Proximity and Intermediacy for Distribution Clusters
Due to their operational requirements, which are space intensive, distribution centers (DC) have migrated to more affordable locations at the periphery of metropolitan areas. Even if many DCs are unrelated and linked to different supply chains, they tend to agglomerate in logistics clusters nearby major road facilities. Market accessibility is the main driving force of this process. Logistics clusters emerged in suburban (or exurban) settings to accommodate two market accessibility factors and their distribution requirements:
  • The first is proximity, either to customers or to the major transport terminals from which DCs draw their supply.
  • The second is intermediacy where a DC must find a location within corridors of freight circulation that enables a reliable and constant supply. Since a DC is just one link in a sequence, being efficiently connected to the upstream segment can be as important as being connected downstream, notably when global sourcing is concerned. This particularly concern crossdocking distribution centers.
As globalization took place, proximity evolved at a wider operational scale, mainly from the metropolitan area to a regional system of cities, which tend to be organized along corridors. Supply chains that are time dependent tend to rely more on an intermediacy strategy (notably large retailers) while those that are less time dependent are more prone to proximity.
In North America, the setting of large distribution centers, often part of distribution clusters, has been a dominant trend, particularly among major retailers such as Wal-Mart, Target and Home Depot. When intermediacy is important, which particularly concerns supply chains of foreign goods, freight clusters tend to locate in small intermediary locations. For instance, the vicinities of Albany (NY) and Allentown (PA) have experienced the setting of several large distribution centers for retailers. These locations are along long distance highway corridors enabling to service the Eastern Seaboard market, particularly the New York metropolitan area, within a 48 hours envelope (order / delivery). Central New York is at the nexus of two important axis between Montreal and New York and between Buffalo and Boston. Eastern Pennsylvania has the advantage of being serviced in less than a day from the major rail terminals of Chicago from which transcontinental containerized rail traffic bound from the Pacific Coast arrives. There is thus the emergence of a functional specialization in distribution clusters depending on the supply chains they are linked with.