The Lehigh Valley’s logistics boom is impacting wages, construction and infrastructure

Since the start of the COVID-19 pandemic, growth in the e-commerce, logistics and transportation industries, which were already booming in the Lehigh Valley, has gone full tilt.

According to the Lehigh Valley Economic Development Corp., the Lehigh Valley’s gross domestic product for transportation and warehousing was $2.5 billion in 2019, and while newer numbers are not available, job growth statistics indicate that number should be dramatically higher today.

The number of jobs in the logistics industry grew from 22,005 in 2015 to 34,477 in 2020, according to the Lehigh Valley Economic Development Corp.

Reading-based Penske Logistics, which employs more than 10,000 truck drivers across the country, said the demand for drivers in the region is strong.

“We are seeing tremendous demand for truck drivers in the Lehigh Valley; it’s one of the most challenging driver markets in the country,” said Jeff Jackson, senior vice president of operations for dedicated contract carriage at Penske Logistics. “The local transportation companies that we hire to service our customers, to pick up and deliver freight regionally, have been kept busy by the work we have given them. These small companies in the greater Reading-central Pennsylvania-Lehigh Valley markets appear to be doing well in this environment.”

That demand for workers in the sector has led to higher wages, according to Don Cunningham, president and CEO of the LVEDC. Because of the demand, workers in the sector had an average weekly salary of $844 in Lehigh and Northampton counties by the third quarter of 2020. That’s led to nearly full-employment in the sector, he said. Even low-skilled labor at these logistics facilities are seeing starting wages that are generally higher than $15 an hour.

“These are wages we’ve not seen in our history for non-skilled workers,” Cunningham said. “Most regions in the country would kill to have full-employment for their non-skilled labor population.”

The need for logistics space, which includes pack-and-ship companies like Amazon, retail aggregators, like Zullily, third-party logistics providers and direct-to-consumer ecommerce companies, has kept the construction industry hopping.

The Lehigh Valley had nearly 9 million square feet of industrial and flex space under construction at the end of 2020, Cunningham said. By that measure, Lehigh Valley’s construction activity was among the busiest in the nation, ranking only behind Nashville and Austin. Much of that was in the logistics sector, he said.

Growth in the sector is so strong, the only thing hampering its expansion at this point is the availability of land, he said.

The pace continues

And, the construction isn’t slowing down. Much of it is in providing infrastructure needed to accommodate the increased traffic coming in and out of the region.

Lehigh Valley International Airport just announced plans to build space to meet the increased air cargo coming into the Hanover Township, Lehigh County airport. Since 2016 LVIA has seen a 165% increase in cargo traffic — going from processing 47 million pounds to more than 126 million in 2019 and 210 million during the COVID-19 bump last year.

The Lehigh Northampton Airport Authority recently hired Aviation Facilities Company Management LLC of Dulles, Virginia, to plan and develop portions of the airport’s property to help plan cargo, logistics and other airport facilities to help meet the demand.

“Developing air cargo infrastructure remains a strategic goal for the Airport Authority,” said Thomas R. Stoudt, executive director, LNAA.  “Partnering with the AFCO team on this important initiative will allow Lehigh Valley International to better serve our current air cargo demand, while providing expansion opportunities for new and existing businesses. This partnership will increase the ability of cargo carriers to serve the growing demand in our region.”

The increase in traffic, including truck traffic, has also led to the widening of a number of roadways in the Lehigh Valley, including Route 22 and Route 412. Right now the region is feeling the growing pains of the transition to a logistics-heavy region, with increased truck traffic and the sprawl of big-box buildings into suburban and rural areas. But, he said, with the infrastructure improvements that are coming, traffic issues should ease in the future.

“You need to adapt and you need to adjust, and that’s exactly what the Lehigh Valley is doing,” Cunningham said.

While issues like open space and farmland preservation are an important concern in the community and developers should be mindful of the impact of the construction boom, Cunningham said the growth is coming from the demand right in the community.

“Ask yourself how many products have you been ordering online and having them delivered to your door,” He said. “”Every package that has been delivered to my door versus me going to the store – that’s a truck that brings it.”

But for those concerned by the fast development of logistics and ecommerce facilities and the number of trucks on the road, Cunningham said he believes the boom is slowing.

“I think we’ve peaked as far as the large scale build out of logistics,” he said. “But, it’s still a great place to move your product and it’s also a great place to make your product.”