International Trade and Logistics: a million-job economic strategy.

President Eisenhower saw the tie between transportation infrastructure, economic efficiency and living standards and subsequently proposed the Interstate Freeway system. Imagine our economy without it. Today, Southern California faces similar challenges. To unleash our economy's full power, the lack of truck, rail, airport and port infrastructure must be fixed. Investments in doing so will allow our logistics and construction sectors to accelerate, providing 1,000,000 good-paying blue-collar jobs. With manufacturing weakened, this is our only available strategy to raise living standards for workers, while reducing the deleterious effects of diesel engines and transportation congestion.

In 2003, 44.6 percent of Southern California's adults hadn't attended one college class. Once, they could succeed by climbing the manufacturing sector's skill ladders. But California's manufacturers lost 324,800 jobs from 2000-2004 (-17.8 percent). Fortunately in Southern California, the logistics sector can more than replace them. In 2003, it employed 550,000 people. Importantly, unskilled workers earn entry-level pay well above minimum wage ($10-$12/hour) and can move up toward the sector's 2003 average pay of $45,314 by on-the-job learning. That's better than manufacturing ($43,871) or construction ($40,439).

Logistics pays well because the sector is among the country's most capital and information intensive. This is required by the speed required to react to customers who only order goods when their inventories are disappearing. Complex information systems thus govern functions like receiving orders, transmitting them to foremen, communicating with warehousemen, picking and placing packages on conveyor belts, tracking containers along highways, assembling merchandise or driving delivery routes.

Since 1990, the rise of Asian trade and the use of just-in-time systems have made Southern California the nation's goods handling center. From 2000-2004, containerized volume through the ports went from 9.5 million TEUs (20-foot equivalent containers) to 13.0 million, with a 2010 forecast of 18.3 million. The advent of giant container ships, too wide and deep for the Panama Canal or San Francisco Bay will send most of this cargo here, if Southern California builds the infrastructure to handle it.

However, the growth of logistics is not guaranteed. Giant warehouses, port expansions and intermodal facilities require large tracts of land. Goods moving from the ports to local warehouses and then to national destinations are causing heavy truck traffic, long waits at rail crossings, noise and diesel fumes. These difficulties are engendering stiff opposition. Fortunately, strategies exist to allow the logistics sector to expand while dealing with them:

Two dedicated truck lanes are proposed, each way from the ports up the 1-710, east to the 1-15 and north to Victorville. These lanes would reduce congestion, driving dangers and deterioration on automobile lanes. Truckers would get faster average speeds and lower congestion. Research shows that truckers could help retire the construction debt to build this system by paying a fee to use it that would only represent a small part of their extra profits from it.

New railroad track is proposed from the harbors through the Inland Empire as well as grade separations at major streets to eliminate vehicle bottlenecks and train horns. New intermodal yards for railroads would allow more transloading of containers between trucks and trains. A short-haul rail strategy is proposed, using an "inland port" intermodal facility. This would divert some of the 1.3 million truck-hauled containers going from the harbors to inland warehouses. Using this system, anticipated average rail system delays of three hours in 2012 would be cut to a half hour.

For the environment, $10 billion is proposed. This would go for projects such as having ships use on-dock electrical--not on-board diesel--for power, replacing old dirty trucks, and speeding the conversion of rail, railyard, port and truck engines to clean technologies.

With this full system in place, retailers will benefit financially from increases in the speed and reliability of their deliveries. Research shows that by investing only a small portion of these gains into container fees, they would also help repay the debt incurred in building it.

Finally, the huge volume of trade entering Southern California is partly the result of federal trade policy. Yet, none of the tariffs collected are invested into the landside infrastructure to move containers cross-country or deal with the attendant health issues. The U.S. has an obligation to do so. Their contribution would complete the financing to allow Southern California to handle the growing volume of goods, clean up the environment and create 1,000,000 jobs.

John E. Husing, Ph.D., is Vice President of Economics & Politics Inc.