Just 40-miles east of Los Angeles is Southern California’s Inland Empire (IE), comprised of the San Bernardino and Riverside counties. It’s also home of the Ontario, CA – a top five truckload freight market year-round.
It is also one of the fastest-growing population centers in the U.S., covering over 27,000 square miles with nearly five million residents.
The IE is one of the largest warehouse markets in the country, serving as a sorting, storage and shipping hub for the hundreds of thousands of imported containers that arrive in the Ports of Long Beach and Los Angeles. The freight market has been in the news during the ongoing port congestion crisis, as record import container volumes flow into warehouses before being shipped out all over the country.
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According to the latest import data from IHS Markit PIERS, 33% of imported containers arrived in Los Angeles in December with China alone accounting for 67% of monthly volume – furniture imports remain the number one imported commodity
The growth rate of the IE is directly relational to the volume of loads and the increase in spot rates on high-volume lanes. According to an analysis by the Center for Economic Forecasting and Development at the University of California, Riverside School of Business, the number of people working in transportation and warehousing in the IE, the third largest work sector behind Education and Government, has increased by almost 24% during the Covid-19 pandemic. Employment growth and surging imports volumes have pushed commercial property vacancy rates to its lowest levels in its history, according to leading global commercial real estate firm CBRE.
What makes the Inland Empire one to watch for carriers and brokers?
Nearly all large truckload carriers having a truck terminal in the IE, and it’s a top 5 warehouse market ranked by commercial warehouse square footage. Warehouse markets like Ontario, Phoenix, Denver and Stockton have been deluged with retail freight since the pandemic took hold. And as Class 1 railroads struggled to move a larger share of the surging import volumes, truckload carriers stepped in to take market share on traditional intermodal routes.
The most noticeable increase in truckload volume in the last 18 months has been on the Los Angeles/Ontario to Chicago freight lane where truckload volumes have almost tripled. It’s also a lane frequently used by intermodal shippers, with an estimated 30% of all intermodal moves on this lane alone. Inland congestion in Chicago and the suspension of intermodal services last year allowed truckload carriers to pick up significant market share but at a premium for shippers.
Spot and contract rates on this lane have increased 61% and 51% respectively in the last 12 months, as shippers, desperate to secure capacity and on-time deliveries, moved freight from the lower cost intermodal network to truckload.
Is this growth likely to continue?
There are still over 100 container ships waiting an average of 18 days to unload, so surging volumes of imported freight landing in the IE is set to continue well into the second quarter of this year.
For carriers and brokers, the Ontario freight market is one to watch for higher spot market volumes throughout the first quarter, especially while the pandemic rages, work-from-home continues and online purchasing of imported goods from Asia continues to influence truckload demand.
