Economics Of Southern Californias Logistics Industry by sammyc2007

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									Economics Of Southern California’s Logistics Industry

John Husing, Ph.D. Economics & Politics, Inc.

So. California’s Falling Economic Status Vs. Other U.S. Multi-County Areas
Exhibit 8. -P er Capita Income Ra nk, 196 9-2003 SCAG Ra nk of 17 Consolidated Metropolitan Are as
20 18 16 14 12 10 8 6 4 2 0
17t h = w orst

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
Source: Southern California Association of Governments

Key Labor Force Issue: Adults Without A Single College Class
Education: High S chool or Less v. BA or M ore Pe rsons 25 & Over, 2 005
62.1% 50.9% H.S. or Less BA or More

47.8%

47.4%

44.0% 37.0% 36.2% 35.2%

27.6% 17.5% 11.6% 20.3%

28.0%

29.8%

34.9%

34.0%

Imperial

San Bernardino

Riverside

Los Angeles

So. Calif.

Ventura

Orange

San Diego

Source: 2005 American Comm unity Survey, Cenus Bureau

Path to Prosperity: The Right Kind of Jobs

Tech Dependent On the Job Learning Defined Career Ladder
Good Entry Level Pay

Blue Collar Southern California Based

Sectors With Few Training Barriers To Beginning Employment
Mining Manufacturing Logistics
Construction

($90,491) ($48,397) ($47,411)
($42,714) Blue Collar

Gaming Retail Trade Hotel/Motel
Agriculture

($29,785) ($28,108) ($24,108)
($23,474)

Eating & Drinking ($15,132)

Total Payroll Growth: Main Blue Collar Sectors
Exhibit 16. -Cha nge in Blue Collar Payrolls Southern Ca lifornia (7-Counties), 2 001-20 05
$1,284,396,42 6 $909,813,831

($118,5 23,490 ) Construction LOGI STI CS GROUP M anufacturing

Sources: CA Employment Development Departm ent, U.S. Railroad Retirement Board, U.S. Bureau of Economic Analysis U.S. Bureau of Economic Analysis, 2002 Economic Census, U.S. Census Bureau

Manufacturing Jobs, 1990-2005

Lost: 361,300 of 1,279,600 in 1990 = -28%
Exhibit 4. -Manufacturing Employment Change Southern Ca lifornia , 19 90-20 05
24,000 7,600 (3,000) (19,200) (13,500) (12,700)(13,900) 33,300 27,100

(47,400) (64,200) (73,500) (84,500) 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 (72,500)

(48,900)

China & India Now Allowing Their Entrepreneurs To Compete
Source: CA Employ ment Development Department

2002

2003

2004

2005

Logistics Sector Characteristics
Exhibit 11. -Employment By Logistics Sec tor Southern Ca lifornia (7-Counties), 2 005
W hole sa le tra de Truc k tra nsporta t ion Support a c tivit ie s for t ra nsport a tion W re housing a nd st ora ge a Courie rs A ir tra nsporta t ion 93, 294 53, 986 36, 425 33, 914 25, 561 407, 771

Ra il t ra nsport a tion 9, 023 W t e r tra nsporta t ion 1, 876 a LOGI STI CS GRO UP
Sources: CA Employ ment Development Departm ent, U.S. Railroad R etirement Board, U.S. Bureau of Economic Analy sis U.S. Bureau of Economic Analy sis, 2002 Economic Census, U.S. C ensus Bureau

661, 850

Logistics Sub-Sector Pay
Exhibit 12.-Mean Average Pay Per Worker By Logistics Sector Southern California (7-Counties), 2005
Rail transportation Wholesale trade
Support activities for transportation Air transportation LOGISTICS GROUP Water transportation

$71,871 $50,703
$49,011 $48,259 $47,411 $41,797

Warehousing and storage
Couriers Truck transportation

$39,802 $37,136
$36,317

Sources: CA Employment Development Department, U.S. Railroad Retirement Board, U.S. Bureau of Economic Analysis U.S. Bureau of Economic Analysis, 2002 Economic Census, U.S. Census Bureau

Logistics Sub-Sector Payroll Growth
Exhibit 14. -Perce nt Gain in P ayroll by Logistics Sec tor Southern Ca lifornia (7-Counties), 2 001-20 05
Support activities for transportation Warehousing and storage Wholesale trade Truck transportation Couriers Rail transportation LOGISTICS GROUP Water transportation Air transportation -29.7% -1.0% 17.0% 15.8% 13.5% 13.4% 13.2% 13.1% 23.3%

Sources: CA Employ ment Development Departm ent, U.S. Railroad Retirement Board, U.S. Bureau of Economic Analy sis U.S. Bureau of Economic Analy sis, 2002 Economic Census, U.S. Census Bureau

Good 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 Education Wholesale Trade
Work Experience & Bachelor's or Higher 7.50% Moderate 6.30% Bachelor's Degree Post-Secondary Vocational Education Experience 4.70% Associates Degree 1.20% $44,637 Long-Term On-the-Job Training 4.50% Moderate-Term On-the-Job Training 5.60% Work Experience Related Occupation 26.30% Short-Term On-the-Job Training 43.90% Wholesale Trade Sector 100.00% No Schooling After High School 80.60% Trade or Community College 5.70% 13.70% Bachelor's Or More $44.14 $27.87 $19.85 $21.05 $27.80 $21.49 $20.37 $11.65 $19.17 $15.67 $26.43 $36.72

Entry Level $24,232

What Drives Demand? International

Exactly What Shippers Want

Transported our Asia To Arrive Containers To Distribution inTrains Unloaded at Retailers And in on Chain Goods by Trucks Shipped Made Centers International SupplyPorts Management

Soaring International Containers Thru So. Calif.
Exhibit 6.-Port Container Traffic Ports of Los Angeles & Long Beach, 1990-2006 & 2030e (million TEUs)
2005 41.5% U.S. Imported Containers 24.1% U.S. Exported Containers
42.5

3.7 3.8

4.1 4.4

5.1 5.4

5.8

6.5

7.5

8.2

9.5

15.8 13.1 14.2 11.8 9.6 10.6

2007 YTD LA up 11.2% LB up 1.1%

TEU=20 foot equivalent container units Source: Port Import Export Reporting Service; forecast: Moffatt & Nichol Engineers

1. West Coast Location
Over 70% of imports pass through to other markets

Ports handle 1/3 of all U.S. containers 2/3 of Asian containers

2. Ports On West Coast Nearest Asia

Los Angeles

Long Beach

Ships Bump Into Us First

3. Deep Water Ports As Ships Need Over 50 feet of Water

8000-Container Panamax Ships

4. Competitors Much Smaller
Port Region
LA-Long Beach

Imports Exports
60.5% 39.7%

Other US West Coast US Gulf + East Coasts

16.1% 23.4%

30.8% 29.5%

Note: Shares measured on a TEU basis Source: PIERS, courtesy of MARAD

5. Best Land Side Infrastructure At Ports

6. Best Land Side Infrastructure State-of-the-Art On-Dock Facilities

7. Best Landside Infrastructure So. California’s Goods Handling Complex

8. Huge Internal Population
Population, 2 007 Southern Ca lifornia
I mpe ria l Ve ntura Sa n Be rna rdino Rive rside Ora nge Sa n Die go Los Ange le s Southe rn Ca lif 172,672 825,512 2,028,0 13 2,031,6 25 3,098,1 21 3,098,2 69 10,331,939 21,586,151

Source: California Department of Finance

9. Non-So. CA Handling = Slow Deliveries
Nation-wide order placed with Asian Factory

En Route to Destination Port

Depart DestinationArrive at Destination Port
Retail Stores

ORDER

DAYS OUT:
75 - 100 25 - 40 1- 5 1- 10 Committed 27 - 55 Days

10. So. CA Gives Faster Deliveries
Nation-wide order placed with Asian Factory

En Route to Trans-Loading Destination Ports

Depart Destination Port

Arrive at Destination

Retail Stores

ORDER

Allocate goods just before vessel arrives

DAYS OUT:
75 - 100
25 - 37 5-9 1- 9

Committed 6 - 18 Days

Average of one month advantage

What Drives Demand? Domestic

1. Just In Time Inventory Trend
U .S. Inve ntory to Sale s Ratio, 1 985-20 07 Months of Inventory On Ha nd At Existing Sales Lev els
1.65 1.60 1.55 1.50 1.45 1.40 1.35 1.30 1.25 1.20
85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 20 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 07

Source: U.S. Census Bureau

2. Long Term Sector Strength: Domestic E-Commerce Soaring

E-Commerce P ercenta ge Growth U .S . , Quarter Over Quarte r of Prior Y ear, 2 001-20 06
42% 39% 31% 27% 26% 27% 24%

29% 23% 19% 12%

29%

29% 25% 23% 24% 25% 26% 23% 23% 26%

2001

2002

2003

2004

2005

2006

Source: U.S. Census Bureau

3. So. California’s Population Growth
Population Growth, 2 005-20 30 Southern Ca lifornia 's Area s
6,007,000

1,853,000 1,417,000 111,000 216,000 618,000 816,000 976,000

I mpe ria l

Ve ntura

Ora nge

Sa n Diego Sa n Be rna rdino Rive rside

Los Ange le s

So. Ca lif.

Source: SCAG Prelim inary 2008 RTP, SANDAG 2004 RTP

4. Retail Trade Per Capita After Inflation Means More Goods Moving Per Person
Per Capita Taxable Retail Sales (constant dollar) Southern California, 1994-2004 (1984-1986=100)
$6,589
$6,988

$5,608 $5,696

$5,861 $6,037

$6,201

$6,770 $6,604

$6,700

$6,984

24.5%

$1,375

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

1994-2004 Percent

Sources: CA Board of Equalization, CA Department of Finance, U.S. Bureau of Labor Statistics

5. Local Manufacturing Only Driver Declining

Exhibit 4. -Manufacturing Employment Change Southern Ca lifornia , 19 90-20 05
24,000 7,600 (3,000) (19,200) (13,500) (12,700)(13,900) 33,300 27,100

(47,400) (64,200) (73,500) (84,500) 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 (72,500)

(48,900)

2002

2003

2004

2005

Source: CA Employment Development Department

Lost: 361,300 of 1,279,600 in 1990 = -28%

Job Growth If Trade Grows

Exhibit 4.-Logistics Investment, Job Creation, 2005-2030

Activity Logistics Natural Growth Multiplier Impacts: Logistics Construction: Rail Capacity, Grade Separation, Truckway Multiplier Impacts: Construction

Job Creation 559,000 334,000 894,000 277,000 258,000

TOTAL

535,000 1,429,000

1,000,000 Job Strategy

What’s Left To Do …

1. Agreement On What To Build
•Dedicated Truck Lanes •Expanded Rail Capacity •Electrified Dedicated Short Haul Rail •New Intermodal Facilities •Vetted Projects From Agencies •Inland Port

2. Agreement On Environmental Mitigation Program
•$10 Billion •SCAG Study •Cold Ironing, Buy/Retire Trucks, Green Goats, Tier III Engines, Clean Fuels, Retrofits, Carl Moyer …

Diesel

3. Industry Peer Review of Research
•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

$$$

4. Institution(s) To Manage a Multi-County Process
•Caltrans •LA Metro Transit, OCTA, RCTC, SANBAG, VCTC •Multi-County ACTA
•Gubernatorial Appointed Multi-County Board

5. Federal & State Legislation on Funding Tools to Lower Costs
•Design Build To Lower Cost & Increase Construction Speed •Public:Private Infrastructure Legal •Tax Credits For Private Investment In Infrastructure
•Voluntary Container Fees & Road Tolls

6. Infrastructure Bond Program to Jump Start Process

They Did … As Can Governor & Did The Voters! Legislature Agree?

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 Groups Support Agenda
SCAG IETC LAEDC SCLC LA C of C ILWU Construction Unions

9. Health, Community, Environmental Leaders Support Agenda
•Consensus on How to Address Issues

Diesel

10. Elected Official Understand & Move Agenda Forward
•Governor •State Senate •Assembly
•House •Senate

Leaders Have Changed The Economy

Inter-State Freeway System

President Eisenhower

State Water Project

Governor Pat Brown

Logistics 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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