Lehigh Valley Flexes its Logistics Muscle as E-Commerce’s Star Rises During COVID

By Nicole Radzievich Mertz on December 15, 2020

The Lehigh Valley transportation network that offers direct access to Interstate 78 and 80, the Pennsylvania Turnpike Northeast Extension and major roadways such as U.S. Route 22, PA Route 33, and PA Route 309.

The Lehigh Valley transportation network that offers direct access to Interstate 78 and 80, the Pennsylvania Turnpike Northeast Extension and major roadways such as U.S. Route 22, PA Route 33, and PA Route 309.

More consumers during the pandemic are finding there is no place like home for holiday shopping – as online sales are expected to climb this season by 40% to $234.9 billion.

It is a seismic shift in spending that will require the muscle of logistics hotspots like Lehigh Valley to deliver the merchandise by Christmas. Toys, jewelry, electronics and other purchases are wending through Lehigh Valley’s vast network of distribution centers and transportation hubs.

The work is expected to continue long after the New Year as gifts are returned and more consumers become comfortable with e-commerce. The growth in online shopping could require as much as 400 million square feet of distribution space to process returns and as much as 1.5 billion square feet of additional industrial space nationwide over the next five years, according industrial real estate brokerage CBRE’s latest forecasts.

“The Lehigh Valley is a vital link in this supply chain and at the forefront of this new retail market,” said Don Cunningham, Lehigh Valley Economic Development Corporation (LVEDC) President and CEO. “Logistics employers are adding jobs and building distribution space to meet the increasing online shopping demand. Wages in this sector continue to rise past $15 hour for entry level workers.”

Online shoppers tend to return items more often than those who shop in person. Returned items need to be inspected, possibly repackaged, restocked or sent to a discount merchandiser. The December CBRE report says so-called “reverse logistics” require about 20% more space and labor than the supply chain responsible for the initial delivery. Lehigh Valley is well positioned to fill those needs.

“Companies prize the Lehigh Valley’s location within a short drive to 40% of U.S. consumers and its talented workforce, which will be even more important as e-commerce grows,” Cunningham said.

Within 90 minutes of international ports of New York and Philadelphia, Lehigh Valley is criss-crossed by interstates that connect to inland ports including Columbus and Nashville. The Lehigh Valley metropolitan regions boasts 108.9 million square feet of logistics space, according to Co-Star, one of the leading providers of commercial real estate information and analytics. Another 7.3 million square feet is under construction.

“It’s hard to be pessimistic about Lehigh Valley when it comes to logistics,” Co-Star market analyst Ben Atwood said. “I would expect Lehigh Valley to be in a remarkably strong position if the e-commerce trend continues.”

Every major industrial sector lost employment during the second quarter of 2020 but the Transportation and Distribution sector. (Graphic/Liz Martin)

The number of new jobs in that sector reinforces Atwood’s optimism. While initially hit by the fallout from the COVID-induced recession this spring, employment in the transportation and distribution sector was the only one in Lehigh Valley to recover its employment by June. The average second-quarter employment was 32,279 in Lehigh and Northampton counties – about 6% more than the previous year, according to the Quarterly Census of Employment and Wages.

Demand continues in the industry during a historically busy season. New job postings for typical logistics occupations exceed the ads from last year. There were 1,006 new postings for stocking and material moving occupations in October and November 2019 compared to 1,921 over that same period in 2020, according to Chmura Economics JobsEQ.

Last month, FedEx announced it has plans to hire 1,300 people for its new facility in Upper Macungie and Amazon expected to hire 500 more at its Lehigh Valley distribution centers to keep up with the holiday season, according to published reports.

The number of new job postings for stockers and material movers has increased over year over year. (Source: Chmura Economics JobsEQ)

Growth in employment will continue as new distribution centers come online. Co-Star projects there will be as much as 20 million square feet more of logistics space added to the Lehigh Valley region, which also includes Carbon and Warren counties, in the next five years.

Co-Star’s Atwood called that “just incredible,” adding investors value the junction of I-78, I-476 and Route 22.

It’s part of a recent trend in Lehigh Valley’s economic story where developers have completed 18 industrial buildings larger than 500,000 square feet in the last five years, and have 8 more under construction. The companies locating and expanding their footprints in Lehigh Valley include e-commerce giants like Amazon and Wal-Mart but also popular brands like the California-based women’s clothier Lulus and Irish retailer Primark. Last month, Forward Air Corporation – a leading asset-light freight and logistics company from Tennessee – announced it will be leasing space in LVIP VII.

“The Lehigh Valley area is highly attractive for us,” Forward Air President and CEO Tom Schmitt said. “With manufacturing on the rise and a very capable workforce, we see a tremendous opportunity to grow with the region.”

Third-party logistics companies including Fed Ex and XPO Logistics and Geodis also have a strong presence, and Geodis this spring signed a lease for more than a million square feet in Allen Township.

Lehigh Valley has ranked in the Top 5 markets for industrial space under construction as a percentage of total industrial space (about 6%) in the third quarter of 2020. It is the only Northeast market to make the Top 20, according to CoStar.

Bowery Farming to Create 70 Jobs with New Bethlehem Facility

The largest vertical farming company in the country has chosen the Lehigh Valley as the best place to expand its operations. The New York City-based Bowery Farming, Inc[...]

Continue to Next Page

LVEDCMajor Investors

Investor Spotlight
City Center Lehigh Valley
Investor Spotlight
Lehigh Valley Health Network
Investor Spotlight
Air Products
Investor Spotlight
Lehigh Valley Electricians
Investor Spotlight
PPL Electric Utilities
Investor Spotlight
Investor Spotlight
Mack Trucks
Investor Spotlight
Investor Spotlight
Magestic Realty Co
Investor Spotlight
Investor Spotlight
Wells Fargo
Investor Spotlight
Investor Spotlight
Key Bank
Investor Spotlight
St. Lukes University Health Network
Investor Spotlight
Workforce Board
Investor Spotlight