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The Ports of Los Angeles and Long Beach experienced the largest concentration of port activity in the Americas and the third largest in the world in 1999, behind Singapore and Hong Kong.
According to the Ports of Los Angeles and Long Beach, roughly eight million twenty foot equivalent units (TEUs) of goods passed through them combined last year. That represents almost three times the activity of the second largest port in the U.S., New York/New Jersey.
Airfreight activity at LAX also surged last year. According to a report by Trade Inflo Inc., air cargo imports and exports hit $67.3 billion, nearing two million metric tons.
These huge volumes of freight are an indication of the robust global market and are great news for the local economy. However, the sheer volume creates logistical challenges for cargo and transport companies –- challenges further complicated by already clogged freeways.
In moving goods through the supply chain, speed has become far more important than storage. The explosion in expedited commerce among all parties in the supply chain places an even greater premium on speed from production to consumption. Global logistics increasingly are being tailored right down to the individual SKU.
Many freight and transport companies need real estate facilities located and designed for speed, not storage. Airfreight companies can expect new kinds of on- or near-tarmac facilities that facilitate "high throughput" distribution – low cube, narrow, column-free clearspans that are double-loaded so you can ship and receive on both sides of the building. They look to locations near freeway arteries, such as I-105 and the Century Freeway, that save them time.
Transport companies also look to the South Bay industrial market. Given its strategic proximity to the Ports of Los Angeles and Long Beach, it has become a premier industrial market with rents and property values increasing significantly over the last twelve months.
The ports of Los Angeles and Long Beach will become an increasingly important part of the flow of goods. High throughput distribution buildings that facilitate the speedy movement of goods and enable time definite deliveries will be in greater demand in the future. This will mean potential profit for thoughtful investors and a driver of economic growth for the region.
W. Blake Baird is President of AMB Property Corporation, one of the leading owners and operators of industrial real estate nationwide. AMB's properties are concentrated in major distribution markets across the country -- located near airports, ports and major freeway systems.