Regional Strategy for Location of Distribution Facilities in

Regional Strategy for Location of Distribution Facilities in NORTHERN NEW JERSEY Talking Freight Workshop Presentation May 19, 2004 MOFFATT & NICHOL E N G I N E E R S

OBJECTIVE Link Transportation Efficiency with Local Economic Development derived from the movement of foreign and domestic cargo flows through the region’s major intermodal facilities, while reducing truck VMT through the region. Thus enhancing the NJTPA REGION AS A GATEWAY TO THE GLOBAL MARKET MOFFATT & NICHOL E N G I N E E R S

A MAJOR ENGINE OF REGIONAL ECONOMIC DEVELOPMENT The NY/NJ/CT Tri-state Metropolitan Region is the largest Consumer Market on Earth. The movement of freight generates a demand for advanced distribution facilities capable of performing value-added services. This is a growth market linked to the future expansion of foreign trade through the PONYNJ. MOFFATT & NICHOL E N G I N E E R S

NORTHERN N. J. ’s HOTTEST FUTURE REAL ESTATE MARKET MEGAMALLS Mastodon : Extinct animal OR Distribution Center = Key Land Use to the New Economy MOFFATT & NICHOL E N G I N E E R S

Growth Forecast for Port Of New York and New Jersey 50 Foot Channels 40 -45 channels TRENDS: a) 2000 to 2001 cargo volumes increased by 8. 7% to 3. 32 million TEUs b) First 9 months of 2002 increased by 8. 5% over previous year c) In last two years cargo volumes have increased greater than forecasted MOFFATT & NICHOL E N G I N E E R S

DIVERSION OF WEST COAST ASIA TRADE TO EAST COAST PORTS Channel deepening/large container vessels/capacity constraints for transcontinental rail landbridge will cause shift in shipping patterns 10 -State Market Area Landbridge PONYNJ Algeciras Gioa Tauro LA/LB Today: 6% 2020: 13% Kobe Jiddah Hong Kaohsiung Today: 80% 2020: 73% Colombo Singapore Shift 2. 5 million TEUs: from West-Coast Ports to PONYNJ by 2020 MOFFATT & NICHOL E N G I N E E R S

Geographic Distribution of 1998/99 Containerized Trade within 17 State Market Area CANADA Montreal Ottawa Newark, NJ Houlton, ME Toronto Ogdensburg, NY Saint Albans, VT Halifax Buffalo, NY Detroit, MI Chicago, IL Cleveland, OH 75 mile Boston, MA New York, NY 200 mile ATLANTIC OCEAN 300 mile Baltimore, MD Port of NY & NJ 400 mile REGION POPULATION GROSS STATE PRODUCTS TOTAL CONTAINERIZED* TRADE Number % of Total Millions of Current US$ % of Total TEU’s % of Total 103, 885, 761 38. 40% 3, 349, 934 41. 3% 6, 901, 512 39% Source : Moffatt and Nichol Engineers, Based on adjusted PIERS data

NJTPA REGION LOCATION MAP WITH HIGHWAY AND RAIL NETWORK Newark Legend US Route Newark Airport NJ Interstate Railroads NJTPA Region Bethlehem PA PONYNJ iles 75 m MOFFATT & NICHOL E N G I N E E R S

ROUND TRIP TRUCKING COST (1) FROM EPAMT (LOADED 1 st LEG, 85% EMPTY 2 nd LEG)--1999 New York Connecticut Pennsylvania Notes 1. Truck operational costs ($1. 31/mile loaded) were calculated by amortizing Vehicle Depreciation; Insurance; Fuel Costs; Driver Wages; and Overhead and Profit on a per mile basis 2. Minimum cost for trip, even if less than 1 mile Legend PONYNJ Mileage Cost Ranges $10 (2) to $30 to $60 New Jersey 75 mile radius $60 to $90 to $120 to $193 MOFFATT & NICHOL E N G I N E E R S

EAST COAST WAREHOUSE TRENDS TRADITIONAL STORAGE WAREHOUSE SYSTEM Containerized Cargo from Asia Container Terminal Trucking Consumer Public Warehouse Regional Trucking Retail Store Regional Warehouse • Trade-off between economies of size versus land price • Definitive trend to relocate beyond 100 mile radius • Little demand with 75 mile radius MOFFATT & NICHOL E N G I N E E R S

WEST COAST WAREHOUSE TRENDS CONSUMER DISTRIBUTION SYSTEM Containerized Cargo from Asia Container Terminal Container Trucking Local Components Private Home Value-Added Distribution Center Private Home Third Party Shipper (UPS, Fed. Ex, etc. ) Private Home Internet Fulfillment MOFFATT & NICHOL E N G I N E E R S

WATSON INDUSTRIAL CENTER P. V. A MOFFATT & NICHOL E N G I N E E R S

DISTRIBUTION CENTER ACTIVITIES Old Style Dist. Evolution to More Complex Process. Traditional Just-in-Time Retail Consumer Warehouse Distribution Center Basic Services Storage Transloading Customs Foreign Trade Zone Freight Forwarding Trucking Value-Added Services Logistics Barcoding Sorting/Labeling Marketing Materials Scanning Repacking/Pick & Pack Kitting Packaging Design & Manufacture Manipulation Repair Internet Fulfillment Special “Piece” Manipulation X X X X X X X X X X X X MOFFATT & NICHOL E N G I N E E R S

NJTPA - “STRING OF PEARLS” Dedicated Freightway and ITS Systems Architecture NJTPA REGION Container Yard Major Rail or Direct to Market Value-Added Distribution Center MOFFATT & NICHOL E N G I N E E R S

STRATEGY: LOWER VMT/AID PORT THE NEED: REGIONAL VALUE-ADDED DISTRIBUTION CENTERS NEAR PORT AND MARKETS • Size : 50 to 150 acres… Phased Development • Planned Unit Development (PUD) • Employees : 500 to 3, 200 • Foreign Trade to Domestic Ratio : 60/40 or 100, 000 -250, 000 TEUs/yr. • Activities : – Transloading – Distribution Center – Drop-Shipping – B 2 B and B 2 C MOFFATT & NICHOL E N G I N E E R S

DEMAND FORECAST FOR DISTRIBUTION CENTERS IN NJTPA REGION 2000 -2040 TIME PERIOD 2000 -2010 150 2010 -2020 500 900 2020 -2030 1400 2030 -2040 0 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 ACRES Absorption rate of 35 acres/yr for next 40 years MOFFATT & NICHOL E N G I N E E R S

KEY BROWNFIELD SITES Portway Corridor Overview Phase I Portway Alignment Brownfield sites Portway Alignment And Brownfields Figure 1 MOFFATT & NICHOL E N G I N E E R S

NJTPA VALUE-ADDED DISTRIBUTION CENTER LOCATION CRITERIA • Capable of being linked to the port’s maritime container terminals by weight-unrestricted, preferably on dedicated freight-ways; • Direct access to network of interstate highways; • Situated within Foreign Trade Zone (disjointed FTZ); • Location makes possible rapid unloading of containers and immediate return to container yard; MOFFATT & NICHOL E N G I N E E R S

NJTPA VALUE-ADDED DISTRIBUTION CENTER LOCATION CRITERIA, continued • Convenient for use by B 2 B & B 2 C package freight distribution to NJ, NY, PA, CT conurbation; • Accessible to inbound domestic production inputs( e. g. Rail and Truck); • Accessible to a two-tiered labor pool; and ability to develop Planned Unit Developments (PUDs) MOFFATT & NICHOL E N G I N E E R S

RECOMMENDATIONS • The State of New Jersey working with the Port Authority and local govts. should prepare immediately to “land bank” (450 acres) of recommended sites for development of distribution centers, adjoining container yards, and linked dedicated freight-ways. • This integrated economic development program should be seen as a single, revenue producing project like the “Alameda Corridor”, and should seek and receive federal funding assistance for upgraded infrastructure and improved connections to regional transportation grid. MOFFATT & NICHOL E N G I N E E R S