Ties That Bind - Bay Area Council Economic Institute

Bay Area-China Trade: Behind the Numbers
These products tend to reflect local demand, since most import cargo bound for interior points
in the U.S. has historically moved through Southern California or the Pacific Northwest. Since
2004, however, freight shippers have increasingly demanded—and shipping lines have increasingly
offered—first vessel calls at the Port of Oakland in order to avoid port, rail and highway
congestion at Southern California gateways.
A number of large retailers—Home Depot, Target, Walgreen’s, Williams-Sonoma, Gap and
Dollar Tree Stores—as well as third-party logistics providers, distribution center developers and
specialty importers have opened inland warehouse facilities to receive import cargo; inspect, test,
assemble, package, label and tag specific items for retail sale; and re-load domestic containers
with regional shipments ordered by specific stores. Marine containers are then returned to the
Port of Oakland, either empty or with backhaul loads of agricultural and other products for export
or local Bay Area delivery.
New distribution center development has tended to concentrate along the I-80/I-50 corridor to
Sacramento, Placerville and Sparks, NV, and at the I-580/I-5 juncture in the Stockton-Tracy-
Modesto-Lathrop area, near the Union Pacific and Burlington Northern transcontinental rail
ramps. Grubb & Ellis Co. reported that a dramatic 3.7 million square feet of industrial property
was leased during 2005 along I-80/I-50, more than 2.6 million square feet of that in warehouse/distribution
facilities. Industrial vacancy rates overall fell from 16.5% to 14.3%, and unemployment
in affected counties fell to an average 4.6%. The San Joaquin Partnership, a publicprivate
economic development corporation, added 857,000 square feet of new and expanded
warehouse/distribution space in San Joaquin County during 2005, on top of 3.3 million square
feet in 2004.
China-related import distribution has contributed to this growth. The Port of Oakland has seen
import container volumes grow steadily since 2001, from 243,000 to 418,000 FEUs. Port container
volumes in 2005 were up nearly 11% over 2004 totals, but imports were up 20.3% while
exports grew by only 4.1%. Oakland’s share of West Coast cargo in 2005 approached 12%, as
shipping lines diversified to other ports in order to avoid congestion at Los Angeles and Long
Beach, which dominate West Coast trade. That trend has eased somewhat as Southern California
terminals have improved productivity and extended gate hours under the “PierPass” offpeak
incentive program, but inland rail congestion delays out of Los Angeles and Long Beach, particularly
along southern U.S. routes and to Chicago, remain a problem.
Exports Are Also Growing, but More Slowly
Export statistics provide a less clear picture of Bay Area-China trade, since the Port of Oakland
and Northern California are historically an export gateway to Asia for the entire U.S. Containerized
exports to mainland China via Northern California nearly doubled from 52,000 FEU in
2002 to 102,000 FEU in 2005. During that same period, exports to Taiwan increased from
39,000 to 51,000 FEU, and exports to Hong Kong declined from 35,000 FEU to 27,000 FEU.
Among non-containerized bulk shipments, exports to the PRC from 2001 to 2005—mainly
scrap metal, petroleum and chemicals—grew from 611,000 to 723,000 metric tons. During
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