Trade with China is boon to industry of logistics
LOS ANGELES: The huge wave of trade with China and other countries that has washed over ports in Southern California has been a boon to companies that once saw themselves simply as small warehouse and distribution businesses.
Processing and distributing millions of freight-laden containers through the region and to the rest of the United States has become the largest source of jobs on the West Coast. But the overall growth in the industry is raising new challenges, as California regulators demand reductions in air pollution in the port areas and larger companies raise the pressure on smaller businesses.
Small to medium companies exemplify the logistics industry, a fast-growing business of warehousing, trucking and freight forwarding on the cutting edge of technological and social trends, from Internet commerce to evolving Latino markets. Their businesses have grown along with the ports in Southern California, which now handle 44 percent of the merchandise imported to the United States, according to the Los Angeles County Economic Development Corp.
Formerly a business of thousands of trucking and storage outfits, logistics has become a giant industry in the past decade as international trade has grown. U.S. Commerce Department statistics show that the value of imports and exports reached almost $3 trillion in 2006, up 67 percent since 1999. At $900 billion in annual revenue, logistics now accounts for some four million jobs across the United States. It is the largest single source of employment in Southern California, at more than 650,000 jobs, according to the economist John Husing, of Redlands, California, an authority on regional industry.
Weber Distribution is one of the companies that has grown along with the port. It started in 1925 as a warehouse operator for products made in the East and Midwest and shipped to the then-remote West Coast. Today, Weber, based in Santa Fe Springs, California, has 11 warehouses in three states, 500 employees and more than $120 million in revenue distributing products that come mainly from Asia through the enormous ports in Southern California.
Companies like Weber Distribution have had to invest in new technology to deal with growth in recent years. “We handled fewer than 200 containers a month in 2000, and today we handle 2,500 containers a month,” said William Butler, Webers president and chief executive. In 1999, the company invested heavily in computing and communications systems. In its warehouses, forklift operators now use personal digital assistants to keep track of goods stacked on shelves several stories high. The company now “gives clients information about products all the way from factories in China, on ships across the Pacific and through the ports of Los Angeles to final delivery,” Butler said.
Another company, Source Logistics, has benefited from rising demand in the United States for products from Mexico and Central and South America. Marcelo Sada founded the warehouse company in 1999 with the idea that he could help food companies in Latin America gain access to the rich expanse of supermarkets and specialty stores in the United States. Today, Source Logistics, in addition to its headquarters in Montebello, California, has warehouses and distribution centers in Laredo and Houston, Texas, and Atlanta.
Sada, from Monterrey, California, is a member of one of the most influential Mexican business families. He started in the export-import business in the early 1990s using public warehouses in the United States, but said he found the service and information deficient. With three partners, a $100,000 investment and a warehouse management software system, he started Source to help companies like Grupo Bimbo of Mexico City, a large bakery company.
“I store inventory for them and when they make contact with an American distributor or retailer, I ship their products immediately,” Sada said. His company now handles shipments from Central America and Colombia, Brazil, Peru and Argentina.
“My strategy is simple,” Sada said. “I open operations near ports of entry - San Diego, Los Angeles, Laredo - and in places of large Latino population.” A distribution center in Atlanta was built because of growing concentrations of Latino immigrants in the Southeast, Sada said, and Source Logisticss next planned distribution center will be in Chicago.
Dan Sanker, a onetime Procter Gamble executive, formed CaseStack in 1999. Based in Santa Monica, California, it now relies on a network of half a dozen warehouses and 1,000 independent trucking companies, linked by Internet communications, to transport consumer goods from manufacturers to retailers throughout the United States.
CaseStack is opening an office in Fayetteville, Arkansas, to be near the 1,300 companies that have located in the area to serve the headquarters of Wal-Mart Stores in Bentonville.
