Advantages of Logistic Zones

Advantages of Logistic Zones

Logistic zones offer advantages (value proposition) related to their geography, particularly in terms of land availability and accessibility, and related to their operations, such as economies of agglomeration:

  • Geographical advantages. The core geographical advantage of a logistics zone is the provision of a real estate base available on the market for sale or for lease. Land has been zoned accordingly and most projects are “shovel ready”. For an activity looking for a site, this tends to lower acquisition or renting costs. Accessibility is also an important advantage of logistics zones, granting access to terminals, suppliers and customers, which lowers distribution costs. This accessibility is related to the provision of infrastructures and utilities within the logistics zone, which also connects it to the local transport system (mostly road and rail). Leasing warehousing space (built on spec) and equipment is also part of the value proposition.
  • Operational advantages. Many logistics zones offer a fast track in the approval of logistics projects since they have already received zoning for related activities. This also ensure compliance to existing regulations related to the environment, safety and security. Since they are planned entities (in several phases), most logistics zones have incremental infrastructure development strategies. The principle of economies of agglomeration is important in the development of logistics zones as it enables lower distribution costs with the generation of larger freight volumes and the possibility to develop transport services with higher load factors. The status of a free trade zone is also a value proposition that several logistics zone offer, conferring them extraterritorial advantages. Logistics zones are commonly developed around an anchor tenant (a large actor in the logistics industry) which commands large cargo volumes. Around this anchor tenant, multiplier effects are created in terms of diffusion of best practices and know how, which also support service industries.