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Logistics Clusters Offer Job Creation, Innovation and Sustainability

By Joel Anderson | 07/25/2013 | 7:03 AM

Yossi Sheffi, Ph.D., professor of engineering systems at Massachusetts Institute of Technology (MIT)
knows the importance of logistics clusters in driving growth and commerce. While his Winter 2012 article in IWLA’s 3PL Americas magazine provides an overview of his research, Sheffi also published a book about clusters that is essentially a long-term analysis of the societal value-add of government pursuing and enabling these hubs.

“Logistic clusters are able to lower transportation costs and improve customer service, advantages that attract more companies. And, as the member base expands, costs diminish even further and service levels continue to improve, luring more companies to the community,” Sheffi writes in the article, “Realizing the Economic Potential of Logistics Clusters.”

IWLA-member companies are a major player in growing logistics clusters: They provide needed warehousing and offer a diverse array of value-added third-party logistic services, including returns processing, light assembly, kitting and packaging. Manufacturers, distributors and shippers outsource warehousing services to save money on costly real estate and to take advantage of the efficiencies associated with well-managed inventories.

For IWLA advocacy purposes, Sheffi’s work demonstrates a long-term sustainability of logistics jobs (you cannot outsource local distribution work) with fulfillment operations that are located in metropolitan markets in close proximity to the end-consumer. In fact, Sheffi’s research is validated by U.S. Bureau of Labor Statistics’ employment data, which show year-over-year increases in the warehouse and logistics sectors from 2010 to 2012.

However, despite the positive impact, the government (at all levels) continues to challenge our industry with undue tax reforms. Case in point: Minnesota recently included a service and sales taxes on warehouse service providers in the state. These misdirected extra costs on warehouse-based 3PL companies hinder the flow of transportation of goods and commerce. The long-term impact will be detrimental if the course is left unchanged.  

Of similar importance is the growth of the semi-skilled workforce development in logistic clusters. As policy makers, particularly in urban areas, look to high-tech industries to rebuild taxes and employment, they overlook logistic clusters as a growth area. And, unlike other professions that employ a semi-skilled and entry-level workforce, logistic companies have a fully developed and upwardly mobile managerial career structure.  

Below is a video of Sheffi in his own words describing his research. My recommendation is that every practitioner of logistics secure his book and use it a reference manual for your own workforce to provide them the big picture of what we do, and make it available to your zoning commissions, your elected officials and others who seek create jobs in urban areas.





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About Joel Anderson

Joel Anderson

Joel D. Anderson is president and CEO of the International Warehouse Logistics Association (IWLA). Based in Des Plaines, Ill., IWLA is the 120-year-old association of the warehouse-based third-party logistics industry, with 500 members in the U.S. and Canada. Before joining IWLA, Anderson spent 28 years at the California Trucking Association, the last 13 as executive vice president and CEO. An economist by training and profession, Anderson was also a past board member of Cascade Sierra Solutions. He is a frequent speaker before supply chain industry groups.


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