Growth trap of public freight villages in Europe

Abstract

Freight Villages (FV) are important nodes in supply chains and can be seen as industrial and trade zones with good connections to transport networks, such as road, rail and air, offering basic logistics services, such as warehousing and transshipment, as well as further complimentary services especially for transport-intensive companies, such as logistics service providers. As such, FVs are promoters of intermodal transport. They are successfully introduced and run throughout the world and are well accepted by companies. Therefore, FVs can be found in almost every country. Accordingly, many papers were published on how best to set up those centers but less is known about their growth and the challenges they face here. Our research shows that there is an interesting counter-intuitive effect in growth and expansion of FVs. We conducted empirical analyses and developed a System Dynamics model to reveal a so-called “growth trap”. Public and public-private FVs interested in the expansion of their terminal infrastructure will attract private competitors offering warehouse capacities in the near vicinity which will impede the growth of the FV. This effect is also validated by means of a case study. To avoid such development, we propose policy recommendations for a proper and healthy growth of such FVs.