1. Logistics and Goods Movement Jobs in Los Angeles County:An Industry Snapshot and Overview of Employer NeedsPrepared on behalf of Community Career Development, Inc., and the WilshireMetro Worksource Center By Steven Simon and Deborah Helt December 2008

2. Table of Contents Executive Summary1 Introduction .....4Scope of Report . ..............5Industry Snapshot: Federal, State, and Other Datasets...6Logistics Employment and the Ports6NAICS AND SOC Data ..7Industry Snapshot: Field Interviews.21Methodology.21Company Types and Occupations Defined . .24Is Logistics A Los Angeles Growth Industry?.............................29Entry Level Employment and CCD Standards..35 Wages .35 Career Opportunities .38Industry Hiring Practices .....40 Common Hiring Sources .. 40 Background Issues and Hiring .43 Temporary Staffing Agencies and Hiring.45. Do Training Programs Provide an Edge?.........................47 Top 10 Suggestions for the LGMTA Curriculum.49Program Recommendations..51 Curriculum....51Two-Track Approach...51Working With Hard to Serve Populations.53Type of Companies to Target.55Staffing Services56 Achieving Industry Buy-In.57Developing the Employer Network58Building CCDs Public Image.59Expanding the CCD Intern Program.60Conclusion.....61 3. Executive Summary Introduction and Methodology The purpose of this report is to improve the quality of placements and the effectiveness of programming of the Logistics and Goods Movement Training Academy (LGMTA) through a better understanding of the local industry presence and the needs of employers.Our goals for this research are twofold: 1. To gain an accurate quantitative and qualitative snapshot of logistics and goods movement facilities in Los Angeles relevant to LGMTA participants.2. To evaluate the LGMTAs current curriculum and program approach using insights gleaned from interviews with employers.This report was generated between August and December of 2008, during the sixth and seventh sessions of the Logistics and Goods Movement Training Academy (LGMTA). To address our core research questions, we gathered data from state and federal datasets and from a series of 43 interviews with local industry representatives.Key Findings Company Types. It is difficult to make across-the-board generalizations about firms and functions in the goods movement industry. Each type of company provides a wide variety of services. For the purposes of the LGMTA, we divided goods movement firms into three broad types: Third party logistics companies (3PLs) Public Storage Warehouses Retail Distribution CentersOccupations. Based upon our interviews with employers, we have classified occupations into three major types: Warehouse/Material Mover Office Jobs Other (includes driving and courier services)Is Logistics still a Growth Industry in Los Angeles? Despite rapid growth in Inland Empire logistics facilities, employers said that they believe Los Angeles will remain the center of the Southern California goods movement industry. Los Angeles facilities are closer to the ports. Given the rise in fuel costs,many employers prefer the fixed-cost of the land in Los Angeles to thevariable cost of fuel. Los Angeles County locations are more amenable to serving varied and/orsmaller customers.1 4. Entry Level Employment and CCD Standards. Entry level opportunities are limited and tend to be low-paying. While the majority of entry-level jobs offer disappointing starting wages, almost all employers said there are substantial opportunities for career advancement.Entry-level wages average about $9.00 per hour.Targeted placements in specific industry sub-sectors will improve the chances of a higher starting wage. CCD will likely attain more placements at $10 to $15 an hour with strategic employer targeting.Industry Hiring Practices. Employers are using several different methods to find employees, but they still overwhelmingly prefer referrals from current employees and other trusted sources. Temp agencies are playing a growing role in hiring.Common ways of searching for employees include: word of mouth, temporary agencies, internet job search sites, print classified advertisements, the company website, head hunters, career fairs, in- house staffing entities, poaching, and previous employees. Most employers are shifting to on-line applications, especially those that pay well.LGMTA students should approach temporary work with caution and an open mind. Many employers want at least three months of experience. However, students should, as a rule, not spend more than six months in a temporary position.When approaching applicants with criminal background issues employers tend to defer to the standards of customers or regulatory agencies in deciding whether or not to hire a person with a criminal record. About half of employers said they consider applicants with records on a case by case basis.Offenses involving theft are especially hard to overcome for applicants seeking warehouse work.Program Recommendations. The current LGMTA curriculum is not optimally meeting the needs of jobseekers or employers. The program attracts hard-to-serve and more highly-skilled jobseekers but cannot effectively meet the needs of both. We recommend that the LGMTA be split into two tracks, designed to run consecutively: Two-Week Logistics Job Search Academy will address key obstacles toobtaining warehouse floor employment. The curriculum will addressjobsearch skills including a targeted computer skills class, assistance withthe preparation of application materials, and key certifications such asOSHA and basic forklift. The Two-Month Freight Forwarder Training Academy will directparticipants toward a career in freight forwarding or import/export-relatedcustomer service. This program will be geared toward office work andstudents who may ultimately wish to pursue a professional logisticsdegree.2 5. There are several elements that will be critical to the success of the new curriculum. CCD must improve its industry buy in by achieving and celebrating flagship placements and improving outreach with participating companies to develop employer champions. CCD employers should do targeted outreach to companies that provide quality jobs. We recommend older cold storage firms, large multinational logistics Firms, unionized firms and firms in heavily unionized sub-sectors.CCD must also realistically address the impact of staffing agencies on the industry. We suggest three potential courses of action: Partner with existing temp agencies to place LGMTA graduates. Advertise as an agency that can provide staffing services, such as trainingand pre-screening, but without providing the broader liabilities of a tempagency. Become a full-fledged staffing company.CCD must also bolster its public image by participating broadly in industry events, publicly recognizing supportive employers with the help of high-profile partners and improving its website.3 6. Introduction We researched and wrote this report from August through December 2008, during the sixth and seventh sessions of Community Career Developments Logistics/Goods Movement Training Academy (LGMTA). The purpose of our report is to recommend ways for Community Career Development (CCD) to improve both the training and the job placement assistance that students in the LGMTA receive.This report relies primarily on two types of information: (1) statistics from state and Federal datasets, and (2) information taken from our own interviews with goods movement employers, industry organizations, and direct interaction with LGMTA students.For the duration of this project, CCD intended for us to employ a relationship-building research process, resulting in a network of industry employers willing to become involved with the LGMTA and eager to consider hiring graduates of the program. This remained our primary goal throughout our research, despite the challenges posed by a consumer economy that quickly went from sluggish to absolute freefall during the few months leading up to this writing. We have established several relationships with local companies, a few of which have already benefited the LGMTA during the sixth and seventh sessions.The end goal of the LGMTA is not simply job training and job placement. CCD has invested its resources in goods movement training because the conventional wisdom and first-hand experience point to the fact that logistics jobs offer a career ladder to under-skilled individuals with low educational attainment. We found this assumption to be mostly true (though not universally). CCD seeks to use the LGMTA as a springboard into living wage jobs with opportunities of advancement, and this end goal was also the focus of our research. 4 7. Scope of Report For the most part, we have kept the geographical scope of this project to Los Angeles County. We visited a few goods movement firms just over the border between Los Angeles County and Orange County, and none in the major logistics center of Riverside and San Bernardino Counties. All LGMTA participants live in Los Angeles County, so we limited our study to the 30 mile radius surrounding CCDs Koreatown, Los Angeles location.We have made an attempt to solicit information from firms across the spectrum of logistics employment: couriers, 3PLs, global shippers, public warehouses (cold and dry storage) retail distribution centers, freight forwarders, and even packing and crating operations all contributed to our findings. Further, in an attempt to determine the profile of companies likely to benefit LGMTA participants, we have attempted to survey small, medium, and large companies.This report relies on a minimum of technical language (as do those working in the industry, generally). We define any terms that beg clarification in the text. We use the terms logistics and goods movement interchangeably, referring always to the widest net used by CCD any occupations involved in the transportation of goods.As stated, living wages and career opportunities are the focal point of this study. The concept of living wage has primarily colloquial meaning and career opportunities are hard to determine until a person is placed in a given job. However, CCD has one official guideline that we have used as a baseline in determining whether wages are sufficient: for contractual reasons, jobs must start at $11.00 to $14.00 per hour.In general, we do not cite sources by name when we quote them. Several of our sources seemed uncomfortable with the idea that they might be quoted, and one in particular required anonymity as a condition of our interview. (The 3PL in question runs a chemical distribution facility, and the source cited federal law as the reason for this condition.) It is reasonable to assume that our other sources did not expect us to circulate details about their hiring woes, major accounts, and the details of their temporary staffing arrangements. 5 8. Industry Snapshot: Federal, State, and Other DatasetsLOGISTICS EMPLOYMENT AND THE PORTS The Los Angeles and Long Beach ports together are the biggest generator of employment in Southern California. Most LGMTA graduates will be seeking employment tied to port activities. Figure 1 Goods movement and logistics operations in Los Angeles have flourished because of their proximity to the Los Angeles and Long Beach ports. Overall, the twin ports generate an estimated 500,000 jobs in the Southern California region, making them the largest generator of employment in California. Together the Los Angeles and Long Beach ports comprise the busiest port complex in the U.S. and the fifth busiest in the world.At present, approximately 43% of all the goods that enter the United States and over 70% of containers handled at major West Coast ports are handled at the Los Angeles and Long Beach port complex. (See Figure 1) Total container trade at the twin ports grew by 296% between 1995 and 2007. Growth rates in container trade volumes at the ports have leveled off in the last two years, but even at vastly reduced rates of growth, both ports are still anticipating a severe crisis of capacity within the next ten years. Port authorities are developing plans to address the impending needs of infrastructure, labor and the environment. Figure 2 A recent SCAG study predicts that an additional 1.3 million jobs will accompany infrastructure improvements to the ports in the near future. A significant portion of these jobs will be related to the inbound transportation and distribution of goods entering the ports. Most LGTMA graduates will be seeking 6 9. positions tied to port activities and most will likely fall within the Transportation and Warehousing Sector. NAICS AND SOC DATA This report uses government data sets to offer a broad quantitative snapshot of the logistics industry in Los Angeles. The majority of data is from the North American Industry Classification System (NAICS) Sector 48-49: Transportation and Warehousing, and the Standard Occupational Classification System (SOC), Occupational code 53: Transportation and Material Moving Occupations.Data indicate that the industry is growing both nationally and locally.Government data for the Transportation Sector is described by NAICS data and SOC data. The North American Industry Classification System (NAICS) classifies businesses into different industries, while the Standard Occupational Classification System (SOC) classifies occupations by job duties.NAICS classifies major industries by codes based on how a business produces a product, (or by the technology and processes used,) not by what the actual product is. Major sectors are defined by two-digit codes, while sub-sectors are classified with three to six digits, growing larger with degree of specificity. For example NAICS sector 48-49 covers Transportation and Warehousing categories. Within this category Air Transportation, NAICS 481 is then further broken down into smaller sub-sectors called Scheduled Air Transportation, NAICS 4811 and Non-scheduled Air Transportation, NAICS 4812.For the purposes of this research, we analyzed NAICS sector 48-49 Transportation and Warehousing and seven key sub-sectors, focusing mainly on employment and wage data. For additional occupation and wage data we analyzed a selection of SOC codes related to NAICS 48-49. The U.S. Census Bureau defines NAICS 48-49 as the following 1 : The Transportation and Warehousing sector includes industries providing transportation of passengers and cargo, warehousing and storage for goods, scenic and sightseeing transportation, and support activities related to modes of transportation. Establishments in these industries use transportation equipment or transportation related facilities as a productive asset. The type of equipment depends on the mode of transportation. The modes of transportation are air, rail, water, road, and pipeline. The Transportation and Warehousing sector distinguishes four basic types of activities: Subsectors for each mode of transportation Subsectors for warehousing and storage1 http://www.census.gov/econ/census02/data/industry/E482.HTM 7 10. Subsectors for establishments providing support activities for transportation. Subsectors for establishments that provide passenger transportation for scenic and sightseeing purposes, postal services, and courier services. The seven sub-sectors most relevant to our study are described in more detail below: Table 1: Definitions of seven selected sub-sectors from Transportation and Warehousing NAICS 48-49 NAICSSub-SectorDefinition Industries in the Air Transportation subsector provide air transportation of passengers481Air Transportationand/or cargo using aircraft, such as airplanes and helicopters. The subsectordistinguishes scheduled from nonscheduled air transportation. Industries in the Rail Transportation subsector provide rail transportation ofpassengers and/or cargo using railroad rolling stock. The railroads in this subsectorprimarily either operate on networks, with physical facilities, labor force, and Residual-Rail482 equipment spread over an extensive geographic area, or operate over a short Transportationdistance on a local rail line. Scenic and sightseeing rail transportation and streetrailroads, commuter rail, and rapid transit are not included in this subsector.Industries in the Truck Transportation subsector provide over-the-road transportation of cargo using motor vehicles, such as trucks and tractor trailers. The subsector is Truck subdivided into general freight trucking and specialized freight trucking. This484distinction reflects differences in equipment used, type of load carried, scheduling, Transportation terminal, and other networking services. Each of these industry groups is further subdivided based on distance traveled.Industries in the Transit and Ground Passenger Transportation subsector include avariety of passenger transportation activities, such as urban transit systems;Transit & Groundchartered bus, school bus, and interurban bus transportation; and taxis. These485Passengeractivities are distinguished based primarily on such production process factors as Transportation vehicle types, routes, and schedules.In this subsector, the principal splits identifyscheduled transportation as separate from nonscheduled transportation. Industries in the Support Activities for Transportation subsector provide services that support transportation. These services may be provided to transportation carrierSupport Activities establishments or to the general public. This subsector includes a wide array of488for Transportation establishments, including air traffic control services, marine cargo handling, and motor vehicle towing. The Support Activities for Transportation subsector includes services to transportation but is separated by type of mode serviced. Industries in the Couriers and Messengers subsector provide intercity and/or localdelivery of parcels. These articles can be described as those that may be handledby one person without using special equipment. The restriction to small parcels Couriers &492 partly distinguishes these establishments from those in the transportation Messengersindustries. Messengers, which usually deliver within a metropolitan or singleurban area, may use bicycle, foot, small truck, or van.Warehousing &493Industries in the Warehousing and Storage subsector are primarily engaged inStorage 8 11. operating warehousing and storage facilities for general merchandise, refrigeratedgoods, and other warehouse products. These establishments provide facilities to storegoods. They do not sell the goods they handle. They may provide a range of services,often referred to as logistics services, related to the distribution of goods.. Bondedwarehousing and storage services and warehouses located in free trade zones areincluded in the industries of this subsector. Additional sub-sectors not included in this study are: Scenic and Sightseeing Transportation (NAICS 487), Pipeline Transportation (NAICS 486), and Postal Service (NAICS 491). These sectors were not included because they were the least relevant to the content of the LGMTA curriculum.Standard Occupational Classification (SOC) codes. The Standard Occupational Classification (SOC) groups workers into categories by occupations, outlining duties, skills, education and experience involved in a particular job. There are 23 major, 96 minor, 449 broad and 820 detailed categories.The SOCs relevant to our purpose mostly lie in major category 53: Transportation and Material-Moving Occupations. This category is sub-divided into seven major subcategories. Table 2: List of Occupations under Transportation and Material Moving Occupations SOC MajorMinor Transportation and Material53-0000 Moving Occupations 53-1000Supervisors, Transportation and Material Moving Workers53-2000 Air Transportation Workers53-3000 Motor Vehicle Operators53-4000Rail Transportation Workers53-5000 Water Transportation Workers 53-6000Other Transportation Workers 53-7000Material Moving WorkersEmployment Development Department Data. Selected EDD data used in this research is part of the Quarterly Census of Employment and Wages (QCEW) program, a set of data on employment and wages by 6-digit NAICS code collected at the National, State, and County levels. EDD derives data from quarterly tax reports required by California employers subject to State Unemployment Insurance (UI) laws. EDD edits and processes the data which is then send to the Bureau of Labor Statistics (BLS) for dissemination. 9 12. Bureau of Labor Statistics DataThe Current Employment Statistics (CES) are the result of a monthly survey of about150,000 businesses and government agencies, representing approximately 390,000individual worksites regarding employment, hours and earnings from nonfarm payrolls.Results are reported to the Bureau of Labor Statistics. Transportation and Warehousing (NAICS 48-49): U.S. Table 3: U.S. Establishments, Revenue, Payroll and Employees for NAICS 48-49Annual Payroll Revenue (in PaidYearEstablishments(in thousands thousands)Employeesof dollars)2002199,618 382,152,040115,988,733 3,650,8591997178,025 318,245,04482,346,1822,920,77712.120.140.9 25 Percent ChangeSource: 2002 U.S. Economic Census Between 1997 and 2002 (the most recent data available from the U.S. Census), thenumber of establishments in the U.S. Transportation and Warehousing Sector grew by12.1%, while the number of employees grew by 25%. The sector grew by 20.1% inrevenue during the same period, while revenue per employee dropped by 4%, from$109,000 to $105,000. 2 According to CES data, national employment levels in thesector have grown at an average of 1.6%, since 1990. The highest growth ratesoccurred between 1995 and 2000, with a high of 3.5% in 1998. Figure 32U.S. Census Bureau**Data Source: Econ Census/All Sectors/2002/Economy-Wide Key Statistics10 13. Of the six sub-sectors selected from NAICS 48-49 for this report (Rail Transportation figures are not reported in the 2002 Economic Census) Truck Transportation comprised 41% (1,435,210,000) of the total U.S. employment in our reduced sample group, followed by Couriers and Messengers (561,514,000) and Warehousing and Storage (565,533,000) both at 16%, then Support Activities for Transportation at 13% (465,616,000), followed by Transit and Ground Passenger Transportation at 11% (398,383,000).Wages. The average hourly earning of production employees nationally for NAICS 48- 49 was $18.07 in 2007.Figure 4 According to CES statistics, California generates the most revenue and has the most employees in the Transportation and Warehousing Sector than any other U.S. State. Table 4: California Establishments, Revenue, Payroll and Employees for NAICS 48-49 Revenue % Annual payrollPaidDescription EstablishmentsRevenue ($1,000) of U.S. (in thousands)employees California 19,01245,507,276 11.91 13,129,272 397,266Source: 2002 U.S. Economic CensusLos Angeles County Employment. In Los Angeles County, as of 2007, the largest sub-sector in the NAICS category 48-49 in terms of employment was Support Activities for Transportation (NAICS 488) with 31% (47,900 jobs), followed by Truck Transportation (NAICS 484) with 18% (28,100 jobs), Couriers and Messengers (NAICS 492) with 15% (22,100 jobs), Air Transportation (NAICS 481) with 13% (19,500 jobs), and Warehousing and Storage (NAICS 493) with 11% (17,200 jobs) in that order. 11 14. Figure 5Source: Employment Development Department, Labor Market Information DivisionThe Transportation and Warehousing sector as a whole grew by an average of .42% between 1990 and 2006, and grew fastest between 1995 and 2000 at a rate of 3.12%. During this period, the surrounding Counties of Riverside-San Bernardino-Ontario MSA grew by an average of 6.2% between 1990 and 2007. :Figure 6 12 15. Between 1990 and 2007, Support Activities for Transportation (NAICS 488) grew the fastest of the seven major sub-sectors at an average rate of 3.7% and a high rate of 12.7% in 1998 (just after the passage of NAFTA). Employment levels in Truck Transportation (NAICS 484), Couriers and Messengers (NAICS 492) and Transit and Ground Passenger (NAICS 485) have remained consistent, while Rail Transportation (NAICS 482), Air Transportation (NAICS 481) and Warehousing and Storage (NAICS 493) have declined moderately since 1990, at rates of -.93%, -3.07% and -.32% respectively.Figure 7 Wages. According to the Bureau of Labor Statistics, the average wage for NAICS sector 48-49 as of 2006 was $915 per week and $47,548 per year. The highest paying sub-sector that year was Support Activities for Transportation (NAICS 488) at $1,164 per week, $60,525 per year.Figure 813Source: BLS Quarterly Census of Employment and Wages 16. Average hourly wages for the sectors break down as follows: Air Transportation, $28.07, Rail Transportation, $19.83, Truck Transportation, $19.35, Transit and Ground Passenger Transportation, $13.65, Support Activities for Transportation $29.10, Couriers and Messengers, $17.60, and Warehousing and Storage, $20.18.Figure 9 Establishments.In Los Angeles County, Truck Transportation and Support Activities for Transportation have the most reported establishments of our seven targeted sub-sectors, 38% (2,086 establishments) followed by Air Transportation, Couriers and Messengers, Transit and Ground Passenger Transportation and Warehousing and Storage.Warehousing and Storage Nation-wide, employment in Warehousing and Storage grew faster between 1998 and 2006 than any other occupation in the Transportation and Warehousing Sector. While growth in Warehousing and Storage Southern California has been slow, the sub-sector retains a significant presence and is an important source of entry-level employment for LGMTA graduates. 14 17. Figure 10 Warehousing and Storage Establishments and Distribution Size: Los Angeles CountyFigure 11According to the EmploymentDevelopment Department, thereare 441 warehousing employers inLos Angeles County. GeneralWarehousing and Storage (362establishments) account for 82%of the total Warehousing andStorage establishments, followedby much smaller numbers inRefrigerated Warehousing (40establishments), OtherWarehousing and Storage (36 establishments), and a small group of Farm Product Warehousing and Storage Facilities (four establishments.)Los Angeles is still the biggest presence in the industry, despite rapid increases in establishments in Riverside and San Bernardino Counties that occurred as land around the ports became scarce. The most recent available Census Data indicates that of the total Warehousing and Storage establishments in the four-county region, Los Angeles has 57%, San Bernardino has 19%, Orange County has 15% and Riverside has 9%.15 18. Table 7: Southern California Warehousing and Storage Establishments: 2006 LosSan NAICSIndustry Angeles BernardinoRiversideOrange 493Warehousing and Storage441150 72 114 49311General Warehousing and Storage3621305696Refrigerated Warehousing and 49312Storage 4010 6 5Farm Product Warehousing and 49313Storage 4 12 0 49319Other Warehousing and Storage 3698 13 Source: Employment Development Department, Quarterly Census of Employment and Wages, 2007 Since 1990, growth rates in San Bernardino and Riverside have been consistentlyhigher than those in Los Angeles and Orange County. Between 1990 and 2006,Warehousing and Storage establishments grew by an average of 2.82% in Los Angelesand by 2.75% in Orange County. During the same period, Warehousing and Storageestablishments grew by an average of 10.23% in San Bernardino and 7.5% inRiverside. Between 2000 and 2006 the number of Warehousing and Storageestablishments in Los Angeles and Orange Counties fell by .73% and .42%respectively, while San Bernardino and Riverside counties grew by 5.55% and 5.91%respectively. Size Distribution. In the Warehousing and Storage sector in Los Angeles, data indicatean inverse relationship between number of establishments and number of employees.Within the Warehousing and Storage sector (NAICS 493,) 83% of total establishmentsemploy less than 50 people and 33% of total establishments employ between one andfour people. This pattern remains largely consistent, even when the Warehousing andStorage sector is broken down into sub-sectors. The only substantial outlier is a spike in refrigerated warehousing and storage at the 20-49 employees category. 43% of total establishments in refrigerated warehousing andstorage lie within the 20-49 employees category alone. 85% of the 40 totalestablishments in Refrigerated Warehousing and Storage have fewer than 49employees. Table 8: Warehousing and Storage (NAICS 493): Establishment Size Distribution: Los Angeles, 2006250500Total5-10- 20-50- 100- 100 1-4 -- Establishments9 1949 992490+ NAICS Industry 499999493Warehousing and Storage 478 15780 8280 4325 47049311General Warehousing and Storage 356 11664 6449 3718 44049312Refrigerated Warehousing and Storage 40854174 1 01049313Farm Product Warehousing and Storage 1 1 0000 0 00049319Other Warehousing and Storage813211 14142 6 020 Source: U.S. Census, County Business Patterns, 200616 19. Figure 12 Table 9: Southern California- Average Employment, Weekly and Annual Wages AverageAverage Average2006 Weekly AnnualEmployment WagesWages NAICS 493: Warehousing and Storage Los Angeles 16,536 $807$41,962San Bernardino 7,193$690$35,881Riverside5,330$627$32,599 Orange5,365$973$50,611 Source: EDD, California Regional Economies Employment DataWages. In order to contextualize Los Angeles Wages in Warehousing and Storage, we also looked at Orange, Riverside, and San Bernardino Counties. Orange County reported the highest wages of four Southern California counties, 18.3% more than the next highest wages reported for Warehousing and Storage (NAICS 493) and General Warehousing and Storage (NAICS 49311) in Los Angeles County.San Bernardino wages were an average of 16.3% percent lower than Los Angeles County and 41.7% percent lower than Orange County. Riverside County wages were on average 29.1% lower than Los Angeles and 57.3% lower than Orange County for the same sub-sectors. 3 San Bernardino and Riverside Counties have both the highest overall growth rates in the Warehousing and Storage sector and the lowest average 3 The reasons for this significant disparity are beyond the scope of this research. More research is needed regarding the specific types of firms locating in Orange County and/or other discrepancies in the data.17 20. wages. Wages in San Bernardino County were on average 11.1% higher than wages in Riverside County. 4Figure 13 Los Angeles reported the highest wages in Refrigerated Warehousing and Storage (NAICS 49312) by $5,708, or 14.1% over the same category in San Bernardino, and $11,395 or 32.7% higher than in Orange County.Occupations. The following occupations were selected from SOC Code 53:000 as the most likely to employ LGMTA graduates based upon anecdotal data from past placements.(See Table 5 for a survey of wages for Los Angeles Occupations.) Average hourly wages vary widely from an average of $9.26 to $28.16 for a Supervisor position. The overall average of the 15 selected occupations is $16.30, which includes both entry-level and supervisory positions.Laborers and Truck Driving occupations selected occupy the largest share of the employment population. Laborers and Freight, Stock and Material Movers, Hand (SOC 53-7062) and Packers and Packagers (SOC 53-7064) comprise 39% of the total population of May 2007 employment estimates for all of Transportation and Material Moving Occupations (SOC 53-000). The average overall wage of the two occupations is $12.92. The two selected trucking occupations: Truck Drivers, Light or Delivery Services (SOC 53-3033) and Truck Drivers, Heavy or Tractor Trailer (SOC 3032) comprise 19% and have an average overall wage of $16.84. 4Based upon 2006 EDD data for the following sub-sectors: Warehousing and Storage (NAICS 493), General Warehousing and Storage (NAICS 49311) 18 21. Table 5: Los Angeles County Wage and Employment Data: Selected Occupations within Transportation and Material Moving Occupations (SOC 53:000) 50th May 2007 25th Percentile 75thSOCOccupational Title Employme Mean Mean Percentile (Median) PercentileCode nt HourlyAnnual Hourly Hourly Hourly EstimatesWage Wage Wage Wage Wage Transportation and Material Moving 53-0000 Occupations312,580$14.95 $31,091 $8.88 $12.02 $17.99Packers and 53-7064 Packagers, Hand 37,080 $9.26 $19,254 *8.00$8.62$9.58 Cleaners of Vehicles 53-7061 and Equipment 15,740 $9.88 $20,563 *8.00$8.88 $10.68 Laborers and Freight, Stock, and Material 53-7062 Movers, Hand86,080$11.86 $24,656 $8.54 $10.12 $13.4153-3031 Driver/Sales Workers11,000$12.03 $25,014 *8.00$9.12 $14.56 Motor Vehicle 53-3099 Operators, All Other 2,610$13.45 $27,981 $8.77 $10.17 $16.22 Service Station 53-6031 Attendants 1,990$13.00 $27,039 $9.06 $13.63 $16.44 Material Moving 53-7199 Workers, All Other n/a$13.99 $29,096 $8.99 $11.10 $17.45 Truck Drivers, Light 53-3033 or Delivery Services29,370$14.46 $30,057$10.37 $13.49 $17.71 Conveyor Operators 53-7011 and Tenders1,210$15.63 $32,523$12.91 $15.33 $17.82 Refuse and Recyclable 53-7081 Material Collectors3,890$18.83 $39,163$15.93 $17.61 $19.62 Truck Drivers, Heavy 53-3032 and Tractor-Trailer 30,700$19.21 $39,971$15.99 $19.01 $22.47 First-Line Supervisors/Managers of Helpers, Laborers, and Material Movers, 53-1021 Hand 8,340$21.26 $44,216$15.86 $20.15 $25.24Aircraft Cargo 53-1011 Handling Supervisors n/a$21.00 $43,695$15.19 $18.00 $25.64Transportation 53-6099 Workers, All Other 3,830$22.54 $46,887$20.14 $22.66 $26.5519 22. 53-1031First-Line Supervisors/Managers of Transportation and Material-Moving Machine and Vehicle7,290$28.16$58,570$20.65$27.67 $35.49Source: Department of Labor, Occupational Employment StatisticsTable 6 shows average employment projections for SOC codes relevant to LGMTA graduates that have an anticipated growth rate of more than 25% and low barriers to entry. This data is projected based on statewide averages.Table 6: Selected Occupations within Transportation and Material Moving Occupations (SOC 53:000) with Projected Growth Rages over 25% ProjectedAverageAverage Employment Employment BLS Training2006 2016PercentLevel Short-Term On-the- Driver/Sales Workers 800 90050.0%Job TrainingModerate-TermOn-the-Job Truck Drivers, Heavy and Tractor-Trailer5,100 6,300 33.3%Training Short-Term On-the- Truck Drivers, Light or Delivery Services 1,800 2,200 33.3%Job Training Short-Term On-the- Conveyor Operators and Tenders 400 50030.0%Job Training Short-Term On-the- Laborers and Freight, Stock, and Material Movers, Hand 13,900 15,30028.6%Job TrainingModerate-TermOn-the-Job Tank Car, Truck, and Ship Loaders200 30026.7%TrainingSource: Employment Development Department Labor Market DivisionData Inadequacies. NAICS category 48-49 does not capture all logistics activities. One of the most egregious discrepancies in this data is the fact that the self-reported numbers do not catch large retail distribution centers in the correct sector. Even though these facilities are amongst the largest in warehousing and storage, they are most often categorized under their retailer umbrella. In addition, NAICS does not yet have a clear category for third-party logistics firms and some of the other newer types of logistics firms that are emerging.20 23. Industry Snapshot: Field Interviews The foregoing data are useful in providing a birds eye view of the industry as a whole. EDD and BLS data in particular give a sense of proportion and allow us to see the regional significance of the logistics industry in Los Angeles County when compared to nearby counties. It is also helpful to note that the historical trend is toward growth, a rare assurance as of this writing, as we receive news of goods movement firms nationwide closing up a substantial portion of their operations, and local companies have dramatically reduced hiring.However, the data also have the limitations discussed above. In particular, the data draw arbitrary lines between categories of firms and occupations, and offer little on-the- ground guidance to workforce development practitioners concerned employing customers at individual firms rather than analyzing the entire industrys economic impact.The following synopsis of interviews with dozens of industry representatives is an attempt to characterize what will be most useful to CCD in continuing to implement the LGMTA and place participants in goods movement firms.METHODOLOGYThis report culls information from 45 interviews with representatives from goods movement firms and other industry representatives. It represents the perspective of a range of company sizes and types throughout the industry.Throughout our research, our goal was to capture an accurate snapshot of the industry by soliciting input from the widest variety of companies involved in the logistics sector, with a special focus on warehouses and third party logistics firms (3PLs), as CCD targets such companies in its placement efforts. We attempted to survey public storage warehouses as well as large private and retail distribution centers, employing from 1 to 25 people, 26 to 75 people, 76 to 150 people, and over 150 people. Many of the21 24. individuals we interviewed represented just one of several company facilities in the Southern California region.We turned to the California Employment Development Department (EDD) as our starting point for research, downloading relevant Los Angeles County employer lists from their website. 5 We also used a similar list of employers provided by the EDD per CCDs earlier request. (These two lists overlapped significantly.) It is important to stress, however, that these lists served only as a foundation for our research. The majority of our sources came either from other industry contacts, or from searches for specific facilities or types of facilities. For example, many large retail distribution centers are not counted in the Transportation and Warehousing NAICS category, as their umbrella companies are categorized elsewhere. Such companies are major logistics employers, but must be individually targeted for contact, as they are hard to locate in EDD Labor Market Info reports.Having secured sources for our research, we set out to make contacts in the industry. Every week, we cold-called companies that we targeted from the EDD lists and web searches, with the intention of setting up at least three meeting with company representatives for the following week. We asked each contact for a face-to-face interview where we would discuss their company, the logistics industry in Los Angeles County, and the skills workers need to succeed in the industry. The main factor that determined which companies we visited was whether or not an individual was willing to meet with us, but we attempted to maintain a balance between different industry sub- sectors and company sizes, as noted above. We secured 45 meetings total, out of approximately 200 phone requests. These meetings took place from September 20 to October 31, 2008.We made an effort to set up as many meetings as possible before the height of the industrys peak season of September through December. However, it is not clear whether the peak season affected companies willingness to speak with us, as we were able to schedule nearly 25 interviews for the mid-peak month of October, 17 of which we kept (we cancelled the rest due to other commitments at CCD). We also made no attempt to schedule interviews during the months of November and December, aside from those we cancelled.In general, we met with company representative in three types of settings: typically in face-to-face interviews with one to three representatives; three times by phone; and twice as members of a larger meet and greet event organized by the company. Whenever possible, we asked for site visits and photo opportunities, though companies declined photographs almost without exception.Face-to-face interviews and meet and greet events have significant benefits over phone conversations, as well as any other methods of finding qualitative or anecdotal5Employers by Industry. California Employment Development Department. 7 December 2008. . Path: Labor Market Info>Data Library>Industries>Find Employers>Employers by Industry.22 25. information about this industry. Face-to-face interviews offer the opportunity to build rapport over a meeting that typically approaches or exceeds an hour in length. Most industry representatives seemed to genuinely enjoy our interviews, and their enthusiasm encouraged them to explain the issues with greater detail than we received by phone. On more than one occasion, face-to-face interviewees introduced us to new contacts either in person or by phone. (One interview even led to an impromptu visit to a trucking yard, where the owner of a 3PL was tending to some damaged cargo - a Bentley headed for Ghana. His longtime friend in the industry asked for resumes from the LGMTA, and we forwarded him five of them.) One final benefit of face-to-face meetings is that we were able to leave promotional material about CCD with each interview, and answer questions about the LGMTA.Meet and greet events with multiple participants offer a unique opportunity to engage with representatives when their guard is down. In a face-to-face meeting, a rapid-fire succession of questions about a companys practices can send off a red flag. Sometimes it is easier to get this information when a company has already put together a presentation that answers many questions and makes other questions seem more appropriate and less threatening.It is worth noting that we intended to do a series of interviews with representatives from industry associations and temporary staffing agencies (often referred to hereafter as temps agencies that place temps in jobs.) Industry associations such as the Foreign Trade Association, the Council of Supply Chain Management Professionals, the Los Angeles Customs Broker Association, Warehousing Education and Research Council, the Los Angeles Transportation Club, and the Harbor Transportation Club are important in disseminating information and networking, and as such they are a potentially valuable resource for the LGMTA Advisory Board.Temporary staffing agencies, as we will discuss in this report, are one of the primary doors into the goods movement industry today. We hoped to find out whether it is possible to identify temporary staffing agencies that provide higher wages or are more likely to lead to permanent hire. However, other demands at CCD prevented us from23 26. keeping several of these interviews, and consequently, only two industry associations and one temporary staffing agency are represented in this report. It would be a good idea to continue outreach to both types of organization. (Keep in mind that temporary staffing agencies take more convincing before they will meet, as the industry is not only competitive, but also aware of the stigma associated with temporary staffing.)COMPANY TYPES AND OCCUPATIONS DEFINEDIt is hard to make across-the-board generalizations about firms and functions in the goods movement industry. We divide goods movement firms into three broad types: third party logistics companies (3PLs), public storage warehouses, and retail distribution centers. Each type of company provides a wide variety of services, carried out by workers in several different occupations, mostly in the office or on the warehouse floor.We have already mentioned how government datasets make arbitrary distinctions between the companies and occupations in the industry, making the accuracy of some statistics less useful for workforce development practitioners. Our sources described a web of industry relationships, occupations, and specialties that similarly defies easy categorization, and requires some generalization. It became clear very quickly that industry representatives define their own businesses by the work that their own employees do, and by their relationships with customers and contractors.After the first few interviews, it was clear that employers require their workers to also think in these terms. As CCDs goal is job training and placement, we have also chosen to define the industry in broad categories: major services offered, which determine employee tasks; generic types of firms, which sum up a companys relationship to others in the supply chain; and employee occupations, which are determined by the other two areas.These definitions are important to understand if CCD intends to gain credibility in the industry as a whole, and to have a more intuitive understanding of the components that must go into training.Major Services Offered While we visited a wide variety of companies representing several industry niches, all companies offered some variety of the following services.Break-bulk. Break bulk cargo traditionally refers to non-containerized cargo moved in individual units such as crates, drums, and barrels. We find that many companies use the term more generally, referring to any non-containerized or even containerized cargo that must be repacked for separate destinations. Examples of such cargo include chemical pellets, liquids, grains, even conventionally packaged freight heading for several different endpoints. 24 27. Case picking. Companies with any storage component require workers able to operate a variety of forklifts for case picking. This is simply taking a crated, boxed, or otherwise contained product and moving it to a staging area for assembly into a larger package.Cross-docking. Cross-docking is simply the act of moving goods from one vehicle to another, often vehicles of the same type. For example, most large ground transportation companies have a hub where goods come in through one truck dock, and leave for a distribution center or other facility on another truck.Customs Clearance. Many companies offer significant customs services, processing necessary import and export documents, calculating duties and taxes, and abiding by a web of regulations from different government agencies. Typically customs clearance is one part of a larger freight forwarding function, and goods awaiting clearance sit in a sequestered container freight station (CFS) on site. In most customs operations, all customs employees work under one supervisors customs broker license.Drayage. This is simply the act of picking up a shipment from the port and bringing it to its next destination, typically a transloading facility or warehouse.Freight consolidation. Most of the individuals who referred to freight consolidation used this as an umbrella term for any warehouse activity that involved taking goods out of a shipping container and reassembling them into unique shipments to be sent to the customer, usually by palletizing them. Freight consolidation includes both pick and pack and case picking functions.Freight forwarding. Freight forwarders are non-asset based companies that make shipping arrangements for other companies. Such arrangements can include arranging drayage, booking space on an oceanliner, an airline, a freight train, or a freight truck, arranging storage, processing customs clearance, and tracking freight. Typically, a company that refers to itself as a 3PL provides some or all of these functions, including - at minimum arranging ground transportation.Pick-and-pack. All storage companies of any size offer pick-and-pack services. Essentially a more detailed version of case picking, pick-and-pack requires workers to locate containers, disassemble the goods inside, and reassemble and label them for their next destination.Public Storage Warehousing. On its own this refers to a more traditional conception of warehousing. Public storage companies sell space in their warehouse for their customers goods. A very limited public storage operation will usually offer both racked storage, high-pile storage, or both, pick and pack freight assembly, and freight consolidation. some Sub-groups of public storage include general dry storage, cold storage, and chemical storage. 25 28. Your average freight forwarder is a warehouse, three cubicle, and forklift type of operation. Dirty, nothing special. President, small South Bay 3PLTransloading. This service is similar to cross-docking, but most references to transloading specify moving goods from one mode of transportation to another; for example, unloading a shipment from a rail car onto a freight truck.Value-added. Value-added services are usually services that were once provided at the point of manufacture for example, labeling, tagging, hanging clothing, or assembling store displays.Types of Companies An individual company in the goods movement industry can provide any number of the services described above, and presumably others. Some companies that we contacted provide all of these services, and some provide just one or two. Further complicating things, companies that provide identical services often use different terms to identify themselves. For example, many asset-based public storage warehouses that arrange refer to themselves as 3PLs, as long as they arrange rail or truck transportation for their customers. Similar warehouses use the term 3PL only when referring to the trucking companies they contract with. In addition, industry representatives often refer to other companies by the more famous function of a parent company. For example, while all the ocean shipping lines have separate 3PL divisions, a trucking company may still refer to this 3PL division as an oceanliner from China, or a similarly generic term.Given this lack of uniformity in describing the industry, any system of classification is bound to have problems. While some of our own sources may disagree with the broad categories presented below, we think that they are useful for a workforce development program in conceptualizing the industry.3PLs. Third party logistic firms are companies that provide any of the services mentioned above on a contract basis, for other companies. These companies fall into a wide spectrum, from small transportation companies to multi-national companies with a global presence.Companies that perform third party logistics services often refer to themselves simply as 3PLs. However, companies that provide an identical range of services may also identify as just a freight forwarder, or a transportation company, or a logistics company. They may also object to being characterized as any of these, though our sources used all of those terms interchangeably at times. As mentioned, most international shippers have a logistics arm that provides third-party logistics service, including running entire distribution centers for individual customers. While we refer to DHL, FedEx, and UPS as package delivery firms elsewhere in this report, we also count them as 3PLs because 26 29. they have sophisticated logistics divisions. Many industry representatives also call them freight integrators, though this term seems to refer to any one-stop shop for freight forwarding.Public Storage Warehouse. This is a company, typically asset based, which focuses on short- or long-term storage of customers goods. While very little remains of what could be called pure storage, there are still companies whose main source of revenue is floor space dedicated to other peoples freight. Case picking and pick-and-pack is central to their operations, and they may or may not also offer drayage, provide or arrange ground transportation, or operate a CFS. Public storage warehouses are further divided into dry storage and cold or refrigerated storage facilities.(Public storage warehousing is not to be confused with personal public storage or mini-storage spaces that people use for their personal belongings, though such businesses are classified as transportation and warehousing under the NAICS system.)Retail Distribution Centers. These distribution centers are typically non-asset based, meaning that they lease all or most of their facilities, including building, trucks, and even forklifts. They are owned by retail chains, grocery chains, automotive companies, and other large businesses focused on distributing their goods to their own outlets or to other companies retail shelves. They work with either 3PLs or different company divisions to arrange pick-and-pack, freight assembly, shipping, transportation, and value-added services. (In some instances a 3PL will take over the entire operation of a companys distribution center. We define this as a 3PL function.)Occupation Types There are a variety of specific entry-level jobs in goods movement, and each firm differs in the variety and requirements of the occupations required by its own operations. In general, most entry level jobs can be grouped into two types: warehouse jobs and office jobs. Both types of entry-level jobs are typically open to individuals who do not have a bachelors degree. Typically warehouse jobs require little skilled work, and often they require some familiarity with Microsoft Word and Microsoft Excel. Office jobs require a higher level of computer proficiency, including typing skills.Warehouse/Material Mover Jobs Pick-and-pack and/or lumper. This is the most general and least skilled of all the occupations, and one that many LGMTA participants have performed in the past. Material movers perform pick-and-pack duties, sort packages, and load and unload packages weighing up to 50 pounds. The term lumper connotes more truck unloading than pick-and-pack duties, but many view the terms as synonymous.Forklift Driver. Forklift drivers load and unload pallets into containers and trucks, and do case picking and assembly of orders to be shipped. Many LMGTA participants have performed these duties in the past.27 30. Value-added. Typically the domain of women by industry custom, value-added services such as tagging, hanging clothes, and other last-minute minor alterations are often the lowest paying jobs.Office Jobs Sales. Sales representatives solicit new customers and maintain relationships with existing customers. Many companies have entry-level sales representative positions, while others require some experience before hiring.Customer Service. Customer service representatives often work with sales departments and accounting departments, and can perform a wide range of miscellaneous duties. Typically these include answering customer calls, tracking orders, filing, and handling overflow from other departments.Import or Export Agent. Import and export agents sometimes make up the bulk of a logistics companys workforce. Agents negotiate payment, book ocean, air, rail, and ground transportation within the company or from other companies, and prepare many of the documents required in customer transactions.Customs Agent. Customs agents classify goods, prepare documents that must be submitted to customs officials, and see shipments through the customs process.Accounts. All logistics firms require some kind of in-house team that deals with arranging and receiving payments. The Los Angeles locations of large companies often handle accounts nationwide.Dispatcher. Dispatchers are central to the operations of any company that does some kind of ground transportation, including drayage. They route trucks, respond to any issues that come up in the transportation of goods, and fit each days orders into the tight schedule of the workday. In Los Angeles County, dispatchers must be able to adjust and coordinate multiple pick-ups and drop-offs for every driver in the fleet. Dispatch is not actually an entry-level job, as most companies require at least a year or two of experience in a related position. Commonly, dispatchers started as drivers or in a clerical warehouse job. Still, some LGMTA participants have done dispatch in past job, and others may qualify for dispatch positions as well.Other Types of Jobs Driver. This is an entry-level position in the sense that the only educational or professional requirement is a Class A Commercial Drivers License (CDL). Courier. Due to the rigors of the job, drivers are always in demand, and several of our sources stress that a CDL gives an individual more options in the industry. 28 31. Courier. Courier and messenger services typically perform many of the package delivery services that DHL, FedEx, and UPS do. However, they tend to operate only on a regional or local scale. These companies are not necessarily what LGMTA participants think of when they apply for a logistics training program, but according to the EDD, couriers make up a larger industry subsector than companies specifically designated as warehouses. 6 They also have a number of driver jobs that often do not require a CDL.IS LOGISTICS A LOS ANGELES GROWTH INDUSTRY?Industry representatives shared a unanimous opinion that Los Angeles will be the center of the Southern California goods movement industry for the foreseeable future. Los Angeles County locations are close to the ports, allow for lower transportation costs, and are more suited to serving varied (and often smaller) customers.One of CCDs major goals for this report was to determine whether logistics is a growth industry in Los Angeles County. We take the term growth industry to mean several things: opportunities for individual career growth, wage increases, and perhaps most obviously, growing or at least stable opportunities for entry-level employment for the foreseeable future.The short answer is yes, logistics is a growth industry in Los Angeles County. According to the industry representatives we spoke with, we can count on goods movement to be a major source of entry-level jobs in the long-term. Our survey interviews yielded a unanimous belief that goods movement is in Los Angeles County to stay, regardless of the remarkable growth of the industry in the Inland Empire counties of San Bernardino and Riverside, and the current recession.At first glance, the Inland Empire seems like it should be more attractive to companies across the board land, labor, and city taxes are generally all cheaper there, while weight restrictions on individual freight trailers are less stringent than in Los Angeles County. However, employers cited a number of reasons that Los Angeles County remains central to the goods movement industry in the Southern California region. (Much of what follows compares Los Angeles County and the Inland Empire, but leaves out discussion of Orange and Ventura Counties, which also have substantial logistics industry presence. This is due in large part to the fact that the Inland Empire continually came up in our interviews, since many companies have locations in both Los Angeles County and the Inland Empire.)Proximity to the port. As one interviewee put it, San Pedro is beachfront property. I look out my office window and I see the gantry cranes. Eighteen of our sources offered6California Regional Economies Employment Series, Los Angeles. California Employment Development Department. 23 December 2008. Path>Labor Market Info>Data Library>California Regional Economies Employment Series>Los Angeles County.29 32. detailed comparisons of the logistics industry in Los Angeles County and the Inland Empire. Eleven of those 18 mentioned the Ports of Los Angeles and Long Beach as the primary reason for the long-term significance of goods movement firms in Los Angeles County. Goods that come into either port are just a mile or two from warehouse hubs like Wilmington or Long Beach, just 20 miles from major inland distribution hubs such as Vernon and Commerce, and 20 miles from Los Angeles International Airport (LAX) and countless air freight operations clustered near there. By contrast, Inland Empire logistics hubs like Ontario are 50 miles from the ports.The fact that many companies prefer real estate closer to the ports may seem obvious, but companies cited a surprising number of unique reasons that close proximity to the port makes good business sense. Ability to make up to three trips to and from the ports per day, versus one trip perday in the Inland Empire. Lower fuel and labor costs due to less time spent on the road and in heavy traffic.This translates to a lower drayage cost from the port to the warehouse ordistribution center. Drayage from the port to a Los Angeles facility takes considerably less time thandrayage from the port to an Inland Empire facility. Los Angeles has a larger workforce, and labor in the Inland Empire is notnecessarily cheaper in every instance. More temporary staffing agencies. Facilities of a size and configuration that allow public distribution companies to bemore flexible, in response to the needs of multiple small vendors. Proximity to customers.Other reasons for companies to locate in Los Angeles County all connect in one way or another to these benefits.Transportation costs. Transportation is at the root of all activities in the logistics industry. Indeed, several of our interview subjects do not even count non-transportation functions such as materials handling in their own definitions of the word logistics. The cost of transportation, particularly ground transportation, is something of an obsession among warehouse and transportation managers. There is little wonder why: one warehouse manager told us that by saving one-tenth of a mile per gallon in truck fuel costs, he saved his company $1.2 million in one year.Even in the best of times, the cost of getting goods from the ports to the Inland Empire is much higher than it is to most Los Angeles County locations. As the Operations Manager of a large shipping companys logistics arm described: You have all these costs to get things out from the port, and they go up if youregoing to the Inland Empire. Theres fuel, and the time it takes to get there.Riverside [a major freight destination] is off of Highway 60, which is the worstroad in Southern California between 3:00 PM and 8:00 PM, with all the30 33. congestion. Youre not only paying for the fuel to sit in traffic, but youre alsopaying a lot more for the labor to sit there in the truck.It is important to note that we conducted our survey during a period of serious volatility in diesel costs. The cost of a gallon of diesel fuel on the west coast typically varies by several cents at most from month to month, and never varied by more than $0.25 month to month from January 1994 to August 2005. 7 (Comprehensive pre-1994 diesel rates are not available.)By contrast, diesel costs in 2008 were erratic, changing by over $0.25 in 8 months of the year, and as much as $0.70 from on month to the next. West coast diesel costs topped out at a record-setting $4.85 per gallon in June and July 2008, up $1.47 from the beginning of the year, and marking an increase of $3.22 from the beginning of 2004, when costs began to increase dramatically.Figure 14: West Coast Price of Diesel Fuel Cost per Gallon Diesel Fuel, West Coast Cost per Gallon (Dollars) $6.00 $5.00 $4.00 Dollars $3.00 $2.00 $1.00 $0.00 Jan-94Jan-95 Jan-96Jan-97 Jan-98Jan-99 Jan-00Jan-01 Jan-02Jan-03 Jan-04Jan-05 Jan-06Jan-07 Jan-08DateCost per Gallon (Dollars)Noting the volatility of diesel prices, one interview subject went past the frustration of dealing with freeway congestion and suggested that industry insiders now see fuel costs in a fundamentally different light. What we have to look at now is, land may be more expensive in L.A., but land cost is a fixed cost. Fuel used to be sort of a fixed cost, but now we have to look at it as a variable cost. So it can make fuel [to the Inland Empire] and labor [in Los Angeles County] almost equal in cost. 7Weekly Retail Gasoline and Diesel Prices. Energy Information Administration. 20 December 2008. . Path: Petroleum>U.S. Data>Prices>Weekly Retail Gasoline and Diesel Prices.31 34. Los Angeles County has great infrastructure, and its central, which means youre closer to your customer. Warehouse Manager, South Bay freight forwarderThe owner of a Vernon 3PL struck a similar note when he compared the costs and benefits of Los Angeles County and the Inland Empire. quot;We've looked at the Inland Empire, but transportation costs outweigh the lower land cost now. Transportation to the Inland Empire would add $100 to each container we send out.If the extreme unpredictability of fuel costs in 2008 does have the long-term effect of redefining fuel as a serious variable cost instead of sort of a fixed cost, then this will resonate throughout the industry for some time. The consensus seems to be that logistics firms will think twice before locating further from the ports, causing retrenchment of the industry in Los Angeles County.It seems unlikely that major distribution centers would relocate to Los Angeles County from elsewhere, given their need for more land and newer buildings than much of Los Angeles County has to offer. (We deal with this at length below.) But industry representatives are in agreement that transloading facilities, cold storage facilities, mid- sized companies, and companies with a client base in Los Angeles County or a large number of customers will all prefer Los Angeles County in large part because transportation from the port to Los Angeles County is so much cheaper than the alternatives.Needs of individual companies. There are clear differences between the types of goods movement companies that cluster in Los Angeles County and those that tend to locate in the Inland Empire. In general, the Inland Empires larger facilities serve few companies, and often just one company, reducing the complexity of packaging activities and benefiting from automation of facilities. By contrast, Los Angeles County facilities are smaller, but they also have the flexibility to serve a wide variety of customers.The real estate market is perhaps the single greatest factor determining these differences. The goods movement industry in Los Angeles County stretches back to the 19th century. Only a relative few buildings in Los Angeles County are this old, but most are significantly older than those in the Inland Empire, and there is very little land available for newer facilities. Industrial land in Los Angeles County is expensive one interviewee put it at a monthly lease cost of $1.60 per square foot, compared to $0.52 per square foot in the Inland Empire -- which makes it nearly impossible to acquire and redevelop enough land for a modern distribution facility. 8This means that the Inland Empire is now the domain of the large distribution centers, essentially stopover and processing facilities for one companys products. A drive8 Give the whole thing about land downtown being more valuable as residential as an interesting side note. FIX32 35. through the area makes this clear, as buildings occupied solely by Toyota, Wal-Mart, K- Mart, Target, Nordstroms, Ford, Staples, Mattel, and companies of comparable size dot the landscape of cities in Riverside and San Bernardino Counties. These buildings are typically between 200,000 and 500,000 square feet, though it is not unheard of for one companys distribution facilities in the Inland Empire to surpass 1 million square feet. (There are, of course, public storage warehouses, transloading facilities, and other logistics functions in the Inland Empire. Still, our contacts emphasized that the overall trend is toward large distribution centers.)This is not to say that there are no large distribution centers in Los Angeles County. Grocery chains with stores in Los Angeles County also require distribution centers there, and Anheuser-Buschs Van Nuys production and distribution facility is just one example of a massive local distribution center. Several of the people we met with described Gardena, Torrance, and Carson as rich with distribution centers, and companies such as Huffy, Kubota Tractor, Frito-Lay, Honda, Toyota, and Smart & Final do have facilities in those cities. But by and large, Los Angeles County is home to a wider variety of goods movement companies that can work with the land and facilities that are available here. Such companies include the following: Air freight forwarders. These companies locate near (LAX), and often usewarehouses as small as 10,000 square feet. Transloading and cross-docking facilities for 3PLs. Large 3PLs locate thesefacilities in Los Angeles County for their ground transportation divisions. Typicallysuch facilities have no storage and focus only on moving freight from inboundvehicles to outbound vehicles. Package delivery services. Companies such as DHL, UPS, and FedEx do thework of 3PLs as well as traditional package delivery. FedEx and UPS inparticular are decentralized operations with a variety of truck yards andprocessing facilities throughout the Southern California region. The combinedfreight of the ports and LAX lead these companies to locate some of their largestcities between the two, in South Bay cities like Torrance and Redondo Beach. Public dry storage facilities. The more traditional asset-based warehouses arefound wherever there is even a small goods movement presence. They thrive inthe older warehouse of up to 200,000 square feet. Public cold storage facilities. Refrigerated cargo is more expensive totransport and store, which makes Los Angeles County more attractive for severalreasons. Representatives from cold storage companies agree that mostrefrigerated freight is not worth the additional cost of draying it to the InlandEmpire. Refrigerated storage companies that we spoke with pay from $20,000 to$50,000 per month on electricity, and would pay up to 5 percent more if theymoved further inland. The City of Vernon owns its own electric utility, and offerscheaper rates that have attracted an agglomeration of cold storage firms foryears. Courier services. These companies perform many of the package deliveryservices that UPS, FedEx, and DHL perform, but often with more specializedgoods such as medical supplies or supplies for local businesses.33 36. There are over 40 [goods distribution facilities] empty in theInland Empire. If you go to San Pedro, there is only 1 or 2. Operations Manager, 3PL branch of international shipping lineLocal economic development officials worry about the age and obsolescence of Los Angeles County industrial buildings, and as we did not consider this question a part of our research, we cannot disagree with their concern. However, it seems to be the case that for the type of business noted above, Los Angeles County and its obsolete buildings have some real benefits over newer, more state of the art buildings in the Inland Empire. As the owner of a textile-distributer-turned-3PL said:The Inland Empire was attractive 10 years ago because of cheaper rates, new infrastructure, and an educated labor force you have colleges with Logistics A.A. degrees there.They have these larger warehouses of 200,000 to 500,000 square feet, but with a facility that size, every customer needs to bring in $60,000 per month in revenue to keep it running. Customers who pay $2,000 to $5,000 per month prefer Los Angeles County. Transportation to the building is cheaper here. Also, larger warehouses are not equipped for the different procedures required by smaller companies. [Such differences include: freight shipped in a variety of sizes, different labeling positions required by different companies, and different handling procedures.]This individuals assertions imply something beneficial for the labor market as well. While automation in the logistics industry as a whole threatens to reduce the labor force, Los Angeles County is home to the type of firms that will continue to need employees. Their customers require flexibility, which means that their operations are more labor intensive and as automation is not suitable for such flexibility, this is not likely to change soon.An overwhelming majority of our sources see Los Angeles County as the long-term center of the Southern California goods movement industry. This is consistent with CCDs understanding of the industry as a large long-term employer for county residents. However, the question of whether the industry meets some of CCDs other job placement needs is a more complicated one.34 37. ENTRY LEVEL EMPLOYMENT AND CCD STANDARDS The logistics industry provides limited entry-level opportunities for CCD wage targets, but good long-term career prospects. Entry-level wages across the industry average approximately $9.00 per hour. By targeting placement efforts to certain industry sub-sectors, CCD can expect to make some placements at $10.00 to $15.00 per hour. Wages While we kept an eye on a variety of factors in evaluating jobs in the goods movement industry, wages remained our point of departure throughout our research. This is for two reasons: first, the obvious fact that a paycheck is the individuals first reason for taking a job, but also because CCD has specific income targets required by Workforce Investment Act (WIA) and other contracts that fund the organizations work. These contracts require CCD to place customers in employment at a starting wage between $11.00 and $14.00 per hour.We have wage rates at individual companies for more warehouse jobs than office jobs, as our understanding early in the research was that LGMTA participants were likely to seek employment on the warehouse floor. However, several of our early interview subjects mentioned that starting office wages were higher than those on the warehouse floor, so we began to track those wages as well. While the following focuses primarily on warehouse wages, interviewees indicated that entry-level office jobs often pay from $10.00 to $15.00 per hour, and as high as $25.00 per hour. (This is probably due in part to the fact that such jobs are seen as skilled work. As noted in the Occupation Types section, office employees must be very good with computers.)Figure 1535 38. If a guy has a forklift certificate, it makes my life easier. Illpay him $12.00 instead of $8.00 President, Gardena public warehouse and distribution centerWith CCDs target wage range as a starting point, the results of our research are mixed. Of the 45 interviews that we conducted, we have wage data for at 31 companies. Three companies declined to discuss wage data. Several other industry representatives were from trade organizations instead of companies, and a few conversations with employers were similarly focused on the entire industry instead of their individual company, and so we have no wage data for those companies. In general, starting wages among the companies we interviewed are well below CCDs $11.00 to $14.00 target. For jobs on the warehouse floor, the median starting wage among all companies that provided wage data is $9.00 per hour.Some of our sources weighed in on their own justification for low entry-level wages. Generally, employers cited the competitive nature of the industry, due to the proliferation of companies and an industry-wide lack of consolidation. Potential customers have a number of options for storage and distribution, which allows them to require low rates. Because payroll costs more than energy or other overhead, companies offer low rates by lowering wages or reducing hiring when possible.This is not to say that CCDs entry-level wage targets are impossible to reach, or even that workers will not eventually exceed CCDs targets. The mean starting warehouse wage in our pool of interviews is $10.42 per hour, so while half of the companies we spoke offer entry-level wages of $9.00 or less, seven companies balance out the average with entry-level wages of $12.00 to $18.00 per hour for warehouse work. (Most of these are unionized companies or in heavily unionized subsectors, as discussed below.) In addition, the highest hourly wage earners at most companies take home between $15.00 and $25.00 per hour. Even among companies that start employees out at minimum wage, the typical hourly wage ceiling is nearly $15.00. (The lowest hourly wage ceiling we recorded was $12.25 per hour, though it bears mentioning that this was at the retail outlet of an outdoor goods chain, the only retail establishment that we interviewed.)The distinction between office work and warehouse work was perhaps most obvious in the way people referenced each. After discussing wages, one employer said in reference to office jobs, Oh, they get taken care of. Similar comments were not uncommon, with another responding, Oh, those positions are salaried, so youre talking $30,000 to start. By contrast, one freight forwarder had the following to say about the warehouse floor: You had good wages in the 1970s, but not really now. Two others 36 39. mentioned that wages on the warehouse floor have stagnated or gone down during their careers. 9Another interview subject mentioned that this decline has also affected drivers, saying, [At a specific major grocery chain] 10 years ago, you could make $18.00 to $20.00 dollars an hour, but you cant make that kind of money now. We interviewed a unionized branch of the grocery chain he mentioned, and their contract does give them from $18.00 to $20.00 per hour. However, this interviewees comment may still be true. The company has split in the last several years, and he may have been referring to drivers employed by either of the new companies, or a 3PL that works for one of them. Either way, this wage marks a decline in real terms during the time period he mentioned among earners in the Los Angeles region, $18.00 to $20.00 today is equivalent to $13.49 to $14.99 in 1998. 10Our discussions with industry employers represent a survey of a wide range of companies, but the wage situation is very similar across the board. CCD is unlikely to place many participants in entry-level warehouse jobs that pay $11.00 or more per hour. However, by targeting job placement efforts, CCD can find such jobs. In particular, forklift jobs and office jobs offer wages at $10.00 and often above. Such jobs require relatively little training, and they are available to people who do not have college degrees. 9 Of all of the employers we spoke with, only one admitted to ever paying less than minimum wage. His company, a small air freight forwarder, used to employ primarily undocumented workers for $7.00 per hour, until the government cracked down on such behavior in recent years. 10Consumer Price Index, All Urban Customers (Los Angeles-Riverside-Orange County, CA). Bureau of Labor Statistics. 23 December 2008. Path: Subject Areas>Inflation>Inflation & Prices>Databases>All Urban Consumers>Multi-Screen Data Search.37 40. Clerical and customer service wages are going to be higherpaying, and you have more direct hires instead of temps. Operations Manager, 3PL branch of international shipping lineCareer Opportunities While most jobs on the warehouse floor offer lackluster wages to entry-level employees, the good news is that all of our interviews suggested that there are substantial opportunities for career advancement across the industry. As noted in the previous section, most companies pay their highest hourly wage earners at least $15.00 per hour. Of the 31 companies that gave us entry-level hourly wage rates, only 26 gave us top-tier hourly wage rates several others hesitated to generalize, or estimated salaried positions of between $35,000 and $50,000 per year. Of the 26 hourly rates, the mean average at the companies we spoke with is $16.75, with half earning more than $18.00 per hour (again, union wages significantly bring up the average). Assuming a 2,000 hour year, this means that even warehouse employees can work up to an average income of $33,500, or a median of $36,000 per year. A career in the office is likely to pay more in the long run as well. Office employees tend to move more quickly into salaried positions, and among hourly earners, office employees can expect to make up to $25.00 per hour.Most of our sources suggested that a career in logistics does not offer everyone mobility between jobs in warehousing and the office: Youre not going to get a lot of cross- pollination between departments. (However, one sales manager that we visited got his start in the industry unloading trucks.) It is not clear whether office personnel are likely to move between areas like customer service, accounts, and import/export documentation. Two individuals at smaller companies mentioned that they started in freight and moved to sales. Two other sources from small warehouses said that they have encouraged workers to train for office jobs, but workers typically decline. They speculated that this was either because warehouse workers have no interest in office jobs, or that they are intimidated by the idea.Industry representatives described a relatively simple career trajectory for both warehouse and office workers. On the warehouse floor, people tend to start as pick- and-pack or forklift operators. Often they are hired in this role through a temporary agency, and do not make the payroll for six months or more. From the entry-level, companies often offer help in CDL training for aspiring drivers, or training in low-level supervisory positions. Supervisors may then move to a higher level of authority, and then to a point where they are high level managers, often responsible for some aspect of operations at multiple facilities.A typical office career trajectory may depend more on the size of the company. Because most divisions are likely to have only one supervisor per shift (with up to three shifts per day, depending on the facility) opportunities for upward mobility are limited if a company38 41. is I started out as a lumper, our General Manager in Vernon started out as a lumper. A lot of these top guys did. Sales Manager, Vernon cold storage warehousesmaller or has fewer departments. People may begin as temporary employees, though less frequently than on the warehouse floor. From there they tend to move to more responsibility and higher pay within their department, and occasionally into a general manager or other high-level supervisory position.Not all workers are promoted to higher levels of responsibility, but most companies described wage increases well beyond entry-level rates even if employees do not rise through the ranks. Many companies described a series of wage increases beginning at 90 days, and recurring once every year or two regardless of position. Representatives from cold storage companies and freight forwarding 3PLs said that in these sub- sectors, individuals advance in their careers not through promotion within the company, but by gaining experience and moving to another company. Often, wage gains are substantial. As one 3PL owner put it, Freight forwarders hire from other freight forwarders. Youll work for two years at $12.00 an hour, and then youll move to another guys company for $15.00 an hour.All of the people we interviewed held important managerial or administrative positions, and their personal histories confirmed that entry-level employees at most companies have the opportunity to move up the career ladder. Several noted that they began their careers as temporary employees. Others looked back at careers they never planned for, pointing out a certain kind of serendipity: I just started working here by accident, really, as a summer job. I started out building pallets for $7.00 an hour. 11 Representatives commonly pointed out that their company vice presidents begin their careers on the warehouse floor.A few of our contacts believe that while the industry has historically promoted experienced workers up to the top of the career ladder, a new era of professionalization is changing this. They seemed to attribute this to the growth of the industry, as well as public recognition of the regional economic significance of logistics. As proof, they typically cited the proliferation of certification programs and academic degrees in the community college and California State University systems that focus on global logistics.It is hard to say what the long-term effect of this will be on career opportunities in the industry. At this point, several made it clear that without industry experience, those with11 It bears mentioning that this individual began working 31 years ago, when $7.00 in the Los Angeles Area was equivalent to over $23.00 today, using the Consumer Price Index for All Urban Consumers in this region. We interviewed one packing and crating company, and employees there start at $8.00 per hour. It seems likely that crate-makers in larger operations make similar money starting off.39 42. formal degrees get little respect in the industry. The International Division Manager of one of the worlds top-grossing 3PLs put it succinctly: I look at it like this: I didnt learn this from a book, and neither did you.Several companies contribute to industry professionalization in their own way, particularly the larger multinational 3PLs. CEVA has developed an industry training program for people with bachelors degrees. The companys Torrance office also offers a training program for existing employees interested in becoming licensed customs brokers. This program is probably more beneficial to the newly licensed brokers than it is to CEVA: as CEVA already has all the licensed brokers it needs, and licensed brokers are in high demand, this program encourages successful employees to leave for higher paying jobs as customs brokers for other companies. DHL and FedEx also offer degree opportunities, providing reimbursement for college coursework.INDUSTRY HIRING PRACTICESEmployers look to several sources for new hires, but they heavily prefer referrals from current employees and other trusted sources. Most employers emphasize experience as the most important factor in hiring. Temporary agencies play a unique and growing role in logistics hiring, and many companies start all new hires as temporary employees. Temporary assignments can work for or against LGMTA participants: they provide necessary experience, but employees should not expect permanent hire if the temporary assignment exceeds six months.I got 160 resumes, and from those 160 I did 35 interviews. In the end I didnt hire anyone. And now we have a hiring freeze. This statement, from the General Manager of a major international shippers Los Angeles distribution facility, neatly encapsulates several of the issues facing goods movement companies when they hire: in general, resumes are subpar, interview skills are lackluster, many potential hires are underskilled, and many companies have instituted either a formal or informal hiring freeze as a result of the downturn in the economy.Common Hiring Sources We asked every person we spoke with about hiring practices in the industry, whether or not they represented companies or industry associations. Of those representing companies, 35 provided useful information about hiring.Word of Mouth. Most of the industry representatives we spoke with painted the goods movement industry as an old-fashioned field where a handshake and a hard days work still reign. For employers that focus on this aspect of the industry, the quickest way to a trusted new employee is often through another trusted employee. This is especially the case for jobs on the warehouse floor; friends and family often work together in the same warehouse, and it seems that employers prefer to keep it this way. (Aside from temporary staffing agencies, which we discuss below, word of mouth was the most common method of hiring that sources cited.)40 43. Internet Job Search Sites. Seven companies referred to online job search websites as either their main source of advertising open positions, or as one among many. Employers most often cited Careerbuilder.com. Careerbuilder.com is jointly owned by three major newspaper publishers, including the Tibune Company, 12 so it is also the only online job search service used by the Los Angeles Times. As a result, Careerbuilder.com has effectively replaced the Los Angeles Times print edition Classified Section, with innumerably more listings. Many employers also mentioned Monster.com and JobsinLogistics.com as useful website for listing job openings.It is worth mentioning that while some logistics jobs are posted on Craigslist.com, none of the employers we spoke with mentioned this website. Our own experience working with LGMTA participants suggests that Craigslist.com is of limited use. Many goods movement job listings on Craigslist lead to confusing instructions for money-making opportunities that do not quite amount to actual jobs. Many of the legitimate listings are no longer useful, as they are often several days old and the jobs are typically filled almost immediately.By contrast, Indeed.com is one useful website that no employers mentioned to us. This site is a job search aggregator, which means that it picks up advertisements from Careerbuilder.com, Monster.com, JobsinLogistics.com, and many other sites that advertise a variety of jobs including those in the goods movement industry.Print Classified Advertisements. Employers seem to be phasing out their use of print classifieds. Most employers we spoke with thought that they provide a bit less bang for your buck. As one industry representative said, Many jobseekers just dont use the LA Times. This perspective is helpful to have, because it seems to reflect a majority opinion among employers.Still, this employer comment is contrary to our own experience. Several of our harder to serve LGMTA participants rely only on newspapers as a source of job listings, most likely because they are either intimidated by computers or unfamiliar with job search sites