Transportation legislation: “Give freight a fund” is new cry in Washington

From LM:

WASHINGTON—A potentially powerful coalition of transportation and freight interests is calling for a separate, dedicated freight mobility program to optimize freight movements across all modes and political jurisdictions.

The Coalition for America’s Gateways and Trade Corridors (CAGTC) is calling on Congress to create a dedicated federal Freight Trust Fund (FTF), modeled after the Highway Trust Fund to pay for freight-only projects. The goal is to include such a dedicated fund in the upcoming reauthorization of the highway reauthorization fund, which expires on Sept. 30. Transportation lobbyists are expected to work overtime between now and then on that must-pass legislation.

Whether a dedicated Freight Trust Fund is included in the bill is anyone’s guess. But the idea is gaining support by some members of Congress.

“I am pushing for a national freight policy,” says Rep. Laura Richardson, D-Calif., a member of the House Transportation and Infrastructure Committee chaired by Rep. Jim Oberstar, D-Minn. “I’ve had a meeting with Chairman Oberstar on this issue, and I’m going to have many more.”

Approximately half this nation’s imports move through Rep. Richardson’s district that includes the Port of Long Beach in Southern California. She says modernization of the nation’s freight system is essential to economic recovery and more good-paying jobs. She cited a recent report on surface transportation that recommended this nation spending $384 billion annually for the next 20 years to upgrade the transportation infrastructure.

CAGTC:

Freight transportation is the backbone of the American economy. Without the ability to quickly and cost effectively move goods into, out of and through the United States, America will not be able to maintain her standard of living and high employment levels.The Coalition for America’s Gateways and Trade Corridors was established to bring national attention to the need to significantly expand U.S. freight transportation capabilities and to work toward solutions to this growing national challenge.We invite you to learn more about the Coalition, its mission and members.

The Coalition for America's Gateways and Trade Corridors is managed by Blakey & Agnew, LLC. Learn more at www.blakey-agnew.com.

The Geography of Jobs

Here is a link to a pretty cool graphic.

It shows job losses and gains by MSA from 2004 - present. You can see the effects of hurricane Katrina on job losses for instance.

Towards the end the map looks like you are about to lose on missile command. The job losses keep piling up all over the country.

Cool stuff, wish I had thought of it.

Back from the Abyss: Now What?

Remarks before the 125th Annual Convention of the Texas Bankers Association - Richard Fisher


“Every age has its peculiar folly—some scheme, project or phantasy [sic] into which it plunges, spurred on either by the love of gain, the necessity of excitement, or the mere force of imitation.”

“Men, it has been well said, think in herds; it will be seen that they go mad in herds....”
-Charles Mackay Memoirs of Extraordinary Popular Delusions (1841)

The new set of circumstances included the economic and financial windfalls that came from at least two major structural changes. The first was the end of the Cold War and the commercial reorientation of China, Vietnam, India and
Eastern Europe, which unleashed enormous new capacity for the increased production of goods and services, held down costs and restructured the global economic map. The second was the explosion of computational power and communication ease that came from technological advancement and the Internet, facilitating globalization and leapfrogging frontiers that formerly separated the economic landscape. The world was our oyster. It simultaneously gave us new consumers and suppliers. It provided new sources of funds as well as new places to invest.

The easy money may well have been encouraged by central banks that held interest rates too low for too long. But it was exacerbated by lenders, investors and consumers who—keen on enhancing returns that seemed pedestrian with a flat yield curve anchored by low, risk-free rates—“craved” and “devoured” new risk instruments. As a result, they came up with new “schemes” and “projects” and “phantasies” made more enticing by expanded markets and financial innovation.

The short-sightedness was manifest in the abandonment of prudential practices. For the banker and lender, the time-tested principle of “know your customer” took a back seat to the mad rush to package and sell exposure to others. For the consumer, living within your means became a less compelling discipline in a world where a house was not just a home but a means to financial gain. For the investor, prudence took on another dimension with the presumed ability to mathematize judgment and hedge away the risk of default.

And yet, while the world had indeed changed, the behavioral pathology documented by Mackay and Bagehot in the 19th century—a pathology based on their studies of countless debacles through history—prevailed. A “plethora” of commercial and financial opportunity begat “speculative” excess that inevitably begat a “panic.” The thundering “herd,” spurred on by “the love of gain, the necessity of excitement or mere force of imitation” and “mad” with irrational exuberance for the upside, suddenly realized in 2008 it had “devoured” more risk than it could stomach and panicked. The financial system seized up and the economy descended into recession.

The Recession Is Dead: Long Live The Recession!

Here is a link to a chart of the Aruoba-Diebold-Scotti Business Conditions Index (3/1/1960-5/9/2009).

From the Philidelphia Fed:

The Aruoba-Diebold-Scotti business conditions index is designed to track real business conditions at high frequency. Its underlying economic indicators (weekly initial jobless claims; monthly payroll employment, industrial production, personal income less transfer payments, manufacturing and trade sales; and quarterly real GDP) blend high- and low-frequency information and stock and flow data.

The average value of the ADS index is zero. Progressively bigger positive values indicate progressively better-than-average conditions, whereas progressively more negative values indicate progressively worse-than-average conditions. The ADS index may be used to compare business conditions at different times. A value of -3.0, for example, would indicate business conditions significantly worse than at any time in either the 1990-91 or the 2001 recession, during which the ADS index never dropped below -2.0.

I looks like things are improving. Looking at the historical relationships between recession and this index indicates that when things recover, they will do so very fast. The index moves almost straight up once the recession is over. My guess is that the variables that are used in this index, and the variables used to call a recession are the same, thus you would expect the two to be related.

It looks like things are almost back to where they were last October. You remember last October, right? This was right before the "official" recession was called in December 2008, leading to a drop off as the obvious was proclaimed, this was right before the presidential elections and right after Lehman Brothers filed for bankrupcy.

So we are right back to where we were before "the panic" set in, fundemental economic weakness and not catastrophic world-is-ending weakness.

But, as everyone else will tell you, it looks like we still have a long way to go. Unless we don't,

Warehouse Stike In Fontana

Striking Warehouse Workers In Fontana:

Warehouse Workers Fight Wal-Mart's Anti-Worker Agenda Clergy Members and Warehouse Workers Arrested During Peaceful Protest, Truck Traffic Blocked

FONTANA, Calif., May 14 /PRNewswire-USNewswire/ -- Today, warehouse workers, clergy, community members, and area students staged a nonviolent civil disobedience outside a Wal-Mart warehouse in San Bernardino County.

The protest ended with the arrest of 8 people, including 5 clergy members,
who had literally put their bodies on the line by blocking the truck entrance to the warehouse.
Over 200 people gathered in front of the Wal-Mart warehouse, carrying signs with messages such as "Warehouse Workers Want the Freedom to Form a Union." They were protesting Wal-Mart vicious anti-worker and anti-union policies and highlighting the need for the Employee Free Choice Act. Past attempt by workers at this warehouse to form a union were thwarted by management's harsh tactics of fear and intimidation.

"Greed has become the rule of thumb in our unjust society. Here we have the injustice of degrading salaries and denying the workers' right to be members of a union.

Unions are a necessity due to the injustice and exploitation by the Corporations upon the workers," said Father Pat Guillen, who was arrested at the protest. "Jesus broke bread and shared the cup with His disciples. We demand that the employers also share the cup of production, created by the workers and break the bread of exploitation and injustice, created by the grid of the corporations; for when injustice is present, there cannot be peace."

The warehouse workers of the Inland Empire are fighting back againstthe national retailers who dominate the goods movement industry in what is the largest concentration of warehouse space on the planet and the distribution hub of the new global economy. These are the workers who need the Employee Free Choice Act because the only hope to improve these jobs is to allow them the freedom to choose to form a union free from fear and intimidation.

The Inland Empire has some of the highest rates of foreclosures and unemployment in the country, but the main industry of the area, warehousing for national retailers, is built on bad, low paying jobs.

Most of these jobs are through temp agencies and, in addition to low pay and no benefits, these jobs do not allow workers to have any job security. Jobs in the Inland Empire need to be good jobs with a living wage and affordable health care; this is the best way the region has to pull itself out of the Great Recession.

"I worked in this warehouse and it is a sweatshop. While the workers are slaving away in the heat, management is sitting in their air conditioned offices," said Diana Romero, a 20-year-old single mother who was a temp worker at this Wal-Mart warehouse. "Management was always harassing us. They wouldn't let the workers speak to each other, they followed us into the bathroom to check on us. What Wal-Mart is doing here is not right and we need a change."

The Valley Boulevard warehouse is completely dedicated to products destined for Southern California Wal-Mart stores. The facility serves Wal-Mart stores and supplies a significant percent of non-food goods to Wal-Mart stores in the region. The facility operates 7 days a week, with three shifts running 24 hours a day.

Warehouse Workers United is only in the Inland Empire. This looks to be a wildcat union, not affiliated with the AFL-CIO. Looks like I should set up an interview to see what all the fuss is about.

Cal State Long Beach Transportation Newsletter

The following is a link to the May 2009 issue of the California State University, Long Beach Center for International Trade and Transportation’s Building Bridges.

Included are an update on the March 11th CITT Town Hall Meeting; a Q&A with Domenick Miretti, ILWU Senior Liaison for the Ports of Long Beach and Los Angeles as well as Earth Science Professor at East Los Angeles College; an overview of the new CITT Marine Terminal Operations training program; and an article on the 3-day seminar for transportation planners developed and facilitated by CITT’s Tom O’Brien.

Mailers, Postage Rate Increases and You

The United States Postal Service raised their base postage rates on May 11th of this year. For the average person, this means using your 1 cent stamps, unless you had the foresight to purchase the Forever Stamp, which is good, well, forever.

For companies that do extensive mailing with the USPS, the added cost can quickly add up.

In addition to the increased rates, several other changes were made. The most noticeable is the raised minimum to achieve the bulk mailing status which I will explain shortly.

There are many ways to send a parcel, and there are different rates for these various types.

First-class mail is more expensive than standard mail which is more expensive than periodicals (magazines, which is more expensive than packing services.

Packing services is a classification used by the USPS for commercial and retail needs. Many believe this to be the future of the post office since while domestic mail has been declining (thanks to the invention of the telephone, the Internet and email) business use has been increasing (to the detriment of the conventional retail store.)

The USPS has steadily been losing market share to UPS, FedEx and until recently, DHL, since these companies have been very proactive in providing shipping solutions for businesses.

The biggest change in the postage rate increase has to do with the minimum weight needed to achieve special pricing under the bulk mailing category. The new minimum weight is 200 pounds per shipment. This means that companies will have to change the way they send their mail in order to optimize their mailing.

One way to reduce costs is to consider a postal consolidator. These are 3rd party providers that know the ins and outs of postal delivery and allow small companies to take advantage of bulk shipping prices.

Here are some other tips on how companies can save on mailing:

Size of the envelope: The USPS offers lower costs for processing smaller envelopes and using standard #10 envelopes instead of flat 9x12 envelopes can save a few pennies. Folding and inserting machines may also be able to save your business money by streamlining the mailing process and guaranteeing the consistency of your parcels.

Presort: The USPS also offers significant discounts for mail that is presorted before it enters the post office. The USPS offers these discounts because presorting mail saves the USPS time and money. Presorting can be done in-house through the use of sorting software, or companies can partner with a postal consolidator to presort their mail for them.

The USPS has a decision tree to help customers decide how best to send mail to save them some cash.

Please Don't Plant Bombs on Your Way Out: Not a Good Way To Improve Your Credit Score

So evidently a foreclosed resident planted fake pipe bombs around his foreclosed home.

Because the abandoned pools full of mosquitoes, squatters, copper thieves and meth labs were not enough for the county to worry about.

From MSNBC:

A bank representative checking on a Riverside foreclosed home got a nasty surprise Tuesday afternoon when he spotted what appeared to be pipe bombs laying all over the property.

Arriving cops agreed with the bank rep and called in the bomb squad. Eight homes surrounding the vacant house at 1420 Orange Street were ordered evacuated
and a small manned armored tractor was sent in to clear the yard of what appeared to be pipe bombs.Bomb squad experts said it would take hours to make sure the property surrounding the home is clear.

Police said after the yard is given an "all clear" they would tackle the issue of whether the home is booby trapped. Sgt. Jaybee Brennan of the Riverside Police Department said police think there are more pipe bombs inside the house.

Where Is That?

One thing I realized when I started working here is that Southern California is a very big place with many different markets.

Most people might not know the difference between Chino and Commerce simply because they do not know where these areas are.

So I created a game that highlights the industrial markets here in Southern California. The object is to put the pointer as close to the industrial submarket as possible. See if you can tell the difference between Ontario and Anaheim, between Vernon and Perris. You might be surprised that some of these areas are not where you think they are.

Also for kicks, see if you can find the Ports of Los Angeles / Long Beach. Some regions might be closer to the ports than you think.

For some areas, you may have to drag the map to find them. Unfortunately, most of these areas are in the Inland Empire and the dragging might give you the false impression that they are farther away than they actually are.

So far, most people think that cities in the Inland Empire are further east than where they actually are and most people still have no clue where Vernon is.

If you have ever gotten lost near downtown Los Angeles and ended up in a scary warehouse district you should know exactly where Vernon is.

Import Volume and Industrial Absorption

Today I had a presentation going over some of the first quarter industrial statistics.

Here is a recap:

First Quarter 2009 MARKET STATISTICS

• Total Square Feet in the Market: 1.35 Billion SF – Largest Industrial
  Market In The U.S.A.
• Total Vacancy Rate at 7.2% - Below the national average of 9.5%
• Total YTD Sales & Leasing Activity – 15 million SF (Down 15.8% from Q1
  2008, Down 40.3% from Q1 2007)
• Net absorption was -7.5 million SF, was -0.3 million in Q1 2008, was +4.7
  million in Q1 2007
• Total YTD New Construction of just 3.6 Million SF (Down 26.9% from Q1
  2008, Down 53% from Q1 2007)
• Weighted Avg. Asking Lease Rate: $0.47 PSF per month NNN (Down from
  $0.55 in Q1 2008, Down from $0.59 in Q1 2007).

One thing that everyone liked was the relationship chart I created that compares quarterly change in import vs. the change in occupied SF (industrial absorption)

Basically, for every container imported into the Ports of Los Angeles / Long Beach will bring with it industrial demand equal to 53 SF.

I think I will break this apart further to see the relationship between the large distribution / warehouse space, since this property type is more dependant on imports than the smaller spaces.

May Article

Inland Empire logistics industry shows small signs of hope

For the past two years almost every day has brought more bad economic news. This trend is especially true for the Inland Empire, which has a local economy highly dependent on real estate development and foreign imports to stimulate job growth. Both of these vulnerable sectors have been hit especially hard during the current recession; but for one of these sectors, some rays of hope are making their way through the clouds.

Preliminary employment information for the Inland Empire shows that job losses are beginning to slow. The construction industry, which has lost more than 25,000 jobs in the previous 12months, has only decreased by 800 jobs in the past month. The trade, transportation and utilities sector, which in the past year has shed more than 21,800 jobs, has only declined by 1,000 positions in the past month. The rate of job losses in these vulnerable sectors has begun to slow as businesses have started to adapt to the new economic climate.

Construction activity is likely to remain depressed for some time as the Inland Empire works through oversupply issues. However, the hope of a modest recovery for the trade, transportation and utilities sector remains very real. This sector accounts for 1 in every 4 jobs in the Inland Empire and is heavily tied to consumer spending and foreign imports. "Warehouse employment in the Inland Empire depends to a large extent on foreign imports, as Southern California is the entry point for most Chinese imports" said Steven Bellitti, senior vice president of Colliers International.

"Chinese production has been steadily decreasing for the past eight months as global demand has shrunk. This is especially true for the United States, and warehouse demand locally has been low. However, Chinese manufacturing is showing some signs of leveling out since the beginning of this year. Since January, the China Purchasing Managers Index has steadily increased, and we might see an uptick in imports in the near future," said Bellitti.

As foreign production prospects begin to improve, so too does port volume at the nation's largest and second largest ports, those of Los Angeles and Long Beach respectively.

Imports into these ports have started to level out after more than a year of continuous decline. Container volume is down 16.8percent over the previous year in March, whereas they were down 36percent over the previous year in February.

Conditions for warehouse employment in the Inland Empire are still far below what they were a year ago, but some signs of hope are emerging. Production overseas will have a trickle-down effect on the regional economy, especially for the logistics industry, which is heavily concentrated in the Inland Empire.

While foreign production and local businesses are still contracting, they are beginning to show signs of recovery.

Thomas R. Galvin is a regional research analyst for Colliers International in Ontario.

April 2009 Manufacturing ISM Index

From the Institute of Supply Management:

PMI

Manufacturing contracted in April as the PMI registered 40.1 percent, which is 3.8 percentage points higher than the 36.3 percent reported in March. This is the 15th consecutive month of contraction in the manufacturing sector. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI in excess of 41.2 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates contraction in both the overall economy and the manufacturing sector. Ore stated, "The past relationship between the PMI and the overall economy indicates that the average PMI for January through April (37 percent) corresponds to a 1.3 percent decrease in real gross domestic product (GDP). In addition, if the PMI for April (40.1 percent) is annualized, it corresponds to a 0.3 percent decrease in real GDP annually."


Supplier Deliveries

The delivery performance of suppliers to manufacturing organizations was faster for the seventh consecutive month in April as the Supplier Deliveries Index registered 44.9 percent, which is 1.3 percentage points higher than the 43.6 percent registered in March. A reading above 50 percent indicates slower deliveries.

The two industries reporting slower supplier deliveries in April are: Furniture & Related Products; and Transportation Equipment. The industries reporting faster deliveries in April are: Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Primary Metals; Food, Beverage & Tobacco Products; Fabricated Metal Products; Machinery; and Chemical Products.

Customers' Inventories

The ISM Customers' Inventories Index registered 49.5 percent in April, 4.5 percentage points lower than the 54 percent reported in March. The index indicates that respondents believe their customers' inventories are too low at this time. This is the first time the Customers' Inventories Index has been below 50 percent since July 2008.

Five industries reported higher customers' inventories during April: Textile Mills; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Chemical Products; and Fabricated Metal Products. The industries that reported lower customers' inventories during April are: Primary Metals; Wood Products; Miscellaneous Manufacturing; Machinery; Computer & Electronic Products; and Furniture & Related Products.

Looks like there is a trend. The bolded text are industries that look like they are growing or show some signs of life.