Warehousing and logistics have been a key driver of economic growth in the Inland Empire for years. With warehouse capacity at an all-time high in the region, there are signs the expansion may be peaking. However, the fundamentals that have made the Inland Empire a prime destination for logistics in the area are unlikely to change dramatically, keeping this sector a key part of the regional economy for the foreseeable future.
Factors Behind the Economic Trend
What makes the Inland Empire such an ideal spot for logistics and warehousing? First, the nearby ports of Los Angeles and Long Beach process almost 40% of U.S. imports from Asia, meaning that any goods in need of storage or repackaging require warehousing before they’re sent on to the rest of the country. Located close to the ports, rail lines, and major freeways, Inland Empire cities have been a more economical option for increasing warehouse space than overbuilt and expensive cities elsewhere in the Southern California area.
While the need to process imports helped drive warehouse expansion, e-commerce provided an additional push both before and during the COVID-19 pandemic. E-commerce made up 10% of total retail sales in the first quarter of 2019, a significant fraction of the overall picture. However, that figure soared to 16% only 18 months later, as many shifted their shopping habits to online options in response to fears about the coronavirus. With 24 million people living in Southern California, this increased demand for warehousing and fulfillment fueled more growth.
Warehouse Capacity Growth Over the Years
To get a true sense of the breathtaking expansion in warehouse capacity in the Inland Empire, you have to go back forty years. According to researchers at Pitzer College, the area had only 234 warehouses in 1980. However, from there the number doubled each decade, reaching nearly 4,300 in 2021. That number undersells the growth in warehouse capacity, though, because warehouses got larger on average as the years went on, with ones more recently built being almost three times the size of those built four decades ago. The area went from 22.5 million square feet of warehouse space in 1980 to over a billion square feet now.
The economic benefit from this growth has come in the form of increased employment and increased property tax revenue. In 1990, there were 3,300 warehouse and storage workers registered in the Inland Empire, but twenty years later, the number had grown to 20,200. In 2022, that figure had ballooned to 136,700. Automation trends in the industry may slow the creation of warehouse jobs in the future, though, while creating a different demand for more skilled technical roles.
What to Expect
Some cities in the area have begun to take a warier approach to new warehouse construction in the region, citing the need to diversify the regional economy. In addition, a recent dip in e-commerce to 14% of total retail sales has called into question the need for further capacity. Finally, the movement to begin repatriating manufacturing to the U.S. to avoid supply chain issues from Asian imports may change logistics in Southern California in ways that are currently impossible to predict. Despite these potential headwinds, however, the Inland Empire is still certain to continue as the logistics hub of the Southern California for some time to come, as the underlying factors that brought the industry to the region remain unaltered.
LTL Shipping in Southern California
If you’re shipping goods to or from the Inland Empire, Total Transportation & Distribution has the reliable, competitively priced service you need to keep your business on track. Whether you’re looking for commercial or residential delivery, or need coordination with 3PL or drayage, we have last-mile solutions that will get your goods where they need to be on schedule. We have both online tracking and dedicated customer service staff to give you full visibility into the status of every shipment. To find out more about how Total Transportation & Distribution can provide economical LTL service you can rely on, contact us here.