Guide to Warehousing and Industrial Real Estate
Special Report where the Yellow terminals went for a premium , they were in markets where you have no other way to get a truck terminal ,” Jindel said .
LTL shippers are likely to pay at least some of the cost of that highly coveted land in the form of higher pricing , with more attention being paid to weight and cube than ever before , Jindel said , noting , “ How much space you use in the trailer is going to become more critical .”
The auction of 161 Yellow terminals for nearly $ 1.9 billion from December through February is one side of that race for space . The other is ongoing construction of new LTL terminals and expansion and renovation of older ones to meet new requirements .
In January , regional carrier Southeastern Freight Lines expanded an older facility in Charlotte , NC , to 230 doors and added a remote trailer parking lot . Averitt expanded its Nashville , Tenn ., service center to 162 dock doors .
Old Dominion Freight Line ( ODFL ), the largest LTL carrier after FedEx Freight , has more than 100 active real estate projects , president and CEO Marty Freeman told the Journal of Commerce . “ Some of the projects are paving yards and adding dock doors ,” he said .
ODFL will open between three and five service centers this year . “ We plan to continue to grow our real estate ,” Freeman said . “ You can ’ t grow if you don ’ t increase capacity .”
Matching shipper strategies
To grow , LTL carriers are chasing customers , and the changing needs of shippers are changing LTL terminal designs . Terminals designed for the 1990s , let alone the 1970s or 1950s , won ’ t support the freight shipping needs of the 2020s or 2030s , either .
“ They ’ re looking to build taller and wider terminals ,” said David J . Burch , managing partner at InLight Real Estate Partners , a Jacksonville , Fla . -based industrial real estate firm . LTL carriers “ want at least five to six parking spaces for every dock door ,” he said .
“ A lot of people talk about capacity in terms of dock doors , but acreage capacity is just as important now ,” Webb Estes , president of Estes Express Lines , said in an interview . “ Parking is just as important as door count . Old terminals were pretty small .”
LTL network expansion is a complex three-dimensional puzzle . Customer warehouse and distribution locations are key . LTL carriers are being pulled along in the proliferation of distribution centers across markets in the wake of e-commerce growth .
Shippers that once had three to five distribution centers nationwide now may have 30 to 40 sites where they ship and receive freight , trucking executives say . LTL carriers are forced to respond in kind , opening terminals closer to customer sites or expanding facilities .
The increased use of dropped trailer pools , as well as ocean freight transloading near ports , means LTL carriers need not just more terminals , but bigger ones .
“ Shipper warehouses often don ’ t have much parking ,” Estes said . “ Customers don ’ t have the room to store the trailers they ’ ve emptied . You need to bring in a driver bobtail , grab the empty and take it somewhere else to park it , which can be a significant cost .”
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Hence the need for more trailer parking space at LTL facilities . “ When we built a new 40-acre terminal in Southern California , we paved it all ,” Estes said .
A different scale
LTL carriers involved in transloading containerized freight need space for containers as well as trailers , Burch told the Journal of Commerce . “ They want to constantly fill up trailers ,” he said . “ The more area they have to place loaded and unloaded equipment , the better off they are .”
Delivery requirements imposed by receivers , especially large retailers , also force LTL carriers to move terminals closer to their locations , Estes said . “ The consignee is driving a lot of this ,” he said . “ It ’ s amazing how many shipments require appointments today .”
Estes said he has seen “ the whole spectrum ” of approaches to LTL network design . “ You have to ask if you
“ The bill count is going to return to where it was in 2022 . When it does , we need to be ready .”
are better being really close to consignees and having short pedal runs , or being further away so you are able to build bigger loads and go further ,” he said .
Increased volume means more need for space , leading to wider terminals and longer docks . “ If you look back years ago , the standard width of a dock was maybe 60 feet ,” Averitt ’ s Blakely said . “ Over the years we ’ ve widened the width of the platform .”
“ Terminals today can be up to 160 feet across ,” Burch said . “ We ’ ve seen clients prototype 160 feet across and 32 feet high because they want to have room for automation equipment .” Shipment dimensioners , for example , require dock space .
Not all terminals , however , will be that big . Size depends on the needs of the local market , but LTL carriers want the option to scale and build out the four walls of their terminals when that becomes necessary . That means a larger and larger real estate footprint .
Even in an economic slowdown , with lower freight demand , the LTL market can ’ t stand still , Blakely said . He and other LTL executives repeatedly stressed the need to think not just of the next few fiscal quarters , but the next several years .
“ Where the economy is today , we ’ re fine , but the economy isn ’ t going to stay where it is ,” Blakely said . “ The bill count is going to return to where it was in 2022 ,” when LTL demand was strong , he said , adding , “ When it does , we need to be ready .”
That will mean more terminals , more acreage and more dock doors .
Associate Editor Teri Errico Griffis contributed to this report .
email : bill . cassidy @ spglobal . com
March 25 , 2024 | Journal of Commerce 13