M.Hesse,J.-P.Rodrigue I Journal of Transport Geography 12 (2004)171-184 181 distribution centers or the reliance on third-party logis- thus on the freight traffic performance.This is due to tics providers (which are using their own terminals or legal issues,particularly the enforcement of load and distribution centers),are strategies to reduce the friction vehicle inspections,to the continuous check of drivers of the supply chain (Fig.9). working hours,or to the definition of vehicle noise and air emission standards,in order to improve the envi- 4.3.Transactional environment ronmental performance of truck fleets.At the local and regional level,zoning policies and building permits According to the increasing degree of logistics inte- regulate the locational constraints and opportunities of gration,a rising number of firms and locations are the firms.To some extent,firms depend upon the bound together in material flows and value chains.In establishment of a co-operative transactional and regu- order to operate their businesses efficiently and com- lation environment-even if capital nowadays seems to petitively,these firms establish complex relationships be more powerful than the state or the local communi- that are performed by contracting(vertically or hori- ties appear. zontally),by competition (horizontally),or,in rare cases,by co-operation.Since different players pursue 4.4.Physical environment different interests and have distinct authority to realize their vital interests,their transactional environment is The physical environment of logistics and distribu- characterized by structural tensions.They unfold dis- tion comprises the "material space"where any social tinct power issues along the chain,which is regarded as a and economic activity is embedded in,and also the major source of logistical friction.This issue has hard'transport infrastructure that is necessary for the extensively been discussed with regard to producer- efficient operation of the system,like roads,railways, supplier relationships in the automotive industry,where warehouses,terminals or ports.Such physical environ- the costs of time,of uncertainty and risk (notably ex- ment appears as a major external determinant of the pressed in transaction costs)were passed on to suppliers movement of vessels and vehicles.It thus can become and subcontractors.Regarding the widely practiced decisive for the success or the shortcoming of the dis- outsourcing in distribution and logistics,such behavior tribution system.Normally it is regarded as a compo- is becoming more and more common in this business as nent of transport costs,since infrastructure bottlenecks well. or road congestion do harm the firms'productivity in Supply chain power is particularly performed by terms of delays and malfunctions.This follows the more firms who are acting as purchase and order agents,e.g. negative'consideration of space as a barrier for the large retail chains who are buying transport services notion and the physics of flow. from 3PL logistics firms,freight forwarders who are In the concept of logistical friction,the physical trading and brokering orders,large ocean shipping environment plays a more sophisticated role,since it companies who are responsible for moving a consider- represents the entire pressure that is exerted by space on able amount of cargo worldwide,or large conglomerates the supply chain,positively and critically.This happens having multiple production and distribution units (e.g. particularly in those areas that are characterized by Japanese keiretsus).These units are able to command scarcity of access:e.g.congested places such as port the conditions of delivery that have to be fulfilled by areas and port hinterlands,or core urban areas that are service providers.In order to cope with this pressure, problematic for delivery.They are not only bottlenecks transport and distribution firms are impelled to provide for exact channel distribution.but also traditional lo- high service quality at low cost,in an increasingly cales where logistics is committed to adjust to its built competitive environment.The uneven distribution of environment.This is the simple reason why urban power is primarily due to specific supplier-customer delivery vehicles are lighter and smaller than the long- relationships,it depends on the firms'position within distance trucks.Port areas embody the contradiction the chain,related to market demand (Taylor and between scale economies and the limitations of infra- Hallsworth,2000),to its organizational or technological structure and facilities in a very typical way:in cases know how,or to factors such as the mere size of the where simple expansion of a port system is out of firm.In comparison to traditional approaches mainly question,due to space,money or policy constraints,the based on transport costs,the concept of logistical fric- agents of distribution have to arrange themselves with tion mirrors a more comprehensive understanding of the their environment.Such ability to balance different constraints and capabilities of firms. interests,originally caused by constraints for the usual The transactional environment also includes regula- path of development,can also be considered positively, tion issues,since public policy appears as another major as a source of creativity and innovation. factor of influence.Even in the age of transport market Fig.9 represents an attempt at operationalization of deregulation,government issues and the public sector the logistical friction concept discussed so far with the remain influential on the distribution framework and possible impedance measures displayed on Table 1.distribution centers or the reliance on third-party logis￾tics providers (which are using their own terminals or distribution centers), are strategies to reduce the friction of the supply chain (Fig. 9). 4.3. Transactional environment According to the increasing degree of logistics inte￾gration, a rising number of firms and locations are bound together in material flows and value chains. In order to operate their businesses efficiently and com￾petitively, these firms establish complex relationships that are performed by contracting (vertically or hori￾zontally), by competition (horizontally), or, in rare cases, by co-operation. Since different players pursue different interests and have distinct authority to realize their vital interests, their transactional environment is characterized by structural tensions. They unfold dis￾tinct power issues along the chain, which is regarded as a major source of logistical friction. This issue has extensively been discussed with regard to producer￾supplier relationships in the automotive industry, where the costs of time, of uncertainty and risk (notably ex￾pressed in transaction costs) were passed on to suppliers and subcontractors. Regarding the widely practiced outsourcing in distribution and logistics, such behavior is becoming more and more common in this business as well. Supply chain power is particularly performed by firms who are acting as purchase and order agents, e.g. large retail chains who are buying transport services from 3PL logistics firms, freight forwarders who are trading and brokering orders, large ocean shipping companies who are responsible for moving a consider￾able amount of cargo worldwide, or large conglomerates having multiple production and distribution units (e.g. Japanese keiretsus). These units are able to command the conditions of delivery that have to be fulfilled by service providers. In order to cope with this pressure, transport and distribution firms are impelled to provide high service quality at low cost, in an increasingly competitive environment. The uneven distribution of power is primarily due to specific supplier–customer relationships, it depends on the firms’ position within the chain, related to market demand (Taylor and Hallsworth, 2000), to its organizational or technological know how, or to factors such as the mere size of the firm. In comparison to traditional approaches mainly based on transport costs, the concept of logistical fric￾tion mirrors a more comprehensive understanding of the constraints and capabilities of firms. The transactional environment also includes regula￾tion issues, since public policy appears as another major factor of influence. Even in the age of transport market deregulation, government issues and the public sector remain influential on the distribution framework and thus on the freight traffic performance. This is due to legal issues, particularly the enforcement of load and vehicle inspections, to the continuous check of drivers’ working hours, or to the definition of vehicle noise and air emission standards, in order to improve the envi￾ronmental performance of truck fleets. At the local and regional level, zoning policies and building permits regulate the locational constraints and opportunities of the firms. To some extent, firms depend upon the establishment of a co-operative transactional and regu￾lation environment––even if capital nowadays seems to be more powerful than the state or the local communi￾ties appear. 4.4. Physical environment The physical environment of logistics and distribu￾tion comprises the ‘‘material space’’ where any social and economic activity is embedded in, and also the
hard’ transport infrastructure that is necessary for the efficient operation of the system, like roads, railways, warehouses, terminals or ports. Such physical environ￾ment appears as a major external determinant of the movement of vessels and vehicles. It thus can become decisive for the success or the shortcoming of the dis￾tribution system. Normally it is regarded as a compo￾nent of transport costs, since infrastructure bottlenecks or road congestion do harm the firms’ productivity in terms of delays and malfunctions. This follows the more
negative’ consideration of space as a barrier for the notion and the physics of flow. In the concept of logistical friction, the physical environment plays a more sophisticated role, since it represents the entire pressure that is exerted by space on the supply chain, positively and critically. This happens particularly in those areas that are characterized by scarcity of access: e.g. congested places such as port areas and port hinterlands, or core urban areas that are problematic for delivery. They are not only bottlenecks for exact channel distribution, but also traditional lo￾cales where logistics is committed to adjust to its built environment. This is the simple reason why urban delivery vehicles are lighter and smaller than the long￾distance trucks. Port areas embody the contradiction between scale economies and the limitations of infra￾structure and facilities in a very typical way: in cases where simple expansion of a port system is out of question, due to space, money or policy constraints, the agents of distribution have to arrange themselves with their environment. Such ability to balance different interests, originally caused by constraints for the usual path of development, can also be considered positively, as a source of creativity and innovation. Fig. 9 represents an attempt at operationalization of the logistical friction concept discussed so far with the possible impedance measures displayed on Table 1. M. Hesse, J.-P. Rodrigue / Journal of Transport Geography 12 (2004) 171–184 181