The recent site selection luncheon hosted by the East Tennessee Economic Development Agency featured insights from an individual with 35 years of experience in the real estate and economic development sector, the last nearly 10 years with a corporation that owns the third largest long-haul trucking company in the country.
Bill Luttrell, Director of Global Corporate Real Estate for Werner Enterprises Inc., focused on three significant trends – globalization transformation to regionalization, geopolitical risks, and the dynamic supply chain and impacts from technology – during his presentation to a roomful of economic development professionals.
His creds include service at The World Bank, Deloitte, and JLL (Jones Lang LaSalle) before joining Werner in early 2010. Prior to the start of the luncheon, Luttrell told us that the Omaha-based corporation has about one-half of its business in trucking and the other half in third party logistics. Those two sectors provide a very useful view of the ever-changing dynamics of the nation’s economy.
“The biggest issue (from a global perspective) is the U.S.-China relationship,” he said at the outset, then offered some significant observations near the end of the presentation. “There’s going to be a winner and a loser (when a trade agreement is eventually executed). We have the upper hand. China will have to capitulate. Do we let them continue to be a player or do we isolate them?”
In between those thoughts, Luttrell offered praise for the region and its position, reviewed recently enacted or pending trade agreements, and discussed the long-term impact of technologies like 5G and blockchain.
“Globalization has been so successful (that) no longer are companies having to face the global supply chain,” he said, defining regionalization as having the supply chain located much closer to the customer. “We are seeing more nearshoring (transferring work to companies that are less expensive and geographically closer) than reshoring (returning production and manufacturing back to the company’s original country).”
Later in his presentation, Luttrell noted that the regionalization trend is making local warehouses that were built 20 to 30 years ago much more attractive to clients. It’s driven in many respects by the fast sourcing for delivery in this dynamic eCommerce environment.
With a number of trade agreements already executed between the U.S. and countries in Asia and South America, Luttrell noted that several big ones remain, the most notable being the United States-Canada-Mexico Agreement (USCMA) along with separate ones with the United Kingdom (U.K.), Germany and France.
“It (USCMA) will happen,” he said. “Whether it happens before the next election is the big question.”
Luttrell also predicted that the U.S. and the U.K. will execute a separate agreement regardless of the final decision regarding Brexit and the U.K.’s exit from the European Union.
We took particular note of one insight he offered about the reason for the “one-off” agreements between the U.S. and individual countries. “The reason (President) Trump has done this is to corral China,” he said.
On the technology front, Luttrell explained how two emerging technologies – 5G and blockchain – will impact companies, how they operate, and where they locate. To illustrate the impact of 5G, he noted that it currently takes about a minute to download a video with 4G technology, while individuals should be able to download a dozen videos in a second with 5G.
“Everything becomes real-time as a result,” Luttrell said, adding that blockchain and its encryption capabilities, coupled with 5G, will significantly impact every aspect of transactions throughout the supply chain.
One technology that he said would take time to develop, at least in the long-haul trucking industry, was autonomous vehicles. Luttrell predicted it would take 15 to 20 years before than happened. Werner Enterprises purchases about 15 long-haul tractors a day, refreshing its fleet after two years.