Analyzing the development of a logistics hub

One of the things you realize when looking at corporate operations is that they imitate each other, all around the world. Or rather, they try to outdo each other along particular paths. They call it “benchmarking,” which means that whenever anyone gets results, the new process that they use to do so becomes the standard for everyone. Recognizing this dynamic, a couple of MIT students, Daniel Muñoz and Liliana Rivera, wrote a master’s thesis that begins with Singapore and Dubai, analyzes them as successful logistics hubs, observes the effects of their success on the regional environment, then uses the model to speculate about the development of a logistics hub in Panama (which is in full swing, see the earlier post on the Colon Free Zone).

Here’s how the MIT students frame their thesis:

A hub is defined as a regional cross-docking point, where products from multiple supply sources arrive and are sorted in accordance to the needs of the destination points. Products are then delivered to these points without being stored at the hub…. This thesis proposes a structure of seven critical factors needed for developing logistics hubs, resulting from the analysis of the Dubai and Singapore logistics hubs developments…. The proposed structure of critical factors is used to analyze the development of a logistics hub in Panama.

What’s interesting are the categories they use for the analysis. In the introduction they present a blank template. What you see in the center are the core elements of a logistics hub: transportation lines, logistics services, basic infrastructure, plus the “critical institutions” that make it possible to operate all that. Then on the left you have the supporting industries, such as engineering and repair firms (they say “supported,” but it seems to be not so good English). Finally, there are related industries which are really local users of the logistics hub, as opposed to the kinds of distant clients that would be served by a just-in-time cross-docking operation. So here’s the template:

Framework for logistics cluster analysis

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Well, it seems to me like that could really help us in Chicago! On the one hand, it pushes us to look a little closer and enumerate what kind of services are being provided, and by whom. Then, the supporting industries, which for me are a total blank right now. Even more interesting, the local industrial users: how to identify them? If we separate the port itself from the Joliet cluster, we might at least start getting a handle on the clients of the port and the canal, here in the Chicago metro area. Finally, the notion of critical institutions would allow us to look into the regulation of all this. We have been confronted with some of these institutions, but we have never drawn up a list and tried to see which ones are the most important, so there is lots of work indicated on this simple looking template.

Here is how it looks for Singapore:

Singapore_as_model

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According to the MIT students, Singapore functions as a benchmark, it shows what can be done at the global scale. The logistics hubs of Panama then develop according to that kind of example. This is striking, because while in both Kansas City and Panama, I had the clear impression that these places were somehow like Chicago. In particular, the logistics park within the Colon Free Zone seemed to be modeled on US processes that I became familiar with here. Is there a Chicago benchmark? Or does it just seem that way because we first discovered these processes here? What was the Joliet cluster modeled on? Where did an intermodal yard like Corwith get its design from? Does the Illinois International Port district continually remake itself according to models found elsewhere, and if so, where? To what extent does the entire logistics industry develop as one continuous endeavor – spatially dispersed, yet unified both through interoperability and through benchmarking?

So many questions…

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