Logistics centre – location and its significance for the city

Abstract

Logistics centres play an important part in the logistics infrastructure. They have become a noticeable element of the economic landscape characteristic for cities and suburban areas. Apart from typical functions and goals of the logistics centres resulting from their logistics operations, they also have an exogenic function, which means that, as a result of their interactions with the local environment, they spur the development of the local economy. The aim of the present paper is to determine the location factors facilitating the establishment of logistics centres as well as to assess their benefits for the local economy. Theoretical conclusions drawn within the paper are supported by the empirical analysis performed on a seven logistics centres. The survey was based on an questionnaire addressed to companies in Poland. The areas which offer the combination of the above mentioned location factors are sought by the companies as they enable them to reduce the investment costs and daily operation costs, as well as enable the companies to increase profit and decrease the investment risk.

Keywords: Logistics centredevelopment conditionslocalisation factorscities

Introduction

In Poland, logistics centres are a relatively new, but important, part of the economic landscape. They are a visible, or even characteristic, element of the Polish urban and suburban landscape. Their location in the vicinity of big cities is not accidental. It results from their strong connection with the cities which, due to their infrastructure and transportation hubs, facilitate the establishment and development of logistics centres. The article discusses the conditions and factors facilitating the establishment and operation of logistics centres, pointing out to the role played by the local administration. It also discusses the significance of logistics centres for the cities. In the theoretical part, the paper presents some remarks on the significance, function and tasks of the logistics centres understood as the entities providing logistics services. The theoretical part is followed by the empirical analysis of a survey conducted on seven logistics centres selected for the study.

Types of logistics centres

Logistics centres differ in terms of their spatial integration, types of ownership, scopes of handled goods, scope of influence as well as the degree of transport availability (Table 2 ). The objects comprising the logistics centre may be either spatially concentrated, or scattered across a bigger area. They may also be grouped into a few sets of buildings. Moreover, they differ in terms of their origins and financing, which may come from the private or public-private sector. They also handle a variety of goods which may – or may not – require specific authorisation as well as those which may be grouped according to their similar characteristics (branches of industry).

Logistics centres are also divided according to their territorial scope, which marks their operational space. These are: international LCs (scope around 500 km), regional LCs (up to 50-80 km), local LCs (up to 5-8 km). Such differentiations, however, should be treated as tentative or even artificial. The reason for it being the fact that:

• economic areas and global supply chains used by global manufacturers and logistics operators are changeable and their transport conditions are being adjusted mainly to the pan-regional units such as the supply and trade market,

• local territorial scope cannot be limited to a small regional range (5 km) (Fechner, 2004), as it would be difficult to define a clear-cut border of the economic activity. Regional scope should therefore be linked to the particular functions of the logistics centre within the area.

One may thus agree with Fechner (2004), who argues that the best way to classify LCs is to do so according to their intermodal or non-intermodal (monotransport) character. Intermodal LCs use a single terminal for handling the combined transport system and a single freight unit, which justifies their territorial scope at more than 300 km between the place of shipment and delivery. Non-intermodal LCs should have a smaller territorial scope and more limited functions (Table 2 ).

The reasons behind the location of the LCs and their impact on the cities – the results of the survey

The main aim of the study was to determine what factors influence the decision on the company’s location as well as to assess the quality of cooperation between the companies and the units of the local administration. The participants were to choose from 26 factors (14 hard and 12 soft factors).

According to the surveyed companies, the most important factors are (Draft 1): transport infrastructure, geographical location near urban agglomerations and the local market’s demand for the company’s services – these were ranked as “important” or “very important”. This shows a significant role played by agglomeration and the opportunities it offers. Advanced infrastructure, trade market and offered services attract investors and thus affect the area’s development. The location of a LC is connected with the city’s investment in transport infrastructure (e.g., the development or modernisation of roads, ring roads, express roads, bridges, tunnels, etc.). One may even argue after Kaźmierski (2006 p. 49) that the logistics centres, being a new form of business activity organisation, enforce the development of infrastructure. The creation of a LC as a new form of urban development raises land prices and attracts investors, enhancing the city’s competitiveness on the market and improving its image.

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Additionally, one should pay attention to some indirect benefits brought about by the presence of an LC such as the development of advanced manufacturing networks comprising specialised sub-suppliers and co-operators (cooperation within the supply chain) or the development of horizontal relationships between the companies working in different business areas (development of various forms of cooperation). Such benefits mean that LCs improve the economic situation of the agglomeration, making it a centre of economic development for the region.

Therefore, the local administration should more decisively support economic activities and create favourable conditions for the companies. The respondents pointed out the lack of sufficient support from the local administration. Municipalities should be more active in attracting external investment as it boosts employment and increases tax revenues. The single company’s success may attract other investors, improving the local business activity. It is a multiplication effect.

The companies do not regard labour cost incurred by the local workforce as vital. The workforce supply within the agglomeration is not a problem, even if it means additional costs connected with organising the commute for the employees. However, generating additional traffic connected with the commute may cause increasing traffic problems within the whole agglomeration area (traffic congestion). As a result, the costs may rise and it is more difficult to maintain the timeliness of deliveries. Increasing traffic congestion means also the rising levels of pollution and noise, increasing wear of the road surface (especially due to lorries and trucks). In consequence, one should take into account also the negative aspects of locating LCs within the area.

According to the surveyed companies, the most important soft factors (Draft 2) are: promotion, good condition of the natural environment, quality, effectiveness, JST administrative expertise, social mentality (positive attitude towards new investment, openness and readiness to take up challenges). The logistics centres marked soft factors as less important. VW, GEFCO and Hendi claim that they have no significance when it comes to the location of a logistics centre.

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The companies ascribed particular importance to the factors related to the investment attractiveness of the area. It is a source of the competitive advantage of the companies located in the area. It also affects the competitiveness of the region. While making location decisions, contemporary companies take into account environmental protection and social interests according to the ideas of CSR – corporate social responsibility.

One may therefore claim that it is crucial to enhance the investment attractiveness of the area; this may be achieved with the aid of some mechanism of shaping the market in favour of the development of LCs on the local and regional level. It applies predominantly to technical infrastructure, real estate, technological innovations as well as effective economic marketing of the region. According to the companies, secondary, though still important, factors are the protection of the spatial order, natural environment and quality of life.

The areas which offer the combination of the above mentioned location factors are sought by the companies as they enable them to reduce the investment costs and daily operation costs, as well as enable the companies to increase profit and decrease the investment risk. As Camagni (2002 p. 2396) argues, every area has a particular specialty which decides of its competitiveness. According to the responders, this specialty should be clearly visible in technological innovation, research, and innovation characteristic for developed and highly developed economies. In this way, the investors’ trust may be enhanced and specialised capital may be drawn to the area.

Conclusion and Discussions

Numerous examples of cites and their functions prove the existence of a relationships between the urban centre and the logistics centre. Transportation hubs contribute to the formation of the cities. They may be enhanced by the location of a logistics centre. A similar rule applies to the industry function, which in the past played a similar, city-forming role. Their importance may be kept by the logistics services offered in the vicinity and realised through the LC. One should also stress the fact that LCs’ connections with the city are stronger and more visible in the case of a mono-transportation centre (of a smaller scope).

Localised logistics centres may draw other manufacturers or sellers to invest in the area, as they require complex logistics services. Investing in logistics projects has a positive impact on construction, transport, roads as well as services. The location of a logistics centre improves city logistics; the concentration of goods in the centre, in turn, facilitates the management of deliveries for the companies and inhabitants of a given agglomeration.

The location of LCs as a large format facility usually embracing from a few dozen up to 200-300 hectares has a significant impact on the surrounding space. In spite of that, such investments allow for a relative concentration of logistics activities. It is important to note that the logistics centre should be located in non-urbanized areas so as not to interfere with the everyday life of the city, but support it economically.

The creation and development of the logistics centre depends on the city (public sphere) which creates the favourable conditions for the creation of LCs, and sometimes takes part in the realisation of the investment as part of the public-private partnership. Mutual relations between the city and LC are strong, but the cities create LCs and it depends on the cities (their authorities) if such investments are successful and if they bring expected long-term benefits.

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