Pandemic Spurred Change in Industry, Transportation Professionals Say

The 1,065,000-square-foot Prologis Park warehouse in Easton, Pa. E-commerce "pushes the goods closer to where people live," says Melinda McLaughlin, the company's senior vice president of global research. (Prologis)

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LONG BEACH, Calif. — Because of the now more than two-year-long COVID-19 pandemic, the freight industry is undergoing an accelerated rate of change.

Trends such as the explosive growth of e-commerce that were expected to take five to seven years to complete now are becoming permanent in an accelerated fashion.

That was one of the main conclusions from the Metrans International Urban Freight Conference held May 25-27. Metrans is a joint partnership of the University of Southern California and California State University-Long Beach.



Giuliano

A few miles away, the Port of Long Beach complex and the nearby Port of Los Angeles are on pace to move nearly 21 million 20-foot-equivalent units, which would be a record.

“We have a giant freight problem, which has not only to do with e-commerce and delivering to people’s houses but also the international trade aspect and how to handle the enormous volume of freight that is moving around the country and the globe,” Genevieve Giuliano, Metrans director and a USC professor, told TT. “But sometimes in a crisis you do things and can accelerate things, in particular the political decision-making process, and sometimes it’s these crises move us a little further and in a different direction than we might do otherwise.”

Metrans is a transportation research organization that partners with several universities to find solutions to congestion and improving national infrastructure.

Conference attendees said it’s not just a matter of rebuilding ports, highways, roads and railroads, but creative solutions are needed as experts forecast the volume of freight at Long Beach and Los Angeles alone could surge to 30 million containers by 2030.

Growth is surging at other ports, including Savannah, Ga., and Houston.

Giuliano said as an educator she would give the ports an “A” for the work men and women have done at those facilities during the pandemic, and the periodic shortages the nation has experienced during the pandemic are not necessarily their fault.

“They do move a huge amount of freight very efficiently,” she said. “We have a ground system, and often things get backed up at the ports because something else gets backed up in the system. And as you have more accumulation of stuff, you can’t move around the ports as you were able to. You lose productivity because of the congestion.”

There’s not only congestion at ports, on the railroads and on the highways, but at warehouses — especially in Southern California’s Inland Empire in San Bernardino-Riverside-Ontario area, which is fast becoming one of the country’s key transportation and freight hubs.

McLaughlin

According to Melinda McLaughlin, senior vice president of global research for Prologis, the vacancy rate for warehouse space in that area is less than 2%, and costs for that prime real estate have skyrocketed by more than 50% in just the past 18 months.

“E-commerce does a couple things. We need more space. You don’t have stores to store your goods at; you need this parcel shipping operation, which is very space-intensive,” she said. “It pushes the goods closer to where people live. You want those same-day, one-day deliveries, and you need to be closer to achieve that.”

McLaughlin said another reason why more warehouse space is needed also has to do with e-commerce. If the average big-box, brick-and-mortar retail store has 50,000 items in stock in the building, that same company’s website may have three to four times as many choices for consumers, and those products need to be available at the click of a mouse and ready for shipping in a matter of hours.

“In order to have that variety of choice, you have to have a place to put it, and in an e-commerce operation it’s 100% in the warehouse,” she said. “We’re going to have to build more logistics facilities and make those more dense, and I think it will be a combination of the two.”

O'Brien

According to one of the conference’s organizers, Tom O’Brien, executive director of the Center for International Trade and Transportation, the pandemic has shown transportation and logistics officials what needs to be done in the next several years to keep up with the expected surge in freight.

But he said much of what happened in the supply chain, with its successes and failures, has given the industry a road map.

“I think it’s an untold story. It’s an amazing how much worked during the pandemic,” O’Brien said. “The fact that we got our goods, even though they might have been delayed, is pretty amazing and shows the resiliency of the supply chain and the stakeholders that are involved in it.

“We have a lot of things to correct and address, but the fact that we were able to move the goods is a good foundation on which to start.”

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