Phoenix, Arizona has become a hub for advanced manufacturing. In particular, companies in the aerospace, semiconductor and electric vehicle (EV) sectors are joining Intel and others in calling Phoenix home.
But large-scale manufacturing requires large-scale shipping and logistics operations to support both OEMs and their suppliers. Without the right Phoenix freight shipping partners, transportation issues could slow down these high-speed supply chains.
Advanced manufacturers are flocking to Phoenix for several reasons:
- Phoenix is a business-friendly state, ranked #4 among U.S. cities as a place to do business (Chief Executive Magazine).
- Arizona is offering attractive tax credits, specifically to the semiconductor industry. That is on top of federal dollars linked to the Biden administration’s passage of the Chips and Science Act, designed to revitalize U.S. manufacturing. It includes $52 billion in support of semiconductor research, development, and manufacturing.
- Phoenix operating costs are up to 12.8% less and real estate purchase costs are up to 25% less than the competing markets of Las Vegas, Nevada, Reno, Nevada, and Riverside/San Bernardino, California (source: Greater Phoenix Economic Council).
- It’s a cost-effective distribution hub, with one-day service to California, Texas and Mexico.
- Lower risk of transportation-related delays due to the warmer climate
Just some of the semiconductor companies in Phoenix include onsemi, NXP Semiconductors, Microchip Technology, Intel and, notably, TSMC – the world’s largest semiconductor company, which is building a second factory in Phoenix.
These companies have thousands of suppliers. The major ones are setting up distribution in Phoenix, while others are challenged to arrange international freight shipping to Phoenix – a market they may not have shipped to before.
The expansion of advanced manufacturing in Phoenix, coupled with the growth in supplier ecosystems to support these OEMs, creates supply chain challenges that increase the need for solid partnerships with logistics and transportation providers.
Phoenix freight shipping challenges
Here are some logistical obstacles that must be overcome to create reliable, efficient supply lines to and from Phoenix.
Lack of direct air freight routes into Phoenix
Much of the supply for semiconductor and EV manufacturing in Phoenix Is shipped via air from Asia, and little of that freight ships direct to Phoenix. It’s traveling via LAX, requiring an air-to-truck solution that gets products to Phoenix within 24 hours after touch down. There is only a handful of drayage operators qualified to transport sensitive equipment on this route and companies newly entering the Phoenix market may struggle to source the capacity they need. Challenges like these can lead to frustrating delays in setting up and running freight lanes to Phoenix. The right logistics partner locally can solve that problem and help suppliers quickly and painlessly meet customer commitments.
The Phoenix-Mesa Gateway Airport outside Phoenix offers potential for future direct freighter service. Some companies are already arranging direct charters to and from Mesa. But the airport (a former military base) is not yet a viable option for regular air freight service.
Indirect ocean freight moves
While many of the essential components for semiconductor and EV manufacturing travel via air freight, efficient ocean freight services are also a key requirement for supplies destined for Phoenix.
Because there is no direct rail route from the Ports of LA and Long Beach to Phoenix, container freight moves to Phoenix via truck. As mentioned, the pool of reliable drayage operators for this lane is limited. When volume at the port is up, this capacity may not be readily available, thereby delaying supply and potentially slowing down or halting factory production. The right freight forwarder can manage door-to-door shipping from Asia into Phoenix using strong carrier relationships to ensure reliable ocean freight service at a competitive rate.
Limited Outbound freight capacity
The fact that Phoenix is a secondary freight market located inland creates similar challenges on the outbound side. There is simply no international lift out of Phoenix for regular air freight shippers. The right freight forwarder can arrange door-to-door shipping from Phoenix to worldwide locations, typically utilizing the LAX gateway.
For domestic air freight services, there are just a handful of viable options, with Southwest and American Airlines being the main freight carriers. Delta and United Airlines are options as well, but have fewer flights. Dimerco Express Group manages regular next-flight-out services for several semiconductor companies. For over-the-road transport, expedited or hotshot trucking is also a significant requirement. Among technology companies, it’s critical to have a local partner that can handle your urgent shipping requests.
Poor market understanding
Arizona is a new market for many suppliers, so they lack the understanding and relationships required to establish efficient operations here. For instance, certain licenses may be required, and customs clearance could be a challenge for companies unfamiliar with U.S. Customs requirements. The right 3PL can fill in these knowledge gaps.
A Phoenix freight shipping partner like Dimerco has an advantage because the company combines local market expertise with a global shipping infrastructure, particularly between Asia and the US. Through BC Dimerco Logistics, Dimerco has provided local, national and international logistics services in Phoenix for over 20 years. The team can advise newcomers on all legal and regulatory requirements, as well as connect them with an established base of reliable carriers.
Investing in Phoenix
Because of its strategic focus on logistics services for the semiconductor industry and the EV industry, Dimerco has expanded its capabilities in Phoenix. In 2022, the company invested in BC Logistics, which is now part of Dimerco’s global network of 150+ company-operated forwarding offices across 17 countries. The merged companies combine BC Logistics’ superb local market knowledge and logistics services with Dimerco’s global capabilities to support freight shipping between Phoenix and anywhere in the world.
For OEMs and component suppliers that need help establishing efficient supply lines to and from Phoenix, Dimerco brings the following advantages:
- 20-year history of service to Phoenix-area businesses. This includes a special focus on time-definite transportation service.
- Knowledge of semiconductor logistics requirements. Nearly half of Dimerco’s global revenues are from semiconductor companies and other technology manufacturers. The company understands the requirements of shipping high value, sensitive products.
- Local freight shipping specialists in Phoenix. The team manages local, national and international transportation, coordinating closely with Dimerco offices in LA and all other global gateways.
- 24/7 service. Many of the products destined for or made by semiconductor factories in Phoenix are mission critical. Round-the-clock, expedited shipping is essential for such companies. Dimerco’s Phoenix office offers a true “at any time, to anywhere” shipping capability. Here’s an example. At 4:00 PM on New Year’s Eve, the office got a call that a large chain of gas stations in Puerto Rico was shut down due to a faulty electrical part that needed replacement. Dimerco’s Phoenix team hand carried the part from Phoenix to San Juan, PR for delivery at 7:00 AM the next morning. This protected hundreds of thousands of dollars in revenue that the retailer earned over that busy holiday weekend.
- Local warehousing space. Dimerco operates 16,000 square feet of warehouse space in Phoenix, with expansion capability to more than 500,000 square feet on Phoenix’s west side. Temp-controlled space is available. Special requirements like repacking, shrink wrapping and banding can be handled at the warehouse. Not all freight forwarders, even the largest ones, have a local warehouse in Phoenix to perform value-added services.
- Hot shot services. Several Dimerco customers utilize the company’s nationwide hotshot service from Phoenix using vans and box trucks. Because of the value and urgency of the freight, these customers prefer to avoid regular commercial trucking services in favor of two-person hotshot teams who can deliver direct and as fast as possible.
- Strong solution for service between Phoenix and LA/Long Beach. Dimerco partners with the top drayage trucking companies servicing this route to ensure ready capacity. A 20-acre yard in Long Beach provides off-port storage to avoid demurrage fees.
- Integrated, one-stop solution. Dimerco offers air, ocean, customs brokerage, warehousing and trucking services to provide customers with a single point of contact and accountability.
Need freight shipping services in Phoenix?
Phoenix is emerging as an important production hub for the semiconductor and EV markets. That means Phoenix is now an important logistics hub, as well. For OEMs and suppliers in these industries, it’s important to have the right Phoenix shipping and logistics strategy in place – and the right partners to connect Phoenix with the world.
If you need help creating a reliable freight shipping solution to and from Phoenix, contact the Phoenix freight shipping experts at Dimerco.