Amazon, Walmart and other big shippers said to be customers of 50-year old facility that has been frequent target of labor actions.
Third-party logistics firm NFI Industries will vacate a major warehouse serving shippers in the busy Los Angeles Harbor, the company said in press release.
The decision to vacate comes almost four months after the Los Angeles City Council voted down extending the lease on the 600,000-square foot space. The warehouse sits on land owned by the Port of Los Angeles.
The warehouse is operated by Cal Cartage, the Southern California drayage carrier NFI bought in 2017. Cal Cartage has occupied the site since the 1960s.
“This is a very sad day for Cal Cartage, our employees, our customers and the Wilmington community,” said Sid Brown, chief executive of NFI. “We have been fighting, with the help of our employees, for the past four months to negotiate a deal to keep this facility open long-term. This is not the outcome we wanted.”
But Cal Cartage and Teamsters Local 848 have been in a pitched battle over representing the warehouse’s approximately 500 workers. The warehouse was one of the site’s targeted in a week-long labor action last October.
The Teamsters say the warehouse has been the target of numerous investigations by federal and state regulators, citing issues such as a lack of steel-toed boots for employees, poor brakes on forklifts, and workplace hazards such as potholes.
“If the company is unwilling to follow the law and play by the rules, and in so doing so puts the Port’s proprietary interests at risk, then they are wise to vacate the property to make room for a company that will follow the law," said Teamsters Port Division Director Fred Potter.
The Teamsters have also accused Cal Cartage and its related companies of improperly classifying drayage drivers that serve the warehouse as independent contractors when they should be classified as employee drivers.
The attention brought by the Teamsters’ efforts prompted the Los Angeles City Council last October to evict Cal Cartage from the site. The Port of Los Angeles plans to vote on a settlement agreement ending Cal Cartage’s lease next week.
Although old, the facility is still a major distribution and trans-load center located in space-constrained Los Angeles market.
Major shippers including Amazon (Nasdaq: AMZN), Walmart (NYSE: WMT), Target (NYSE: TGT), and Home Depot (NYSE: HD) are said to be among the customers, according to a person who is familiar with the site. The loss of the site could put pressure on shippers using the Port.
“Even if it was shut down for a short period of time, it could drastically impact the Port from a long-term perspective because those folks are going to look for alternative logistics solutions and that supply chain could go through somewhere else,” the person said.
Whether another logistics provider wants to occupy the site is doubtful due to its advanced age and the cost of upgrading the facility. Moreover, the Port of Los Angeles already has designs on the land as the potential site for a major near-dock intermodal rail yard, a project which has stalled due to community opposition, but may still be in the cards.