Following a year of unforeseen and unprecedented challenges, America’s businesses are gearing up for a rebound in 2021. But one industry never slowed down, and Kentucky is uniquely poised to capitalize.
That industry is distribution and logistics, which stepped up in a major way amid the pandemic as consumers gravitated even further toward online ordering and home delivery. The Bluegrass State, in the most literal sense, stands at the center of those efforts.
Online ordering and home delivery quickly became consumers’ go-to method during this crisis, both in terms of usage frequency and for a broader range of goods. That appears likely to continue as part of the post-COVID new normal.
E-commerce played a major role in the industry’s growth for the past two decades, as online shopping became an integral part of modern life. In 2000, eCommerce comprised less than one percent of all retail sales. By 2019, that number climbed to more than 11 percent.
That steady rise took a sharp upturn in 2020, as more consumers relied on online ordering out of necessity. In the third quarter, eCommerce accounted for over 14 percent of retail sales, and the figure topped 16 percent earlier in the year.
While 2020 undoubtedly was a year of anomalies, eCommerce shows no signs of slowing down – and Kentucky, with its ideal geographic location and formidable logistics landscape, is poised to leap ahead.
Distribution and Logistics Surges Ahead
With more than 540 logistics and distribution facilities employing about 75,000 people full-time, Kentucky already stands tall in this ever-growing industry.
But as reliance on overnight shipping increases and the role for the industry overall expands, Kentucky is positioned to establish itself as the premier destination for distributors and logistics companies, while also appealing to manufacturers looking to onshore in the near future.
Despite a tumultuous 2020, several positive signs emanated from Kentucky companies announcing expansions.
Dollar General Corp., for example, unveiled plans in August to open two new distribution centers that are expected to employ more than 360 people in Kentucky.
Kentucky Governor Andy Beshear announced the retailer’s plans, which include adding a warehouse in the Northern Kentucky city of Walton, plus a DG Fresh cold storage facility in South Central Kentucky’s Bowling Green. These developments are expected to create more than 365 jobs and support operations at more than 2,300 stores.
Another case deals with the increasing importance of supply chain analytics, as one homegrown company continues creating high-wage opportunities for Kentuckians while also helping to combat the spread of COVID-19.
Louisville-based Healthcare Asset Network, doing business as HANDLE Global, in November pledged to invest $7.8 million toward additional warehousing and to create 80 high-paying jobs across its distribution and headquarters operations. Former health care providers and manufacturing and technology executives head the company, which develops, sells and implements technology in support of the healthcare equipment supply chain.
Throughout the pandemic, HANDLE has provided clarity and guidance to healthcare systems, government agencies and businesses across the country through supply chain analytics.
“I’ve said many times in the fight against COVID-19, we are in this together, and few companies embody that spirit of togetherness like HANDLE Global,” Governor Beshear said. “This Kentucky-based company is doing its part to combat the virus by working closely with healthcare providers and other organizations to meet drastically rising demand for supply chain analytics. In addition, its new expansion will provide new jobs, high wages and help HANDLE Global continue to lead by example during a challenging time.”
Company executives plan to double HANDLE’s employment by the end of 2021 at its Norton Commons headquarters.
Kentucky’s support of tech startups in part aided the company in its early success. HANDLE received assistance in its first years through KY Innovation – the commonwealth’s office for entrepreneurial and small business support – with investments from the Kentucky Enterprise Fund, managed by the Kentucky Science and Technology Corp., and also Commonwealth Seed Capital.
While the state lends strong support to startups, it also is a great home for retail giants such as Amazon. In November, the company announced its plans for a 500-job fulfillment center in Lexington, Kentucky. The facility – the second of its kind in Lexington – will add to the company’s significant impact in the state. Since 1999, when Amazon first set its roots in Kentucky, the company has invested more than $8 billion and created roughly 13,000 full-time jobs for Kentuckians.
Amazon operates more than a dozen fulfillment centers throughout the central part of the state, and Kentucky has more Amazon employees than any other state aside from the company’s home state of Washington.
Kentucky’s role as a major national player in the distribution and logistics industry stems from its ideal geographic location. The state sits at the center of a 34-state distribution area in the Eastern U.S., and its borders lie within a day’s drive of more than two-thirds of the nation’s population, personal income and manufacturing operations. This advantageous placement provides unparalleled distribution benefits for Kentucky’s businesses.
“The combination of Kentucky’s ideal location, its robust infrastructure and its premier logistics capabilities gives businesses here an edge in quickly reaching customers throughout the country and around the globe,” said Jeff Taylor, business development commissioner at the Kentucky Cabinet for Economic Development. “These same traits that have made Kentucky a logistics leader also position our state for continued growth in the years ahead.”
Kentucky’s centrality, plus UPS, DHL and Amazon Air shipping hubs, help the state rank No. 2 in the U.S. for air cargo by volume – and it’s on track to soon reach the No. 1 spot.
Leading up to the pandemic, these giants continued making transformative investments in Kentucky. These include Amazon’s announcement of its air hub in January 2017 – an investment of nearly $1.5 billion expected to create 2,700 full-time jobs at the Cincinnati/Northern Kentucky International Airport in Hebron – and UPS’s September 2019 announcement of its $750 million investment in support of its Worldport air cargo hub and Centennial Ground hub in Louisville, a development promising 1,000 new full-time jobs.
With shipping demand now at an all-time high, these companies are more essential than ever. Throughout the pandemic, they have not only supplied the world with the products people need to get by, but also kept the economy afloat during an economically turbulent time.
Kentucky is also home to hundreds of small and mid-size logistics companies that are naturally nimble and responsive to market and demand shifts. Given the state’s strengths, plus the foreseeable post-pandemic changes in both consumer behavior and how businesses operate, the industry in Kentucky is well-positioned for success.