1. Economics Of Southern California’s Logistics Industry John Husing, Ph.D. John Husing, Ph.D. Economics & Politics, Inc. Economics & Politics, Inc.

2. So. California’s Falling Economic Status Vs. Other U.S. Multi-County Areas

3. Key Labor Force Issue: Adults Without A Single College Class

4. Path to Prosperity: The Right Kind of Jobs Southern California Based Blue CollarGood Entry Level PayDefined Career LadderOn the Job LearningTech Dependent

5. Sectors With Few Training Barriers To Beginning Employment Mining ($90,491) Manufacturing ($48,397) Logistics ($47,411) Construction ($42,714) Gaming($29,785) Retail Trade($28,108) Hotel/Motel($24,108) Agriculture ($23,474) Eating & Drinking($15,132) Blue Collar

6. Total Payroll Growth: Main Blue Collar Sectors

7. Manufacturing Jobs, 1990-2005 Lost: 361,300 of 1,279,600 in 1990 = -28% China & India Now Allowing Their Entrepreneurs To Compete

8. Manufacturing May Grow Slowing … BUT Training Will Still Be In Great Demand Semi-Skilled Replace Retiring Skilled Baby Boomers Semi-Skilled Replace Retiring Skilled Baby Boomers Entry Level Replace Semi-Skilled Moving Up Entry Level Replace Semi-Skilled Moving Up New Entry Level Workers New Entry Level Workers Specific Niches (Green) Specific Niches (Green)

9. Logistics Sector Characteristics

10. $71,871 $50,703 $49,011 $48,259 $47,411 $41,797 $39,802 $37,136 $36,317 Rail transportation Wholesale trade Support activities for transportation Air transportation LOGISTICS GROUP Water transportation Warehousing and storage Couriers Truck transportation Sources: CA Employment Development Department, U.S. Railroad Retirement Board, U.S. Bureau of Economic Analysis U.S. Bureau of Economic Analysis, 2002 Economic Census, U.S. Census Bureau Exhibit 12.-Mean Average Pay Per Worker By Logistics Sector Southern California (7-Counties), 2005 Logistics Sub-Sector Pay

11. Logistics Sub-Sector Payroll Growth

12. Good Pay Due To Use Of Technology Computerized Order Receiving Personal Digital Assistants Robotic Goods Handling Random Product Testing & Measurement Equipment Geographic Information Systems Truck Routing Laser Scanners Global Positioning System Tracking of Vehicles Internet Communications Manufacturing Inside Warehouses

13. Median Pay By Education Wholesale Trade Entry Level $24,232 Moderate Experience $44,637

14. What Drives Demand: International 1. 1.Port Container Volume (2000-2005): +8.5% per year 2. 2.Port Breakbulk Tonnage (1995-2005): +2.5% per year 3. 3.Air Cargo Tonnage Forecast (2005-2030): +4.6% per year

15. Exactly What Shippers Want Goods Made in Asia Shipped in Containers Unloaded at our Ports Transported on Trains And by Trucks To Distribution Centers To Arrive at Retailers International Supply Chain Management

16. Soaring International Containers Thru So. Calif. 3.73.8 4.1 4.4 5.1 5.4 5.8 6.5 7.5 8.2 9.5 9.6 10.6 11.8 13.1 14.2 15.8 42.5 1990 1991 1992 1993 1994 19951996 1997 1998 19992000 2001 2002 20032004 2005 2006 2030e TEU=20 foot equivalent container units Source: Port Import Export Reporting Service; forecast: Moffatt & Nichol Engineers Exhibit 6.-Port Container Traffic Ports of Los Angeles & Long Beach, 1990-2006 & 2030e (million TEUs) 2005 41.5% U.S. Imported Containers 24.1% U.S. Exported Containers 2007 YTD LA up 11.2% LB up 1.1%

17. So. California Has Strong Competitive Advantages For Logistics West Coast Location Deep Water Ports Only Competitors: Seattle, Vancouver Better Land Side Infrastructure Come To Southern California First Retailers save 18-20% of inventory cost managing goods from So. Calif. Not Asia.

18. Ports handle 1/3 of all U.S. containers 2/3 of Asian containers Over 70% of imports pass through to other markets 1. West Coast Location

19. 2. Ports On West Coast Nearest Asia Los AngelesLong Beach Ships Bump Into Us First

20. 3. Deep Water Ports As Ships Need Over 50 feet of Water 8000-Container Panamax Ships

21. 4. Competitors Much Smaller Port Region Imports Exports LA-Long Beach 60.5%39.7% Other US West Coast16.1%30.8% US Gulf + East Coasts23.4%29.5% Note: Shares measured on a TEU basis Source: PIERS, courtesy of MARAD

22. 5. Best Land Side Infrastructure At Ports

23. 6. Best Land Side Infrastructure State-of-the-Art On-Dock Facilities

24. 7. Best Landside Infrastructure So. California’s Goods Handling Complex

25. 8. Huge Internal Population

26. 9. Non-So. CA Handling = Slow Deliveries ORDER Nation-wide order placed with Asian Factory 75 - 100 DAYS OUT: Depart Destination Port 1- 5 Committed 27 - 55 Days Retail Stores Arrive at Destination 1- 10 En Route to Destination Port 25 - 40

27. 10. So. CA Gives Faster Deliveries ORDER Nation-wide order placed with Asian Factory 75 - 100 DAYS OUT: Depart Destination Port 5 - 9 Committed 6 - 18 Days Retail Stores Arrive at Destination 1- 9 En Route to Trans-Loading Destination Ports 25 - 37 Allocate goods just before vessel arrives Average of one month advantage

28. What Drives Demand? Domestic 1. 1.Inventory:Sales Ratio 2. 2.E-Commerce 3. 3.Population Growth 4. 4.So. Calif. Retail Per Capita after inflation 5. 5.Local Manufacturing

29. 1. Just In Time Inventory Trend

30. 2. Long Term Sector Strength: Domestic E-Commerce Soaring

31. 3. So. California’s Population Growth

32. 4. Retail Trade Per Capita After Inflation Means More Goods Moving Per Person $5,608 $5,696 $5,861 $6,037 $6,201 $6,589 $6,988 $6,770 $6,604 $6,700 $6,984 $1,375 24.5% 199419951996199719981999200020012002200320041994-2004Percent Sources: CA Board of Equalization, CA Department of Finance, U.S. Bureau of Labor Statistics Per Capita Taxable Retail Sales (constant dollar) Southern California, 1994-2004 (1984-1986=100)

33. 5. Local Manufacturing Only Driver Declining Lost: 361,300 of 1,279,600 in 1990 = -28%

34. Job Growth If Trade Grows ActivityJob Creation Logistics Natural Growth 559,000 Construction: Rail Capacity, Grade Separation, Truckway 277,000 Multiplier Impacts: Logistics 334,000 TOTAL 1,429,000 Exhibit 4.-Logistics Investment, Job Creation, 2005-2030 1,000,000 Job Strategy Multiplier Impacts: Construction 258,000 894,000 535,000

35. What’s Left To Do …

36. Dedicated Truck Lanes Expanded Rail Capacity Electrified Dedicated Short Haul Rail New Intermodal Facilities Vetted Projects From Agencies Inland Port 1. Agreement On What To Build

37. 2. Agreement On Environmental Mitigation Program Diesel $10 Billion SCAG Study Cold Ironing, Buy/Retire Trucks, Green Goats, Tier III Engines, Clean Fuels, Retrofits, Carl Moyer …

38. Husing: Job Creation Capability & Pay Levels Leachman: 18%-20% Cost Savings From West Coast Handling Leachman: $200 Fees Not Divert Transloaded Cargo SCAG: Clear Time & Reliability Savings Justify Costs 3. Industry Peer Review of Research $$$

39. Caltrans LA Metro Transit, OCTA, RCTC, SANBAG, VCTC Multi-County ACTA Gubernatorial Appointed Multi-County Board 4. Institution(s) To Manage a Multi-County Process

40. Design Build To Lower Cost & Increase Construction Speed Public:Private Infrastructure Legal Tax Credits For Private Investment In Infrastructure Voluntary Container Fees & Road Tolls 5. Federal & State Legislation on Funding Tools to Lower Costs

41. 6. Infrastructure Bond Program to Jump Start Process Can Governor & Legislature Agree? They Did … As Did The Voters!

42. 7. Federal Funding of Trade Related Infrastructure Tariffs Collected at Ports Go to General Fund Need Federal Goods Movement Infrastructure Fund Use Growth of Tariffs For National Program

43. 8. Private Sector & Union Leadership Support Agenda SCAG IETC LAEDC SCLC LA C of C ILWU Unions

44. Consensus on How to Address Issues 9. Health, Community, Environmental Leaders Support Agenda Diesel

45. Governor State Senate Assembly House Senate 10. Elected Official Understand & Move Agenda Forward

46. Leaders Have Changed The Economy Inter-State Freeway System President Eisenhower State Water Project Governor Pat Brown

47. Logistics Gives Us The Chance Do It Again & … We Owe It To Our Blue Collar Workers To Make It Happen!

48. www.johnhusing.com