‘Proximity logistics’: the development of logistics facilities in dense, mixed-use urban areas

The maturation of online consumption and the amplification of cities’ initiatives in response to local and global environmental challenges has placed goods transport, an essential but impactful activity, at the forefront of urban stakeholders’ scrutiny.

High-performance and low-impact supply chains benefit from the presence of logistics facilities in proximity to goods’ destinations. This development of logistics facilities in high-demand areas, which are essentially urban, dense, and mixed-use, we term ‘proximity logistics.’

Proximity logistics entails extending and refining networks of logistics facilities towards urban cores and allows them to counteract some of the undesirable effects that their historical tendency to outward migration (or logistics sprawl) potentially brings. The phenomenon is established around the world, albeit to different extents.

In a new article, researchers discuss the trends supporting proximity logistics’ development and present a typology of facilities it could entail, followed by case studies of five cities: New York (United States); Paris (France); Seoul (South Korea); Shanghai (China); and Tokyo (Japan). The researchers characterize the state of practice of logistics facilities in each city’s dense, mixed-use areas, compare the characteristics in light of their context and distill learnings in support of sustainable land use patterns.

Following the introduction of a typology for logistics facilities, the researchers identified the presence and growth of fulfillment centers, delivery stations and fast delivery hubs in urban areas. Where the five city cases converge is the development of multi-story, multi-tenant, and multi-activity logistics facilities. While multi-story buildings are more common in Asian cities, as demonstrated in Seoul, Shanghai, and Tokyo, there are now several examples elsewhere as well, as exemplified by the cases of New York City and Paris. Multi-use facilities are an emerging type. They combine logistics activities with housing, retail, or other uses. This allows for responding better to the various necessities that emerge in dense, mixed-use urban areas. One way the five city cases differ widely is the degree of governmental intervention.

Picture: future west truck terminal in Yangcheon

This trend of urban logistics facilities presents a paradox, as these five very large and highly developed urban areas are unwelcoming to logistics facilities by nature. Large cities are expensive, their development is highly regulated, and they are full of people and businesses who potentially resent the goods transport that proximity logistics represents. It shows that higher levels of service for urban goods delivery are now required, overcoming the cost of operating these facilities in dense urban environments and the lack of easily deployable space to develop them. 

Economic factors drive proximity logistics more so than policies and regulations and more than factors related to resource endowment. E-commerce as a technological advancement and business model is an undeniable accelerator of proximity logistics, albeit not the only one. The COVID-19 pandemic not only pushed deliveries to consumers’ homes at the expense of office deliveries, which may be declining. It also encouraged various business types to settle (again) in dense, mixed-use urban areas. Proximity logistics is thereby directly responding to changes in demand.

Nonetheless, governments’ perspective on proximity logistics proves important, particularly when cities’ initial regulatory framework on logistics facility development is restrictive. Cities show different motivations to introduce supportive and restrictive policies and regulations, from reducing transport externalities to tax contributions and employment growth. The availability of land, access, or labor, all factors related to resource endowment, are hardly drivers for proximity logistics and are considered more challenging to overcome.

best practice research of these real estate products has several questions to address, including spatial characteristics (e.g., location in relation to residential and commercial areas, a location that fosters multimodality), operational (e.g., management to foster multimodality, sharing, and consolidation), architectural (e.g., design to enable local acceptance and to support the energy transition), and economic (e.g., financial evaluation of sites that are multi-tenant and multi-activity). 


Heleen Buldeo Rai, Sanggyun Kang, Takanori Sakai, Carla Tejada, Quan (Jack) Yuan, Alison Conway, Laetitia Dablanc, ‘Proximity logistics’: Characterizing the development of logistics facilities in dense, mixed-use urban areas around the world, Transportation Research Part A: Policy and Practice, Volume 166, 2022, Pages 41-61, ISSN 0965-8564, https://doi.org/10.1016/j.tra.2022.10.007.

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