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.