Functional Integration of Freight Distribution Clusters
Three major levels of functional integration can be found for freight distribution clusters:
  • Coincidental. Various logistics zones are formed where land is available and with proximity to major road infrastructure, particularly highways. They are often the outcome of zoning changes done by local governments implicitly defining an area for warehousing and freight distribution activities and giving the green light for private firms to develop their projects. However, these activities are commonly unrelated, implying that they have their own supply chains and distribution networks; they are coincidental. Accessibility tends to be the main factor favoring agglomeration. They are likely to appear rather spontaneously as several firms realize the advantage of a location for freight distribution centers.
  • Interdependent. Several logistics zones are built for a purpose and are master planned and managed. These include distribution centers, warehouses and storage areas, transport terminals, offices and other facilities supporting those activities, such as public utilities, parking space and even hotels and restaurants. Although a logistic cluster can be serviced by a single mode, intermodal facilities (rail terminal, port or airport) can offer direct access to global and regional markets. The development of logistic clusters has many benefits to manage freight flows generated by several unrelated users through economies of scale since they are sharing the same facilities and equipment, mostly around a transport terminal or a depot. This in turn reduces transport costs and promotes its reliability. They are commonly the outcome of strategies of port authorities, regional governments or private terminal operators.
  • Integrated. Implies a higher level of integration between the firms and distribution centers present within the zone as well as with transport terminals. This can also involve the setting of a free (foreign) trade zone (FTZ) within the zone, conferring an additional level of flexibility (and complexity) in freight distribution. A higher level of integration with intermodal terminals, let them be ports, rail yards or airports, results in an intermodal freight distribution system. In some cases of advanced supply chain management strategies, the terminal upstream of the supply chain can act as a storage buffer and functionally be part of the logistic zone. Integrated zones tend to be the outcome of a concerted action between high level government agencies and the private sector since regulatory changes are required as well as large scale infrastructure investments. In particular, they are built on the principle of co-location where the planning and operation of both the terminal and the logistic zone are concomitant. They thus have a well established governance structure as well as a logistics service market that include education and training strategies to insure a productive labor force.
Freight distribution clusters can grow both in scale and scope. Although they can independently grow either in scale or scope, this process tends to be concomitant. Most of the coincidental logistics zones tend to be solely associated with road transportation while integrated logistics zones tend be co-located with intermodal facilities.