Logistics-intensive clusters: Global competitiveness and regional growth

Abstract

Logistics intensive clusters are agglomerations of several types of firms and operations: (1) firms providing logistics services, such as 3PLs, transportation, warehousing and forwarders, (2) the logistics operations of industrial firms, such as the distribution operations of retailers, manufacturers (in many cases after-market parts) and distributors and (3) the operations of companies for whom logistics is a large part of their business. Such logistics clusters also include firms that service logistics companies, such as truck maintenance operations, software providers, specialized law firms, international financial services providers, etc. Logistics clusters exhibit many of the same advantages that general industrial clusters (such as Silicon Valley, Hollywood, or Wall Street) do: increase in productivity due to shared resources and availability of suppliers; improved human networks, including knowledge sharing; tacit communications and understanding; high trust level among companies in the cluster; availability of specialized labor pool as well as educational and training facilities; and knowledge creation centers, such as universities, consulting firms, and think tanks. Logistics clusters, however, exhibit other characteristics which make them unique in terms of cluster formation and their contribution to economic growth. Logistics operations may locate in a logistics cluster due to the cluster’s role in supporting economies of scope (mainly for direct operations transport modes) and economies of density (mainly for consolidated transportation modes); their provision of spill-over capacity for warehousing and transportation; and the ability to cooperate between providers when dealing with demand fluctuations. Such clusters provide a range of employment opportunities—from moving boxes to executive, IT and other professional jobs, and they diversify the economic base since they support many other industries, such as manufacturing as well as a range of “mini-clusters.” This chapter describes such clusters, based on primary research in several large logistics clusters around the world, interviews with dozens of executives in retail, manufacturing and distribution organizations; with transportation and logistics service providers; with infrastructure operators; with public and private development agencies; and with real estate developers.