An introduction to logistics hubs

This is the first of a four-part series on logistics with the aim of reducing the mysteries surrounding the issue, the Shipping Industry News will also continue into the future to prepare and present other features explaining the concept of the logistics hub and allied services.

The recent discussions surrounding the establishment of a logistics hub in Jamaica begs clarification of basic points crucial to the discussion - what is a logistics hub and what does it entail? The concept of the logistics hub has developed as a response to the global integration of markets and the remarkable increase in the movement of goods, people, and capital over the last 40 years.

Globalisation itself has been largely driven by innovation in technology which has made business transactions easier and quicker between and across states, extending domestic markets and increasing the trade of goods and services.

Logistics is the organisation and administration of resources, including raw material, finished goods, equipment and personnel, between or among locations. The term 'logistics hub' refers to an area, city or region which facilitates multiple modes of transport (land, air and sea) and all activities involving the transportation, distribution, storage and collection of goods for domestic and foreign use. A logistics hub is, therefore, comprised of the infrastructure, legal framework and procedures which promote the movement of goods and service through the supply and distribution chain.

Clear guidelines

A successful hub is geographically central to the market which it aims to serve, has an established, efficient logistics and transport sector, and clear guidelines for potential investors and developers.

Operations within the hub are performed by either the owners themselves or are outsourced on a commercial basis to multiple operators and business partners such as distribution centres and transport lines. However, it is important that logistics hubs be accessible to all companies and function as an unbiased, neutral body within an environment which encourages the development and execution of sustainable transport solutions.

In the face of global economic challenges and reduced profits, businesses worldwide have sought to minimise operating costs in terms of production and delivery. Logistics hubs allow companies to manage their transportation needs using simple, cost-effective processes by sharing resources such as warehousing, personnel and equipment. Companies also benefit from and are encouraged by the rationalisation of real-estate holdings which significantly lessens maintenance costs.