Inland Empire braces for huge job losses!

The slowdown in imports to the US West Coast is taking a toll on the distribution complex in southern California. Correspondent Ian Putzger tracks the situation at the numerous warehouses in the region

The jittery US economy and the weak dollar are taking their toll on imports flowing through the gateways on the West Coast and the giant warehousing and distribution complex near the ports of Los Angeles and Long Beach. Traffic volumes continue to slide, prompting predictions of massive job losses in the Inland Empire, southern California's warehousing Mecca.

The monthly Port Tracker, which is published by Global Insight and the National Retail Federation, estimates that the container volume at the 10 largest US ports fell 3.2 percent in April, and its authors predict more grief ahead.

They project a 4.8 percent decline in May, followed by a seven percent drop in June and a two percent decrease in July. According to the Port Tracker, growth will not return until September, when container volumes should go up three percent.

"Import container traffic is forecast to continue to be quite weak through September due to the underlying weakness in consumer demand in the US economy," said Jonathan Gold, vice-president for supply chain and Customs policy at the National Retail Federation.

The Port Tracker figures for March, the latest period for which numbers are confirmed, show a total of 1.16 million TEUs handled at the top 10 US ports, an 8.5 percent drop from the same period in 2007 and 4.8 percent below the February count. The result marked the lowest monthly volume recorded since February 2006.

In February, box traffic had slid 5.4 percent. With the drop in traffic continuing through March and April, the Port Tracker now shows nine consecutive months of decline in throughput.

With traffic down, a work stoppage staged by labour unions on May 1 failed to disrupt cargo flows through the West Coast ports, let alone create significant backlogs.

The drop in volume at the ports has cascaded through the US transportation system. According to the Association of American Railroads, intermodal rail volumes were down 3.5 percent in the first 17 weeks of the year.

At the Inland Empire, which receives a large chunk of the imports coming through the Los Angeles and Long Beach ports, sales and leasing activity dropped nearly 40 percent in the first quarter of 2008. The slump came after five consecutive quarters of strong activity in the warehousing Mecca.

According to the Husing Report, a recently published study by a local economist, about 17,900 jobs are going to disappear in the Inland Empire this year. If true, this would be the worst slump the region has suffered since 1964.

Viewed widely as a bellwether for the state of the US economy, the Inland Empire has seen a strong surge in warehouse space and related jobs, with over half a million positions created over the past 18 years. Last year, however, the momentum clearly fizzled out, with a mere 592 new jobs created, down from 44,700 new jobs in 2006.

Air cargo gateways on the US West Coast are not faring any better at the moment. Los Angeles, far and away the leading gateway, suffered a 10.9 percent drop in air freight throughput in March, which left the total volume for the first quarter nine percent below the tonnage clocked up in the first three months of 2007.

Air cargo traffic at Seattle Tacoma declined seven percent in March and 5.8 percent in the first quarter. The main culprit for the drop in traffic was the softer import market. Seattle's inbound tonnage form overseas points of origin fell 14.7 percent in March and 16.9 percent in the first three months.