- A Logistics center is an area where domestic and international transport, Logistics, and distribution activities are carried out by many different entities.
- Logistics centers are responsible for optimizing goods transit time, lowering Logistics costs, increasing efficiency and competitiveness…
- Logistics centers are classed depending on factors such as function, operating purpose, size, geographical location, etc.
What is a Logistics center?
The European Association of Freight Villages defines a Logistics center as “the hub of a specific area where all the activities relating to transport, logistics and goods distribution – both for national and international transit – are carried out, on a commercial basis, by various operators.”
According to their definition:
- The operators may be the owner or tenant using the facilities and equipment of the logistics center such as warehousing, offices, loading and unloading areas …
- Logistics centers must be equipped with facilities necessary for the center’s operation and services.
- In order to provide a convenient and synchronous transportation solution, the Logistics center had to be better served by various modes of transport methods such as road, rail, sea, inland waterways, air, etc.
The role of the Logistics center
- In the concept of 3PL and 4PL, Logistics centers play an important role in integrating Logistics services to provide customers with comprehensive and high quality services, thus improving the competitiveness of businesses.
- A connecting point for the regional transport vehicles from road, rail to inland waterways, sea, air, etc: By providing intermodal transport solutions, the Logistics center helps reduce the time of movement of goods in the supply chain and reduce Logistics costs.
- Raise revenue for logistics companies and the state budget.
- Encourage circulation: Logistics centers make it easier for commodities to circulate as it is the best location for transporting and storing commodities…
- Promoting Logistics real estate: investment in warehouses and land, might be considered a development trend.
Classification of Logistics centers
Based on function according to Keyence, Logistics centers are divided into three main categories: Transfer centers, Distribution centers, and Processing distribution centers. There is also a type of fulfillment center – usually applied to online ordering, specifically:
- The transfer center has a primary role in sorting and transshipping goods also known as cross-docking functions. These centers usually do not store goods and or perform other functions. Goods upon receipt will be sorted immediately and transferred to the next destination.
- The distribution center stores and manages inventory sorted by shop and region, and distributes commodities to retail stores or end customers. This is the most popular type of logistics facility. This is a standard type of logistics center, which serves basic logistics functions such as shipping, picking, inspection and packaging orders. However, when compared to a Transfer center, the cost of construction is higher because the equipment is required on a bigger scale.
- Processing Distribution Center is a distribution center with advanced distribution processing. The relatively simple distribution processing is done at the distribution center, such as packaging and labeling, but the difference is that the processing distribution center can perform advanced distribution processing that requires specialized equipment, such as raw fish and meat processing, as well as assembly and installation of parts. Highly distributed processing functions can add value, but this may ask for dust-proof facilities, temperature-controlled facilities, production lines and labor on par with that of a factory.
- Fulfilment Center performs all Logistics functions serving online sales, including receiving orders from end-users and delivering goods on time. It’s advantage is that all the jobs (e.g. receiving goods, taking orders from end-users, packaging, shipping, inventory management, customer data management, returns handling, claims and payment processing) are completed at the logistics center. As E-commerce has grown strongly in recent years, fulfilment centers are being more and more invested.
Furthermore, a Logistics center can be integrated all above function.