BY Randy Kendrick | Market Trends
April 10, 2019

Xebec is committed to the Industrial & Logistics (“I&L”) sector for many reasons, but continued growth of the sector is critically important to our success. Growth leads to expansion of the base, creating opportunity for Xebec to further its “Build to Core” strategy that is at the heart of value creation for our institutional partners and private Xebec investor community.

In Part 1 of this Blog series, we identified three factors that we believe will continue to drive the expansion of the overall base in the I&L sector: demographic trends, technology and supply chain infrastructure. Having addressed demographic and technological trends in Part 1 & 2 of the Blog series, this final installment will discuss the third factor – supply chain infrastructure.


Globalization, the process whereby consumer goods can be manufactured all over the world and efficiently shipped to advanced economies like the U.S. for consumption, was made possible through the invention and standardization of the “shipping container.” If you would like to know more about this revolutionary invention we recommend reading “The Box,” by Marc Levinson.

The modern global economy is driven in part by modern shipping containers that can be loaded with cargo anywhere in the world, and move through multiple modes of transportation, including truck chassis, ocean going container vessels and/or overland rail. These multiple modes of transportation are referred to as “Intermodal” transport, where the transported goods remain in the shipping container until they reach their final point of destination. The modern shipping container and intermodal transport have concentrated the flow of goods–especially finished consumer goods–to deeply rutted supply roots defined by the seaports with containerized cargo capability (e.g., the Los Angeles/Long Beach port complexes), intermodal rail (e.g., BNSF, UP) and trucking infrastructures.

This modern flow of goods has moved the I&L sector from a highly decentralized transportation model to a much more consolidated one. Imagine the shipping container as the “life blood” of the economy and the global supply chain infrastructure as the “veins” allowing for increased “life blood” to flow to and from the heart. We believe the ongoing expansion of port, rail and trucking intermodal assets in gateway and inland port markets will provide for the continued expansion of the I&L sector in the US. Developing and owning I&L assets with adjacency to high concentrations of international and domestic intermodal assets is an important piece of our investment strategy at Xebec.

There is an old saying in real estate: “The three most important factors are location, location and location.” In the I&L sector, this means owning assets that are close to the intermodal portals with superior demographic reach in a relative radius out from those intermodal portals, ranging anywhere from 25 to 400 miles. This adjacency reduces the transportation cost known as “drayage,” which is the distance required to transport goods from intermodal portals to their final destination and the largest single operating cost for logistics operators. It also gives the properties locational advantage for demographic reach critical to the eCommerce B to C operational model.

Whether “Infill/Last Mile” or large bulk intermodal distribution, creating I&L assets in the right locations is key to Xebec’s strategy for the creation of long-term value in real estate assets. The I&L facilities developed and owned by Xebec, in its focused “Build to Core” execution, will be centralized in locations that have been thoroughly analyzed for reducing drayage costs and maximizing demographic reach, all which helps us deliver quality investments to our investors at the project level and core plus portfolio at Xebec Industrial Trust, LP.


    Sign up now for updates on new posts from our blog.

    This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.


    CBRE Reports 2020 Bulk Space Transactions are 26% Higher Year over Year