Southern California Warehousing: A Perfect Spot for Importers

Southern California Warehousing: A Perfect Spot for Importers

If you’re a merchant importing goods into the U.S., there are all sorts of factors that weigh into what port(s) you ship into. But chances are pretty good that at some point, you’ll have inbound freight coming through the West Coast, more particularly Los Angeles and Long Beach, Calif. In that case, having access to California warehousing needs to be more than just California dreamin’.

Over 40% of containerized cargo entering the U.S. comes through California ports, as well as nearly 30% percent of all exports. The Ports of Los Angeles and Long Beach rank #1 and #2, respectively, in annual container volume. According to a report from TRIP, a nonprofit provider of transportation research, California’s freight system moved 1.4 billion tons in 2022, valued at $2.8 trillion, second only to Texas. Between 2022 and 2050, freight moved annually in California by truck is expected to increase 65% percent by weight and 100% percent by value, inflation-adjusted.

California, therefore plays a key strategic role in both the domestic and global economy as a major trade gateway. It provides direct access to international shipping lanes across the Pacific Rim. When California ports face disruptions, as was the case with massive pandemic-fueled cargo volume in 2021 and 2022 led to chronic congestion, the ripple effects are felt worldwide. This led to major shipment delays, inventory shortfalls, late orders, and diversion of volume to other West and East Coast ports.

Because of its vital role, California has an unmatched supply chain and logistics infrastructure in place to support this flow of trade, in terms of storage and distribution, drayage, rail, highway, air freight, and intermodal services. Put all this together and California warehousing, particularly in and around Los Angeles, is where it’s at for merchants who want to position their import/export, warehousing, and eCommerce/DTC fulfillment operations to the best advantage.

Geographic Advantages

Southern California offers significant geographic advantages for warehousing operations involved in importing and exporting. Being in close proximity to the ports of Los Angeles and Long Beach reduces transportation lead times and costs for goods flowing between Asia and North America, making it an ideal global trade hub.

Thus proximity also makes for easier and more cost-effective logistics, especially for containerized freight. Shippers benefit from access to an extensive intermodal infrastructure designed to handle high volumes of cargo efficiently. This supports rapid distribution from port to warehouse facilities and on to final destinations across the U.S.

Southern California’s vast warehousing districts cater to a diversity of shipper needs, from bulk storage to specialized freight services. A robust local economy provides a skilled workforce and a vibrant market for goods.

The region’s mild weather conditions (OK, it does rain sometimes!) minimize the risk of weather-related delays or damages, improving operational reliability. Because of the constant flow of goods in and out of the region, economies of scale — particularly in a multi-tenant 3PL facility — can help lower operating costs for warehouse operations.

For these reasons, setting up a California warehousing operation offers logistical efficiency, economic benefits, and a strategic gateway to international and domestic markets.

Infrastructure and Transportation

Few places in the U.S. can match Southern California’s well-developed, modern infrastructure to support logistics and supply chain operations vital to the national economy. 

Between them, the Ports of Los Angeles and Long Beach have 47 cargo terminals and handle about 18 million twenty-foot equivalents (TEUs) of containerized freight annually. There are thousands of pieces of cargo-handling equipment, including dockside cranes, and hundreds of miles of rail, including on-dock rail yards.

In addition, many major 3PLs, freight forwarders, shipping consultants, cargo and customs brokers, etc. are located within the area of the twin ports in Southern California. There, you can find any imaginable service needed for facilitating export and import logistics.  

Two major railroads, BNSF (the largest intermodal carrier in the U.S.) and Union Pacific, have a combined 5,300 miles of track in California, connecting the ports to locations throughout the state and country. California also has 3,054 miles on the national Primary Highway Freight System and 64 miles of intermodal connectors. More than 800 trucking companies operate at the Ports of Los Angeles and Long Beach, totaling 16,000 trucks.

For expedited shipments, Los Angeles International Airport (LAX) is well-equipped to handle large volumes of air freight, both domestically and internationally. The proximity to the major ports allows merchants to efficiently manage inventory and meet consumer demand for fast delivery. LAX handled 2.7 million tons of air cargo in 2021.

Regulatory Environment and Incentives

California’s environmental policies are among the strictest in the U.S., impacting various sectors, including trade and transportation. The state’s transportation regulations also play a crucial role, especially for businesses involved in logistics and supply chains. California collaborates with federal agencies like the Department of Transportation (DOT) and the Federal Motor Carrier Safety Administration (FMCSA) to regulate commercial motor vehicle operations​.

California often sets the regulatory pace for the rest of the nation. In that regard, it’s more comparable to the European Union than the federal government or the other states. It has promulgated regulations on consumer data privacy, agricultural labor, gig workers (still wending its way through the courts three years later), EVs, and, of course, the environment.

California’s Warehouse Indirect Source Rule (ISR), which went into effect in 2021, was driven by concerns over idling truck engines in the Inland Empire east of Los Angeles, home to many retail and eCommerce fulfillment centers. Operators of 100,000-square-foot-plus warehouses in a district covering part of four counties have to offset emissions from medium- and heavy-duty trucks traveling in and out of their facilities. It’s the first measure to regulate facilities rather than truck operators.

On Jan. 1, 2024, California instituted its Advanced Clean Fleets (ACF) rule, requiring large fleet operators of more than 50 vehicles or $50 million in revenue to adopt zero-emissions medium- and heavy-duty vehicles.

Navigating these complex, often changing regulations poses significant challenges for businesses, especially those engaged in international trade. A local third-party logistics (3PL) partner can offer expertise on compliance and logistics management, so you can focus on your business without worrying about the risk of incurring regulatory penalties.

California supports import/export businesses through various incentives, such as tax credits and grants, that enhance the state’s attractiveness as a trade hub. These programs are designed to bolster economic activities linked to international trade, reflecting the state’s strategic importance in global supply chains.

While California’s stringent regulations on trade and transportation aim to safeguard environmental and public health and safety, they also create a web of complexity for businesses. Tapping the expertise of a local logistics provider, and taking advantage of state-funded business incentives, can help you successfully navigate these challenges.

Access to Foreign Markets

For small businesses, entrepreneurs, and startups, the Port of Los Angeles offers a program called Trade Connect. It offers introductory courses covering the basics of commercial transactions, foreign markets, financing, documentation, and logistics. There are also advanced seminars on international demand in different product categories, and emerging global consumer markets. It’s open to all, but its mission is to encourage more local businesses to take advantage of cross-border trade, which only 15% of California manufacturers do currently.

Another benefit that importers can take advantage of in Los Angeles and Long Beach is Foreign Trade Zones (FTZs). The FTZ program was established by New Deal legislation in 1934 to drive American industry and competitiveness during the height of the Great Depression, and it’s seeing increased interest from companies realizing significant savings on import costs. 

In an FTZ, foreign merchandise is designated as within international commerce and therefore outside of Customs and Border Protection (CBP) territory. This means businesses that set up in an FTZ can defer, reduce, or eliminate import duties and take advantage of other benefits, encouraging foreign commerce within the U.S. For the first time in 2022, the 197 active FTZs in the U.S. handled over $1 trillion in merchandise.

At the Port of Long Beach, FTZ #50 covers Orange County, western San Bernardino County, and most of Los Angeles County. FTZ #202 at the Port of Los Angeles takes in Los Angeles, Orange, San Bernardino, and Riverside counties, as well as three sub-zones in the cities of Vernon, Carson, and El Segundo, Calif.

Southern California Warehousing: An Ideal Gateway to Global Commerce Opportunities

Cross-border eCommerce is projected to hit $1.98 trillion in 2024, growing to $5.06 trillion in four years, according to Capital One. With such huge opportunities beckoning, it’s easy to see why Southern California, especially the busy twin ports of Los Angeles and Long Beach,is such a draw for importers and exporters.

ShipBots, a comprehensive 3PL provider specializing in LA fulfillment. We specialize in all aspects of eCommerce fulfillment, from Amazon FBA prep to apparel to subscription box services and international shipping. Our main fulfillment center is in Gardena, Calif., just miles from the port of Los Angeles. Facilities in the Midwest and East Coast enable fast, cost-efficient delivery anywhere in the country.

With easy integration into all major eCommerce platforms (Amazon, Walmart, Shopify, TikTok Shop, BigCommerce, eBay) and fast product store onboarding, ShipBots has the technology, team, and resources to make high-powered Southern California warehousing a reality for your business. Get a free quote today!

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