The shortage of warehouse space across the country has been yet another factor clogging up the supply chain. Although construction projects for industrial warehouses have been robust across the country, real estate firm JLL noted in its report earlier this year that the imbalance between supply and demand is stark enough that new projects in the pipeline won’t be enough to meet future needs.
“Prior to the pandemic, a steady flow of tenants taking occupancy and projects being delivered to meet demand kept vacancy rates stable,” report authors said. “However, in 2020 the pandemic shattered old consumer shopping habits, accelerating online shopping. This ultimately sent shock waves down the supply chain system and contributed to an increase in warehouse demand as tenants grappled with ways to prevent a future shortage of inventory. …Given the heightened demand experienced in 2020 and 2021 and the velocity at which it is going forward, we are starting to see the first wave of a supply crunch.”
And a warehouse moratorium within the Inland Empire certainly won’t help.
A “Warehousing Mecca”
In a post last month, “Los Angeles Warehousing Mecca Halts Expansion Just as Needs Soar,” Bloomberg writers Ngai Yeung and Augusta Saraiva described why new warehousing projects in the region have been suspended.
“Communities in the Inland Empire, the US’s logistics mecca east of Los Angeles, are suspending new warehousing projects to examine the impact from decades of pollution — putting the industry under pressure when it’s needed most,” they wrote.
At the time, the city council for Pomona was planning to vote on an extension of a previously established freeze on “industrial developments” so the environmental impact could be studied more thoroughly, a dynamic also occurring within other cities in the region.
The vote resulted in an extension that will last into the first half of next year.
Noting that a large volume of the imported goods that pass through the ports of Los Angeles and Long Beach “pass through the Inland Empire’s more than 1 billion square feet of distribution centers before heading out by truck and rail across country,” Yeung and Augusta Saraiva described the booming development of the warehousing region.
“Once a major farming center, the Inland Empire saw the number of distribution centers skyrocket from about 160 in the 1970s to almost 4,300 in 2021, according to research from Claremont, California-based Pitzer College,” they wrote.
As a result, residents in the area are “rethinking” the health ramifications of all that traffic and pollution. In that light, the moratoriums are providing the opportunity to further examine environmental impacts, as well as other solutions that may help.
A project that’s underway in the desert may be one solution that will have an impact.
The Mojave Inland Port Project
As J.M. Rodgers noted in its August 24th supply chain roundup, there’s a growing shift inland when it comes to the demand for industrial warehousing.
“The demand for additional warehousing and distribution centers is focused largely on inland markets as a means for expanding distribution networks outward from major ports around the country. …The boom in inland distribution networks as a result of the pandemic’s supply chain bottlenecks signifies a changing distribution pattern for importers, shippers, and retailers as they seek more resilient methods for getting goods to market,” J.M. Rodgers said.
In another story within its roundup, J.M. Rodgers highlighted the Mojave Inland Port project, which is a perfect example of such a shift: “The Kern County Board of Supervisors recently endorsed a potential project to construct Southern California’s first rail-served inland port, which would receive import containers from the Los Angeles and Long Beach ports to reduce marine and trucking congestion in the port. The Mojave Inland Port would receive thousands of containers a week and would be located 90 miles from the ports.”
A major efficiency boost within this scenario is that containers bound for the Mojave Inland Port could be loaded directly onto rail cars, instead of requiring trucks to move them around.
According to Freightwaves, development of the new port will be conducted by Houston-based Pioneer Partners, which has owned the 400-acre Mojave site since 1991.
In a press release, Pioneer Partners provided more details and described the benefits that are anticipated.
“The first-of-its-kind facility will significantly reduce supply chain pressure at the Ports of Los Angeles and Long Beach and provide an annual economic benefit of half a billion dollars, locally and statewide,” according to the release. “The Mojave Inland Port will be situated 90 miles from the San Pedro Bay, allowing goods to arrive by rail from nearby ports more efficiently and to be redirected to their final destinations more quickly.”
Referring to the new project as a “critical relief valve,” the release notes that the Mojave Inland Port will absorb a “significant portion” of the increased container traffic that is anticipated in the years ahead, “processing it in a more efficient, environmentally friendly, and less disruptive way.”
Quoted in the statement, Mario Cordero, Executive Director of the Port of Long Beach, underscored why a solution like the Mojave Inland Port is so needed.
“The Port of Long Beach has seen record container traffic in recent years, which shows no sign of slowing down,” Cordero said. “Being surrounded by the dense urban areas of Long Beach and South Los Angeles, there is limited real estate available. The Mojave Inland Port is the type of innovative solution that will alleviate congestion and allow dockworkers to do their jobs more efficiently, getting goods to businesses and consumers faster. It will also ensure the Port of Long Beach can adapt to growing demand and continue to be an engine of economic growth.”
“We want to thank the State, Kern County, the federal government, and all of our supporters and stakeholders for helping to make the dream of an inland port in Mojave a reality,” said Richard Kellogg, Chair of Pioneer Partners, in the statement. “This one-of-a-kind project will help unsnarl the congestion in the twin ports of Los Angeles and Long Beach; it will help the national economy by reducing pressure on the supply chain; it will help the local economy through job creation. Goods will get to businesses and consumers faster and more efficiently. We can’t wait to get started.”
The Mojave Inland Port will break ground in 2023 and will be fully operational in 2024. For more information visit www.mojaveinlandport.com