America’s Logistics Industry Becoming an Economic Powerhouse

Logistics is becoming a growing American economic force.  Driven by technological changes creating more efficient supply chain operations and consumer behavior changing the face of retail where goods and services are delivered directly to the purchaser, logistics is a growing industry worthy of attention. From an industry definition standpoint, the logistics industry includes transportation and warehousing workers.  According the Bureau of Labor Statistics (BLS), 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.

As the table from BLS data illustrates, America’s workers in the transportation and warehousing occupations has seen a dramatic rise in the last ten years.  While still substantially behind manufacturing for total workforce, the manufacturing sector lost workers over that same timeframe. The average earnings for these workers are nearly $25 an hour and the industry as a whole is valued at over $540 B to the US economy. 

Another way to illustrate the strength of the logistics marketplace is to track how it is impacting growing regions.  As the chart below illustrate, the vast majority of the top twenty growing Metropolitan Statistical Areas (MSAs) as measured by Gross Domestic Product (GDP) growth have a location quotient higher than 1 for Trade, Transportation and Utilities industry.  A location quotient is an economic measure of whether a region has a higher than average share of jobs in specific industries.  A location quotient measure of greater than 1 confirms that region does have a higher than average allocation of jobs in that industry. 

As the data above indicates, only tech heavy and very expensive markets for real estate and labor like San Jose and San Francisco are way below average when it comes to the strength of the logistics market.  While these regions are successful due to a number of factors, the across the board strength of the logistics marketplace illustrate there is some impact of for the logistics industry on their overall economic strength.

Logistics is gaining economic steam and more corporate site location projects are likely coming down the pike soon as regions and states work to attract these job rich projects.