CSCMP's Supply Chain Quarterly
October 21, 2018
Forward Thinking

Report forecasts future shifts in global logistics hubs

Cities like Shanghai, Los Angeles/Long Beach, and Rotterdam are major nexus points for global supply chains. Demographic, policy, and economic trends will allow other cities to join their ranks, according to the industrial real estate firm CBRE.

As global trade volumes have skyrocketed over the last 35 years, the number of logistics hubs—locations that function as a central point of local and international logistics activity—has also been on the rise. And while port-centered cities like Shanghai, Los Angeles/Long Beach, and Rotterdam will continue to be vital trade and transportation centers, other locations will come to play a similar role in global logistics within the next decade, according to the industrial real estate firm CBRE.

CBRE's recently issued report, "Global and Emerging Logistics Hubs," identifies 30 logistics hubs that play a key role not only in regional supply chain operations but also in the global supply chain. The report also points to 20 "rising stars" that may within the next decade become global hubs themselves.

According to CBRE, global logistics hubs share four common characteristics:

  1. Multiple transportation options, such as major seaports or airports, strategic intermodal facilities, and key highway interchanges
  2. An abundance of facilities to process, store, and distribute products (typically owned by institutional and global investors)
  3. Access to a large market and connected to other international locations, usually through other global logistics hubs
  4. A low-risk political environment and local economies that are heavily engaged in international trade of goods and services

The report identifies current global logistics hubs around the world, including nine in North America, five in Asia, and 11 in Europe, the Middle East, and Africa (EMEA). They include such acknowledged logistics powerhouses as the three port complexes mentioned earlier; Hong Kong, China; Singapore; Antwerp, Belgium; and Hamburg, Germany, as well as smaller but influential hubs like Toronto, Ontario, Canada; Monterrey, Mexico; Tokyo and Osaka/Kobe, Japan; Dubai, United Arab Emirates; and Moscow, Russia, among others.

CBRE went on to identify 20 more "emerging logistics hubs" that are likely to take a more prominent position as logistics and supply chain centers. Some on that list—major seaports such as Amsterdam, the Netherlands; Busan, South Korea; and Seattle, Washington, USA, for example—come as no surprise. But others, such as the Bajío region of Mexico (home to the growing industrial centers of Guanajuato, Querétaro, Aguascalientes, and Jalisco); Istanbul, Turkey; Santiago, Chile; and Philadelphia, Pennsylvania, USA, might not be on everyone's radar.

While a host of individual reasons and factors are driving each of these cities' or regions' increased prominence, the CBRE report identified five common influences or trends that suggest a bright future as a logistics hub:

  1. Infrastructure investments. The report cites the example of the construction of a deep-sea terminal at the Port of Liverpool, England, UK, which could potentially turn the Manchester/Liverpool area into a global hub.
  2. Trade policy. For example, CBRE believes that Chile's 24 trade agreements with 63 countries is helping to push Santiago from being a small, regional hub to becoming the main distribution location in western South America.
  3. Demographics. The rise of the middle class in emerging markets, particularly in Asia, is a major factor behind the increase in logistics hubs in those regions. CBRE forecasts that China's existing global logistics hubs, including Shanghai and Shenzhen, will retain their importance but will be joined by other cities, such as Beijing, Hangzhou, Nanjin, and Suzhou.
  4. Global supply chain shifts. As manufacturing capacity moves, logistics capabilities will move with it. One example is the Bajío region of Mexico, which has become a hub for automobile production and concurrently grown in importance for global and North American logistics operations.
  5. e-Commerce. As companies struggle to respond to demands for same-day or next-day delivery to fulfill e-commerce orders, new locations will come to the forefront as key logistics points. For example, Philadelphia/Eastern Pennsylvania's rise in importance is being driven by its access to over 100 million people within a one-day drive of the region.

"Global and Emerging Logistics Hubs" can be downloaded here.

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