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The Quest to Green an Empire of Mega-Warehouses

The Quest to Green an Empire of Mega-Warehouses
The Quest to Green an Empire of Mega-Warehouses
June 14, 2021   //   

By Patrick Sisson

Joe Gross and his family have lived in Moreno Valley, California, for decades. He’s watched as the vast fields in front of his low-slung ranch home on Bay Avenue bloom with spring wildflowers. Part of a mainly rural expanse known as the Inland Empire, the land once supported citrus groves and a horse racing track, a nod to the horse farms that still dot the region. Now, however, a new crop has claimed it: e-commerce warehouses. 

Gross will soon be neighbors with the World Logistics Center, a long-gestating, just-approved megadevelopment that will eventually encompass more than 40 million square feet of warehouse space, or the equivalent of 705 football fields.

“At least they could paint it brown, to blend in with the mountains,” said Gross, 55. Another warehouse across the way already blots the Kalmia Hills on the horizon. “I’m worried about trucks, pollution, more traffic and the roads falling apart. It’ll be an eyesore.”

This corner of Southern California, which includes Moreno Valley and nearby San Bernardino and Mira Loma, has become one of the busiest cogs in a global supply chain juiced by e-commerce and a pandemic-era boom in online orderings. Drive east from Los Angeles on State Route 60 and you hit stretches of highway that become an endless river of diesel-spewing trucks ferrying goods from thousands of warehouses.

The warehouse industry’s growth began in earnest a little over a decade ago and continues to accelerate: Commercial real estate analysts at CBRE predict 250 million new square feet of warehouses coming online in 2021, near an all-time record. The creation of this vast “inland port” has reshaped California’s landscape and contributed significantly to the region’s horrendous air quality, consistently ranked among the worst in the nation by the American Lung Association. An estimated 40% of the nation’s consumer goods come through this region.

“It’s the slow violence of the supply chain,” said Anthony Victoria, an activist with the People’s Collective, an Inland Empire-based environmental justice group. During a tour of many of the area’s clusters of warehouses, including a massive collection of Inc. facilities, he pointed out the toll that the pursuit of next-day shipping has exacted on residents, in the cracked roads and faceless industrial facilities backed up onto residential neighborhoods and communities of color.

“My generation hasn’t known an Inland Empire with citrus groves,” he said. “We’ve been born into the global supply chain.”  

But the World Logistics Center — an industrial super-site the size of three Central Parks, or six Pentagons — could be the harbinger of major changes. When the development was approved on April 30, after nine years of legal wrangling, it was due to a settlement with five environmental groups, who agreed to drop lawsuits holding up construction in exchange for a $47 million investment in electric vehicle tech and green technology, including rooftop solar panels, electric trucks and on-site vehicle chargers, $1,000 grants for local residents to buy electric vehicles, $4 million in conservation grants, and a pledge to cover 90% of air filtration costs for local homes.

The goal is to “make the World Logistics Center the most sustainable logistics center in the world,” Iddo Benzeevi, president and chief executive officer of Highland Fairview Properties, the WLC developer, told the Desert Sun. (The company did not respond to multiple requests for comment.) Other big players in Southern California freight and logistics, such as Amazon, have also been making promises to mitigate the industry’s environmental impacts. 

This comes as a constellation of new regulations and investments conspire to clean up the industry. The South Coast Air Quality Management District, a regional pollution regulation agency, approved its long-awaited Indirect Source Rule on May 7, making warehouses responsible for the pollution generated by the trucks that visit their docks, and as an agency spokesperson said, “the disproportionate air quality challenges felt by communities who live near these facilities.” The rule will force owners of roughly 3,000 warehouses to invest in various emissions-reducing clean tech options or pay funds that will be reinvested into the community for cleaner transportation. 

The powerful California Air Resource Board (CARB) also released the Advanced Clean Trucks rule last summer, pushing manufacturers to invest in developing electric trucks, and is close to finalizing the Advanced Clean Fleet Rule, which will mandate fleet owners operate an increasingly larger percentage of electric vehicles, eventually hitting zero emissions by 2045.

California Governor Gavin Newsom, meanwhile, has proposed a $1.5 billion investment in clean transportation, including funds to replace 1,150 currently operating trucks with electric models. 

“We’re working toward a zero-emissions freight system,” said Heather Arias, division chief of the transportation and toxics division of CARB. “That includes the railroads, cargo ships, and the handling equipment. We truly believe it’s possible, and are working toward regulations to make all that happen.” 

The state’s efforts have national significance, said Zac Rogers, a Colorado State University assistant professor of supply chain management, because “as California goes, everybody else goes. In the past, you may have moved your business from California to Nevada to avoid regulations. But you can’t get next-day delivery from Reno. In some ways, the warehousing folks and fulfillment companies have become a victim of their own success. They can’t really move.” 

In the Shadow of the Warehouses

The environmental settlement and adoption of the Indirect Source Rule could be huge steps towards environmental justice for the communities most directly affected by warehouse pollution, says the People’s Collective’s Victoria: He called the ISR “monumental” and sees it as a model to adopt nationwide.

“Both the settlement and the ISR are designed to get money into the community,” said attorney Adrian Martinez, staff attorney of Earthjustice, which negotiated the WLC settlement. “There was concern about having people pay a fee to pollute and not give back to the communities bearing the brunt of the emissions.” 

The region’s embrace of warehouses has its roots in the closure of Norton Air Force Base in 1994, which took 12,000 jobs away and left an economic vacuum that local leaders sought to fill with a new industry. Elected officials in counties and municipalities across the region, who often received campaign contributions from warehouse developers, helped pave the way, approving new projects that turned vast expanses of flat and cheap land, including dairy farms and orchards, into new warehouse projects. 

After the Great Recession, warehouses were suddenly everywhere, says Ben Reynoso, a gun-violence-activist-turned-environmental-justice-crusader who was recently elected to the San Bernardino City Council. The logistics boom brought jobs: Transportation and warehousing now account for nearly 12% of all jobs in Riverside and San Bernardino counties. But the downsides have become increasingly impossible to ignore. Childhood asthma rates have spiked, with some doctors calling the neighborhoods near distribution centers and highways “diesel death zones.” 

“Every summer the sky gets thicker and thicker, with truck traffic spilling into neighborhoods,” said Reynoso. “There’s just constant awareness that there’s a warehouse near here. I can’t see the mountains next to my home some days. I can’t see 200 yards, it’s so gray.” 

Today, the base is now the San Bernardino International Airport, mostly a cargo freight hub, surrounded by a warren of white, panelized, flat-roofed warehouses with small identifying marks to break up the monotony. Amazon Air, decorated in the trademark swoosh with blue trim, is just a few miles from other massive Amazon facilities, including the ONT2 and ONT5 fulfillment centers.

The rest of the surrounding working-class Highland neighborhood shows the wear from its new neighbors; the streets full of modest stucco homes lack sidewalks and are pockmarked from constant truck traffic; some homes nearby bump into the multistory storage facilities next door. The Jet Lounge across the street from the airfield is boarded up. Empty lots have been turned to truck yards, so drivers have places to park as they wait to load or unload.

Reynoso believes the environmental settlement and new rules can be an opportunity to reshape the local economy in a more sustainable way, by helping to create a green-tech sector centered around the global logistics and warehouse industry. “We’re uniquely positioned down here to create career pathways to develop solar power, or the electric engine that can move freight,” he said.

He also called a vote in council in June to place a moratorium on new warehouse construction that lost by a single vote (the city has approved 26 projects covering nearly 10 million square feet since 2015). But he says he’s not against the logistics industry: The settlement and ISR are not anti-development or anti-business as much as they are “pro-life,” he says. 

“This is what the nation should be modeling in terms of cleaning up irresponsible development, and holding the developer accountable in a way that benefits the community,” he said. “Families in the Inland Empire literally share back fences with warehouses.” 

The juxtaposition between some of the globe’s richest firms and the neighborhood’s crumbling infrastructure is one of many scenes that coax Victoria into talking about the need to bring better jobs to the community. To him, arguing that fulfillment centers are a good deal for the area is another way to say those living in this region aren’t capable enough to have a better quality of life.

That’s why his colleague, Ivette Torres, says it’s so important for a rule like the ISR to be passed. Elected officials typically use land-use authority to approve all warehouse projects, overriding the objections of low-income communities by arguing the area needs jobs. “These projects keep getting approved without any sort of regulations,” she said. “This rule is the first of its kind to do anything for an industry that didn’t have much in the way of regulation.” 

The jobs promise also rings hollow to Reynoso. When area leaders and economic development experts say all the warehouse-related economic activity helped the city of San Bernardino recover from a 2012 bankruptcy, he points to stats saying half of the region’s renters spend 50% or more of their income on housing. According to reports by the Economic Roundtable and Brookings Institution, the average wage of a warehouse job, $22,000, falls far below the $36,000 each adult in a two-parent household needs to make ends meet. Warehouses also churn through their workers: One study found San Bernardino Amazon facilities hit a 98.6% turnover rate, meaning nearly as many left as worked in the facility in total. 

Asked to comment on that study and on the company’s position on the Indirect Source Rule, an Amazon spokesperson cited the company’s climate policy and the Climate Pledge, a “commitment to be net-zero carbon across our business operations 10 years ahead of the Paris Agreement,” which includes investments in electric delivery vehicles and increasing use of renewable energy sources, and the $2 billion Climate Pledge fund to support decarbonizing services and startups. “We are committed to finding innovative solutions to reduce emissions and are transforming our transportation network with investments that help us deliver packages more sustainably to support the communities where we operate,” the spokesperson said. 

How Green Can the Supply Chain Get? 

Within the logistics industry — a varied collection of trucking, real estate developers, e-commerce firms, shipping companies, and other interest groups — there has been some pushback over the new environmental laws. Some developers warn that the adoption of expensive new equipment could force the industry to make job cuts. The South Coast AQMD’s own analysis suggests up to 10,000 jobs could be lost a year due to the ISR. But there’s also a sense that the industry’s turn to a more sustainable model is inevitable. 

“I’m convinced the transportation and logistics center has embraced and accepted the idea that electrification and sustainability are part of their future — that’s not a controversial statement in any way,” says Anne Goodchild, who runs the Urban Freight Lab at the University of Washington. “The general preference is for carriers and shippers to make those choices themselves, to have the flexibility to choose what’s right for them.” 

That sums up the position of the California Trucking Association. “In the right use cases with supporting infrastructure, economics for these vehicles will turn positive in the coming years,” said Chris Shimoda, CTA’s vice president of government affairs. “But as illustrated by the ISR, bad policy that doesn’t actually help deploy zero-emission vehicles can result in harm to blue-collar workers.”

Some experts argue that electrification and autonomous trucking will end up saving the industry money in the long run. “The economic benefit of an electric vehicle is compelling,” said Gregg Healy, leader of industrial and logistics services in North America for the commercial real estate firm Savills. Moreover, cleaning up truck exhaust and pollution “will reduce the stigma of having industrial properties in your backyard.”  

The ISR uses a point-based system that rewards companies for switching trucks to natural gas, considering that fuel a cleaner alternative to diesel power that can be a bridge to no emissions. Amazon, for example, plans to invest in battery electric trucks as well as more than 700 compressed natural gas Class 6 and Class 8 vehicles that run on renewable natural gas.

Victoria, however, strongly advocates going all-electric now, since trading one fossil fuel for another still means more emissions and pollution. Arias at CARB agrees that trading one fossil fuel for another won’t delay the inevitable. “We’re being clear to the industry that the endgame is zero,” Arias said. “You can decide as an industry if you want to go to natural gas now, but by 2045 you need to be zero.” 

Others see the supply chain greening from the point of delivery backwards: Several companies are piloting electric delivery bikes in urban areas, and Amazon is investing in 100,000 all-electric vans from startup Rivian with plans to have 10,000 on the road by 2022. 

Once the Advanced Clean Fleet rule gets finalized and passed, questions remain on how long it will take members to upgrade and electrify their fleets, and whether the other parts of the U.S. with outsized logistics footprints — Pennsylvania’s Lehigh Valley, I-78 in Berks County, Texas, the I-55 corridor outside Chicago — will follow California’s lead. “Communities don’t want a Band-Aid solution that will cause more impact in the long run,” says Torres. “That’s where the next battle is. We hear the trucking tech isn’t there yet, but in the coming years it’ll become a lot more accessible and affordable. Right now, truckers and community members need help from their employer to transition to zero emissions.” 

Progress can’t come fast enough for Torres and other activists watching diesel-burning trucks graying the skies around the Inland Empire. The impact of this once-unseen industry, good and bad, is becoming harder to ignore.

“These regulations are a response to the idea of shadow costs,” said Colorado State’s Rogers. “Right now, it’s so much easier to measure these things. Jobs had always been easier to measure than carbon emissions. But now that you can better quantify these costs, it’s so much easier to set a precedent.”