Logistics Clusters: The Next Hub of Environmental Innovation

The increase in such geographical market opportunities provides benefits beyond the logistics space


“There are certain benefits of even having your competitor next door—this is true of any cluster,” explained Sheffi. “Why is most of the entertainment industry in Hollywood? Why is most of the financial services industry on Wall Street? Why is most of the information technology industry in Silicon Valley?” he questioned.

“You have lots of benefits in having ‘like’ companies in the same area. You get more ‘sway’ with local government to make investments that benefit that particular cluster—whether it’s a bid for road improvements or regulatory zoning changes. For logistics in particular, the benefits are even stronger in having lots of activity in close proximity to each other. Transportation carriers can provide a higher frequency of direct services to more locations—so the services are better. Other institutions may move into the area and develop a two-year certificate for operating all kinds of logistics equipment (at the lowest level of employment),” said Sheffi.

Yet, the surrounding population around such areas of development may think otherwise. While residents around such areas of economic growth may not want such big “logistics clusters” in their backyard, to others, their overall benefits—including proactive environmental strategies—may far outweigh such cries of the local population. For ex., the Port Authority of Cartagena, contains five waste collection points—specific for hazardous wastes—located in Cartagena Basin. In addition, logistics clusters also create manufacturing job opportunities—such jobs that continue to be reshored back to the U.S. and which may call for “greener” supply chain processes within manufacturing.

“Logistics clusters are becoming hubs of environmental innovation,” said Sheffi. Another such example is in the case of PortTech Los Angeles( PortTechLA), a commercialization center and incubation program which funds innovation and environmental sustainability around the ports, according to Sheffi.

PortTechLA maintains regulatory etiquette, for example, a truck that is more than five years old cannot enter a port,” Sheffi continued. “They also funded the development of all kind of alternative fuel trucks, alternative fuel cranes and all kinds of different oils and diesels in order to reduce the carbon footprint but also reduce cost and noise. And such places continue to invest a lot in environmental innovation,” he concluded.

Future developments

Whether we continue to see some of the high-end logistics providers and 3PL’s moving into such “logistics clusters” in 2013 is to be determined. But as demand for more logistics services across such sectors as automotive, retail and high tech continues to increase—as customers look for better performance and supply in such services—logistics clusters will continue to add market value through industrial activity generation.

For more information on logistics clusters, visit http://bit.ly/13i1iIg.

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