[Flying Ace]

Originally Posted by mshab356

Can someone explain the benefits of opening a distribution center in Texas as opposed to expanding the one(s) on the east coast and just shipping the cars via train/truck as they have been? I'm assuming the variable cost per vehicle of extending shipment via sea is cheaper in the end than via train/truck?

Originally Posted by BEMR

Relief from the middle usually provides relief to either side of the U.S. this is a good idea and will loosen up the stress from the other 2 ports.

Originally Posted by jphughan

That, and circumstances may have prevented expanding the existing facilities to the required degree. Maybe there wasn't enough appropriate land available for sale at a reasonable price, or at all. Maybe downstream logistics like trucks and trains wouldn't have been able to handle the projected increased load even if they'd been able to expand their existing facility. Maybe they got a more favorable tax deal from Texas than they would have from NJ. Who knows?

And yes, shipping by boat is much, MUCH cheaper than any other way. It's sheer economy of scale, though it is of course slower. Take a look at this article for an idea of the relative costs: http://www.autoblog.com/2016/03/07/a...locks-closure/.

good points. I have to add, to answer the question requires a deep dive into BMWNA's logistics infrastructure.

Somewhere, they computed the delievered cost per vehicle or cost per mile or whatever the their major metrics are on costs they want to minimize.

Then there are variables such as costs of shipping operations as it relates, distance travelled by ship vs train vs truck, and also costs related to port unloading fees. Remember, commercial ports are competing against each other for container traffic, so depending on volume, they might cut you a discount.

I suspect there are some potential city/state tax incentives to unloaded at certain ports around the country as well. So you have account for those incentives.

Then there are labor costs of each location to set up BMW inspection offices as assoicated HR costs. (ahem, maybe that's why they're not making their port of entry Long Beach/Oakland/Bermerton)

Finally, you also need to get an understanding of the weighted final mile delivery distances to each dealership from each prospective port-of-entries (weighted against total volume).

So you can see, it's a complex logistic puzzle, that's why the leads at any company who has to solve delivery logistics are paid well over $200k salary to figure all this out and minimize cost.

Also, there are companies who got really good at computing these algorithms taking into account the variables specifically related to their business. Amazon, Fedex, UPS comes to mind. For these companies, their propreitary logtistics algorithms or fulfillment services are worth more than the tangible assets of the company itself. I read somewhere that the fullfillment and logistics algorithm and infrastructure of Amazon itself is worth a good 50% to 60% of the entire net value of what Amazon's business is worth. Further, UPS, Amazon and Fedex are now in the business of selling their algorithm to less sophisticated businesses to deliver their products to customers (fulfillment warehouses by Amazon) or the entire logistics advisory services you can purchase from UPS/Fedex.