Business and Industry | Logistic Centers

The 8-county region of Southern California is home to about 850,000 businesses, including approximately 6,600 warehouses and 400 businesses involved with goods movement and transportation. The role of warehouses and storage facilities for storing goods, merchandise, etc. worth millions of dollars and keeping them secure is extremely crucial. These facilities provide a range of services, often referred to as logistics services.

Efficiency in goods movement is impacted by access to transportation infrastructure. Southern CA is crisscrossed by major interstates and state routes and is home to two of the nation’s largest ports (LA and Long Beach) and several airports catering to freight transportation. By virtue of access to this infrastructure, several regions within Southern CA have the potential to evolve as major logistics hubs. This research project provides a framework to visualize logistics facilities, identify which areas are evolving as logistics hubs for warehousing or transportation, and analyze relative proximity of warehouses to transportation facilities using accessibility indices.

Freight Transportation and Warehousing and Storage business locations were identified using NAICS industry codes and data from ESRI’s Business Analyst©. Mapping warehouse locations reveals three major concentrations: (a) in LA and Orange Counties; (2) in the Inland Empire; and (c) in coastal San Diego County (map). The proximity of warehouses and goods movement facilities to transportation infrastructure is unmistakable and hence is a crucial determinant of site location. Next, Location Quotients (LQs) were calculated to identify which areas have a higher share of employment, and therefore specialization, in the logistics industries. The map of LQs reveals that the cities of Long Beach and Compton (LA County), Mira Loma (Riverside), and Fontana and Rialto (San Bernardino) are specialized and can be considered logistics hubs.

Finally, indices of accessibility were computed for warehouses based on proximity to truck, rail, and air (freight) transport facilities based on simple Euclidean distance (point to point) and network distance and travel time. These indices included both individual and composite accessibility for one or all modes of transportation, respectively (see concept diagram). The resulting maps show that the accessibility of warehouses in LA County to different modes of transportation is higher than their regional counterparts. While cities in the Inland Empire such as Mira Loma, Fontana and Rialto serve as logistics hubs, they derive their competitive advantage from warehousing and storage, not freight transport infrastructure.

A region’s goods movement is often a reflection of its economy. Goods movement services play a critical role in the generation of jobs and economic activity in their own right. The economic activity of goods movement has “multiplier” effects for the economy of an entire area. The maps developed as part of this research can be used by businesses for operational decision-making such as route planning, optimization and development of transportation strategy as well as strategic decision-making such as site location, relocation, or facility consolidation. It provides an initial framework for further research to investigate commodity classes being shipped, popular modes of transportation, volume and value of goods movement and storage, primary sources and destinations of goods in Southern CA and to study economic and environmental impacts of goods movement and other related business logistics issues.

Contributor: Avijit Sarkar is an Assistant Professor in the School of Business at the University of Redlands.