bush Intercontinental Airport," says Spencer.

But the potential ripple effect extends far beyond Houston, notes the federal appointee to the Advisory Committee on Commercial Operations of the U. S. Customs Service. "The decision that Wal-Mart made to bring between 20 percent and 28 percent of its container capacity through Houston will forever change the dynamics of international trade lanes coming into the United States," Spencer says.

Delivery of Wal-Mart goods will make Houston a greater port of call for steamship traffic. And shipping activity will continue to mushroom as the globe's biggest retailer attracts copy-cat projects.

"Houston is finally on the logistics map," sums up Spencer.

"The log jams and delays in California are propelling more companies to look for alternative ports of entry, and Houston is a great one," says Gray Gilbert of CB Richard Ellis.

All of these factors combined contributed to making Houston Wal-Mart's fifth -- and largest -- gateway market. Spencer says the local complex is scheduled to receive more than 20 percent of Wal-Mart's total annual imports, much of it coming from Asia.

Products previously shipped to the West Coast and sent cross-country by rail will now go by sea all the way to Baytown via the Panama Canal. The all-water route is 11 days longer than the water/rail route, but Spencer says the total trip time is about the same when delays at California's ports are taken into account.

While officials gear up for an influx of container business driven by Wal-Mart at the sixth-largest port in the world, real estate players are also mapping plans.

OK, I'm not really buying the comparison to building IAH, but nonetheless, this is a pretty big deal for Houston. It's an important part of Houston's economic diversification to offer quality blue-collar jobs outside of the oil industry. One of the things I've always liked about Houston is our mixed white/blue-collar economic base, which I think makes for a more diverse and interesting city.

So what's next for Wal-Mart? I'm thinking they might one-up pallet-based Costco by opening container-based retail on open asphalt at their new distribution hub: just walk among the open shipping containers and load up your own personal forklift of bargains... ;-)

(side note: I'm headed to Austin Thursday afternoon through Friday evening, so there will probably not be a post tomorrow. See ya next week.)


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