Who’s Who

Amazon Fulfillment Center, Gladeville, TN

Who’s Who: Wilson County’s Supply Chain Industry

Table 1 provides a partial listing of various corporations (25+ employees) residing in Wilson County18 that are engaged in various kinds of interstate supply chain operations. The list contains both private and public SC operators. Private operations refer to corporations who manage their own corporate supply chains. Public operations refer to corporations who act as a third party provider for companies who have outsourced all or part of their supply chain activities or infrastructure.

A testimonial to Wilson County’s strategic value as an attractive logistics partner is the presence of many well known national corporations who have added Wilson County to their corporate supply chain infrastructures. FedEx, Lifeway, Nissan, Starbucks, Under Armour, Wilson Sporting Goods, to name but a few.

The county’s role as an important supply chain locale is further strengthened by the large number of top ranked third party transportation and warehouse providers who have also chosen to locate some of their key SC facilities within the county. Wilson County’s 3PL (third party logistics) business community include, for example, CEVA Logistics, DSC Logistics, FedEx Supply Chain, Geodis, XPO Logistics, Schneider National, among others.

It is interesting to observe that a large percentage of the 3PLs operating in Wilson County are owned, either directly or indirectly, by Canadian or European corporations, a business demographic that is consistent with the state’s foreign investment strategy19 .

Supply Chain Staffing

We should also mention the various 3rd party logistics staffing agencies in Wilson County which augment direct company hiring of supply chain personnel. In Wilson County, this includes Abacus, Adecco, Randstad and Woods Personnel Services. At any given point in time, these local public staffing agencies collectively seek qualified applicants to fill several hundred to a few thousand open positions in WC warehousing, freight handling, and truck operations

18 In Table 1, proximate locations outside formal city limits are considered part of Mt. Juliet if to the west of Route 109, and part of Lebanon if to the east of Route 109. 19 See, for example, “Tennessee: a Hot Bed for FDI”, Business Facilities, July 17th, 2017 retrieved from https://businessfacilities.com/2017/07/tennessee-a-hotbed-for-foreign-direct-investment/

Table 1 – Who’s Who in Wilson County’s Supply Chain Industry

Company [1]

ADLI[4] (grocery) Amazon (online retailer) Bridgestone (tires) Caleres (footwear) CEVA Logistics Denney Trucking Inc. Denso (auto parts supplier) DSC Logistics Famous Footwear FedEx Supply Chain[5] Genesco (footwear) GEODIS[6]

Hollister Inc. (medical equipment) Jacobson Warehouse Co.[7]

Primary SC Function[2]

regional distribution regional distribution regional distribution regional distribution 3PL, SC systems design heavy cargo hauling regional distribution 3PL regional distribution 3PL regional distribution 3PL national distribution storage 3PL

Location[3]

MJ Leb Leb Leb MJ Leb MJ Leb Leb Leb MJ, Leb MJ, Leb MJ Leb

Knight Transportation Inc. 3PL, truck & intermodal transport Leb

Legacy Supply Chain Services logistics 3PL

Lifeway Christian Resources warehousing, regional distribution

May Trucking Co. Music City Logistics Express Nashville Refrigerated Services[8] truck transport services TL & specialized freight transport cold storage 3PL

Omniparts Automotive Optoro (reseller) Opus/ Nissan parts distribution warehousing, regional distribution parts distribution

Ozark Motor Lines Inc.

TL truck transport Performance Food Group (food services) regional distribution Richie Brothers (heavy equip reseller) truck tractor auctions Schneider National[9] long haul/mid haul trucking, 3PL

South Shore Furniture [10] Starbucks[11] Under Armour[12] regional distribution store supply regional distribution global distribution MJ Leb Leb Leb Leb Leb Leb MJ Leb Leb Leb Leb MJ Leb MJ

Vijon Inc. (personal care products) Wilson Sporting Goods[13] Wilson Trucking Corp.[14] XPO Logistics manufacturing, regional distribution MJ national distribution MJ

LTL services 3PL, LTL services Leb MJ

[1] Please email any table additions or corrections to wilsoncountytrends@cumberland.edu . [2] Abbrev: SC=supply chain, 3PL=third party logistics, LTL=less than truckload, TL=truckload [3] Abbrev: MJ=Mt Juliet, TN, Leb=Lebanon, TN. [4] North Carolina-based Sharp Transit, LLC is the main private carrier for Aldi Foods in eastern USA. [5] FedEx 3PL subsidiary Genco was rebranded as FedEx Supply Chain in 2017. [6] French co. Geodis acquired TN-based 3PL Ozburn-Hessey Logistics (OHL) in 2015. [7] XPO acquired Jacobson Warehouse’s french parent company in 2015. [8] Nashville Refrigerated is owned by Dutch multinational Agro Merchants Group. [9] Schneider National maintains a tractor-trailer drop yard in Lebanon, TN. [10] Quebec-based South Shore Furniture is a key supplier to Walmart and other major US retailers. [11] Starbuck’s Lebanon, TN location is a store supplies regional distribution center. [12] Mt Juliet's UA facility is expected to expand to 1500 workers & double sqft by 2020. [13] Wilson Sporting Goods Co. is owned by Amer Sports, a Finnish company. [14] Texas-based Central Freight Lines acquired Wilson Trucking Corp. in 2017.

(Chain, continued from page 19)

Map 1 – Wilson County Regional Highway Systems Source: Google Maps

Interstate 40

Interstate 40 passes through Wilson County’s urban centers of Lebanon and Mount Juliet, all three grand divisions of Tennessee, and terminates at both U.S. coastal regions. I-40 is the third longest highway in the US interstate highway system. The segment of I-40 that passes through Tennessee and Wilson County is considered an important part of the country’s national freight transport infrastructure that supports regional, national and international commerce.

In 2015, the federal 2015 FAST Act20 created the Primary Highway Freight System (PHFS) which identified a list of highways (including I-40) deemed as the most critical highway portions of the U.S. freight transportation system. Tennessee is identified as one of 18 “high mileage” states whose PHFS percentage exceeds 2% of the nation’s total PHFS mileage21

I-40 is strategically important to companies residing in Tennessee and Wilson County as a major transport, storage and processing link in corporate supply chains. Having I-40 span the entire east/west length of the county is indeed fortuitous to WC’s local economy as the segment acts as a business magnet attracting a bevy of public and private supply chain organizations alongside the corridor.

Since the 1980s, traffic volume along Wilson County’s I-40 segment has increased steadily. We can measure the specific vehicular increases by reviewing the Annual Average Daily Traffic22 (AADT) data compiled by the Tennessee Department of Transportation (TDOT).

20 On December 4th, 2015 President Obama signed the Fixing America’s Surface Transportation (FAS) Act into law (Pub. L. No. 114-94) which reauthorized federal surface transportation programs for five years (FY 2016-2020). 21 National Highway Freight Program (NHFP) Implementation Guidance Memorandum, US Department of Transportation, Issued February 29, 2016 22 Annual average daily traffic, abbreviated AADT, is the total annual volume of car and truck traffic on a road or highway divided by 365 days and seasonally adjusted. AADT is a commonly used measure of how “busy” a road is.

Figure H6 –

Annual Average Daily Traffic Volume along I40 in Wilson County, 19852016

Source: Tennessee Department of Transportation

Based on the available traffic count data23 for the period 1985 to 2016, a steep annual growth rate in travel is evident along WC I-40. Traffic volume is expected to triple from 1985, which averaged 27,100 vehicles daily, to year 2020 (already at 80,991 vehicles by 2016). We note that since 1985, an average of 1,730 vehicles has been added annually to the daily travel commute on Wilson County I-40. See Fig. H6.

But what percentage of this general traffic growth can be attributed to truck traffic? We can answer this question by reviewing the available data for USDOT designated major truck routes on the National Highway System24 . Federal estimates indicate that the percentage25 of trucks traveling along I-40 (as well as I-24 and I-65N) through Tennessee exceed 25% of all vehicle traffic. Thus, at least every fourth vehicle that travels on major Tennessee highways is a truck. Of the estimated 80,991 vehicles which traveled daily along I-40 through Wilson County in 2016, for example, at least 20,247 were trucks. That’s a lot of freight moving through the county.

Interstate 840

Conjoined to I-40 is the completed southern portion of Interstate 840, which interconnects with the I-65 and I-24 interstate highway systems, south of Nashville. Construction of I-840’s “southern loop” was completed in 2012. I-840, also known as Tennessee National Guard Parkway, is not, as its name suggests, an interstate highway per se. It is a regional highway system. Upon completion of its “northern loop” component26, similar to highway loops in other urban areas (e.g., Atlanta’s I-285, Charlotte’s I-485, Washington DC’s I-495, Baltimore’s I-695, etc.), I-840 would serve as a full outer loop bypass around Nashville27 , providing alternate route support for commuter and truck traffic in all directions.

23 TDOT traffic count station no. 990 located on I-40, just west of state route 109 24 Freight Facts and Figures, p. 3-20, 2017; this data is based on the U.S. Census Bureau’s Commodity Flow Survey (CFS) which is conducted every 5 years. The CFS was last administered in 2012. Preliminary 2017 CFS data will be released on December 6th, 2018. 25 This percentage is calculated as the ratio of AADTT/AADT, where abbreviated AADTT refers to the Annual average daily truck traffic. 26 Completion of I-840’s northern loop is unclear at the present time. Objections by local residents concerning land use and construction disruptions have prodded TDOT to put further I-840 construction on “indefinite hold”. 27 I-440 already encircles Nashville, serving as an existing inner loop highway system.

Stewarts Ferry Road on-ramp to I-840, Wilson County

As shown in Map 1, I-840’s southern loop connects to I-40 on the western side of Lebanon, and east of Mt. Juliet. For “pass through” freight movements, I-840 provides truckers hauling loads on bidirectional routes (east/westerly to or from a north/south direction) with a convenient bypass around the Nashville/ Middle Tennessee region. I840’s seven on/off ramps in Wilson County (excluding the I-40 interchange) provide fast convenient access to the region’s various interstate highway systems for commuters residing near the ramps, as well as for trucks hauling freight to or from nearby public/private distribution warehouses. Wilson County’s I-840 vehicular usage patterns are shown in Fig. H7. The higher growth rate on I-840 during the initial years 1995-1999 is probably due to buildup of general public awareness and ongoing activation of various completed segments of the southern loop.

I-840’s two notable decreases in I-840 traffic patterns correspond to years 2001 and 2007 which, not coincidentally, correspond to key recessionary periods in the U.S. economy.

Looking at Figure H7’s traffic count data28 for 19992016, we observe a steady though moderate growth of approximately 295 vehicles added to the daily traffic volume along Wilson County’s I-840 segment. In 2016, WC’s I-840 average daily traffic was 17,320 vehicles. It is unclear what percentage of this volume is attributed to truck travel. However, daily truck usage of I-840’s southern loop can be expected to increase significantly once connectors to Tennessee’s northern segments of I65 and I-24 are complete.

Figure H7 –

Annual Average Daily Traffic Volume along I840 in Wilson County, 19952016

Source: Tennessee Department of Transportation

28 TDOT traffic count station no. 170 located on I-840, between I-40 and State Route 265

Road construction near the I-40 and Route 109 Interchange

State Route 109

State Route 109 is an important state highway that traverses Wilson and Sumner Counties. The well traveled state road’s southern terminus begins in southern Wilson County at the intersection of state route 265 and I-840, bypasses the city of Gallatin in Sumner County, with a northern terminus at state route 31W near I-65, just south of the Kentucky state line.

Car and truck traffic on Route 109 has been steadily increasing since the mid-1980s, even before the recent group of completed and inprogress expansion projects. Based on available traffic count data29 for the thirty one year period 1985-2016, we observe a sizable steady annual addition of approximately 573 more vehicles traveling daily along the important stretch of Route 109 through Wilson County, north of I-40. See Fig. H8.

Route 109 is currently undergoing a series of construction projects to widen the road to a 5 lane highway with 12 foot travel lanes making the highway a strategic connector between interstates I-40 and I-65N, as well as I-840.

TDOT summarizes ongoing improvements to Route 109 as follows: “Completed and proposed improvements for State Route 109, from Interstate 65 in Sumner County to Interstate 40 in Wilson County, include reconstruction and widening for nearly 35 miles. These improvements are intended to address congestion, improve safety and traffic operations, and accommodate growth along this rapidly developing corridor” 30 .

Most of Route 109’s lane widening, as well as construction of new interchanges, are scheduled for completion by late 2020 and will likely result in increased daily car and truck traffic volumes. The revamped Route 109 will provide a viable

Figure H8 –

Annual Average Daily Traffic Volume along Route 109 in Wilson County, 1985-2016

Source: Tennessee Department of Transportation

29 TDOT traffic count station no. 71 located on State Route 109, north of I-40 at Hickory Ridge Rd intersection. 30 TDOT statement, retrieved from https://www.tn.gov/tdot/projects/region-3/state-route-109-widening.html

Supply Chain

Industry Component

Number of Establishments Number of Employees

Average Weekly Wage 2010 2017 2010 2017 2010 2017

Truck Transportation Firms (NAICS Sector 484)

46 60 486 808 $823 $1,226

Warehousing & Storage

7 16 382 2870 $794 $804

Firms (NAICS Sector 493) Table 2 - Wilson County Supply Chain Industry Demographics31

transport corridor that supports I-65/I-40 and I65/I-840/I-24 bidirectional freight movements.

WC Supply Chain Demographics

General supply chain industry demographics32 for Wilson County are provided in Table 2 for truck transportation firms (sector 484) and warehousing & storage firms (sector 493) for comparison years 2010 and 2017. Table 2’s employee data should be compared with Figures H9 and H10 which show WC supply chain employment trends from 2007 to 2017.

We note from the table and figures that during 2008 to 2009, employment levels in both trucking and warehousing were relatively low in Wilson County, which we may attribute at least in part to the Great Recession of 200833 which created national and worldwide economic downtowns that lasted into 2010. After 2010, we observe that both supply chain industry groups experienced positive growth in WC over the next seven years and on up to the present time. Beginning in 2010, the number of trucking firms residing in WC increased 30%, reaching a total of 60 firms by 2017. During the same period, the number of local warehousing establishments in WC more than doubled to its present 2017 total of 16 firms.

Over the study period, Wilson County’s supply chain employment rates are very good. The number of WC workers employed by trucking firms increased by 66%, from 486 employees in 2010 to

Figure H9 –Number of Trucking Firm Employees in Wilson County, 2007-2017

Source: US Department of Labor

31 2017 data is based on US Dept of Labor preliminary estimates. 32 As our discussion interest here is mainly in interstate highway-based supply chain activity, we exclude from Table 2 those NAICS industry categories in Supersector 40 which are primarily focused on local or intrastate transport (e.g., sightseeing transport, courier services, etc.) , as well as other transportation modes (e.g., air, rail, water, etc). 33 See, for example, The Great Recession, link at https://www.investopedia.com/terms/g/great-recession.asp .

Figure H10 –

Number of Warehousing & Storage Employees in Wilson County, 2007-2017

Source: US Department of Labor

808 in 2017. We observe a six fold increase in the number of warehouse employees over the same time period, from 382 to 2,870 employees. In Figure H10, we note that this robust six fold increase was the result of steady annual growth, by hiring a net additional 355 employees per year. Earnings for local supply chain industries over the seven year period is somewhat of a mixed bag. While average weekly wage growth for trucking employees was a respectable 49% ($823 in 2010, increasing annually $403 per paycheck to $1226 by 2017), warehousing employee earnings were relatively flat over the same period, increasing by $10.

Future Outlook

In view of Wilson County’s advantageous geography, public highway systems, relative low business costs, high standard of living, and expanding economy, the likelihood of continued significant growth of WC’s supply chain industries is very good. How good? Looking at the “big picture”, there are four key factors that will influence the future demand for supply chain resources in Wilson County and elsewhere. These factors have to do with: 1) national economic forecast for physical goods, 2) freight shipment patterns, 3) U.S. global trade, and 4) incorporation of new information technologies.

Economic Expansion

The whole purpose of the supply chain is to facilitate the creation of physical goods and bring them to market. Clearly, an expanding U.S. national economy will, in turn expand the need and demand for goods and their supply chains. According to the Congressional Budget Office, while current (2018) real GDP growth is in the 34% range, the annual growth rate in GDP projected over the next 10 years is expected to be more in the vicinity of 1.7%34 .

Reasons for the lower rate prediction include ongoing tariff policies and expected changes in the Federal Reserve interest rate, both of which can change in the short term. Other economists predict a GDP growth rate slightly above 2% for the next few years, noting how quickly things can change (improve). The general economic consensus for the next decade or so is moderate to good increases in the nation’s Gross Domestic Product. Hence, one would expect a healthy increase in supply chain demand as well.

34 An Update to the Economic Outlook 2018-2028, Congressional Budget Office, U.S. Congress, retrieved from https://www.cbo.gov/publication/54318 .

National Freight Movements

The U.S. Department of Transportation predicts that total domestic freight movement will increase to 20.9 million tons by year 2045 with trucks continuing to be the primary transport mode with a modal share rising slightly to 68%.35 American Shipper magazine notes that total value of the nation’s freight moved by truck is projected to growth 84% by 2045.36

Consider current national freight movements by truck. Map 2 shows average daily long-haul truck traffic on the national highway system for 2015. One notes three primary cross country (intercoastal) routes currently used to move freight long distance in an east/westerly general direction. In hierarchical order of higher to lower daily truck traffic volume, these long haul routes are: 1) a northern route through Chicago, Illinois, 2) a midUSA route through Memphis/ Nashville/ Wilson County, and 3) a southern route through Baton Rouge, Louisiana. Now consider the freight movement patterns which US DOT expects to develop over the next 30 years. Map 3 shows the projected national daily truck traffic for year 2045.

The major traffic flows shown in Maps 2 and 3 include domestic and international freight moving by truck on highway segments with more than 25 FAF trucks per day. A FAF truck classification includes all private and for-hire trucks but excludes mail trucks and trucks that are part of an intermodal transport37 . A comparison of Maps 2 and 3 presents a fascinating view of expected U.S. freight movement dynamics in the years to come. While daily truck volumes are expected to increase on all of the primary freight highway routes, certain U.S. corridors are expected to be overly gorged with freight traffic, the highly populated Great Lakes and New England regions in particular. Expanded highway systems, regional only transport, and environmental concerns aside, one can foresee increasing challenges (e.g., travel gridlock and congestion) in continuing to move long haul freight along the northern route, and to a lesser extent, along the mid-USA and southern routes.

We can see quite clearly the primary supply chain corridors that are projected to develop in the U.S. over the next 25 years or so. Heavy daily truck traffic is expected to flow in and out of Nashville and Wilson County to/from I-40 towards Memphis, I-24 towards Atlanta, GA, and I-65 towards Louisville, KY. An interesting question to ponder at this point is the degree of importance of the I-65 Nashville segment as a mid-USA connector to northern truck routes and markets located in states in the upper Midwest and Northeast sections of the country. The other national highway system truck corridor that could possibly play a similar connector role would be I-81N through Bristol, TN but which would pass through mountainous terrain.

International Freight Movements

While truck transport is crucial to domestic freight movement, U.S. trucking also plays an important role in global supply chains, hence the role of WC’s I-40 segment and its highway system connectors as facilitators in global commerce.

A recent USDOT report states that “trucks are the most common mode used to move imports and exports between international gateways and inland locations. This trend is expected to continue with tonnage of international trade forecast to grow at a rate of 4.0 percent per year between 2015 and 2045. ”38

35 Freight Facts and Figures, Table 2-1, Bureau of Transportation Statistics, U.S. Dept. of Transportation, 2017. 36 “US DOT Projects Freight to Grow 40% by 2045” by Eric Kulisch, American Shipper, March 4, 2016 retrieved from https://www.americanshipper.com/Main/News/US_DOT_projects_freight_to_grow_40_by_2045_63234.aspx . 37 Freight Analysis Framework Version 4.0, User Guide, Federal Highway Administration, U.S. Department of Transportation, October 31, 2015 38 Freight Facts and Figures, p. 2-16., 2017

Map 2 - Average Daily Long-Haul Truck Traffic on the National Highway System: 2015

Source: US Department of Transportation, Federal Highway Admin., Office of Freight Management and Operations, Freight Analysis Framework, ver. 4.3, 2017

Map 3 - Average Daily Long-Haul Truck Traffic on the National Highway System: 2045

Source: US Department of Transportation, Federal Highway Admin., Office of Freight Management and Operations, Freight Analysis Framework, ver. 4.3, 2017

According to U.S. Census Bureau data39, the total value of U.S. exports and imports in physical goods for 2017 was about $1.6 trillion and $2.3 trillion, respectively, representing a trade total of $3.9 trillion. Notably, 75% of all U.S. trade in that year were with 15 countries, including Canada and Mexico. With the USA in the map center, international trade totals break down directionally as follows: North (Canada at $582 billion, or 15% of total U.S. trade), South (Mexico and Brazil at $624 billion, or 16%), West (Asia-includes China, Japan, South Korea, India, and Taiwan at $1.1 trillion, or 28.5%), and East (Europe- includes Germany, United Kingdom, France, Italy, Netherlands, Ireland and Switzerland at $608.7 billion, or 15.6%).

We note that U.S. total trade value with Asia is about twice the percentage as trade with international trading partners located to the north, south or east of the U.S. If these U.S. trading partner percentages remain stable in the foreseeable future, though the nation’s freight movement infrastructure must be multidirectional and scalable, east/west could arguably be the more economically important transport direction in which to move freight in the coming years.

These global trading characteristics serve to underline the future potential and importance of Wilson County’s I-40 and its supply chain resource providers that are located along the highway segment. WC I-40 and its SC providers have two particular roles they could play in future Asian global supply chains.

For exports, a key east-to-west role could be to aggregate physical goods produced in the eastern and southern U.S. and transport the consolidated freight to west coast gateway ports.

For imports, the supply chain operations would be reversed. A key west-to-east role of WC’s I-40 segment and its supply chain providers would be to act as a freight dis-aggregator and through its federal highway connectors (e.g., I-840 and/or Route 109), distribute goods received from west coast gateway ports to eastern and southern U.S. markets.

Smart Supply Chains

Since the beginning of the 21st century, powerful new emerging information technologies have been increasingly used to create and embed innovative upstream data communication capabilities in supply chains. These new technologies improve the coordination of downstream physical logistics (for example, transmitting changes in market demand back up to the factories, raw material vendors, and parts manufacturers).

There are thousands of logistics related hardware devices and software products on the market today, designed to improve some aspect of supply chain processes. Emerging “smart supply chains” differ from most current supply chains by significant improved computer automation of processes that today are either handled manually or by less efficient automated means. In more advanced cases, smart supply chains may incorporate artificial intelligence modules that automate complex SC decision making scenarios. Emerging smart supply chains will be faster, cheaper and adapt more quickly to changing market and logistical conditions.

As rival manufacturers and distributors continue to seek cost efficiencies and competitive advantages against one another, we are witnessing a new generation of transport, warehousing and distributed manufacturing processes enabled by emerging information technologies. Three key technology categories in particular, are having, or are soon to have, a major impact on the development of smart supply chains:

 mobility technologies - such as global positioning systems (GPS), radio frequency identification (RFID), inventory drones, and cellular data,

39 Year to data total trade for 2017, US Census Bureau, retrieved from https://www.census.gov/foreigntrade/statistics/highlights/top/top1712yr.html .