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Ship comes in Logistics industry, once down, is not only on an upswing in state, it appears on verge of huge growth

Michael Rofman, an accountant at Mazars
Michael Rofman, an accountant at Mazars-(MAZARS USA LLP)

Take it from the guy who gets a look at the books of the state’s logistics companies: The industry is faring well these days.

Michael Rofman, an accountant at Mazars who specializes in providing auditing, tax and consulting servics to businesses in this sector, said it comes as a relief for the logistics industry, which experienced a sharp slowdown several years in a row.

“The industry is known for its ups and downs,” he said. “Volumes of shipments had been down across the board … and there were some other factors as well, such as uncertainty going into the presidential election.”

That situation gave way to a surging New Jersey logistics market as recently as late last year and the opening quarter of this year, a wave that the industry expects to ride for the next few years.

Thom Campbell, chief strategy officer at Capacity LLC, is among those appreciating the shift.

“The industry has had a dramatic recovery … with ocean container traffic up, shipping up and overall sales showing strong signs of a consumer recovery. The one dark spot is retail doors, which are suffering, but that volume is clearly moving online, so those well-positioned to capture that are gaining more than the majority of the brick-and-mortar stores.”

Many attribute the upswing to the strength of the U.S. dollar and stable fuel costs. But the impact of booming e-commerce businesses — that come with massive fulfillment needs — is no small factor, especially considering the local investments of a company largely responsible for that trend.

Catching up
Without much in the way of pomp and circumstance, ride sharing app Uber launched a long-haul trucking business with a division called Uber Freight last year.
And while the company’s self-driving trucks are far from the norm today, the ride-hailing model of Uber is being mirrored in the trucking industry by a number of startups that are already operational.
Shippers now have the ability to log into mobile apps to find an available truck that has made a delivery and is coming back to a terminal empty, explained Erik Holck of Port Jersey Logistics.
But besides it not yet being clear whether mobile apps will offer better rates and increased efficiencies, there’s another hurdle for these platforms to overcome:
“A lot of the industry runs on reputation — and you simply don’t know who you might be getting as your trucker,” Holck said. “So, not everyone is just dialing in and thinking this will be the best thing.”
Regardless, he expects that there should be a lot more of this to come in the next few years.
“Technology has been around for ages in the (logistics) industry, but it’s really just being felt in the transportation side now,” he said. “Those still wanting to do things the old-school way will have to adapt.”

“A couple decades ago, Amazon had zero physical presence in New Jersey; today, not only do they employ 11,000 people, but they’re hiring more,” said Michele Brown, CEO and president for Choose New Jersey.

The Garden State is actually the e-commerce behemoth’s largest employer on the East Coast, Brown said, and is third in that regard only to Washington state, where it has its headquarters, and California across the entire nation.

Even when the logistics industry in New Jersey was at a somewhat lower point, back in 2015, the logistics and distribution sector was already contributing more than $56.8 billion to the state’s gross domestic product.

That figure has likely seen a boost in the brief period since then, years that have featured an influx of meal kit delivery businesses choosing to base warehouse and fulfillment operations in the Garden State, such as Blue Apron and Hello Fresh.

“Large commitments from those companies (have been) centered right here in New Jersey, and that’s all happened in the past year or two,” Brown added.

While the timing of the industry uptick seems to point to an effect from the presidential administration changeover, that’s not as easy to measure.

Hauling in more workers
Each year, the logistics industry gears up for holiday deliveries, which turns up the need late in the season for an already sizable labor force of commercial truck drivers.
Erik Holck, director of business development and quality at Port Jersey Logistics, said labor constraints in the trucking sector have been apparent during the busy parts of the past few years.
It’s a workforce that’s aging significantly compared with other industries, and it doesn’t necessarily have the glamour to bring in a new generation of truckers.
John Hill, executive vice president at Pilot Freight Services, said he’s definitely seen the industry’s shortage, with the added caveat that it’s mostly confined to one segment of the business.
“It’s mostly on the long-haul trucking side,” Hill said. “Growth has been dramatic in the e-commerce home delivery area, so we need people making those last-mile deliveries. Drivers like those jobs because they get to come home at night after finishing their route. That’s the kind of job you want as a driver, so there’s less trouble finding people for it.”

Bill Parker, president of Associates Warehousing Inc., said that, among other things, President Donald Trump’s scrapping of the Trans-Pacific Partnership has gotten both good and bad reviews from shippers.

“And if you’re dealing with a place like Mexico, you might be worried about something like tariffs,” Parker said.

One positive note for the industry is that there has been more oil and gas extraction equipment coming through the port, imports that had been flat for years. The Port of New York and New Jersey faces competition for such imports — destined for Ohio or North Dakota — with southern neighbors, ports in Virginia, South Carolina and Georgia.

But shipments overall have increased since the Panama Canal was expanded to accommodate bigger ships, which was done in mid-2016. Local ports have been in a rush to expand terminals to receive the increased volumes, which could be a boon to logistics activities in the close future.

It’s a confluence of factors that advocates for New Jersey business, such as Brown, expect to keep the state’s logistics industry traveling in the right direction.

“With the way we keep on seeing these rapid changes, we’re able to confidently say that growth will continue,” Brown said.

E-mail to: brettj@njbiz.com

Brett Johnson

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