Chicago's freight and manufacturing clusters play a significant role in local economic activity, representing 15 percent of all jobs in the region. The Chicago region is the largest rail-truck intermodal port in the country. In 2013 the region exported over $34 billion worth of manufactured goods.
Cluster Employment and Location Quotient
The number of employees working in metropolitan Chicago's freight and manufacturing clusters (jobs) and the concentration of employment in these clusters compared to the national average (location quotient).
Why it matters
Metropolitan Chicago's dual concentration in freight and manufacturing is one of the region's many built-in advantages that help it compete in an increasingly global economy. With more interstates than any other region, six of the seven Class I railroads, connections to the Mississippi River and St. Lawrence Seaway, and the nation's second largest cargo airport (in terms of total cargo value), the region's freight cluster is able to move more goods than any other region in the nation. Chicago's manufacturing cluster is the second largest in the nation and equally impressive and diverse. Employment in both clusters has been impacted by recent economic shifts. Manufacturing employment in the region declined steadily during the 2000s and has experienced a slight rebound since 2010, while employment in Chicago's freight cluster has been volatile, experiencing large swings during the recent recession and recovery. The region's manufacturing location quotient has declined since the early 2000s and now stands at 1.04. The region's freight location quotient declined in the early 2000s but has grown since 2008. The region's freight cluster location quotient is now 1.15.
The Chicago region enjoys a diverse mix of industries while also realizing significant gains through its economic specializations in freight and manufacturing. These two industry clusters create high-quality jobs, spur innovation, and generate growth among numerous interconnected industries. Within the seven-county CMAP region, the freight and manufacturing clusters contain roughly 637,000 jobs.
The health of cluster economies within metropolitan areas can be measured by tracking both employment levels and location quotients for each cluster. Total employment measures provide an easy-to-understand metric for measuring the size of a cluster, while location quotients measure employment levels in the region compared to the national average.
Freight Cluster Employment Trends
Metropolitan Chicago's freight cluster employs approximately 176,000 individuals. The cluster includes both direct freight jobs (trucking, rail engineering, etc.) and jobs supported indirectly by freight activity (such as bridge construction or packaging manufacturing).
Freight cluster employment in the region declined between 2001-03 before growing by over 13,000 jobs between 2003-07. This growth was erased between 2007-10 when the cluster lost more than 16,000 jobs. Since 2010, employment in the cluster recovered and added over 18,000 jobs. Total freight cluster employment in the region now exceeds the region's pre-recession cluster jobs peak.
Manufacturing Cluster Employment Trends
The region's manufacturing cluster contains approximate 551,000 jobs. The cluster includes core manufacturing industries along with several supporting industries such as industrial design and engineering, freight transportation, research and development, and energy generation.
Between 2001-11, the CMAP region lost over 180,000 manufacturing cluster jobs. The region experienced significant cluster job loss both during and after the 2001 and 2007-09 recessions. Cluster employment grew between 2011-13. Preliminary estimates for 2014 project a slight employment decline.
Location Quotient Trends
Measuring employment within the region's clusters is a straight-forward method of analysis. Examining cluster location quotients takes this analysis a step further by measuring employment within the region while controlling for national trends that affect employment levels. Location quotients measure the concentration of employment in particular industries or clusters within the Chicago region compared to national concentrations in the same year. A location quotient greater than 1.0 indicates increasingly greater concentrations (also referred to as "specialization") in a cluster compared to the national average. Metropolitan Chicago's freight and manufacturing clusters have location quotients of 1.15 and 1.04, respectively.
Industry clusters bring substantial benefits to regions. The larger a cluster becomes, the larger its impact on the regional economy. Clusters tend to attract both professionals and employers to a region -- professionals may move to a region seeking employment in that cluster, and related businesses follow in order to take advantage of a growing labor pool with industry-specific skills. This process has a synergistic effect -- as more workers and firms move to a particular metropolitan area, the incentive for others to relocate increases.
The Chicago region's dominance as a transportation hub attracts not only traditional transportation jobs such as trucking and warehousing, but also a variety of supporting industry jobs (traffic engineering, logistics management, packing material manufacturing). And, as the region's transportation capabilities increase, Chicago's manufacturing cluster also benefits. Faster and more efficient movement of goods from Chicago gives local manufacturers a competitive advantage over manufacturers not located near efficient, cost-effective transportation infrastructure. Monitoring the health of industry clusters and understanding their future needs is a critical part of ensuring the region's prosperity. CMAP has produced detailed analyses of the region's freight and manufacturing clusters, as well as the nexus between the two.
The region's manufacturing cluster location quotient has declined slowly from 1.09 in 2001 to 1.04 today. The region's freight cluster location quotient declined in the early 2000s but has seen relatively consistent growth since 2008. This growth is good news as it suggests that the region is maintaining its competitive advantage in freight activities. The region's rail, freight, and air infrastructure have helped nurture this competitive advantage, and an increased focus on supporting this cluster will support future growth.
About the Data
Employment and location quotient data are compiled through EMSI. Freight and manufacturing clusters data presented here are defined by CMAP's drill-down reports on freight and manufacturing. EMSI utilizes both public and proprietary data sources to estimate employment totals.
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The number of 20-foot equivalent units (TEUs) of freight cargo containers moved through the metropolitan Chicago's rail-truck intermodal terminals.
Why it matters
The Chicago metropolitan area is one of the busiest freight hubs in the U.S. The region's confluence of rail, truck, and air infrastructure make it a critical shipping node for North American freight. The number of TEUs moved through the region's rail-truck intermodal facilities has increased by roughly 26 percent since 2009. Approximately 14.9 million TEUs of cargo were moved through the region's intermodal terminals in 2013.
With its heavily utilized rail and intermodal yards, international airports, access to a transcontinental road network, and connection to the St. Lawrence Seaway, Great Lakes, and Mississippi River systems, metropolitan Chicago is one of the largest and busiest cargo hubs in the U.S. Estimates show that between one-quarter and one-third of all freight tonnage in the U.S. originates, terminates, or passes through the region.
The constant movement of goods into and out of the region supports metropolitan Chicago's economy by creating demand for freight and logistics jobs and providing manufacturers with timely, cost-effective, and reliable options for moving products to market. Recent advances in logistics have made the region's multiple transportation options even more appealing as businesses are increasingly taking advantage of multimodal transportation as a way to move goods more efficiently at a lower cost.
The most common method of measuring freight activity levels in metropolitan areas involves estimating the total number of cargo containers handled in the region. Intermodal cargo movement is often estimated in TEUs, with one TEU representing the volume of a standard twenty-foot cargo container. Higher TEU counts indicate busier ports with more goods moving through them. According to the World Shipping Council, in 2013 the world's busiest port city was Shanghai, which moved over 33.6 million TEUs of cargo.
TEUs are most commonly used to estimate the volume of intermodal cargo freight moving through sea ports. Since the Chicago region receives goods by rail or truck rather than by sea, additional calculations need to be made to estimate a TEU equivalent for cargo movement in the region. This can be accomplished using intermodal lift data reported by intermodal facilities within the region. An "intermodal lift" occurs when a shipping container is moved from one mode of transportation to another (train to truck or vice versa). Estimating the average volume of each intermodal lift for the region's intermodal rail terminals yields a TEU equivalent estimate. Containers that pass through Chicago without an intermodal lift are not included in
Trends in Intermodal Lifts
Intermodal freight volume in the Chicago region based on intermodal lifts was approximately 14.92 million TEUs in 2013. Intermodal freight volumes declined during the last recession but have since experienced a significant rebound, increasing by 26 percent from 2009-13.
Comparing Chicago Region Freight Activity to other Metropolitan Areas
Metropolitan Chicago's TEU equivalent estimates suggest that the region is one of the busiest ports in the U.S. This is not surprising considering Chicago's concentration of rail, truck, and air traffic activity. The Chicago metropolitan area is commonly referred to as the freight hub of North America. The region is served by six of the nation's seven Class I railroads and seven interstate highways. Approximately one out of every six vehicles on Illinois' urban interstates is a truck, and O'Hare International Airport is the nation's second busiest international air cargo gateway by value.
About the Data
TEU estimates are based on intermodal lift counts for intermodal facilities located in the CMAP region. Intermodal lift data are reported to CMAP by each railroad. CMAP then sums the total number of lifts and multiplies the total by a container size factor for both U.S. and Canadian Railroads to estimate a total TEU equivalent. This total is then multiplied by a "laden" container factor to eliminate empty containers from being counted in TEU estimates. In some cases intermodal lift data are not available and lift totals are estimated by CMAP. For more information on this methodology, please refer to CMAP's freight data web page at http://www.cmap.illinois.gov/mobility/freight/freight-data-resources.
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The real dollar value of manufacturing exports from the Chicago customs district.
Why it matters
The export of goods and services from the region helps Chicago's economy connect with a growing global consumer base. In 2013 the Chicago customs district exported $34.3 billion in manufactured goods. Real manufacturing export growth in the region kept pace with national averages between 2002-08, but growth has lagged far behind the national average since 2009.
Advances in technology and logistics and growth of the global population have created a marketplace for goods and services that is increasingly global in nature. As a result, metropolitan economies across the U.S. are now regularly competing with economies across the world. This increased competition has led to declines in U.S. manufacturing employment but has also given U.S. manufacturers access to a worldwide customer base. Approximately 95 percent of the world's consumers live outside of the U.S., and the vast majority of global economic growth in the future will occur outside U.S. borders. Many U.S. manufacturers are exploring these lucrative new markets, and an increasing number of firms are now exporting their goods overseas. Exporting brings new dollars into the regional economy and supports jobs in goods producing industries such as manufacturing, which is an integral part of Chicago's economy.
Trends in Manufacturing Exports
Manufacturers who export can access new markets and are less dependent on changes in local demand. As demand for advanced manufactured goods continues to increase in developing countries, the region's success in exporting will serve as a measure of the competitiveness of metropolitan Chicago's manufacturing cluster. In 2013 the Chicago customs district exported $34.3 billion in manufactured goods. In terms of total export value, the largest manufacturing export sector was Chemicals, which accounted for roughly one quarter of all manufactured exports, followed by Computers and Electronics, and Transportation Equipment (20 percent each).
Manufacturing export growth in the Chicago region outpaced national trends between 2002 and 2008, but has failed to keep pace since the end of the most recent recession. The chart below shows real manufacturing exports for the Chicago region and the U.S. indexed to the year 2002. Between 2002-08, the total value of Chicago's manufacturing exports grew by 52.8 percent while national manufacturing exports grew by 49.3 percent. Both the U.S. and Chicago district saw declines in exports during the recession, followed by recovery from 2009-13. Manufacturing export recovery has been much faster in the nation as a whole compared to the Chicago district. Between 2009-13, manufacturing exports grew by 38.5 percent nationwide, but only by 12.3 percent in Chicago.
About the Data
The value of manufacturing exports from the Chicago customs district is measured using statistics reported by the U.S. Census Bureau and Export.gov's Trade Stats Express. Reported figures include domestic exports for the Chicago region customs districts, which includes the following airports and harbors:
Chicago (Including Waukegan Harbor, Calumet Harbor, and Chicago River to Lockport)
Gary, IN (including Michigan City Harbor)
Davenport, IA, and Rock Island and Moline, IL
Greater Rockford Airport
Waukegan Regional Airport, Waukegan, IL
Chicago Executive Airport (formerly Palwaukee Municipal Airport), Wheeling, IL
Decatur User Fee Airport, Decatur, IL
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