Insights Jun 20, 2018 Elion Partners

U.S. Corporate Transportation Costs at All-Time High; Aligns with Elion’s Industrial Strategy

It’s no surprise that e-commerce pressure continues to heighten logistics costs for corporations. This is driven by the way Amazon has revolutionized and enhanced consumer expectations for delivery speed, delivery price, and assortment.¬†Here’s what’s new:¬†just in 2017 alone, companies spent a record $1.5 trillion on shipping costs, according to the Council of Supply Chain Management Professionals’ annual State of Logistics report. According to the report, the costs of shipping goods and services is rising, as seen by increased capacity rates, which is leading to higher supply chain costs for corporations, and the consolidation of smaller trucking and logistics companies that cannot keep pace. The continued growth of e-commerce pushed parcel shipment volume up by 7% in 2017, to nearly $100 billion; forecasts expect that to rise at similar levels for the next few years.

At Elion, we’ve anticipated and observed this growing trend. This is why we build several of our private equity fund portfolios with a high focus on solving the various challenges that come along with logistics. As you may know, 64% of our assets under management is comprised of industrial assets. We tend to acquire projects in areas that are most convenient for offsetting transportation costs for our corporate tenants, who have significant ecommerce and other shipping needs. For example, we own the largest inventory industrial project in the Greater Chicago market, RidgePort Logistics Center, which is well-positioned along Interstate 55 and just a few miles south of the interchange that services the busiest inland container yards in the United States. In our latest fund, EREF IV, one of our five industrial properties includes Bridge Point Riverbend in South Florida, which is conveniently located at the intersection of I-95 and Broward Boulevard, eight miles from Fort Lauderdale Hollywood International Airport.