Logistics Hiring Surge in California’s Inland Empire Can’t Satisfy Demand

Date: Thursday, December 23, 2021
Source: The Wall Street Journal

The number of people working in transportation and warehousing near the nation’s busiest port complex in Southern California has surged almost 24% during the Covid-19 pandemic, but even so, plenty of vacancies remain.

Between February 2020 and October 2021, the number of workers in these industries in a logistics-heavy region known as the Inland Empire rose by 36,500 to 192,100, according to an analysis by the Center for Economic Forecasting and Development at the University of California, Riverside School of Business.

During the same period, job openings in transportation and warehousing in the region more than tripled to 5,600 vacancies, labor-market analytics company Emsi Burning Glass found.

The Inland Empire, a region east of Los Angeles covering more than 27,000 square miles in the Riverside-San Bernardino metropolitan area, serves as a sorting, storage and shipping hub for many of the hundreds of thousands of containers that enter the U.S. each month through the twin ports of Los Angeles and Long Beach.

Logistics businesses in the Inland Empire are battling to bring on and keep workers amid the tightest U.S. labor market in years, offering signing bonuses, starting salaries of $20 an hour or more and perks such as flexible schedules.

“The market has gotten that tight,” said Bill Fraine, chief commercial officer for GXO Logistics Inc., which has tripled its workforce in the region during the past two years to about 3,900 employees, and still has 600 vacancies. “You’re creating much more competition, which means much more pricing power for the employees to get into the job.”

Kevin Patterson, president of distribution at NFI Industries Inc., a third-party logistics operator with more than 200 warehousing facilities across the U.S. and Canada, recalls several years ago worrying about how the company would cope with California’s plan to raise the minimum wage to $15 an hour by 2022. Mr. Patterson said that during the past year, NFI has raised average hourly pay in the Inland Empire by 15% to more than $18 and expanded its full-time workforce in the region by about 28% to 1,800 workers.

Nationwide, demand for labor has been highest close to ports, Mr. Patterson said. “One of our biggest challenges in staffing this year has certainly been in the West Coast, in Southern California,” he said.

Some shipping-industry officials say warehouse labor shortages have exacerbated congestion at ports that have been swamped with containers because the warehouses can’t unload goods and trucks fast enough.

Sal Ferrigno, vice president of SSA Terminals, which operates several terminals at Long Beach, said containers take 10 days, on average, to make the round-trip from his facilities to a warehouse and back to the port, empty—more than twice as long as before the pandemic. Mr. Ferrigno said the extended delivery time ties up scarce trucking equipment such as the trailers needed to haul containers, which in turn causes further delays.

The shortage of warehouse labor is one of many kinks tangling global supply chains, from Covid-related shutdowns of factories and ports in Asia to shortages of truck drivers and container storage space.

The neighboring Los Angeles and Long Beach ports, which handle about 40% of the nation’s containerized seaborne imports, are expected to handle record volumes this year, driven by an increase in consumer spending during the pandemic. Between January and November, the ports handled the equivalent of about 9.4 million import containers, up 21% from pre-pandemic levels.

Hundreds of thousands of the boxes are stacked up at terminals waiting to be claimed or to be returned empty to Asia. This congestion has contributed to a backlog of container ships waiting to unload at the ports, which reached a record of more than 100 vessels earlier this month.

Logistics companies were expanding rapidly before the pandemic, particularly in regions such as Southern California, eastern Pennsylvania and cities that serve as major e-commerce hubs, including Louisville, Ky. The fulfillment operations for online orders require more workers than traditional warehouses to handle the continual movement of goods, adding to the labor crunch in those areas.

The effect has been magnified in the Inland Empire. “It’s been a phenomenal growth machine,” said Taner Osman, research manager at the UC Riverside center that analyzed the Inland Empire’s logistics-jobs data. Drilling down to just the warehousing sector, jobs in the Inland Empire grew 28% between February 2020 and October 2021, compared with national average growth of 13%, according to the center’s analysis and federal data.

The push to hire has led businesses such as Ingram Micro Inc., a third-party logistics company that serves many big-box retailers, to grant pension and other benefits to full-time employees on the first day of work. Bill Ross, executive vice president of global operations, said companies can no longer compete simply on wages. “People have a lot of choices,” he said.


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