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A case for incorporating logistics services in urban andregional policy: Some insight from US metropolitan areasrsp3_1064 1..13
Kevin O’Connor1, Brian Holly2*, Audrey Clarke3*
1 Urban Planning, University of Melbourne (e-mail: [email protected])2 US Bureau of the Census (e-mail: [email protected])3 US Department of Health and Human Services (e-mail: [email protected])
Abstract. Firms and jobs in producer services are often part of the target in some urban andregional policies. Although metropolitan areas (and the small core region within them) have longbeen the focus for these activities, there has been research to show that they can operate fromsmaller cities and indeed remote locations. This paper explores whether this outcome is likelyfor logistics services. Though these too have been seen as anchored to transport infrastructure,the research here shows that logistics services associated with supply chain management haveweaker ties to the major transport centres. Jobs in this activity have been expanding recently.Taken together, these aspects suggest that urban and regional policy could begin to targetlogistics services as a way of attracting higher firms and jobs. For smaller cities that effort willbe more effective where there is established road, rail or airport infrastructure.
JEL classification: R58, R40, O32
Key words: Logistics services, producer services, transportation, urban and regional policy
1 Introduction
There is a well developed regional and local policy concern surrounding the location of producerservices, as these activities provide relatively high wage paying jobs and, in some nations andregions, have grown faster than total employment over past decades. Attracting these jobs toparticular cities and regions has usually involved a focus on the way firms provide their services.Establishing that insight has involved analyses of different size of firm, organizational struc-tures, the role of networks, the importance of flexibility, types of corporate inter-linkages
* Brian Holly is an employee of the United States Department of Commerce and Audrey Clarke is an employee ofthe United States Department of Health and Human Services and their contributions to this paper were made outside oftheir official duties. Any opinions or conclusions expressed herein are exclusively those of the authors and do notnecessarily reflect positions or policies of the Department or any of its agencies.
The authors acknowledge the financial support of the Volvo Research and Education Foundation toward thepreparation of this paper.
doi:10.1111/j.1757-7802.2012.01064.x
© 2012 the author(s). Regional Science Policy and Practice © 2012 RSAI. Published by Blackwell Publishing, 9600 Garsington Road,Oxford OX4 2DQ, UK and 350 Main Street, Malden MA 02148, USA.
Regional Science Policy & Practice, Volume •• Number •• •• 2012.
(especially outsourcing), and the use of IT (in particular in association with the rise ofe-commerce). The current research fits into that array by looking at two categories of logisticsand a sub-sector of producer services. It finds that a new way of doing business maybe producinga new locational pattern and in turn could be creating an unexpected potential for firm and jobdevelopment away from the traditional centres of transport activity.
2 Spatial patterns of producer services
Over an extended period Sassen (2000) developed an argument that outsourcing arrangements(associated with the application of IT) generated specialization and clustering of interrelatedfirms in advanced corporate services, creating a ‘new production complex’ in the centralbusiness districts of major cities. An illustrative outcome is the locally specific clusters ofparticular activities such as those identified in London by Cook et al. (2007). In contrast, Beyersand Lindahl (1996a, 1996b) showed that outsourcing and IT can be used by some producerservice firms to operate in locations away from clients and other activities. Their survey workshowed specialized firms even in rural locations (‘lone eagles and high flyers’) who usedtelecommunications to reach export (i.e., beyond local area) markets. The ‘lone eagles and highflyers’ interviewed used mail, courier, fax and computer transfers to serve clients. This outcomewas also detected in wide ranging survey work on the location of producer services in the UK,as summarized by Bryson et al. (1997: 349), where a decentralization from inner London“reflects powerful ‘lifestyle’ and residential preference motives on the part of the entrepreneursinvolved . . . together with the ease of communications and transport from home and low officecosts in the rest of the South East”.
These results suggest some producer service firms can operate away from the traditionalsites associated with their activity by taking advantage of different ways of service delivery. Thisidea lies at the heart of the current research. It uses two ways that statisticians define logisticsto address the question: Are differences in the background and operation of logistics servicefirms, as expressed in two NAICS definitions, reflected in differences in the location of theiremployment?
3 Logistics services
3.1 Definitions
Hesse and Rodrigue (2000, p. 172) observe that logistics is a “wide set of activities dedicated tothe transformation and circulation of goods, such as the material supply of production, the coredistribution and transport function, wholesale and retail and also the provision of householdswith consumer goods as well as the related information flows”. This wide array can be groupedinto two subsets:
1. physical distribution, in effect the movement of goods from points of production to finalpoints of sale and consumption; and
2. materials management, perhaps the more modern task of production co-ordination in thesupply chain associated with this physical distribution.
Both elements of logistics services have been shaped and re-shaped by changes in the technol-ogy of transport and the scale and organization of companies involved. The latter has includeda shift to outsourcing (Razzaque and Sheng 1998; Gordon 2003), which was expressed in the
2 K. O’Connor et al.
Regional Science Policy & Practice, Volume •• Number •• •• 2012.
growth of specialist third party providers (Cap Gemini 2002). In addition, information technol-ogy lies at the heart of modern logistics (Bowen 2008), reinforced in the recent adoption ofe-commerce within logistics services (Beyers 2003; Aoyama et al. 2005; Anderson andLeinbach 2007). Taken together these changes may have been felt in some changes in thelocation of logistics services.
3.2 Location of logistics services
An early global perspective on the location of services in the global maritime transport in-dustry showed that some were co-located with concentrations of other producer services(O’Connor 1987). National studies in Canada (Slack 1989), and Australia (O’Connor 1989),confirmed that understanding. These approaches have been re-visited recently in what is nowa very different geography of world shipping, and where outsourcing is managed by IT-richthird party logistics suppliers. Reviewing a number of port cities in this modern context,Jacobs et al. (2010) confirmed the overlap in location between maritime services and producerservices in Singapore, Hong Kong, New York and London. However they also found thatHouston, Rotterdam, Panama City, Piraeus, Hamburg and Antwerp, not highly ranked asproducer service cities, were highly ranked as maritime service cities. That outcome suggestslogistics services do not necessarily need to be located close to the major clusters of theproducer services.
Of course logistics services are not just about maritime activity and Slack (1996) hasprovided insight on intermodal (rail to road) transport centres in the US. Though there was a wellestablished set of rail transport locations in the US he detected new trends in organizationalstructures, with some rail companies establishing branch offices in rail centres (Calgary,Winnipeg, Toronto, Memphis and Columbus) while there was also evidence of headquartersmoving to smaller centres. This perspective has been widened recently with a focus on road andair transport. Bowen (2008) and Cidell (2010) working in the US, and Hesse (2008) workingin Europe, have shown there is now a new geography of warehousing. Hesse and Rodrigue(2000) suggest this has three components: one, in and around the big physical nodes of seaportsand airports; two, at inland centres in the suburbs and beyond the edge of a metropolitan area(sometimes long distances from the ports and seaports); and three, at sites in hinterlandcorridors. Market research studies by Cushman et al. (2003) and Graham and Sahling (2004)confirm this interpretation. To that can be added airports that specialize in freight movement;Alkaabi and Debbage (2011) found a positive relationship between air freight demand in ametropolitan area and its share of national employment in their defined ‘transport, shipping andlogistics’ industries.
The new geography described here could create the possibility of new locations for logisticsservice firms. The scope of that possibility could be widened by the creation of new sea ports andintermodal terminals as older facilities have become congested. The growth of Savannah in theUS, and the new Union Pacific rail terminal 80 miles west of Chicago, are two examples. Henceit might be that alongside the long-established anchors of logistics services (the old seaports andrail termini), some new service niches are developing in or near major highway junctions, smallto medium sized airports, new ports and intermodal centres. If so, employment opportunitiesmay emerge in some different locations and this activity could well become a new agenda itemin local economic development policy for these locations.
This research will engage with this possibility by comparing the geography of two differentperspectives on logistics services, one developed in association with the physical transport taskand the other associated with management and information. The purpose of the research is toshow whether these differences are reflected in different location patterns.
3Logistics services and urban and regional policy
Regional Science Policy & Practice, Volume •• Number •• •• 2012.
4 The data and the approach
The research strategy is to compare the metropolitan distribution of one perspective on logisticsservices provided by the North American Industrial Classification System (NAICS) (US Census2007) which seems to draw upon the ‘physical distribution’ component of Hesse and Rodrigue(2000), with a second associated with management and scientific services, perhaps drawingmore on the ‘materials management’ part of the definition.
4.1 Logistics services as part of the transportation sector
The first approach to the definition of logistics services involves separating the service compo-nents from the NAICS sectors 48–49: transportation and warehousing. As indicated in Table 1there is a sub-sector 488 entitled support activities for transportation, which includes serviceactivities. Closer study of the specifications of the five subsectors within this three digit groupexposed sub-sector 4885 (the shaded column in Table 1). The NAICS specification of thissubsector group is:
Freight Transportation Arrangement – Includes arranging transport of freight between shippersand carriers, otherwise known as freight forwarders, marine shipping agents, or customs brokers.They offer a combination of services spanning transportation modes. Can be cross-classified withSector 541614 – Process, Physical Distribution, and Logistics Consulting Services (US CensusBureau 2007).
The definition directly draws attention to the transport task without the specification of the modeinvolved (as is the case for the other four subsectors shown in table 1). The 4885 subsector issmall, accounting for 5 per cent of employment in the transportation and warehousing sector. Itis labelled ‘transport services’ in the analysis that follows.
4.2 Logistics services as part of the producer services sector
As noted in the definition of sub-sector 4885, logistics activity is also recorded in NAICS withinsector 54 professional, scientific and technical services. There are nine sectors, one of which isindustry group 5416, management, scientific, and technical consulting services. Within thatthere is a six digit group labelled 541614 process, physical distribution, and logistics consultingservices. The technical specification in NAICS indicates this industry is:
Primarily engaged in providing operating advice on a range of manufacturing and produc-tion issues, but of interest in the logistics sphere:
• inventory management;• distribution networks;• warehouse use, operations, and utilization;• transportation and shipment of goods and materials;• materials management and handling;• freight rate or tariff rate consulting services;• transportation management consulting services; and• inventory planning and control management consulting services (US Census Bureau 2007).
The definition highlights the management dimension of logistics. It is possible the firmsincluded here may be drawn from transport industry, but also may have backgrounds incomputing, mathematics and engineering that address production and delivery problems in
4 K. O’Connor et al.
Regional Science Policy & Practice, Volume •• Number •• •• 2012.
Tabl
e1.
Log
istic
sse
rvic
esas
part
ofth
etr
ansp
orta
tion
sect
or
NA
ICS
48–4
9tr
ansp
ort
and
war
ehou
sing
Tota
lem
ploy
men
t4,
395,
432
NA
ICS
cate
gori
es48
148
8Su
ppor
tac
tiviti
esfo
rtr
ansp
orta
tion
482
4881
supp
ort
activ
ities
for
sir
tran
spor
t-at
ion
4882
supp
ort
activ
ities
for
rail
tran
spor
t-at
ion
4883
supp
ort
activ
ities
for
wat
ertr
ansp
ort-
atio
n
4884
supp
ort
activ
ities
for
road
tran
spor
t-at
ion
4885
frei
ght
tran
spor
tatio
nar
rang
emen
t48
348
448
548
7D
ata
and
term
sus
edin
the
rese
arch
Tra
nspo
rtan
dw
areh
ousi
ngac
tivity
Tra
nspo
rtse
rvic
es
Em
ploy
men
t3,
572,
626
610,
641
212,
165
100%
81%
14%
5%
5Logistics services and urban and regional policy
Regional Science Policy & Practice, Volume •• Number •• •• 2012.
space and time. The position of this activity within the broader producer services sector isdisplayed in Table 2. The employment within this group is also small, about half that identifiedin the transportation-based definition, and less than one per cent of the overall service sectorcategory. It is labelled ‘management services’ in the analysis that follows.
Figure 1 displays data on the percentage change in the number of establishments andemployment in these two categories between 1998 and 2008. It is apparent that the much smallermanagement services category has experienced the greatest recent change.
To meet the research objective, analysis was carried out on the 2007 county business patternsfor 67 metropolitan statistical areas defined in 2006. The analysis utilized a series of measuresof employment establishing the scale and location of the activity, and then investigating itsassociation with their location and that of transportation activity (taken as the total employmentin NAICS 48–49) and producer services (the total in NAICS 54).
5 A Different geography of two definitions of logistics services?
5.1 How different is their geography of the two categories?
The first measure compared aggregate metropolitan employment in both categories using thecorrelation between the two distributions of employment. The correlation coefficient was 0.67suggesting there is some correspondence in the location patterns, which is not unexpected, butthat the data sets are not identical, and the employment distribution may reflects the possibleimportance of different cities in each category. That difference justified close study.
5.2 Differences in concentration in cities?
The second measure explored the share of all US employment in the two categories that islocated in the 67 cities used in the analysis. Results are shown in Table 3. The data in this tableshow that employment in transport services is more concentrated in these 67 metropolitan areasthan is employment in management services, indicating that the management-based activities inlogistics seem to have spread more widely across the country. Both are more concentrated thantransport and warehouse activity generally, where the 67 metropolitan areas account for just59 per cent of US Employment.
5.3 What cities are involved?
The third measure identified the ranking of the top ten cities in terms of employment in bothcategories (see Table 4). The table shows there are some significant differences in the locationof these two activities. While the large well known transport centres in the country (New York,Los Angeles, Chicago, Atlanta, Dallas and Detroit) figure in both lists, their ranking is a littledifferent. Then Memphis, Washington, St Louis and Boston figure in the top ten locations ofmanagement services employment, but not in transport services, while for Miami, Houstonand San Francisco the opposite is the case. The major international seaport gateways of NewYork and Los Angeles along with the major continental distribution centre, Chicago, are highlyranked on employment in both categories, although apart from New York are relatively lessimportant in the management services. The percentages in the bottom row confirm the greaterdispersal of management services. The top ten cities have a lower share of employment than isthe case of the transport services.
6 K. O’Connor et al.
Regional Science Policy & Practice, Volume •• Number •• •• 2012.
Tabl
e2.
Log
istic
sse
rvic
esas
part
ofpr
oduc
erse
rvic
es
NA
ICS
54–
prof
essi
onal
,sci
entifi
can
dte
chni
cal
serv
ices
Tota
lem
ploy
men
t8,
179,
941
NA
ICS
cate
gori
es54
1154
1654
161
Man
agem
ent
Con
sulti
ngSe
rvic
es54
12O
ther
man
agem
ent,
scie
ntifi
can
dte
chni
cal
serv
ices
5416
1154
1612
5416
1354
1614
5416
1854
13A
dmin
.man
agem
ent
and
gene
ral
man
agem
ent
cons
ultin
gse
rvic
es
Hum
anre
sour
ces
and
exec
utiv
ese
arch
cons
ultin
gse
rvic
es
Mar
ketin
gco
nsul
ting
serv
ices
Proc
ess,
phys
ical
dist
ribu
tion
and
logi
stic
sco
nsul
ting
serv
ices
Oth
erm
anag
emen
tco
nsul
ting
serv
ices
5415
5417
5418
Dat
aan
dte
rms
used
inth
ere
sear
chM
anag
emen
tse
rvic
es
Em
ploy
men
t7,
164,
832
1,01
5,10
970
,278
100%
87.2
%12
.0%
0.8
7Logistics services and urban and regional policy
Regional Science Policy & Practice, Volume •• Number •• •• 2012.
For Memphis in particular, the high level of employment in management services nodoubt reflects the global operations of Federal Express, which is likely to have a differentprofile of employees than the longer established transportation sectors in many other cities. Thetransportation market associated with Washington DC and Boston (with high tech and consult-ing sectors) may also have stimulated more of the managerial side of logistics activity, whileSt Louis’ central location could be a good place for the management of intermodal movements.In contrast, logistics activity in Miami and Houston might be associated with the large scalephysical port facility, and so be high in ranking on transport services. The position of SanFrancisco is difficult to justify however.
5.4 How important is the location of transport activity and producer services?
The final measure of the differences in the location of employment estimated the strength ofassociation between the employment in each category and total employment in transport andwarehousing activity (i.e., NAICS 48–49) and producer services (NAICS 54). This measure wasdesigned to establish the strength of the pull of transport services and producer services on bothcategories. The measure involved four simple linear regressions on two measures of employ-ment in each category (absolute number and shares of total metro employment) against twomeasures of transport and warehousing activity and producer services (again absolute numberand shares of total metro employment). The results are displayed in Table 5. They show two lotsof four sets of R2 values. Looking at the top half of the table, it is apparent that the scale ofemployment in transport and warehousing activity is important to both categories of services,but more so to the transport services than the management services. Here we have furtherevidence of the management services adopting a more dispersed geography. That is supportedby the results in the bottom half of the table where (admittedly on lower R2 values), shares of
0
50
100
150
200
Establishments Employees
Transport services Management services
Fig. 1. Percentage change in firms and employment: two logistics services 1998–2008
Table 3. The national geography of two perspectives of logistics services
Employment Measure National share of activity withinthe 67 cities in the study (%)
Share relative to shareof total employment
Total US industrial employment 57 1.00Total transport and warehouse activity 59 1.04NAICS 48–49Transport services NAICS 4885 78 1.37Management services NAICS 541614 72 1.26
8 K. O’Connor et al.
Regional Science Policy & Practice, Volume •• Number •• •• 2012.
Tabl
e4.
Top
ten
rank
edlo
catio
nsof
two
cate
gori
esof
logi
stic
sse
rvic
es
Ran
kM
etro
polit
anar
eaT
rans
port
serv
ices
Met
ropo
litan
area
Man
agem
ent
serv
ices
1N
ewY
ork-
Nor
ther
nN
ewJe
rsey
-Lon
gIs
land
,NY
-NJ-
PAm
etro
polit
an22
,973
Mem
phis
,TN
-MS-
AR
met
ropo
litan
5249
2L
osA
ngel
es-L
ong
Bea
ch-S
anta
Ana
,CA
met
ropo
litan
20,0
98N
ewY
ork-
Nor
ther
nN
ewJe
rsey
-Lon
gIs
land
,NY
-NJ-
PAm
etro
polit
an40
323
Chi
cago
-Nap
ervi
lle-J
olie
t,IL
-IN
-WI
met
ropo
litan
15,1
82A
tlant
a-Sa
ndy
Spri
ngs-
Mar
ietta
,GA
met
ropo
litan
3909
4M
iam
i-Fo
rtL
aude
rdal
e-Po
mpa
noB
each
,FL
met
ropo
litan
9,91
0D
etro
it-W
arre
n-L
ivon
ia,M
Im
etro
polit
an35
305
Atla
nta-
Sand
ySp
ring
s-M
arie
tta,G
Am
etro
polit
an8,
200
Los
Ang
eles
-Lon
gB
each
-San
taA
na,C
Am
etro
polit
an29
066
Hou
ston
-Sug
arL
and-
Bay
tow
n,T
Xm
etro
polit
an7,
864
Was
hing
ton-
Arl
ingt
on-A
lexa
ndri
a,D
C-V
A-M
D-W
Vm
etro
polit
an25
367
Dal
las-
Fort
Wor
th-A
rlin
gton
,TX
met
ropo
litan
6,49
9C
hica
go-N
aper
ville
-Jol
iet,
IL-I
N-W
Im
etro
polit
an22
388
San
Fran
cisc
o-O
akla
nd-F
rem
ont,
CA
met
ropo
litan
5,36
5D
alla
s-Fo
rtW
orth
-Arl
ingt
on,T
Xm
etro
polit
an17
019
Det
roit-
War
ren-
Liv
onia
,MI
Met
ropo
litan
4,42
1St
.Lou
is,M
O-I
LM
etro
polit
an14
8410
Col
umbu
s,O
Hm
etro
polit
an3,
830
Bos
ton-
Cam
brid
ge-Q
uinc
y,M
A-N
Hm
etro
polit
an14
11Sh
are
ofem
ploy
men
tin
67ci
ties
63%
57%
9Logistics services and urban and regional policy
Regional Science Policy & Practice, Volume •• Number •• •• 2012.
transport services have a stronger connection with total employment in transport, and also shareof employment in transport. That connection is not felt to the same degree in the managementservices.
Turning to producer services, there is a similar set of results in table 6. In the top half of thetable, transport services have a stronger association with producer service employment (nodoubt due to the main concentrations of producer services, NewYork, Chicago and Los Angeles,in very important transport centres), although (in a weaker set of statistical measures) manage-ment services seem to have closer ties to metros with high shares of producer services. In thebottom half of the table transport services seem to have strong associations with shares ofproducer services. These results suggest the management services are less connected to thetraditional business cores of the nation.
6 Conclusions and policy implications
Taken together the measures reviewed above confirm there are two different distributions ofemployment of these two categories of logistics services. One seems firmly anchored to theestablished infrastructure of the transportation task (as reflected in transport employment), andin a number of cases, producer service concentrations. Though these locations are not unim-portant to management services, the connection is weaker, which in effect means that they arespread across a wider array of cities. Hence it does seem that the management services elementof logistics has begun to establish a different geography, one that is less reliant upon the oldtransport infrastructure of sea and rail. Its greater dispersal might also reflect the fact that thisactivity is new and involves new and different firms, only some of which might be drawn fromthe transport industry. Others, for example, may come from a heritage developed in computing,mathematics and engineering, where the service they provide draws upon resolutions of pro-blems in space and time, deriving practical solutions to the problems created by multi-siteoperations.
Table 5. The association of logistics services with transportation employment in metropolitan areas
Total metro employment in: Total metro employment in transportand warehousing activity
Share of metro employment intransport and warehousing activity
R2 values
Transport services 0.86 0.22Management services 0.67 0.35Transport Services 0.34 0.62Management Services 0.15 0.40
Table 6. The association of logistics services with producer services in metropolitan areas
Total metropolitan employment in: Total metro employment inproducer services
Share of metro employmentin producer services
R2 Values
Transport services 0.84 0.30Management services 0.66 0.41Transport services 0.26 0.55Management services 0.10 0.29
10 K. O’Connor et al.
Regional Science Policy & Practice, Volume •• Number •• •• 2012.
The policy issue is whether this different geography affords opportunities for cities andregions to look to these types of services in economic development strategies. An additionalinsight on this idea is provided by the data in Table 7. That has been constructed by using dataon the 50 fastest growing logistics companies in 2008 published by the trade magazine Inc.Firms in this list are likely to be small as the criteria for selection was percentage change inturnover over the past twelve months; those whose business grew off a small base can producelarge numbers on this indicator. Table 7 shows the states that had at least two firms in the list,and their locations have been assigned to metropolitan and non-metropolitan areas. The firstobservation is that smaller metropolitan areas are the main locations. In most cases the locationswere on the fringe of the metropolitan area. The free-standing smaller centres are usually on ornear interstate highways. The geographical pattern detected by this simple analysis supportsthe notion that growing logistics firms locate in a much wider variety of places than thetraditional transport centres or producer service locations.
Before we can suggest policy approaches for cities and regions however, we need to heedsome of the insight in the comprehensive Aoyama et al. (2006, pp. 334–335) research on theproduction systems of logistics firms. They comment:
transportation is primarily a local industry that requires rich, geographically-specific knowledge,even if the industry deals with international and widely geographically dispersed transactionsand . . . remains one of the most localized and embedded industries of all.
Further work on this issue by the same authors has identified the importance of trust innegotiations for logistics services which adds a critical layer to the ‘local’ dimension andindicates that IT use does not mean dispersal to new locations (Aoyama and Ratick 2007).Hence the firms identified in Table 7, along with the more dispersed employment patterns foundin the statistical measures in the research, are unlikely to be created by the ‘lone eagles and highflyers’ of Beyers and Lindahl’s (1996a, 1996b) research. Rather they are likely to be found insmaller cities that have become transport hubs, like Memphis and Louisville, in places withspecial transport needs and different local industrial activities like Washington and Boston, andalong the highway networks that provide good locations for distribution centres.
Table 7. Location of fastest growing logistics firms
State Number of firms Metropolitan area Free standing smaller city
Ohio 6 Cincinnati (3),ColumbusCleveland, Akron
New Jersey 5 New York/New Jersey (4) LakehurstTexas 4 San Antonio, Houston Round Rock, McAllenCalifornia 4 San Jose, Los Angeles (2) San Luis ObispoVirginia 3 Washington DC (2) Prince GeorgePennsylvania 3 Pittsburgh, Philadelphia GibsoniaNorth Carolina 3 Hickory
FayettevilleStatesville
Colorado 2 Denver (2)Georgia 2 Atlanta (2)Massachusetts 2 Boston, FranklinNew Hampshire 2 Portsmouth
ManchesterOklahoma 2 Oklahoma City WoodwardSouth Carolina 2 Charleston GreenvilleTOTAL 40 27 13
Source: http://www.inc.com/inc5000/2008/lists/logistics-companies.html
11Logistics services and urban and regional policy
Regional Science Policy & Practice, Volume •• Number •• •• 2012.
Though the policy implications relate to locations that have transport infrastructure they callfor some innovations in policy application. Though urban and regional policy in locations withtransport infrastructure naturally focuses on the scale and efficiency of the infrastructure, theresults outlined above suggest these approaches need to include the provision of space forlogistics service firms and the creation of education and training programmes for staff with thenew skills needed in the management services dimensions outlined earlier. This approach can bejustified directly in the likely initial impact of additional firms and employment. Indirectly, theskill and innovative character of new and expanding logistics service companies could in factboost the productivity of existing transport infrastructure by spreading peak loads across time,moving loads away from congested central locations at a faster rate, serving new markets withdifferent load frequencies, and in other ways get more output from current infrastructure. Todraw out those gains, agencies responsible for the infrastructure of logistics would benefit frombroader and deeper contacts with logistics service companies, so they are aware of their speciallocal needs and can shape strategic responses cognizant of the way these firms work.
To be more precise in these policy suggestions there is a need to refine and enhance theaggregate perspective used here. This was an initial step, one that has established a case for moredetailed general work and more intensive local analysis. Surveys of different types of firms indifferent places would also provide insight on the way firms evaluate the attractions of large andsmall places and how close they really need to be to the transport infrastructure that they use tomove goods around. The aggregate perspective could also be enriched by measuring the locationof logistical services via the skill or occupation base of the employees in the sector, establishingwhether different locations had different skills levels in their logistics firms. Insight from theseadditional steps will sharpen the policy advice to particular cities and regions. It may show thatnational and global operations can be managed from smaller cities if skilled labour is available,while other places may be limited to less complex tasks of running distribution centres.Whatever the outcome, it seems sensible for many cities and regions to recognize the key roleof modern logistics services and their potential to enhance local employment and economicdevelopment.
References
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