Much has changed for California's pandemic economy in logistics as suppliers look to improve supply chain performance in the state's reset. Logistics encompasses the transportation, warehousing, and wholesale trade of goods. The Inland Empire's growth in transportation and warehousing has helped in the economic recovery, although the state's overall recovery appears to be months away. Here's a look at how logistics services are contributing to California's economic recovery.
Return To Southern California Tourism
Tourism is a massive part of the Southern California economy, as shutdowns impact revenue and jobs. Unemployment rose as high as 16 percent in April 2020 across four counties in the region: Orange, San Diego, Riverside, and San Bernardino. In 2021 certain areas such as Anaheim-Irvine and San Diego have regained over half of the job losses. The Inland Empire has steadily recovered nearly all of its jobs, as the region serves as an essential distribution hub for Amazon, UPS, and FedEx. But Los Angeles and Imperial Counties have continued to suffer double-digit unemployment.
Over 60 percent of job losses in California were in industries associated with tourism, such as hospitality, food, arts, and entertainment. Now California's pandemic economy in logistics is being tested as the state reopens for the summer 2021 season. Anaheim-Irvine and San Diego were severely impacted in terms of restaurant and tourism job losses. While Anaheim-Irvine typically has the highest number of arts and entertainment jobs in California, its theme parks such as Disneyland have cut their staff by over half during the pandemic.
Job Growth In SoCal Logistics Industry
While physical travel plunged, online clicks skyrocketed. The pandemic led to a surge in online shopping, which triggered 17,700 Southern California transportation and warehousing jobs in November 2020. The one-month hiring spree generated a record number of new logistics jobs in the region for the holiday season. By comparison, small businesses of all industries filled about 63,500 positions in four Southern California counties during the time frame.
By the end of 2020, the Southern California logistics industry employed about 383,000 workers. The retail sector, by comparison, employed about 737,700 workers while restaurants employed 522,800 workers. Dining has been weak during the pandemic due to limited seating opportunities. Food delivery jobs, however, are on the rise. Neither the retail nor restaurant industries have seen the same remarkable turnaround in employment that logistics firms have witnessed during the early recovery phases.
Demand for workers in the logistics industry has continued to rise now that the pandemic era is ending and businesses are returning to regular routines. Professional logistics managers and technicians are needed as customers now place high expectations on shipping to be fast and trouble-free. Third-party logistics firms investing in automated processes for picking and sorting mail are gaining a competitive edge in productivity.
One of the improvements in the logistics industry has been the way companies handle returns. Part of the key to boosting customer satisfaction has been setting an easy return policy. These days brands can win the trust of consumers by eliminating hassles associated with returns. Maintaining product quality assurance (QA) for quality control helps achieve the goal of creating a seamless customer journey even when products fail to meet expectations.
Inland Empire Logistics
Unemployment in the Inland Empire fell below double digits in October 2020. While nearly every sector added jobs in the second half of the year, logistics has been one of the fastest recovering industries, along with real estate and construction. Warehousing in the Inland Empire is abundant due to transporting goods through L.A. and Long Beach ports and Ontario Airport. The Port of Los Angeles is one of the nation's most important gateways for imports and exports.
Despite the rise in logistics jobs, the region still faces challenges in supply chains affected by shutdowns of factories in China. The bulk of Inland Empire logistics jobs are in warehousing and storage compared with the population of truckers, couriers, and messenger services. While trucking jobs have declined by 2,000 positions in the past year, courier and messenger services increased by 2,200 jobs. Meanwhile, warehousing and storage positions have grown by 3,500.
Economists forecast the Inland Empire as going through a lengthy recovery period over several months. The hardest-hit industries during the pandemic, such as hotels and diners, are expected to take the longest time to return to pre-pandemic financial norms. A trend likely to continue is consumers leaning more toward goods than services in purchasing patterns.
California Expected To Outpace Nation In Economic Recovery
A group of economic forecasters at UCLA's Anderson School of Management predicts California will recover faster than the nation. The group further expects 2021 to mark one of the state's strongest years of economic growth over the past 60 years. They believe this growth will continue through 2023, based on factors such as strong fiscal relief.
Even though tourism is an essential element of California's economy, its slow recovery will not impact its overall speedy recovery. Many Californians shifted to working at home during the pandemic, which helped businesses remain productive. Now many of these same companies must consider maintaining the remote work model to cut costs. Payrolls will take time to recover while unemployment declines completely.
As for the national picture, the United States needs to gain about 9 million more jobs to break even with pre-pandemic levels. The UCLA analysts predict the shortfall will be 5 million by the end of 2023 compared to what employment would have been had the pandemic not happened. A significant amount of the recovery will be driven by President Biden's $1.9 stimulus package.
One of the uncertain areas of logistics for the state involves a new California law called "AB 5." The law places restrictions on companies that hire independent contractors, which impacts the trucking industry, as independent owner-operators make up most drivers. At the moment, a court injunction has allowed the state's 70,000 independent truckers to resume work.
A major challenge for California to face is international supply chain disruption. Semiconductor companies are experiencing a silicon shortage, causing a chip shortage that's affecting the automotive and other industries. Relief for personal and student loan debt for Californians must also be addressed. California renters owe landlords an estimated $400 million to $3.6 billion. Other concerns are resources need to be boosted for education and health care organizations and infrastructure to overcome environmental issues such as wildfires.
Economic recovery is now in sight for California's pandemic economy in logistics. Third-party logistics firms are offering faster and more efficient deliveries by leveraging modern technology and deep industry experience. Warehouses and storage facilities are among the strongest sectors rebounding early. Contact us at Pallet Market Inc to learn more about more effective ways to use pallets in your logistics.