178 M.Hesse.J.-P.Rodrigue Journal of Transport Geography 12 (2004)171-184 markets (destinations).Distribution firms respond to excellent accessibility,advanced terminal and transport structural change and competition by expanding the infrastructure,critical mass of logistics functions and infrastructure and rationalizing fows in order to meet attractive operating conditions(vis-a-vis its neighbours). the demand for quick and precise delivery.Owing to the Schiphol Airport and the Port of Rotterdam are among increased competition between distribution locations,all the most important hubs for international freight flows major freight hubs (large ports,freight airports,inland in Europe.Major population concentrations are well hubs)are currently committed to expanding their represented-Paris,London,the Ruhr area and Frank- infrastructure.In the case of North America,those furt (Europe's largest air cargo hub).Flanders in particular hubs are the strategic gateways at East and northern Belgium and the Nord-Pas de Calais region in West Coasts,e.g.the Ports of the San Pedro Bay in Los northern France also score highly.UK distributors tend Angeles,the Port of Seattle/Tacoma,the Port of New to prefer north-west Europe,due to improved access to York/New Jersey.The expansion of such places is pri- the continent via the Channel Tunnel (cf.JonesLang- marily due to the growth of trade and transport in LaSalle,2001). general,supported by economic growth and the The contemporary location of distribution centers is enlargement of market areas,both favoring scale econ- an outcome of high pressure on supply chains,caused by omies.Yet the strategy of concentrating freight at hub accelerated information transfers,changing consumer locations is increasingly becoming restricted,due to preferences and rising competition.Since many parts of density,land constraints,and congested traffic arterials. the supply chain are now globally integrated,distribu- Such limits to expansion and the scarce hinterland tion centers tend to be the link between global sourcing connections of major hubs are considered the most and regional distribution.The DC has become an important obstacle for further developing major hub interface between the geographies of manufacturing and locations. retailing,consequently handling the distribution scale As a consequence,.so called“Inland Hubs'”are and scope.Innovations such as containerization and becoming more and more important,where primarily particularly IT developments have integrated all com- road and air freight is consolidated.These new DC areas ponents of the chain.In response,major players in the are mainly affiliated with the interstate network and air distribution business (e.g.container shipping lines, cargo facilities.Consequently,warehousing,trucking, freight forwarders,warehousing firms,terminal opera- freight forwarding and air cargo activities are major tors)are trying to control as many parts of the logistics indicators and drivers of this new distribution economy. chain as possible.Not coincidentally,these firms are One of such new inland hubs is emerging along the Ohio challenged by vertical and horizontal linkages,by River Valley,particularly following a corridor from mergers,takeovers and strategic alliances (Slack et al., Ohio and Indiana to Tennessee."The 'first generation' 2002).For them,staying competitive means increasing e-fulfillment providers are gravitating towards the pre- the throughput and providing the demanded services at ferred location for a single,centralized distribution low rates.As a result,the activity space of main ports is facility,the greater Ohio River Valley,namely the states increasingly becoming relocated to low cost locations of Ohio,Indiana.Kentucky,and Tennessee.Industrial reaching far beyond traditional terminal sites and con- markets such as Columbus/OH.Indianapolis/IN.Heb- necting more distant places of their hinterlands. ron/KY (Cincinnati/OH)and Louisville/KY have seen Regarding the location issue,corporate decision substantial demand from these users."(Abbey et al., makers are used to carefully assessing advantages and 2001,15).In 1997,more than 150 distribution centers disadvantages of different locations.Compared with larger than 50,000 square feet were located only in the core urban areas,suburban sites offer larger and cheaper City of Columbus/OH.Both inventory and recent land resources,unrestricted transport access,a 'robust' absorption in the Columbus industrial real estate sub- environment for round-the-clock operations,and the market belongs to 80%to warehousing(SIOR database, locational advantage of intersections,connecting local 2001). and long-distance flows (Hesse,2002b).Existing facili- Recent European developments seem to be compa- ties often do not fit into the customers'profile,partic- rable.European Distribution Centers (EDC)are ularly with old buildings,or if they are surrounded by becoming larger,as the pressure to consolidate distri- sensitive neighborhoods.Trade-offs between inventory bution centers into pan-European centers continues. and transport costs are also highly supportive for sub- With access to a significant part of the European mar- urban locations,since mobilities(freight transport)and ketplace required,core Europe is the preferred loca- immobilities (land use)are closely intertwined.In order tion-most notably Benelux and eastern France. to find the optimal ratio between low land prices and National and regional centers are under pressure in all short distances to the point of final distribution,firms these countries,as distributors attempt to offload this move their DC location as far away from expensive land layer of warehousing.The Netherlands is emerging as the markets as necessary.For logistical and cost reasons, most favored location for European logistics,due to they also need to stay as close to their customers asmarkets (destinations). Distribution firms respond to structural change and competition by expanding the infrastructure and rationalizing flows in order to meet the demand for quick and precise delivery. Owing to the increased competition between distribution locations, all major freight hubs (large ports, freight airports, inland hubs) are currently committed to expanding their infrastructure. In the case of North America, those particular hubs are the strategic gateways at East and West Coasts, e.g. the Ports of the San Pedro Bay in Los Angeles, the Port of Seattle/Tacoma, the Port of New York/New Jersey. The expansion of such places is pri￾marily due to the growth of trade and transport in general, supported by economic growth and the enlargement of market areas, both favoring scale econ￾omies. Yet the strategy of concentrating freight at hub locations is increasingly becoming restricted, due to density, land constraints, and congested traffic arterials. Such limits to expansion and the scarce hinterland connections of major hubs are considered the most important obstacle for further developing major hub locations. As a consequence, so called ‘‘Inland Hubs’’ are becoming more and more important, where primarily road and air freight is consolidated. These new DC areas are mainly affiliated with the interstate network and air cargo facilities. Consequently, warehousing, trucking, freight forwarding and air cargo activities are major indicators and drivers of this new distribution economy. One of such new inland hubs is emerging along the Ohio River Valley, particularly following a corridor from Ohio and Indiana to Tennessee. ‘‘The
first generation’ e-fulfillment providers are gravitating towards the pre￾ferred location for a single, centralized distribution facility, the greater Ohio River Valley, namely the states of Ohio, Indiana, Kentucky, and Tennessee. Industrial markets such as Columbus/OH, Indianapolis/IN, Heb￾ron/KY (Cincinnati/OH) and Louisville/KY have seen substantial demand from these users.’’ (Abbey et al., 2001, 15). In 1997, more than 150 distribution centers larger than 50,000 square feet were located only in the City of Columbus/OH. Both inventory and recent absorption in the Columbus industrial real estate sub￾market belongs to 80% to warehousing (SIOR database, 2001). Recent European developments seem to be compa￾rable. European Distribution Centers (EDC) are becoming larger, as the pressure to consolidate distri￾bution centers into pan-European centers continues. With access to a significant part of the European mar￾ketplace required, core Europe is the preferred loca￾tion––most notably Benelux and eastern France. National and regional centers are under pressure in all these countries, as distributors attempt to offload this layer of warehousing. The Netherlands is emerging as the most favored location for European logistics, due to excellent accessibility, advanced terminal and transport infrastructure, critical mass of logistics functions and attractive operating conditions (vis-
a-vis its neighbours). Schiphol Airport and the Port of Rotterdam are among the most important hubs for international freight flows in Europe. Major population concentrations are well represented––Paris, London, the Ruhr area and Frank￾furt (Europe’s largest air cargo hub). Flanders in northern Belgium and the Nord-Pas de Calais region in northern France also score highly. UK distributors tend to prefer north-west Europe, due to improved access to the continent via the Channel Tunnel (cf. JonesLang￾LaSalle, 2001). The contemporary location of distribution centers is an outcome of high pressure on supply chains, caused by accelerated information transfers, changing consumer preferences and rising competition. Since many parts of the supply chain are now globally integrated, distribu￾tion centers tend to be the link between global sourcing and regional distribution. The DC has become an interface between the geographies of manufacturing and retailing, consequently handling the distribution scale and scope. Innovations such as containerization and particularly IT developments have integrated all com￾ponents of the chain. In response, major players in the distribution business (e.g. container shipping lines, freight forwarders, warehousing firms, terminal opera￾tors) are trying to control as many parts of the logistics chain as possible. Not coincidentally, these firms are challenged by vertical and horizontal linkages, by mergers, takeovers and strategic alliances (Slack et al., 2002). For them, staying competitive means increasing the throughput and providing the demanded services at low rates. As a result, the activity space of main ports is increasingly becoming relocated to low cost locations reaching far beyond traditional terminal sites and con￾necting more distant places of their hinterlands. Regarding the location issue, corporate decision makers are used to carefully assessing advantages and disadvantages of different locations. Compared with core urban areas, suburban sites offer larger and cheaper land resources, unrestricted transport access, a
robust’ environment for round-the-clock operations, and the locational advantage of intersections, connecting local and long-distance flows (Hesse, 2002b). Existing facili￾ties often do not fit into the customers’ profile, partic￾ularly with old buildings, or if they are surrounded by sensitive neighborhoods. Trade-offs between inventory and transport costs are also highly supportive for sub￾urban locations, since mobilities (freight transport) and immobilities (land use) are closely intertwined. In order to find the optimal ratio between low land prices and short distances to the point of final distribution, firms move their DC location as far away from expensive land markets as necessary. For logistical and cost reasons, they also need to stay as close to their customers as 178 M. Hesse, J.-P. Rodrigue / Journal of Transport Geography 12 (2004) 171–184