Crypto News: Supply Lines: US logistics warning

California's Inland Empire emerged as a poster child of the pandemic-era e-commerce boom, with the warehousing industry fueling a hot labor market and a fast economic recovery.

Now, the region is showing signs of trouble.

Its strategic location near the twin ports of Los Angeles and Long Beach means many of the items consumers buy online at places like Amazon.com or Target stop at one of the region's more than 4,000 warehouses before heading out to the rest of the US.

That dynamic helped the region that spans across the Riverside and San Bernardino counties add jobs faster than both California and the rest of the US during the pandemic. As a result, logistics employment soared 40% since early 2020, and one in three of the Inland Empire's workers is employed in the broad trade, transportation and utilities sector.

But the tide is turning, with imports into North America's largest port complex falling to an almost three-year low and the unemployment rate slowly rising as the transportation industry hits the brakes on hiring. (Read our full story here and watch the Bloomberg Quicktake here via Twitter.)

The gloomy economic outlook is putting pressure on warehousing workers making $8 less than the national average for all occupations. To help, local authorities have requested $100 billion to expand infrastructure and address environmental concerns.

But that's being met with hesitation by the some members of the community who say the constant construction is already contributing to high rates of asthma, heart disease and low birth rates.

While warehouses are still full and large developments are underway, experts are flagging that the region needs to be economically diversified. If it is over-reliant on a single industry, the Inland Empire could soon join the nation's long list of boom-and-bust cities.

"When the party ends, then you know the drop will be even faster," said Johannes Moenius, an economist at the local University of Redlands. "The more warehouses we have today or tomorrow, the steeper the fall."

—Augusta Saraiva and Amanda Albright in New York

From feast to famine | Container shipping lines will post profits of about $43 billion this year, almost 80% lower than their record net income in 2022 as a slowdown in global trade frees up capacity and torpedoes freight rates, an industry veteran said. Earnings in the fourth quarter totaled $34.7 billion, down almost 34% from a year earlier and bringing the calendar-year tally to an all-time high of $215 billion, according to John McCown, the founder of Blue Alpha Capital and a non-resident senior fellow at the Center for Maritime Strategy. That was close to his initial forecast, released at the start of last year, of $220.5 billion. In his note, McCown said profit should continue to slide through 2023, with an estimated $14.9 billion for the first quarter, $10.8 billion from April through June, and $8.7 billion both the third and fourth quarters.

Gauge drops | US factory activity contracted in March by more than expected, with a closely watched gauge dropping to its lowest level since May 2020 as measures of new orders and employment retreated.
Car demand | Many automakers are seeing stronger US new car sales as dealer inventories are replenished by higher production volumes, but those gains are being muted by high sticker prices and surging financing costs.
Sales pitch | Airbus is working to secure a multi billion-dollar sale of wide-body jets to China in a deal that could come together as soon as this week, during French President Emmanuel Macron's planned visit to the Asian nation.
Addressing imbalances | The Biden administration is pushing back against Chinese assertions that the US is containing the rise of the world's second-biggest economy, with a senior diplomat saying more assertive economic measures were necessary to produce "a level playing field."
State spending | Japan is poised to sharply raise its chip-gear spending in an attempt to boost its position in the global semiconductor market, as it tightens exports amid a US-led push to limit China's tech ambitions.
New battleground | A surprise cut in oil production from OPEC+ is now setting the stage for other producers to vie for markets in Asia.
Price freeze | Google is now offering a price-guarantee feature for flights, the latest from a little-known list of tech tools that make it easy to get the best possible airfare — every time.

Opportunity shows | Retailer supply chains are ripe for optimization, and even automation with investment in AI, making them a key focus of the 2023 Shop Talk conference Bloomberg Intelligence says.
Rates to bottom | Relative demand in North America's spot-trucking market tightened in the first quarter, according to Truckstop's Market Demand Index. The market will continue to rebalance as shippers work off excess inventories and capacity exits, which could lead spot rates to bottom sometime in the second quarter and set up a better contractual market in second half, Bloomberg Intelligence says.
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