ArticlePDF Available

The emergence of logistics cities: Conceptual model

Authors:

Abstract and Figures

This paper describes the emergence of logistics cities, which are geographical concentrations of related industries situated around one or more international trade gateways adjacent to a metropolitan area. Broadly, a logistics city comprises logistics activities and related assets combined with an integrated mix of manufacturing and assembly companies, business services, retail outlets, research and education centres, and associated government services and administration sections. This concept is currently being promoted and developed globally by several regions, and examples of these logistics cities are described in this paper. Drawing from these examples and the limited available literature, a preliminary conceptual map of the logistics cities concept has been developed which incorporates a theoretical foundation of economic development and the principles of competitiveness in the notion of trade clusters. This map has provided the basis for our further investigations and the continued development of a more detailed conceptual model that will provide a systematic knowledge base for those engaged in the development of further logistics cities. The beneficiaries of this model will be public authorities, property developers and industrial concerns, and will be used when making decisions for future logistics infrastructure, services, supporting services and related social elements.
Content may be subject to copyright.
58
THE EMERGENCE OF LOGISTICS CITIES: CONCEPTUAL MODEL
C. SENGPIEHL
R. OAKDEN
P. NAGEL
K.T.K. TOH
P. SHI
carsten.sengpiehl@vu.edu.au
Institute for Logistics and Supply Chain Management,
Victoria University, Melbourne, Australia
ABSTRACT
This paper describes the emergence of logistics cities, which are geographical
concentrations of related industries situated around one or more international trade
gateways adjacent to a metropolitan area. Broadly, a logistics city comprises logistics
activities and related assets combined with an integrated mix of manufacturing and
assembly companies, business services, retail outlets, research and education centres,
and associated government services and administration sections. This concept is currently
being promoted and developed globally by several regions, and examples of these
logistics cities are described in this paper. Drawing from these examples and the limited
available literature, a preliminary conceptual map of the logistics cities concept has
been developed which incorporates a theoretical foundation of economic development
and the principles of competitiveness in the notion of trade clusters. This map has
provided the basis for our further investigations and the continued development of
a more detailed conceptual model that will provide a systematic knowledge base for
those engaged in the development of further logistics cities. The beneficiaries of this
model will be public authorities, property developers and industrial concerns, and will
be used when making decisions for future logistics infrastructure, services, supporting
services and related social elements.
INTRODUCTION
Trade competition between regions and countries has increased significantly in recent
years, partly due to developments in globalisation and advances in technology. As a
consequence, the strategic planning of a region to take advantage of its position in the
context of its connectivity function between key economic centres will play an important
role in the sustainable future of the region. In supporting industry and commerce within a
region, relevant governments will encourage regional investment and will work to align laws
and regulations across boundaries to free up global trade and transportation. This input is
59
The Emergence of Logistics Cities: Conceptual Model
essential, because the global connectivity of a metropolitan area and its ability to retain
and further develop its “competitive advantage”, requires a significant review of the way
in which the country interfaces physically, virtually and legally with the rest of the world. In
addition, an overarching strategy is required that addresses a well-structured and relevant
solution to the longer-term sustainability of a region’s economy in the global trading arena.
We believe that the concept of a logistics city can be seen as a major part of this strategy.
The Institute for Logistics and Supply Chain Management at Victoria University (ILSCM
2007c) is currently focusing its research on this concept of a logistics city and has defined it
as the final progression of a dense trade cluster. Dense trade clusters are described as nodal
points, which can be positioned away from traditional land, air and coastal borders that
enable international trade. The facilitation of trade is accomplished by strategic investment
in logistics-related infrastructure such as multimodal transport facilities and by promoting
value-added services (ILSCM, 2007b; Cambridge Systematics Inc., 2004).
The concept of a logistics city broadly represents a geographical metropolitan area with its
main function being a logistical platform providing appropriate logistics infrastructure and
physical facilities (roads, rail tracks, terminals and IT infrastructure) and substantial existing
logistical services (warehousing, distribution and freight forwarding). However, in addition
there are a range of related business value-added services (such as legal, finance and light
assembly factories) and social infrastructure components (including education, health and
recreation facilities) that are necessary elements for the logistics city to act as an integrated
concept.
In their study of intermodal freight literature, Bontekoning et al. (2004) state that, as is
typical for a research field in the pre-paradigmatic phase, there is a lack of a consensus
definition and a common conceptual model. This is currently true for the wider logistics
city concept and therefore this paper provides an initial conceptual model, through the
development and description of the logistics city a mind-map.
At present, the ILSCM (2007c) investigation has identified three main key “enablers” for
the development of logistics cities. The consolidation of the geographic dispersion is the
first enabler, which highlights logistics sites as focal points for services connecting industry
to the main logistics hubs. However, our current understandings of this enabler relate to
the historically grown areas and might not apply in green field logistics cities. Value-added
services, apart from logistics operations, are a key component in the development of logistics
cities. Therefore the second main enabler is called “enhanced professional and business
services”. The third enabler, “increased transport infrastructure capacity”, is related to the
enhancement of capacity and connectivity between logistics sites, residential and business/
industrial centres through the application of intelligent transport system technology.
60
Journal of Transport and Supply Chain Management | November 2008
So far there has been little scientific discussion about the key elements of logistics cities
in terms of their structure and composition, the services which they provide and their
hierarchical relationships and logical interconnections. However, it is evident that industry
has embraced this concept without too much academic consideration, as identified in the
initial interviews.
Recent research by the ILSCM (2007a) proposes four designations of dense trade clusters,
namely freight villages, inland ports, logistics hubs and logistics cities, which progress
in order of size and range of services provided. The logistics city is seen as the largest
designation within a dense trade cluster, making the other three designations subsets of a
logistics city.
Our review of the literature which focused on the definition, specification, characteristics
and services of a logistics city, has shown a number of contradictory designations. It appears
that the characteristics, elements of logistics centres and freight villages are very similar
and that logistics centres have no unanimously agreed name. It was concluded that freight
villages and logistics centres are synonymous (Meidute, 2005; Europlatforms EEIG, 2004).
There are also several studies and publications describing logistics centres and freight
villages (Meidute, 2005; Tsamboulas, 2005; Europlatforms EEIG, 2004; Breitzmann and
Wenske, 2003) which have highlighted definitions of freight villages, their specific services,
characteristics and elements. Tsamboulas and Dimitropoulos (1999) made a significant
statement in saying that intermodal terminals constitute the principal component of freight
villages, and further suggested that freight villages are more than just a terminal as they
provide additional facilities and services.
An important (but limited) consideration by Meidute (2005) is their two-fold approach to
logistics centres. The first approach is that logistics centres are part of a transportation
infrastructure which is designed to conduct transportation activities, and secondly that
logistics centres are a generator of business to stimulate international trade and regional
economic growth.
Ballis (2006) expressed a unique opinion that the term “inland port” is a synonym of freight
villages. The ILSCM (2007a), on the other hand, distinguished between freight villages and
inland ports by stating that an inland port has the “bill of lading” as the final destination,
unlike freight villages. These differing uses of the common elements of logistics cities have
led to the authors’ attempt to develop an unambiguous model that facilitates design and
communication.
Based on field interviews and focus group discussions, Walter and Poist (2003) identified 12
characteristics and services of an inland port, and additionally measured the importance and
61
The Emergence of Logistics Cities: Conceptual Model
perception of shippers and carriers regarding these services and characteristics. Another
study by Leitner and Harrison (2001) included a detailed trade analysis and the identification
of inland ports as well as their impact in terms of trade and transportation. In both studies, the
definition of an inland port is similar and both assume that the transport assets are in general
multimodal and the trade is processed by value-added services. Leitner and Harrison (2001)
additionally identified several other variants of this port activity, listing the inland waterway
port, the air cargo port, the maritime feeder inland port, and the trade and transportation
centre inland port as the four classes of inland ports. The IBI Group (2006) however, has
classified inland ports by three specific methods, using as the modal orientation, the distance
from a maritime port and the principal traffic as distinguishing criteria.
Closer examination of the definitions, services and characteristics of freight villages and inland
ports indicates a small disparity, however, which has a major impact. Foreign trade zones,
including light assembly and bonded warehouse services for tariff and tax postponement
reasons, are only mentioned in conjunction with inland ports; hence, the statement by Ballis
(2006) that inland port is a synonym of freight village, based on the literature review, is
vague and the ILSCM’s (2007a) definition has been offered as a more precise alternative.
The fact that Tsamboulas and Dimitropoulos (1999) stated that intermodal terminals are
the principal component of freight villages and that the transport assets of inland ports are
in general multimodal, led to an additional investigation for intermodal freight terminals.
McCalla et al. (2001) described intermodal freight terminals as the point of transfer of freight
from one transport mode to another, which requires a large amount of land with a high
degree of accessibility. In a later study, Sirikijpanichkul and Ferreira (2005) identified three
criteria to classify intermodal freight terminals, naming them connector, size and organisation.
Aifandopoulou et al. (2006), on the other hand, defined four special classes, based on a
survey of south-east Europe. These recognised types are city terminals, freight villages,
industrial/logistic parks and special logistics areas. Clearly, this effort of classification can be
seen as a controversial subject, due to the fact that Tsamboulas and Dimitropoulos (1999)
interpret the terminal as an element of freight villages rather then seeing the freight villages
as a class of intermodal freight terminals, as proposed by Aifandopoulou et al. (2006).
In addition to the mentioned initial investigation, four so-called logistics cities, being
planned and developed or in an expansion phase, are found in the literature. They are:
• Dubai(Proftt,2006;MEED,2006;Turner,2006)
• Lingang,whichisadjacenttoShanghaiinChina(Leach,2006;LingangGroup,2006)
• ZaragozainSpain(Tierney,2004)
• ShenzheninChina(ShenzhenGovernmentOnline,2007;ChinaEconomicReview,2007;
Hong Kong Trade Development Council, 2004; Jun, 2004).
These logistics cities differ in size, and focus on different elements, infrastructures and
services provided. For example the logistics city in Dubai is seen as the logistics area of the
62
Journal of Transport and Supply Chain Management | November 2008
comprehensive structure of Dubai World Central. In contrast, the logistics cities of Lingang
and Shenzhen include all other elements of Dubai World Central and are clearly referred
toaslogisticscitiesinpublicationmaterials.Inaddition,Zaragoza,locatedinland,appears
small in comparison to Dubai and Lingang.
However, all these centres have commonalities. They include or are adjacent to ports that
include seaports, airports and inland ports. All of them provide sufficient transport and
communication infrastructure, logistics parks and facilities as well as related logistics services,
although admittedly these differ in size and the nature of services provided. Value-added
business services such as light assembly, banking and hospitality are integrated in these
logistics cities; hence the value services as an enabler, mentioned by ILSCM (2007c), can be
seen as a necessity for the development of logistics cities. Additionally the free trade zones
and research/education facilities seem to be an important part of the logistics city concept.
Finally, all of the identified logistics cities are part of an economic development plan of their
related regional government.
The first conclusion that we can make from our review of publications is that there are
many different perspectives on the proposed elements of a logistics city, and the elements
or designations have emerged as contradictory and overlapping. Additionally, there is an
absence of an academically justified conceptual model to adequately or clearly identify
the distinct physical characteristics, operations, valued-added business services and social
components of a logistics city.
The second conclusion that arose from the investigation is that the emergent logistics city
concept and indeed the name itself is used very freely and is accepted by industry as a
viable and unique concept. Metropolitan areas, such as Hamburg (harbour city), Singapore
(logistics cluster) and Rotterdam (port city), with their long seaport and trade history, include
massive transport infrastructure, logistics activities and value-added business services, and
are seen as a logistics city concept by various authors even though they are not named
as such. Van der Lugt and de Langen (2005) support this conclusion by describing the
changing role of seaports as locations for logistics activities. As a consequence, we have
found that focusing on the concept without relying on the naming convention is more
convenient for our investigation.
The third conclusion is that logistics cities are not only found in regions where they are
expected such as seaports, but also as dense trade clusters in the less obvious inland
locationslikeZaragoza,DuisburgandFortWorth/Dallas.Thedevelopmentandextensions
of a logistics city, in particular its “trade gateway” function and its related primary and
secondary transport infrastructure, cannot be fully evaluated without relating it to its
geographical location and therefore the region in which they are found. The geographical
63
The Emergence of Logistics Cities: Conceptual Model
location and conditions that are an intimate part of a logistics city play an import role in its
essential characteristics and, in an important way, determine the setup, quality and efficiency
of its operation. Three important factors in terms of geographical location and conditions
appeared: first the geographic accessibility of the logistics city; second the influences on
the function of the logistics city due to the geographical location and conditions; and third
the pragmatic concerns related to historical dependencies.
DEVELOPMENT OF LOGISTICS CITIES
The existence of a port, here referred to as an international gateway, that can be either a
seaport, airport or inland port, is the most essential element in the logistics city concept.
However, it can be argued that there are significant differences between common port cities
and logistics cities, and in order to separate common ports from logistics cities, a basic
description of various port models is needed to aid the understanding of the differences.
Figure 1: Port model (derived from ESCAP, 2005, p.17)
The regional demand for importing and exporting goods is the nature of the historical
port model, which is a traditional import/export port. However, the increased complexity
of international trade, in combination with the increased sophisticated demands of port
customers and therefore the increased requirements of multinational industries which are
passed on to logistics services (Abrahamsson et al., 2003), lead to the inevitable progression
64
Journal of Transport and Supply Chain Management | November 2008
towards transshipment ports, as part of the hub-and-spoke system, and lastly towards logistics
centre ports. The point of intersection of the three port models, which includes value-added
business services and social aspects can be seen as generating the logistics city concept.
Market expansion and factor-input as a motive for companies to sell and produce abroad, has
a long history. However the liberalisation of trade through the GATT and WTO agreements,
free trade zones, the introduction of loading units, the evolution of information and
communication technology, and the changes of business practices accelerated the trend
towards globalisation. These have had a major impact on logistics management and systems
which influenced the evolution of traditional port models towards the dense trade complex
concept. The determinants for the emerging logistics city concept can be encapsulated
within the following four areas that are briefly described in the next paragraphs:
• tradeagreements
• transporttechnology
• informationtechnology
• changingbusinesspractices.
The progress in trade liberalisation through the reduction of trade tariffs and trade barriers
due to trade agreements has resulted in increasing world trade. Production, assembly, and
quality control activities have been shifted to different regions based on the factor advantage
of labour cost or other competitive advantages. This has been a catalyst for companies to
focus on logistics management and systems, such as distribution management, location
optimisation, inventory management, logistics outsourcing, value-added logistics services
and the introduction of supply chain management in the 1980s. Logistics evolved as a
distinct factor for companies to achieve competitive advantage.
The emergence of the container as a transport unit in the 1960s was one of the major
impacts of transport technology for logistics and trade. They reduced transshipment times
in the ports and made transportation of semi-finished or finished goods more economical.
In combination with the growing average size of transport vehicles such as deep sea
shipping vessels and inland barges, the reduction of operating cost could be achieved
through economies of scale and passed on to customers, leading towards more transport
and major changes of business practices and logistics systems.
Information and communication technology (ICT) is becoming more integrated in transport
and logistics services and its importance is continually rising. Information connectivity has
developed towards being a fundamental component for logistics systems and therefore
the coordination and integration of information in the multi-company sector. E-commerce-
based administration and e-commerce services such as handling customs procedure,
transmitting and processing of bills of lading and other documents, providing information
65
The Emergence of Logistics Cities: Conceptual Model
for transport scheduling and links to involved transport companies, tracking and tracing of
shipments, quoting and booking, were enabled by the development of ICT. It has increased
visibility within the supply chains, which leads to tighter linkage within the system. Through
sophisticated ICT, transport operators can evolve into value-added service providers, and
major shipping lines can become one-stop freight services providers. Logistics cities like
Hamburg use the DAKOSY logistics information system and Rotterdam operates with the
INTIS system. However the most sophisticated logistics information systems are provided
in Singapore, such as Portnet, TradeNet and Cargo Community Network. The Singapore
government, in cooperation with key stakeholders, is developing a trade-integrated
information platform (one-stop platform) that will bring together the different systems to
enable a seamless information transfer between all parties (ICT Working Group, 2002; MTI-
WGL, 2002).
The advantage of trade liberalisation and transport and information technology mean
business practices change and new production, marketing and logistics business architectures
emerge. However, the global market is not homogenous and therefore the adaptation to
regional demands has to take place to generate business. Strategies such as production in
a few key locations, postponement or delayed configuration and centralised inventory are
embedded in today’s business world.
Centralised production is underpinned by theories of economies of scale. Standardised
modules are shipped close to the end user where customisation and final assembly takes
place in distribution centres to meet regional demand and requirements. This allows
businesses to take advantage of cost reduction in production while meeting the regional
requirements. International companies have, as a result, reduced the number of warehouses
and consolidated these into regional distribution centres to reduce total inventory
requirements and costs. This move required a reliable information system to allow visible
access to changing demands and to reduce reaction times, given longer transport distances
inherent in this consolidated approach. Transport and distribution alliances have emerged
in combination with the hub-and-spoke approach, which enables shorter transport times
and reduces costs due to better transport utilisation.
Abrahamsson et al. (2003) provide a comprehensive description for the evolution of logistics
business practice, related to distribution, by presenting three types of logistics based on
two long-term case studies. Type one is decentralised logistics that is tightly connected
to production or sales. It has as its priority increased internal efficiency, and sees that
customer service is related to the geographical distance of the customer, which demands a
decentralised responsibility for design and control. The second type is based on centralised
logistics and direct distribution that is separated from production and sales. The priorities
in this case are reducing the total logistics cost through economies of scale, and hold that
66
Journal of Transport and Supply Chain Management | November 2008
customer service is related to time and availability of products and services. The third type
of emerging logistics system is referred to as being a logistics platform resource base for
market development, such as new market positions, marketing strategy and new offers to
key customers. Logistics is therefore an integrated part of the company’s business model
including its manufacturing and sales areas, and is centralised. While the standardisation
of processes is necessary to achieve high level results, it is important however to have
flexibility to adapt to market segments. These centralised logistics platforms which manage,
develop and adapt complete logistics systems in combination with production and sales,
are a recently emerging trend.
Van der Lugt and de Langen (2005) analysed the role of seaports in terms of these three
logistics concepts, and suggest that seaports can attract the new emerging centralised
logistics. Singapore, for example, is growing in this emerging segment to increase diversity
and strengthen the competitive position of its port cluster. The recently announced “London-
Plus Development Framework” by the working group of logistics (WGL) in Singapore claims
that the highest value return is no longer found in simply moving cargo, but rather in the
controlling and optimising of the flow of cargo. The “Plus” aspect is seen as the physical
infrastructure to facilitate port handling, the area of ship repair and registry as well as the
general logistics and IT activities. The “London” aspect is referred as the “softer” area of
transport and distribution – building influential services sectors with highly skilled personnel.
The aim of the “London” aspect is to turn Singapore into a platform that has the aim of
efficient management of international goods movement as well as a centre for excellence
in logistics research and education. In addition, contrary to the statement of Van der Lugt
and de Langen (2005) where a port’s multinational function will diminish by adopting this
concept, this emerging segment in Singapore is seen as an opportunity for a broader
hinterland such as China, India, Japan and Australia or even to become the nerve centre
managing the logistics limbs (planning and control functions) reaching the whole world.
DEVELOPMENT AND REGIONAL COMPETITIVENESS
The ILSCM (2007c) states that a logistics city increases the competitiveness of a region and
strengthens the regional and economic development. Taking the comments of Meidute
(2005) that logistics centres are a generator of business and regional economic growth
strengthens the ILSCM (2007c) statement. However, no theoretical evidence in the literature
was found that provides an explicit explanation of how and to what extent logistics cities’
characteristics and elements strengthen the region. The ILSCM (2007b) proposes that a
logistics city is the largest designation of a dense trade cluster, which leads to an excursion
into the field of clusters and spatial industrial concentration and their impact on regional
development and competitiveness.
67
The Emergence of Logistics Cities: Conceptual Model
The characteristics for industries to form a specialised concentration were discussed by
Marshall in the beginning of the twentieth century. However in the last two decades the
interest within economic geography and economics of industrial location has increased
(Asheim et al., 2006). Reich (2001), for example, has observed that globalisation and
information technology has decreased the importance of specialised concentration. Morgan
(2004) and Porter (1998) on the other hand, have shown that newly developed clusters in
spatial proximity locations support the development of a region. Economic growth can still
benefit from the concentration of specialised industries even as globalisation takes place
and efficient information technology becomes available.
There are numerous localised concentrations identified in the literature, such as industrial
districts (Paniccia, 2002; Becattini, 1990), new industrial spaces (Scott, 1988), local and
regional innovation systems (Asheim and Gertler, 2005) and industrial clusters (Porter, 1998)
being the most recognised.
Porter derived the competitiveness of firms into a theory of “the competitiveness of
nations” (Porter, 1990). He modelled the effect of location proximity on competitiveness
and economic development through four interrelated influences, which are mostly referred
as the “Porter diamond”. These four influences are:
• factorconditions
• contextforrmstrategyandrivalry
• demandconditions
• relatedandsupportingindustries.
The more developed and intense the interactions of the four influences are, the more
competitive the firms, region or nations become. Porter (1998 and 1990) argues that a
cluster, a geographical proximate group of interconnected companies and associated
institutions in a certain field, will enhance the interactions of the four influences and
therefore increases competitiveness and strengthens a region. This theory has become the
standard for determining competitiveness and is commonly used as a policy tool. However
it has been criticised in terms of cluster definitions and theoretical rigour in the context of
competitive advantage (Asheim et al., 2006; Martin and Sunley, 2003).
Asheim and Coenen (2006) and Martin and Sunley (2003) conclude that clusters vary in size
as well as type, and cannot be explained by a single formal theory. Therefore it appears that
different theories for different clusters are appropriate. Seeing the logistics city as the highest
progression of a dense trade cluster or as an agglomeration of logistics facilities, logistics
services and value-added services, makes it important to develop a theory for this unique
cluster in order to describe its impact on regional competitiveness and development.
68
Journal of Transport and Supply Chain Management | November 2008
PRELIMINARY CONCEPTUAL MAP OF THE LOGISTICS CITY CONCEPT
To enable a first common understanding of the logistics city concept, a conceptual map,
shown in Figure 2, has been developed. Development of this map was based on initial
interviews, the review of publications in terms of the logistics city designations and values,
and the literature investigation of the four named logistics cities, as well as the logistics
clusters of Singapore and Hamburg. We suggest that this conceptual model will allow the
development of a future theory that represents the set of concepts within the logistics city
domain and the relationships between those concepts.
As shown in the conceptual model, the logistics city has ‘enablers’ and ‘scopes’ with inherent
and aggregated relationships that will be briefly explained by providing examples. In
addition, while the logistics city concept is referred to as a generator for economic growth,
literature and initial interviews have, however, shown that the issue of sustainability has
become a very important consideration. Sustainability argues for the balance of economic,
social and environmental values. Therefore the overall scope of the concept is to be a
sustainable global integrated logistics hub located either inland or on the coast, and this
view implies that regional economic growth generated by the logistics city concept means
meeting the needs of today without compromising our ability to meet the needs of the
future.
Singapore sees their pathway of logistics development as the key for meeting future needs
that include the social value aspects such as education and amenities. For the logistics
city of Dubai, it is argued that economic growth cannot be achieved without social values.
The holistic development in Dubai therefore contains a new residential area, commercial
districts and parks that include schools, hospitals, banking and financing, health care centres,
religious facilities, police station, libraries, university and research centres. Hamburg, a long
established port cluster, focuses on environmental issues, using the notion of sustainability,
by arguing that no company or employees would consider locating to or living in a polluted
area, which would decrease economic growth. Therefore emission and noise has been
reduced by the efforts of government and industry, and new recreation areas have been
developedorareunderdevelopment.Zaragozaisdevelopinganewlogisticsclusterincluding
a research and education facility. To sustain healthy economic growth, it is asserted that
these social and environmental aspects must be considered. Educating future professionals
that support the logistics city concept is an import factor in keeping and attracting a highly
skilled workforce, as is the ensuring of an appropriate quality of life through development
of social and environmental values that help to achieve regional economic growth.
69
The Emergence of Logistics Cities: Conceptual Model
Figure 2: Conceptual map of the logistics city
In order to achieve a sustainable global integrated logistics hub, there must be a strong
foundation, which is referred to in the conceptual map as enablers. These enablers have
been identified as important determinants in the development of a logistics city, and the
map can be extended to include others in the future.
In the model, physical, financial and information technology infrastructure play an important
role in the logistics city concept. International gateways, such as seaports, airports and inland
ports including their logistics facilities, are crucial to participation in the global and regional
transport and distribution arena. It is clear that each logistics city and their associated
gateways are unique. Two main types of logistics cities emerged that are naturally linked
to their associated gateways. First there is an origin/destination city that includes so-called
“export platforms” and/or “import platforms”. Secondly there is the transit-type logistics
city environment, which represents the hub function as it main driver. It must be noted that
commonly the two types coexist; however, one of these will represent the main function of
the logistics city and its associated gateways. The gateways have an important role within
the logistics city; however the quality of the connectivity between these gateways, the
commercial infrastructure and social infrastructure, is the major aspect. This connectivity
70
Journal of Transport and Supply Chain Management | November 2008
can be provided by transport infrastructure, such as road and rail, or by information and
communication infrastructure. The increasing cost and complexity of modern systems
have meant that even the huge budgets available to governments are no longer capable
of meeting the increasing pressure for upgrading and extending existing systems. As a
result, it appeared that the capital needed for future infrastructure projects will not only
be provided by public means. Private participation in the infrastructure investments have
been discussed widely, particularly in the form of private public partnerships. In this respect
the freight-user paid system has been introduced such as the German “Maut” system
which was implemented in 2005. For the all motorways (Autobahn) and also some of the
high frequency freight-used federal highways a toll for freight vehicles above 12 tonnes,
which is based on the driven distance, number of axles and the emission category, is now
mandatory.
However, transport infrastructural excellence on its own does not mean efficient connectivity,
and, further, while physical transport infrastructure is seen as a necessity towards connectivity
it is insufficient alone to be considered as contributing to a logistics city. The physical flow
has to be complemented by information flow provided by appropriate information and
communication infrastructure. As mentioned earlier, Singapore is developing a trade-
integrated information platform (one-stop platform) that will bring together the different
systems to enable a seamless information transfer, supporting the already high quality
existing physical infrastructure (Toh et al., 2008).
To ensure innovation in the logistics sector, which is a recognised driver for economic growth,
universities and research centres focusing on logistics as part of the social infrastructure are
integrated in the logistics city concept. These will ensure a specialised skilled workforce,
which enables execution of the holistic concept.
Because of its size and complexity, a logistics city consists of many different stakeholders,
each having different aims. Therefore it is crucial to coordinate the efforts of different
stakeholders to promote and develop the logistics city concept. Lack of clear coordination
will produce duplicated actions or opposing activities that will have overall negative
affects. This might be seen, for example, in the efficient development of physical and
virtual connectivity. Different government departments each focus on individual policies,
for example road policies, rail policies, land allocation policies, and taxation policies, and
these policies do not necessarily align towards the wider benefit of the logistics city. Purely
investing in road transport infrastructure if congestion occurs, and not working on aligned
information systems to provide better coordination and utilisation of the road system, or
taking the rail policies into consideration, does not lead to a sustainable future for the
logistics city. The same issues arise for industry in different areas. To mitigate this effect,
Singapore has established a so-called “champion agency” to bridge all relevant private and
71
The Emergence of Logistics Cities: Conceptual Model
public stakeholders in the area of transport and logistics. Its primary work is to promote,
coordinate and develop the logistics industry in Singapore. Identifying developmental
needs of private industry, working with governmental departments and agencies to remove
unnecessary impediments, and aligning regulations as well as promotion are areas of
responsibility for the champion agency.
The governance and policy of the logistics city concept is therefore strongly related to
the needs of individual stakeholders. Legislation should be aligned to ease the physical
conditions and information flow that will allow planned business growth. Additionally it is
important that governance and policy systems provide stability in order that the business
environment will prosper. Since one of the functions of the logistics city concept is a physical
trade hub, trade facilitation should be enhanced. The logistics city of Dubai has developed a
“free trade zone pathway” connecting the free zone of Dubai logistics city and the adjacent
free zone of the Jebel Ali seaport as a single customs bond area.
What appeared was that the main activities of those logistics services in a logistics city
are all related to adding value to goods by facilitating connectivity to and from distant
markets. This common relationship of shared responsibility for connectivity translates, in a
physical sense, to a gateway function. Thus, with respect to the logistics industry sectors, it
is clear that these lower value-adding activities such as terminal operation, transportation
and simple storage are perceived as being essential activities within a logistics city. These
lower value-adding activities depend on the kind of trade gateway involved. This leads
inevitably to the conclusion that the quality of these basic gateway activities is decisive
for the development of a logistics city and, in the long run, its particular character and
competitive strength. The decisive factors in the definition of a specific logistics city are
grounded in the presence of critical mass of higher logistics value-adding activities that are
commonly linked to the main gateway function. Therefore without any higher value-added
services such as light assembly, customising, or packaging which are commonly executed in
warehouses and without a well-developed and designed supply chain management system,
a certain area should not be designated as a logistics city.
The geographical proximity of the logistics city to the intended markets is an important
factor. In most existing logistics cities, historically their trade gateways and other related
functions are located in densely populated areas that naturally inherit the two market
segments of logistics activities, which are manufacturing and retail/wholesale as a demand
and supply function. It should be appreciated that the importance of proximity to the
markets is not a constant factor since different goods will have a different quantitative
definition of “geographical proximity” depending on their special needs and properties.
Developing an optimum market for a logistics city is an essential consideration. Apart from
the manufacturing and wholesale/retail dichotomy and its possible commodities, there
72
Journal of Transport and Supply Chain Management | November 2008
are more complex issues related to market size and quality that need to be balanced. In
addition, there are immediate and important ramifications for other enablers and support
services that need to be considered.
CONCLUDING DISCUSSIONS
The phenomenon of a logistics city is a concept that is almost becoming a contemporary
truism, albeit with a limited systematic knowledge base in terms of academic literature. The
growing importance of this concept however, makes it imperative that a comprehensive
knowledge base be developed to facilitate well-structured analyses of the economic, social
and environmental elements of future logistics cities. To provide these elaborate analyses,
the answer to a number of key questions are seen as a necessity for further clarification,
since the summarised knowledge base and developed conceptual map of the logistics city
concept is still very limited. Possible subsequent questions are shown here in their logical
order:
• Whatarethecommonenablersofalogisticscity,andwhataretheirproperties?
• Whataretheexternalenvironmentalinuences,suchasgeographyorpolitics,onthe
enablersofalogisticscity?
• Whatarethemaindistinguishingenablers,andtheirproperties,betweenalogisticscity
andotherexistinglogistics-typestructuressuchasintermodalterminalsandseaports?
• What are the unique value propositions that logistics cities might contribute to the
economicdevelopmentoftheregionthatitserves?
• Whatarepossiblesocialandenvironmentalimpactsontheregion?
The proposed further research will focus on narrowing the knowledge gap by establishing
a systematic logistics city framework. The objective of this framework is to allow the
identification of design patterns in logistics cities and to describe these component parts in
a formal and unambiguous way to enable structured analyses of possible relationships and
impacts within the proposed development.
The notion of a logistics city is an emerging concept, and is being developed in response
to specific contexts, experiences and economic needs of practitioners in the area. This
subjectively constructed nature of the concept means that a constructivist approach is
appropriate as the underpinning epistemological position for the upcoming investigation.
In this respect, Fenner et al. (2005) state that the complexity of issues facing industry in
the twenty-first century indicates the necessity to include constructivist epistemology to
a greater extent into research related to economic, social and environmental issues. The
complexity of the logistics city concept that is evident in the simplistic conceptual map,
additionally favours the constructivist approach to investigation of contributing factors. A
constructivist perspective emphasises that the source of knowledge lies with the actors that
73
The Emergence of Logistics Cities: Conceptual Model
are most intimately involved with the concept under review, and the theoretical framework
and methodology chosen for the investigation must be consistent with this perspective.
The theoretical approach of Interpretivism, especially symbolic interaction, has been
chosen to inform this investigation because of the highly symbolic nature of the concept of
a logistics city which is consistent with a constructivist epistemology. The method of data
collection for the upcoming research will be in-depth interviews based on a purposeful
sampling approach. The driving element for the analyses will be the constant comparative
method, meaning there will be constant comparison between different data sets during the
analysis.
The outcomes of this investigation will be compiled into a knowledge base to further build
a substantive theoretical framework. This will establish a comprehensive framework on
which further possible qualitative and quantitative work can be based. Such a theoretical
framework will enable accurate communication between interested parties and provide
a systems approach to the engineering of logistics cities and its components. This will
be important in terms of concept specifications and legal restrictions, together with the
relationship between enablers, external influences and possible impacts. The beneficiaries
of this work will be public authorities, property developers and industry who will be involved
in making decisions for logistics infrastructure, services and social elements.
74
Journal of Transport and Supply Chain Management | November 2008
REFERENCES
Abrahamsson, M., Aldin, N. and Stahre, F. 2003. Logistics platforms for improved strategic
flexibility. International Journal of Logistics: Research and Applications. 6 (3), 85-106.
Aifandopoulou, G., Giannopoulous, G. and Haralampous, G. 2006. Development of
Intermodal Freight Terminals: A methodology for building optimal networks of terminals
and its application in South Eastern Europe. [CD-ROM]. Washington DC. Transportation
Research Board. 01020180.
Asheim, B. and Coenen, L. 2006. Contextualising Regional Innovation Systems in a
Globalising Learning Economy on Knowledge Bases and Institutional Frameworks. Journal
for Technology Transfer. 31 (1), 163-173.
Asheim, B., Cooke, P. and Martin, R. 2006. The rise of the cluster concept in regional
analysis and policy. In: Asheim, B., Cooke, P. and Martin, R. (eds.) Cluster and Regional
development – Critical Reflections and Explorations. London: Routledge, Taylor and Francis
Group. 1-28.
Asheim, B. and Gertler, M. 2005. The Geography of Innovation: Regional Innovation
Systems. In: Fagerberg, J., Mowery, D. and Nelson, R. (eds.) The Oxford Handbook of
Innovation. Oxford: Oxford University Press. 291-317.
Ballis, A. 2006. Freight villages: Warehouse design and rail link aspects. [CD-ROM].
Washington DC. Transportation Research Board. 01037957.
Becattini, G. 1990. The Marshallian Industrial Districts as a socio-economic notion. In:
Pyke, F., Becattini, G. and Sengenberger, W. (eds.) Industrial Districts and Local Economic
Regeneration. Geneva: International Institute for Labour Studies. 37-51.
Bontekoning, Y. M., Macharis, C. and Trip, J.J. 2004. Is a new applied transportation research
eldemerging?Areviewofintermodalrail-truckfreighttransportliterature.Transportation
Research Part A: Policy and Practise. 38 (1), 1-34.
Breitzmann, K.H. and Wenske, Ch. 2003. Planning of Logistics Centres. Gdansk: Final Report
NeLoC Project.
Cambridge Systematics Inc. 2004. NYMTC Regional Freight Plan An Element of the
Regional Transportation Plan. New York: Report for the New York Metropolitan Transport
Council.
75
The Emergence of Logistics Cities: Conceptual Model
China Economic Review. 2007. Shenzhen’s new center of gravity [online]. Available from:
http://www.chinaeconomicreview.com/cer/2007_06/Shenzhen%E2%80%99s_new_center_
of_gravity.html (accessed 19 August 2008).
ESCAP. 2005. Free Trade Zone and Port Hinterland Development. New York: United
Nations.
Europlatforms EEIG. 2004. Logistics Centres Direction for Use. Bologna: Report by the
Presidency & Executive Office of Europlatforms EEIG.
Fenner, R.A., Ainger, C.M., Cruickshank, H.J. and Guthrie, P.M. 2005. Embedding sustainable
development at Cambridge University Engineering Department. International Journal of
Sustainability in Higher Education. 6 (3), 229-241.
Hong Kong Trade Development Council. 2004. Breaking into Shenzhen Logistics Market
under CEPA [online]. Available from: http://info.hktdc.com/alert/cba-e0405p1.htm (accessed
19 August 2008).
IBI Group. 2006. Inland Container Terminal Analysis. Vancouver: Final Report for the
Government of British Columbia/Canada.
ICT Working Group. 2002. Singapore 2012: The Living Digital Hub – where IT Works:
Singapore: Report by the Economic Review Committee ICT Working Group.
ILSCM. 2007a. A Case for a National Logistics City: Positioning the west for the Future.
Melbourne. Technical Report, Institute for Logistics and Supply Chain Management, Victoria
University.
ILSCM. 2007b. East-West Link needs Assessment. Melbourne. Technical Report, Institute
for Logistics and Supply Chain Management, Victoria University.
ILSCM. 2007c. Positioning the West for the Future. Melbourne. Technical Report, Institute
for Logistics and Supply Chain Management, Victoria University.
Jun, L. 2004. Global Logistics giants praised Shenzhen Logistics [online]. Available from:
http://www.west-logistics.com/en/news_info.asp?newsid=135(accessed19August2008).
Leach, P. T. 2006. China plans massive logistics city. Pacific Shipper. 83 (9), 118.
Leitner, S.J. and Harrison, R. 2001. The identification and Classification of Inland Ports.
Austin: Technical Report, Centre for Transportation Research, University of Texas.
76
Journal of Transport and Supply Chain Management | November 2008
Lingang Group. 2006. China’s New Logistics City. Shanghai: Presentation by Harmsen, L.H.,
Guang, Y. and Pick, S.
Martin,R.L.andSunley,P.2003.Deconstructingclusters:ChaoticConceptorPolicyPanacea?
Journal of Economic Geography. 3, 5-35.
McCalla, R. Slack, B. and Comtois, C. 2001. Intermodal Freight Terminals: Locality and
Industrial Linkages. Canadian Geographer. 45, 404-413.
MEED. 2006. Four sign up for Logistics City. Middle East Economic Digest. 50 (38), 26.
Meidute, I. 2005. Comparative Analysis of the Definitions of Logistics Centres. Transport.
20 (3), 106-110.
Morgan, K. 2004. The exaggerated death of geography: learning, proximity and territorial
innovation systems. Journal of Economic Geography. 4. 3-22.
MTI-WGL. 2002. Developing Singapore into a Global Integrated Logistics Hub. Singapore:
Report of the Working Group on Logistics.
Paniccia, I. 2002. Industrial Districts: Evolution and Competitiveness in Italian Firms.
Cheltenham: Edward Elgar Publishing Ltd.
Porter, M. 1998. On Competition. Boston: Harvard Business School Press.
Porter, M. 1990. The Competitive Advantage of Nations. London: The MacMillan Press Ltd.
Proffitt, M. 2006. Dubai World Central: Delivering State-of-the-Art Infrastructure and
Logistics Services. Dubai, 2nd Trans Middle East 2006 Dubai Exhibition and Conference.
Reich, R.B. 2001. The Future of Success: Work and Life in the New Economy. London:
Random House.
Scott, A. 1988. New Industrial Spaces. London: Pion Limited.
Shenzhen Government Online. 2007. Economy: Modern Logistics [online]. Available from:
http://english.sz.gov.cn/economy/200708/t20070824_230021.htm (accessed 19 August
2008).
77
The Emergence of Logistics Cities: Conceptual Model
Sirikijpanichkul, A. and Ferreira, F. 2005. Multi-Objective Evaluation of Intermodal Freight
Terminal Location Decisions. 27th Conference of Australian Institute of Transport Research
(CAITR). Brisbane: Queensland University of Technology.
Tierney, S. 2004. Welcome to logistics city. Supply Chain Europe. 13 (2), 25-27.
Toh, K.T.K., Sengpiehl, C., Oakden, R., Nagel, P. and Shi, P. 2008. The National Logistics
City Business and Information Systems Architecture. In: Third International Conference on
Innovative Computing, Information and Control. Proceedings of ICICIC 2008 - 2214, Dalian
June 2008: Conference Publishing Services.
Tsamboulas, D.A. 2005. Policies Implementation for developing Freight Villages in Greece.
Athens: Presentation of the Integration of Cargo Transport Modes & Nodes in CADSES
Area Project (IMONODE).
Tsamboulas, D.A., Dimitropoulos, I. 1999. Appraisal of investments in European nodal centres
for goods – freight villages: A comparative analysis. Transportation. 26 (4), 381-398.
Turner, R. 2006. Dubai vies to become logistics gateway. Shipping Digest. 83 (4324), 92-94.
Van der Lugt, L.M. and De Langen, P.W. 2005. The changing role of ports as locations for
logistics activities. Journal of International Logistics and Trade. 3 (2), 59-72.
Walter, C.K., Poist, R.F. 2003. Desired Attributes of an Inland Port: Shippers vs. Carrier
Perspective. Transportation Journal. 42 (5), 42-55.
ResearchGate has not been able to resolve any citations for this publication.
Article
Full-text available
Shippers and carriers in the U.S. Midwest have recognized both the opportunities for international trade and the barriers that may be presented by the transportation infrastructure. The concept of inland ports has been proposed to provide facilities and information that will better enable shippers and carriers to handle exports and imports. By assessing the feasibility of establishing an inland port in central Iowa, the current study adds to the very limited selection of literature available about inland ports. Separate surveys of potential shippers and carriers measured the importance and anticipated use each group perceived regarding potential features and characteristics of an inland port. The results indicated widespread disagreement between shippers and carriers regarding the importance and anticipated usage of inland port features. Carriers tended to rank the proposed inland port characteristics higher, in terms of importance and anticipated use, than did shippers. Based on the rankings of the desirability of port features, a recommended strategy for implementing an inland port concept was developed.
Article
Full-text available
The process of knowledge production exhibits a very distinctive geography. This article argues that this geography is fundamental, not incidental, to the innovation process itself: that one simply cannot understand innovation properly if one does not appreciate the central role of spatial proximity and concentration in this process. The goal of this article is to demonstrate why this is true, and to examine how innovation systems at the subnational scale play a key part in producing and reproducing this uneven geography over time. This article addresses four key issues. First, it looks at the reason why location matters when it comes to innovative activity. Second, it turns to examine regional innovation systems, and the role played by them in generating and circulating new knowledge leading to innovation. Third, the article considers the relationship between regional systems of innovation and institutional frameworks at the national level. Finally, the relationship between local and global knowledge flows is examined.
Article
Full-text available
A logistics centre is a center for all the companies which participate in activities related to transport and logistics in the broadest meaning. LCs provide collective equipment needed to develop these activities and have common services for the companies installed there. Together with the values of location and centrality a logistics centre provides quality service and effective selection of the most efficient means of transportation due to its truly multi‐modal transport possibilities.
Article
Full-text available
Freight villages reflect a modern way of organizing logistics, transport, and goods distribution activities. Warehouses are a basic element in such building complexes, and their efficient planning and operation is essential for the viability of the system. Warehouse design requires a mixture of analytical skills and creativity. Although effort has been dedicated to defining a global methodological design framework, the most scientific papers on the subject address well-defined, isolated problems. A practitioner may notice, however, that many warehouses offering efficient, cost-effective services are in operation and that several warehouse design manuals exist that tackle aspects of design and operation. Investigating academic and pragmatic points of view, this paper is an attempt to present an overall view of the facility layout and warehouse design problem, and it introduces the analysis and results of the preliminary design phase of a new freight village where issues related to facilities layout, warehouse sizing, and rail connections have been considered.
Book
With the publication of his best-selling books "Competitive Strategy (1980) and "Competitive Advantage (1985), Michael E. Porter of the Harvard Business School established himself as the world's leading authority on competitive advantage. Now, at a time when economic performance rather than military might will be the index of national strength, Porter builds on the seminal ideas of his earlier works to explore what makes a nation's firms and industries competitive in global markets and propels a whole nation's economy. In so doing, he presents a brilliant new paradigm which, in addition to its practical applications, may well supplant the 200-year-old concept of "comparative advantage" in economic analysis of international competitiveness. To write this important new work, Porter and his associates conducted in-country research in ten leading nations, closely studying the patterns of industry success as well as the company strategies and national policies that achieved it. The nations are Britain, Denmark, Germany, Italy, Japan, Korea, Singapore, Sweden, Switzerland, and the United States. The three leading industrial powers are included, as well as other nations intentionally varied in size, government policy toward industry, social philosophy, and geography. Porter's research identifies the fundamental determinants of national competitive advantage in an industry, and how they work together as a system. He explains the important phenomenon of "clustering," in which related groups of successful firms and industries emerge in one nation to gain leading positions in the world market. Among the over 100 industries examined are the German chemical and printing industries, Swisstextile equipment and pharmaceuticals, Swedish mining equipment and truck manufacturing, Italian fabric and home appliances, and American computer software and movies. Building on his theory of national advantage in industries and clusters, Porter identifies the stages of competitive development through which entire national economies advance and decline. Porter's finding are rich in implications for both firms and governments. He describes how a company can tap and extend its nation's advantages in international competition. He provides a blueprint for government policy to enhance national competitive advantage and also outlines the agendas in the years ahead for the nations studied. This is a work which will become the standard for all further discussions of global competition and the sources of the new wealth of nations.
Article
The 5 papers in the report deal with the following areas: past and future of the petroleum problem: the increasing need to develop alternative transportation fuels; methanol supply and demand issues from a California perspective; rise and fall of diesel cars: a consumer-choice analysis; transportation fuels and the greenhouse effect; unleaded gasoline in the United States: a successful model of system innovation.