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Economics Of Southern Economics Of Southern California’s California’s
Logistics IndustryLogistics Industry
John Husing, Ph.D. John Husing, Ph.D.
Economics & Politics, Inc.Economics & Politics, Inc.
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
0
2
4
6
8
10
12
14
16
18
20
Source: Southern California Association of Governments
Exhibit 8.-Per Capita Income Rank, 1969-2003SCAG Rank of 17 Consolidated Metropolitan Areas
17th = worst
So. California’s Falling Economic Status Vs. So. California’s Falling Economic Status Vs. Other U.S. Multi-County AreasOther U.S. Multi-County Areas
11.6%17.5% 20.3%
27.6% 28.0% 29.8%34.9% 34.0%
62.1%
50.9%47.8% 47.4%
44.0%
37.0% 36.2% 35.2%
Imperial San Bernardino Riverside Los Angeles So. Calif. Ventura Orange San Diego
H.S. or Less BA or More
Source: 2005 American Community Survey, Cenus Bureau
Education: High School or Less v. BA or MorePersons 25 & Over, 2005
Key Labor Force Issue: Key Labor Force Issue: Adults Without A Single College ClassAdults Without A Single College Class
Path to Prosperity:Path to Prosperity:The Right Kind of JobsThe Right Kind of Jobs
Southern California Based
Blue Collar
Good Entry Level Pay
Defined Career Ladder
On the Job Learning
Tech Dependent
Sectors With Few Training Barriers To Sectors With Few Training Barriers To Beginning EmploymentBeginning Employment
Mining ($90,491)
Manufacturing ($48,397)
Logistics ($47,411)
Construction ($42,714)
Gaming ($29,785)
Retail Trade ($28,108)
Hotel/Motel ($24,108)
Agriculture ($23,474)
Eating & Drinking ($15,132)
Blue Collar
$1,284,396,426
$909,813,831
($118,523,490)
Construction LOGISTICS GROUP Manufacturing
Sources: CA Employment Development Department, U.S. Railroad Retirement Board, U.S. Bureau of Economic AnalysisU.S. Bureau of Economic Analysis, 2002 Economic Census, U.S. Census Bureau
Exhibit 16.-Change in Blue Collar PayrollsSouthern California (7-Counties), 2001-2005
Total Payroll Growth:Total Payroll Growth:Main Blue Collar SectorsMain Blue Collar Sectors
Manufacturing Jobs, 1990-2005Manufacturing Jobs, 1990-2005
Lost: 361,300 of 1,279,600 in 1990 = -28%
(84,500)(73,500)
(64,200)
(19,200)
7,600
24,00033,300 27,100
(13,500)(3,000)
(47,400)
(72,500)
(48,900)
(12,700)(13,900)
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source: CA Employment Development Department
Exhibit 4.-Manufacturing Employment ChangeSouthern California, 1990-2005
China & India Now Allowing Their Entrepreneurs To Compete
Manufacturing May Grow Slowing … Manufacturing May Grow Slowing … BUTBUT
Training Will Still Be In Great DemandTraining Will Still Be In Great Demand
• Semi-Skilled Replace Retiring Skilled Baby BoomersSemi-Skilled Replace Retiring Skilled Baby Boomers
• Entry Level Replace Semi-Skilled Moving UpEntry Level Replace Semi-Skilled Moving Up
• New Entry Level WorkersNew Entry Level Workers
• Specific Niches (Green)Specific Niches (Green)
Logistics Sector CharacteristicsLogistics Sector Characteristics
407,771
93,294
53,986
36,425
33,914
25,561
9,023
1,876
661,850
Wholesale trade
Truck transportation
Support activities for transportation
Warehousing and storage
Couriers
Air transportation
Rail transportation
Water transportation
LOGISTICS GROUP
Sources: CA Employment Development Department, U.S. Railroad Retirement Board, U.S. Bureau of Economic AnalysisU.S. Bureau of Economic Analysis, 2002 Economic Census, U.S. Census Bureau
Exhibit 11.-Employment By Logistics SectorSouthern California (7-Counties), 2005
$71,871
$50,703
$49,011
$48,259
$47,411
$41,797
$39,802
$37,136
$36,317
Rail transportation
Wholesale trade
Support activities for transportation
Air transportation
LOGISTICS GROUP
Water transportation
Warehousing and storage
Couriers
Truck transportation
Sources: CA Employment Development Department, U.S. Railroad Retirement Board, U.S. Bureau of Economic AnalysisU.S. Bureau of Economic Analysis, 2002 Economic Census, U.S. Census Bureau
Exhibit 12.-Mean Average Pay Per Worker By Logistics SectorSouthern California (7-Counties), 2005
Logistics Sub-Sector PayLogistics Sub-Sector Pay
Logistics Sub-Sector Payroll GrowthLogistics Sub-Sector Payroll Growth
23.3%
17.0%
15.8%
13.5%
13.4%
13.2%
13.1%
-1.0%
-29.7%
Support activities for transportation
Warehousing and storage
Wholesale trade
Truck transportation
Couriers
Rail transportation
LOGISTICS GROUP
Water transportation
Air transportation
Sources: CA Employment Development Department, U.S. Railroad Retirement Board, U.S. Bureau of Economic AnalysisU.S. Bureau of Economic Analysis, 2002 Economic Census, U.S. Census Bureau
Exhibit 14.-Percent Gain in Payroll by Logistics SectorSouthern California (7-Counties), 2001-2005
Good Pay Due To Use Of TechnologyGood Pay Due To Use Of Technology
Computerized Order Receiving
Personal Digital Assistants
Robotic Goods Handling
Random Product Testing & Measurement Equipment
Geographic Information Systems Truck Routing
Laser Scanners
Global Positioning System Tracking of Vehicles
Internet Communications
Manufacturing Inside Warehouses
Median Pay By EducationMedian Pay By Education Wholesale TradeWholesale Trade
7.50%6.30%4.70%1.20%4.50%5.60%
26.30%43.90%
100.00%80.60%
5.70%13.70%
Bachelor's Degree $27.87 Work Experience & Bachelor's or Higher $44.14
Associates Degree $21.05 Post-Secondary Vocational Education $19.85
Moderate-Term On-the-Job Training $21.49 Long-Term On-the-Job Training $27.80
Short-Term On-the-Job Training $11.65 Work Experience Related Occupation $20.37
No Schooling After High School $15.67 Wholesale Trade Sector $19.17
Bachelor's Or More $36.72 Trade or Community College $26.43
Entry Level$24,232
Moderate Experience
$44,637
What Drives Demand: InternationalWhat Drives Demand: International
1. Port Container Volume (2000-2005): +8.5% per year
2. Port Breakbulk Tonnage (1995-2005): +2.5% per year
3. Air Cargo Tonnage Forecast (2005-2030): +4.6% per year
Exactly What Shippers WantExactly What Shippers Want
Goods Made in AsiaShipped in ContainersUnloaded at our PortsTransported on TrainsAnd by TrucksTo Distribution CentersTo Arrive at RetailersInternational Supply Chain Management
Soaring Soaring International ContainersInternational Containers Thru So. Calif. Thru So. Calif.
3.7 3.8 4.1 4.4 5.1 5.4 5.8 6.5 7.5 8.2 9.5 9.6 10.6 11.8 13.1 14.2 15.8
42.5
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2030
e
TEU=20 foot equivalent container unitsSource: Port Import Export Reporting Service; forecast: Moffatt & Nichol Engineers
Exhibit 6.-Port Container TrafficPorts of Los Angeles & Long Beach, 1990-2006 & 2030e (million TEUs)
200541.5% U.S. Imported Containers24.1% U.S. Exported Containers
2007 YTDLA up 11.2% LB up 1.1%
So. California Has Strong Competitive So. California Has Strong Competitive Advantages For LogisticsAdvantages For Logistics
• West Coast Location
• Deep Water Ports
• Only Competitors: Seattle, Vancouver
• Better Land Side Infrastructure
• Come To Southern California First
• Retailers save 18-20% of inventory cost managing goods from So. Calif. Not Asia.
Ports handle
1/3 of all U.S. containers
2/3 of Asian containers
Over 70% of imports pass through to other markets
1. West Coast Location1. West Coast Location
2. Ports On West Coast Nearest 2. Ports On West Coast Nearest AsiaAsia
Los Angeles Long Beach
Ships Bump Into Us FirstShips Bump Into Us First
3. Deep Water Ports As Ships Need 3. Deep Water Ports As Ships Need Over 50 feetOver 50 feet of Water of Water
3. Deep Water Ports As Ships Need 3. Deep Water Ports As Ships Need Over 50 feetOver 50 feet of Water of Water
8000-Container Panamax Ships
4. Competitors Much Smaller4. Competitors Much Smaller
Port Region Port Region Imports Exports Imports Exports
LA-Long BeachLA-Long Beach 60.5%60.5% 39.7%39.7%
Other US West CoastOther US West Coast 16.1%16.1% 30.8%30.8%
US Gulf + East CoastsUS Gulf + East Coasts 23.4%23.4% 29.5%29.5%
Note: Shares measured on a TEU basisNote: Shares measured on a TEU basis
Source: PIERS, courtesy of MARADSource: PIERS, courtesy of MARAD
5. 5. Best Land Side InfrastructureBest Land Side Infrastructure At At PortsPorts
6. 6. Best Land Side InfrastructureBest Land Side InfrastructureState-of-the-Art On-Dock State-of-the-Art On-Dock
FacilitiesFacilities
7. 7. Best Landside InfrastructureBest Landside InfrastructureSo. California’s Goods Handling So. California’s Goods Handling
ComplexComplex
8. Huge Internal Population8. Huge Internal Population
172,672
825,512
2,028,013
2,031,625
3,098,121
3,098,269
10,331,939
21,586,151
Imperial
Ventura
San Bernardino
Riverside
Orange
San Diego
Los Angeles
Southern Calif
Source: California Department of Finance
Population, 2007Southern California
9. Non-So. CA Handling = Slow Deliveries9. Non-So. CA Handling = Slow Deliveries
ORDER
Nation-wide order placed with Asian
Factory
75 - 100DAYS OUT:
Depart Destination Port
1- 5
Committed 27 - 55 Days
Retail Stores
Arrive at Destination
1- 10
En Route to Destination Port
25 - 40
10. So. CA Gives Faster Deliveries10. So. CA Gives Faster Deliveries
ORDER
Nation-wide order placed with Asian
Factory
75 - 100DAYS OUT:
Depart Destination Port
5 - 9
Committed6 - 18 Days
Retail Stores
Arrive at Destination
1- 9
En Route toTrans-Loading
Destination Ports
25 - 37
Allocate goods just before
vessel arrives
Average of one month advantage
What Drives Demand? DomesticWhat Drives Demand? Domestic
1. Inventory:Sales Ratio
2. E-Commerce
3. Population Growth
4. So. Calif. Retail Per Capita after inflation
5. Local Manufacturing
1.20
1.25
1.30
1.35
1.40
1.45
1.50
1.55
1.60
1.65
Source: U.S. Census Bureau
U.S. Inventory to Sales Ratio, 1985-2007Months of Inventory On Hand At Existing Sales Levels
1. Just In Time Inventory Trend1. Just In Time Inventory Trend
42%
29%
12%
19%23%
29%
39%
31%
27% 26% 27%24%
29%
25%23% 24% 23%
25% 26%23%
26%
2001 2002 2003 2004 2005 2006
Source: U.S. Census Bureau
E-Commerce Percentage GrowthU.S., Quarter Over Quarter of Prior Year, 2001-2006
2. Long Term Sector Strength: 2. Long Term Sector Strength: Domestic E-Commerce SoaringDomestic E-Commerce Soaring
3. So. California’s Population Growth3. So. California’s Population Growth
111,000 216,000618,000 816,000 976,000
1,417,0001,853,000
6,007,000
Imperial Ventura Orange San DiegoSan BernardinoRiverside Los Angeles So. Calif.
Source: SCAG Preliminary 2008 RTP, SANDAG 2004 RTP
Population Growth, 2005-2030Southern California's Areas
4. Retail Trade Per Capita After 4. Retail Trade Per Capita After InflationInflation
Means More Goods Moving Per PersonMeans More Goods Moving Per Person
$5,608 $5,696 $5,861 $6,037 $6,201$6,589
$6,988 $6,770 $6,604 $6,700$6,984
$1,375
24.5%
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1994-2004Percent
Sources: CA Board of Equalization, CA Department of Finance, U.S. Bureau of Labor Statistics
Per Capita Taxable Retail Sales (constant dollar)Southern California, 1994-2004 (1984-1986=100)
5. Local Manufacturing Only Driver 5. Local Manufacturing Only Driver DecliningDeclining
(84,500)(73,500)
(64,200)
(19,200)
7,600
24,00033,300 27,100
(13,500)(3,000)
(47,400)
(72,500)
(48,900)
(12,700)(13,900)
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source: CA Employment Development Department
Exhibit 4.-Manufacturing Employment ChangeSouthern California, 1990-2005
Lost: 361,300 of 1,279,600 in 1990 = -28%
Job Growth If Trade GrowsJob Growth If Trade Grows
Activity Job Creation
Logistics Natural Growth 559,000
Construction: Rail Capacity, Grade Separation, Truckway 277,000
Multiplier Impacts: Logistics 334,000
TOTAL 1,429,000
Exhibit 4.-Logistics Investment, Job Creation, 2005-2030
1,000,000 Job Strategy
Multiplier Impacts: Construction 258,000
894,000
535,000
What’s Left To Do …What’s Left To Do …
•Dedicated Truck Lanes
•Expanded Rail Capacity
•Electrified Dedicated Short Haul Rail
•New Intermodal Facilities
•Vetted Projects From Agencies
•Inland Port
1. Agreement On What To Build
2. Agreement On Environmental Mitigation Program
Diesel
•$10 Billion
•SCAG Study
•Cold Ironing, Buy/Retire Trucks, Green Goats, Tier III Engines, Clean Fuels, Retrofits, Carl Moyer …
•Husing: Job Creation Capability & Pay Levels
•Leachman: 18%-20% Cost Savings From West Coast Handling
•Leachman: $200 Fees Not Divert Transloaded Cargo
•SCAG: Clear Time & Reliability Savings Justify Costs
3. Industry Peer Review of Research
$$$
•Caltrans
•LA Metro Transit, OCTA, RCTC, SANBAG, VCTC
•Multi-County ACTA
•Gubernatorial Appointed Multi-County Board
4. Institution(s) To Manage a Multi-County Process
•Design Build To Lower Cost & Increase Construction Speed
•Public:Private Infrastructure Legal
•Tax Credits For Private Investment In Infrastructure
•Voluntary Container Fees & Road Tolls
5. Federal & State Legislation on Funding Tools to Lower Costs
6. Infrastructure Bond Program to Jump Start Process
Can Governor & Legislature Agree?They Did … As Did The They Did … As Did The
Voters!Voters!
7. Federal Funding of Trade Related Infrastructure
•Tariffs Collected at Ports Go to General Fund
•Need Federal Goods Movement Infrastructure Fund
•Use Growth of Tariffs For National Program
8. Private Sector & Union Leadership Support Agenda
SCAG IETC
LAEDC SCLC
LA C of C ILWU
Unions
•Consensus on How to Address Issues
9. Health, Community, Environmental Leaders Support Agenda
Diesel
•Governor
•State Senate
•Assembly
•House
•Senate
10. Elected Official Understand & Move Agenda Forward
Leaders Have Changed The EconomyLeaders Have Changed The Economy
Inter-State Freeway System
President Eisenhower
State Water Project
Governor Pat Brown
LogisticsLogistics Gives Us The Chance Do It Again & … Gives Us The Chance Do It Again & …
We Owe It To Our Blue Collar Workers To Make It Happen!
www.johnhusing.com
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