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Supply Chain Challenges, Warehouse Operations

Logistics Site Location: Scranton Could Be Lowest-Cost Option

Alex Stark | August 17, 2017

When considering a site location for your company, for manufacturing or distribution, operating costs are a huge part of that decision.  A recent study examined the costs to operate a large food and beverage processing center in 11 different locations and found that the Scranton/Wilkes Barre, PA metro area has the lowest operating costs of all. 

Many of the cost factors used in the study – labor, real estate, taxes, utility costs – are relevant beyond manufacturing and could be applied to any operation that requires a facility and/or workforce of similar size, such as a large-scale distribution center.

The site locations assessed were:

  • Chicago, IL
  • Baltimore, MD
  • Boston, MA
  • Camden/South Jersey, NJ
  • Newark/North Jersey, NJ
  • Long Island, NY
  • Poughkeepsie/Hudson Valley, NY
  • Allentown/Bethlehem, PA
  • Lancaster County, PA
  • Philadelphia, PA
  • Scranton/Wilkes Barre, PA

Using a hypothetical production facility of 225,000 sq. ft. that employs 350 associates, the locations were compared in terms of the following criteria:

  • Total Annual Operating Costs
  • Labor Costs
  • Comparative Electric Power and Natural Gas Costs
  • Comparative Land Acquisition and Construction Costs
  • Comparative Ad Valorem and Sales Tax Costs

site location

Total Annual Operating Costs.  Based on the hypothetical criteria, Scranton has the lowest total annual operating costs at $25 million.  Long Island, NY has the highest costs at over $31.5 million.

Labor Costs.  At just under $21 million, Scranton has the lowest labor costs related to the hypothetical 350-person workforce.  The highest, again, is Long Island, NY at $25.3 million, with Newark, Poughkeepsie/Hudson Valley, and Philadelphia close behind. 

Power and Gas Costs.  Again, Scranton has the lowest site location costs ($616,044), while Boston has the highest at $1.3 million. 

Land Acquisition and Construction Costs.  Scranton is lowest in this category at just under $2.3 million, putting them slightly under Baltimore, Lancaster County, Allentown/Bethlehem, and Poughkeepsie/Hudson Valley.  Long Island is once again the highest at over $3 million, with Newark close behind.

Ad Valorem and Sales Tax Costs.  Scranton (just over $1.1 million) gets edged out by Baltimore (just under $1.1 million) here, but not by much. 

Scranton Gets High Marks for Freight Efficiency

While the study focused on operating costs, we know that’s only part of the equation.  What good are low operating costs when the resultant distribution of products is costly and/or inconvenient?  In the case of a Scranton distribution center, however, transportation characteristics make it even more attractive as a distribution hub.

Scranton is served by 5 major U.S. highways and is within two hours of the Port of NY/NJ, as well as Philadelphia.  It is also within six hours or less of Toronto, Montreal, Boston, Portland, Cleveland, Pittsburgh and Richmond, and is served by Norfolk Southern Railway for freight transport.  For Northeast product distribution, you’re well within a day’s reach of a very sizeable chunk of the U.S. population. 

KANE’s Scranton Capabilities

In addition to food logistics companies, many other manufacturers are well aware of Scranton’s upsides and have established a sizeable presence in the area.  For the reasons cited, the area is also a popular site location for product distribution.

Since 1930, Scranton has been home to our Pennsylvania 3PL operation. Our headquarters campus has over 2 million square feet of distribution space, including temperature-controlled space.  Our two neighboring facilities bring KANE’s total footprint in the region to almost 3.5 million square feet.  Our large truckload fleet is also located here, delivering to retail locations throughout the Northeast.

If you are looking for a highly economical location for product distribution, contact us today to discuss how KANE’s existing infrastructure can work for you. 

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