Traditional logistics, Web fulfillment driving distribution

Northern Nevada’s position as a well-located and low-cost transportation hub continues to push employment in the logistics and distribution sector upward.

And the sector shows no signs of slowing down.

The Economic Development Authority of Western Nevada’s list of hot prospects — companies looking seriously at new locations in northern Nevada — includes a couple of e-commerce outfits that would employ more than 600, and four distribution prospects with total potential employment of near 1,200.

They’d join major e-commerce retailers such as Zulily, Webgistix, Diapers.com, Toys ‘R’ Us and Urban Outfitters operating in distribution centers in northern Nevada. Those four companies alone have more than 1 million square feet under roof.

Nevada continues to emerge as a major distribution hub, state economist Bill Anderson says, due to its proximity to most major markets in the West. About 63,000 people are employed in the logistics, distribution and transportation industries in Nevada, and logistics and operations employment has grown by 9 percent since 2002.

Employment in general warehousing and storage, a sub-sector of the logistics industry, has more than doubled since 2002 and grew 133 percent in that time, the Department of Employment, Training and Rehabilitation reports. The national growth rate for the sector was 36 percent for the same time period.

Another top growth sub-sector is local specialized freight trucking, which has increased 107 percent since 2002 compared to a 13-percent national growth rate. But that rapid rise in employment has led to growing pains at trucking firms that specialize in moving inbound freight containers from the Port of Oakland to northern Nevada.

Brad Meyer, operations manager for NevCal Trucking in Sparks, says a lack of qualified — and safe — drivers continues to hamper growth throughout the transportation industry.

“In order to service our customers and their growing needs, we need to add trucks,” Meyer says. “We can go out and buy those, but finding good, qualified and safe drivers, that is difficult.”

Meyer says that for every truck he adds to the NevCal fleet, it typically takes three or four hires to find one driver who is a good fit for his team. Some drivers, he says, simply don’t have good safety records while others quickly tire of dealing with the stringent Port of Oakland regulations and the International Longshore and Warehouse Union.

“At time they can be difficult and slow to deal with, and drivers’ patience and time is being tied up,’” Meyer says. “They kind of are at the mercy of the union if they want to work efficiently and get in and out (of the port).”

The high cost of diesel fuel — and high taxes in Washoe County — also pressures the regional trucking firms upon which distribution and third-party logistics firms rely to move goods.

Sales of diesel fuel and biodiesel in the county are taxed at 16 cents per gallon, or 14 cents more than regular gasoline. The average price of diesel fuel in late December was above o$3.80 a gallon.

For companies such as NevCal, which burns through 5,000 to 6,000 gallons of diesel fuel each day running trucks over the Sierra Nevada, costs add up quickly.

“Our biggest problem with diesel is trying to find ways to work around Washoe County sales taxes,” Meyer says. “That 16 cents a gallon (tax) is a huge red flag in front of us for doing business in Washoe County.”

Meyer says most of his fleet doesn’t fuel in Washoe County anymore. NevCal installed a fueling island at its Storey County truck yard, and oftentimes drivers headed back from their daily Oakland runs stop in Sacramento for fuel.

Looking ahead, Meyer says trucking firms will continue to grow as new distribution and logistics centers find a home in northern Nevada.

“As long as northern Nevada continues to grow and our customers continue to grow, it is a wonderful environment to be a part of — everything is headed in the right direction.