As the sixth largest economy in the world1 as well as the largest gateway for international trade and domestic commerce in the United States2, California continues to provide an ideal location for logistics solutions such as ocean transportation and distribution. Southern California, in particular, has become a common area for companies to utilize logistical benefits such as popular seaports, airports, and a bustling population with proximity to major markets.
Providing Proximity to Ports
From ocean to air, Southern California has many top performing ports for volume of goods through each area. The Los Angeles International Airport is a top five cargo airport in the United States with scheduled flights covering international destinations3. However, some may argue that the ocean ports are the greatest benefit of the area. With the most direct access to the Pacific Rim, the ports of Long Beach and Los Angeles help shippers to effectively transport goods from production to consumption4. This past month alone, there was a 14.6 percent year over year growth of container imports through these ports5. The Port of Long Beach was recently named the Best North American Seaport at the Asian Freight, Logistics and Supply Chain Awards6. With a focus on the evolution to meet shippers’ needs, both of these popular Southern California seaports are working to improve their infrastructure with planned projects that include terminal and roadway expansions to better combat congestion in the area.
Investing In Infrastructure Improvements
The Southern California seaports are supported with one of the most extensive multi-model transportation infrastructures, one that includes a major network of distribution centers within the area7. There are multiple infrastructure projects underway within the network as highways and roads are being improved to better accommodate the large volume of goods. In addition, agencies at the local, state, and federal levels are working together to continually enhance infrastructure and improve the supply chain including its environmental impact. A combination of dense population and equipment waiting in queue has contributed to severe pollution throughout the area. To advance sustainability efforts, reduce wear and tear on roads, and make processes more efficient, California state leaders have released the California Sustainability Freight Action Plan which will focus on transforming the freight transportation system into an “environmentally cleaner, more efficient, and more economically competitive” market8. At this time, agencies throughout the state are working together to outline strategies and actions to begin making the plan a reality. Today, shippers are partnering with third party logistics providers to help navigate through the ports and better manage the movement of their goods by utilizing their expertise and capacity.
Geography Geared for Growth
Southern California has been an increasingly popular geography for companies to expand. For instance, manufacturing continues to thrive in the area with Los Angeles County becoming the biggest manufacturing hub in the country with industries like automotive growing 22 percent since 2011. Companies are not only establishing a presence through manufacturing facilities, the area is also growing with distribution space. Overall in the United States, availability of warehouse and distribution space hit a 16-year low this past quarter and Southern California is currently one of the areas with the lowest vacancy rates9 with a record low of 3.8 percent10. The combination of larger facilities needed for e-commerce and the proximity to ports and major markets makes it a desirable area to establish fulfillment centers and cross-dock facilities. To ensure space, shippers are strategizing warehousing needs further in advance and communicating these needs to distribution providers. In some instances, shippers are opting to develop brand new facilities to better fit their distribution needs.
As companies continue to utilize Southern California for their logistics solutions, infrastructure will continue to evolve to better address capacity and congestion. To navigate future changes within the area, shippers can partner and strategize with a 3PL to make their supply chains more efficient while improving the customer experience.