Added value, efficiency, and control are the main drivers of supply chain management. The search for added value enables capturing economic opportunities along the supply chain with activities related to consolidation, deconsolidation, transshipment, and transloading. Efficiency drives the improvement of cost and performance attributes of the supply chain through better modal and intermodal options. Control ensures reliability in terms of performance and costs along the supply chain through mergers and information technologies.
The application of logistics involves a paradigm on freight distribution systems that results in two specific externalities:
- The first externality relates to spatial constraints. The more physical distribution is efficient, the less production, distribution, and retailing activities are constrained by distance. This results in changes in the configuration of distribution networks and a higher level of space consumption by logistical activities.
- The second externality relates to the usage level of transportation. A less spatially constrained supply chain involves more ton-km of freight transported, both in terms of the number of trips and the average haul length. This is associated with higher energy consumption levels and correspondingly with more emissions.
The above paradigm relies on an externalization of costs where the full costs of the distribution system are not entirely assumed by the users. It also leads to a concentration, both spatial and functional, of logistical activities and their level of control.