Logistics-intensive clusters and regional economic development: a review of the current evidence
Bill Anderson , Director Cross Border Institute, University of Windsor Prepared for Exploring Freight Hubs , Mississauga, ON November 29, 2013 Logistics Intensive Clusters
• Serve a variety of functions – Intermodal transfers – Consolidation / deconsolidation – Customs administration – Value added activities • Prominent target of regional development agencies – Success stories – Strategy to replace lost manufacturing jobs 2 questions for economic planners
• Is the region a suitable location for a logistics intensive cluster • Are the net economic benefits of attracting such a cluster positive and significant Transformation of freight systems
• Containerization • Intermodalism • Globalization – Growth of ports on both coasts and gulf – Growth of intermodal rail service – Need for large inland centers for intermodal transfers • Logistics revolution – Just-in-time inventory Transformation of freight systems
• e-commerce – Large scale fulfillment centers – Substitution of freight for personal transport • Environmental concern – Calls for more local sourcing – Increasing incentives to move freight as far as possible by water or rail Logistics Intensive Clusters
• Member firms – Logistics service provider – Major users of logistics services – Firms providing inputs to logistics services • Emergence of hubs – Providing transportation / logistics services to non-local demand – Regional specialization Economic rationale for logistics hubs (Sheffi, 2010) • Economies of scope: balanced freight, avoid empty backhauls, lower rates • Economies of scale: full loads, large conveyances, long double stacked trains • Economies of density: significant demand close to hub • Economies of frequency: reduces the time freight spends at rest Inland Ports
• Transshipment point for marine containers • Locational requisites – Access to a major container port, – Intermodal facilities served by a Class I railroad – At least 1000 acres of total land – Status as a Foreign Trade Zone (FTZ) – Access to major highways – Access to a large metropolitan market – Access to a large, qualified labour force • Some of most successful close to Cargo airports
Importance of large local market
• Large number of DCs and other destinations within a short dray • Ability to generate backhaul – Export industries – Opportunities for domestic repositioning – Ability to generate paper and ferrous scrap • Disadvantage of small local market may be offset by containerized agricultural exports
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US Locations of inland ports
• Dallas / Ft Worth* • Chicago • Kansas City • St Louis • Atlanta • Memphis* • Inland Empire (Riverside and San Bernardino, CA) • Columbus* • Charlotte • (Front Royal, VA) • *Cargo airport connections Chicago
• Six Class I Railways • Most important center for intermodal transfers • Rapid growth due to Asian imports, congestions • 2 responses – CREATE project – Inland port projects in periphery Centerpoint Intermodal Center Jolliet, IL • On site of former Jolliet Arsenal, 6000 acre site • 50 miles SW of Chicago, BNSF and UP lines • Designated FTZ • 600,000 lifts per year • Major Clients – Wal-Mart, Georgia Pacific, Bissell – Schneider, J.P. Hunt, Maersk • Walmart DC is 3.4 million sq feet
Alliance Global Logistics Hub
• Developed in 1990s by Ross Perot’s Hillwood Co. • Originally anchored on Fort Alliance Airport (cargo only) • 2 Class I intermodal facilities • 243 tenants, 68 from Fortune 500 • 27 million sq ft warehouses • No. 1 US FTZ
Other prominent examples
• Rickenbacker Global Logistics Park, Columbus OH • KC SmartPort • Memphis – Busiest cargo airport – 5 Class I railroads, 2 million intermodal lifts Canada’s Ocean Ports
2,507,032 TEUs
750,000 TEUs
Prince George Prince Rupert
Prince Rupert Port 1,375,327 TEUs Authority, Prince Regina Rupert, BC
Port Metro, Vancouver, BC 410,649 TEUs
CN Montreal Intermodal Halifax VaughnCN Montreal Intermodal Terminal, Port of Halifax, Source: Map Data - Google 2013 Montreal, QC Halifax, NS Canada Port Authorities, Transport Canada Intermodal Centres in Canada • Prince George (British Columbia ) • Port Alberta (Edmonton, Alberta ) • Calgary Logistics Park (Calgary, Alberta ) , 500K lifts • Global Transportation Hub (Regina, Saskatchewan ), 250K • CentrePort Canada (Winnipeg, Manitoba ) • CN Brampton Intermodal Terminal (Ontario ) 1,455K • CP Vaughan Intermodal Terminal (Ontario ) 700K • CN’s Montreal Logistics Park (Quebec ) 1,375K
21 CN Inland Intermodal Terminals - Canada
Port Alberta, Prince George Port Port Alberta, Edmonton, AB Authority, Prince Edmonton, AB George, BC Prince George
Centre Port Canada, 500,000 Lifts Winnipeg, MB Regina
Calgary Logistics Park, Calgary, AB
Brampton Intermodal 1,455,000 Lifts Terminal, Brampton, ON Brampton
Source: Map Data - Google 2013 Canada National Railway CP Inland Intermodal Terminals- Canada
Port Alberta, Edmonton, AB
250,000 Lifts Centre Port Canada, Regina Winnipeg, MB
Global Transportation HUB, Regina, SK
700,000 Lifts Vaughn Source: Map Data - Google 2013 CPR Vaughn, Vaughn, Canada National Railway ON Logistics Intensive Clusters as Regional Economic Drivers • Traditionally, transportation and logistics activities seen are “residentiary” rather than “basic” drivers of economic growth • At present, few regions in North America show strong specialization in transportation and warehousing activities • This may change Figure 1. Top 20 US Metro Areas by Location Quotient, Transportation and Warehousing, 2008
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Job Creation
• Total employment in cluster (NCFRP 13, 2011) – Alliance: 28,000 – Centerpoint Joliet: 28,000(14,000 more projected) • Employment depends on ability if intermodal facility to attract related industries – Rickenbaker Intermodal Terminal, Columbus, OH • 175 jobs in intermodal facility • 20,000 projected at freight industrial park Employment Controversies
• Are these good jobs? – Replacement for manufacturing? – Logistics becoming information intensive. • Are these new jobs? – Competed away from other commercial locations? • Do logistics intensive clusters increase total industry employment? Other notes of caution
• Low employment and income per unit of land (<10 jobs per acre vs 25 for suburban retail) • Created large, focused truck flows, resulting in congestion • May repel other land uses such as retail and residential (Alliance case suggests not.) • There is limited scope to reproduce success stories (not every node can be a hub.) • Very large clusters still account for a small share of total warehouse space