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.