Three major levels of functional integration can be found for freight distribution clusters:
- Coincidental. Various logistics zones are formed where land is available and in proximity to major road infrastructure, particularly highways. They are often the outcome of zoning changes done by local governments implicitly defining an area for warehousing and freight distribution activities and giving the green light for private firms to develop projects. However, these activities are commonly unrelated, implying that they have their own supply chains and distribution networks; they are coincidental and driven by opportunistic market behavior. Accessibility tends to be the main factor favoring agglomeration, and they are likely to appear as the advantage of a location for freight distribution centers.
- Interdependent. Several logistics zones are built for a purpose and are master planned and managed. These include distribution centers, warehouses and storage areas, transport terminals, offices, and other facilities supporting those activities, such as public utilities, parking spaces, and even hotels and restaurants. Although a single mode can service a logistic cluster, intermodal facilities (rail terminal, port, or airport) can offer direct access to global and regional markets. The development of logistic clusters has many benefits in managing freight flows generated by several unrelated users through economies of scale since they share the same facilities and equipment, mostly around a transport terminal or a depot. This, in turn, reduces transport costs and improves reliability. They are commonly the outcome of strategies pursued by port authorities, regional governments, or private terminal operators.
- Integrated. Implies a higher level of integration between the firms and distribution centers present within the zone as well as with transport terminals. This can also involve the setting of a free (foreign) trade zone (FTZ) within the zone, conferring an additional level of flexibility (and complexity) in freight distribution. A higher level of integration with intermodal terminals, whether ports, rail yards, or airports, results in an intermodal freight distribution system. In some cases of advanced supply chain management strategies, the terminal upstream of the supply chain can act as a storage buffer and functionally be part of the logistic zone. Integrated zones tend to be the outcome of concerted action between high-level government agencies and the private sector since regulatory changes and large-scale infrastructure investments are required. They are built on the principle of co-location where the planning, and operation of both the terminal and the logistic zone are concomitant. They thus have a well-established governance structure and a logistics service market that includes education and training strategies to ensure a productive labor force.
Freight distribution clusters can grow in scale and scope, which tends to be concomitant. Most coincidental logistics zones are solely associated with road transportation, while integrated logistics zones tend to be co-located with intermodal facilities.