E-commerce, Warehousing and Distribution Facilities in California: A Dynamic Landscape and the Impacts on Disadvantaged Communities

Research Team: Miguel Jaller (lead), Xiaodong Qian, and Xiuli Zhang

UC Campus(es): UC Davis

Problem Statement: E-retail sales have experienced a 15% steady year over year growth during the last few years. Although there are circumstances where e-commerce is environmentally beneficial compared to traditional retailing, the full impacts of logistics decisions allowing for expedited and reliable delivery services (which increased the popularity of e-commerce) are not fully understood. One of these logistics decisions is the location of the facilities along the supply chain; particularly, the warehouses and distribution centers. In Southern California, there is evidence of changes in supply chain location decisions where e-fulfillment centers for rush deliveries are locating closer to denser areas. The extent of this phenomenon is not clear, in terms of its magnitude or the specific communities affected from the increased freight activity. Nevertheless, there is already a concentration of freight facilities in specific locations in California, and the vehicle (mostly diesel trucks) movements to and from these facilities are affecting both disadvantaged and low-income communities.

Project Description: This work addresses the distribution of warehouses and distribution centers (W&DCs) influenced by e-commerce, through spatial analysis and econometric modelling. Specifically, this work analyzes the concentration of W&DCs in various metropolitan planning organizations (MPOs) in California between 1989 and 2016-18; and studies the spatial relationships between W&DC distribution and other demographic and environmental factors through econometric modeling techniques. The work conducts analyses to uncover common trends in W&DC distribution. The analyses used aggregate establishment, employment, and other socio-economic information, complemented with transportation related variables. The results: 1) confirm that the weighted geometric centers of W&DCs have shifted slightly towards city central areas in all five MPOs; 2) W&DCs show a non-decreasing trend between 2008 and 2016; and 3) areas with more serious environmental problems are more likely to have W&DCs. A disaggregate analyses of properties sold and leased in one of the study regions shows a trend where businesses are buying or leasing smaller facilities, closer to the core of consumer demand. Among other factors, the growth of e-commerce sales, and expedited delivery services, which require proximity to the customers, may explain these trends. The study results provide insights for planners and policy decision makers, and will be of interest to practitioners, public and private entities, and academia. Caltrans, MPOs, and affiliated institutions will directly benefit from the results as they want to avoid equity issues brought by the fast development of e-commerce, and its potential impact on W&DC distribution.

Status: Completed

Budget: $76,685

Policy Brief(s):