Logistics land use patterns in metropolitan Canada

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Abstract

This paper focuses on the spatial patterns of freight and logistics activities in Metropolitan Canada. The literature acknowledges that these activities, while fundamentally important to economic and social wellbeing in cities, also contribute negatively to aspects of urban life through their associated vehicular traffic for example. The at times sprawling nature of their pattern (Dablanc, Ogilvie, & Goodchild, 2014; Dablanc & Ross, 2012), driven by industry desires for larger footprints, can further exacerbate these negatives. However, the existence of sprawl is not common in all major centres, with local variations in influencing factors interacting with systematic developments in the logistics industry (e.g. larger facilities). The objectives of this paper are to analyse the pattern of logistics developments in Canadian cities and to explore the factors influencing the observed patterns. The methodology employs a case study approach (building on the authors previous work on the Greater Toronto Area - (Woudsma, Jakubicek, & Dablanc, 2015), obtaining fine-grained spatial data on logistics businesses and their employment levels across selected Canadian cities including Vancouver, Calgary, Montreal, Winnipeg and Halifax. The data used to assess these patterns were business listings from DMTI spatial, a Canadian provider of geospatial data. The data set used in this paper contains listings of business names, addresses, SIC codes in 2002, and NAICS and SIC codes in 2012. For analysis of this data, our approach uses basic spatial indicators, like mean centre of establishments and average distance to mean centre, along with statistical analysis of facility types and intra-regional changes. The exploration of influencing factors is conducted through in-depth review of industry publications, regional news sources, and conversations with experts in the commercial development industry in each case study city. Preliminary results indicate that in smaller metropolitan areas (Winnipeg, Halifax), the land supply pressures, and scope of logistics developments result in no evidence of sprawl. In the remaining cities, there is moderate evidence of sprawl, with noted influences including supply and local development controls. These results are discussed in the context of the current literature on urban logistics sprawl with directions for future work provided.

Introduction

Logistics Sprawl has been examined in many urban centres across North America and the results do not show a consistent trend of facilities sprawling into peri-urban areas as is the case for residential development. In some urban areas, like Los Angeles and Atlanta, freight sprawl is occurring (Dablanc et al., 2014; Dablanc & Ross, 2012). In other cities, there is evidence of change in pattern, but this change is more nuanced, and less straightforward than a simple movement of firms to the periphery of the city (Cidell, 2010; Dablanc et al., 2014). The work in this paper builds upon previous work by the authors in Toronto, Canada (Woudsma et al., 2015) and examines five Canadian urban city regions that are central to the national logistics fabric. The objectives are to analyse the pattern of their logistics developments over a 10-year period and to explore the influencing factors. Is their evidence of freight sprawl across the major logistics oriented cities in Canada? Is there preliminary evidence of changes in the national logistics fabric?

Warehousing has undergone major changes over the recent past, and there have been various global and national level trends that have a major impact on the current characteristics of warehousing and logistics facilities. Global trade in consumer goods has shifted to containers from break bulk methods of sea transport, and container use has changed the way that regions compete with each other for logistics activity (Rodrigue and Notteboom, 2015). Global supply chains supply Canadian populations with consumer goods in containers, and containers leave through Canadian ports with commodities, raw materials, and high-value manufactured goods (GTS Group International, 2004). The choice of metropolitan areas used to serve customers is complex, and with the recent rise of ‘mega-DC's’ with more than 500,000 square feet, this choice has become more challenging (Goodchild & Andreoli, 2009). These large facilities are located selectively, and serve large regions which would have in the past been served through many smaller, local distribution centres.

Canada is a large country that has extensive geography to be overcome by shippers. Choosing a location for a large or ‘mega’ DC then becomes a source of competition amongst regions. In recent years, the growth in intermodal transportation appears to be pushing many city regions to develop “logistics parks”, centred around airports or newly constructed intermodal terminals, with a recognition that these areas need to have a number of supporting services to be successful and attract shipment volumes.

At the same time, or with a similar level of importance, the process of locating the actual logistics facility within the urban fabric is undertaken. At this level of supply chain design, the availability of land, local regulations and operational characteristics of the cities comprising the urban region are important for locating new or expansion of existing facilities. Additionally, the ability to be close to the consumer is becoming more and more important with the rise of e-commerce and fulfilment centres that support it. These complex supply chain design considerations are undertaken by companies doing business throughout Canada today, and are reflected in the increasing amount of logistics and warehousing facilities operating throughout the country.

The locations of warehousing facilities is made up of a complex set of considerations and decision making processes. The global linkages of supply chains require that facilities be well connected to international flows of goods, and the region that they are located in support these flows. But the location choices on a local level may be governed by a totally different set of factors, which are interconnected with global flows but grounded in local realities of labour, land costs and tax rates (Jakubicek & Woudsma, 2011).

This paper compares cities across Canada, where there are several important port centres that connect the country to international trade flows, and to a lesser extent, Canada's most important trading partner, the United States. Containerization has changed the potential of ports, and opened new opportunities inland for facilities that in the past were tied to the dock in the ocean port. There are some storage facilities that are not able to move inland from port. Bulk facilities have to have capital infrastructure built at ports, and this infrastructure like grain towers and large tanks for holding liquid bulk goods are extremely capital intensive and cannot be moved inland for the most part. Containerized goods are different, with intermodal rail services being able to move goods inland easily without transhipment at the port. In spite of the ease of moving containers to inland destinations using intermodal rail, there is the observation that steamship lines are hesitant to allow their containers to travel inland, and that local transport regulations in North America can ship larger truckload sizes, fitting three international 40′ containers into two domestic 53′ containers (GTS Group International, 2004), resulting in international containers being unloaded at port cities (Rodrigue & Notteboom, 2015). In the UK, it is observed that having a logistics facility located at a port has an advantage because the container has to be transloaded regardless, and it is beneficial to deconsolidate the container quickly and close to the port (Mangan, Lalwani, & Fynes, 2008).

While reasons exist to have goods processed at ports, the rise of inland ports has been well documented in the literature. Growth in intermodal transport is driving local authorities to focus on logistics firms as a strategy for economic development, and focus on railways as a method of increasing traffic to their intermodal terminals. Examples include Winnipeg (Centreport Canada, 2015), Kansas City (KC Smartport, 2015), and Calgary (CN Railway, 2015). The growth in intermodal traffic and subsequent growth in inland centres as hubs is also noted in Bowen (2008), writing about the Ohio valley and Chicago.

When examining the location patterns of warehousing firms across urban areas, recent work has examined the location patterns across larger urban areas (Dablanc et al., 2014). Other studies have examined the relationship between freight facilities and transportation infrastructure with Bowen (2008) establishing that warehousing establishments measured at the US county level are attracted to places with good highway and air accessibility. A study by Cidell (2010) found that warehousing was both deconcentrating across metropolitan areas, but also there was growth in the core counties of other urban regions.

Of the studies referenced, some utilized the NAICS 493 ‘Warehousing and Storage’ classification (Bowen, 2008, Dablanc & Ross, 2012, and Dablanc et al., 2014), while other studies have utilized the NAICS 48 and 49 ‘Transportation and Warehousing’ classification (Cidell, 2010). All of these studies draw conclusions related to the warehousing industry, and its location patterns within and between urban areas.

In Los Angeles, it was found that there is growth in warehousing establishments farther from the city centre, (Dablanc et al., 2014), while the same study found that this was not the case in Seattle. Another North American centre, Toronto, was found to have little sprawl inside the traditional city, while a geographically broader definition metropolitan region was experiencing freight sprawl.

A common theme throughout the aforementioned studies is that there not a straightforward trend of ‘sprawl’ occurring across all urban regions in the same way that can be said of residential development. There are a variety of patterns of warehousing developments across urban areas and the literature reflects this reality.

The case study cities in this research (Fig. 1) are selected from across Canada, as those that are known to have an important logistics function, and are large Canadian cities. All have some geographical advantages and disadvantages, and there are three major port cities amongst the five cities discussed in this paper. Additionally, the Toronto area was examined in a recent study by the authors (Woudsma et al., 2015), and the “Greater Toronto Area” (GTA) is incorporated in this analysis.

The size of the cities and regional differences in population growth over the study time period are reflected in Table 1. The Vancouver area has seen significant population growth, driven by its economic successes and role as a popular immigration location. Vancouver has experienced economic growth within the study period, although not as much as Calgary. Indeed, the high costs of industrial land and lack of land for new, large industrial developments limits Vancouver's growth potential (Pacific Land Group, 2014). Moving to the east, Calgary's economy has been buoyed by the growth in the Canadian oil and gas industry and this is reflected in the growth of its population. In contrast with Vancouver, land availability is not an issue and logistics developments in Calgary often serve the Vancouver market. Winnipeg, significantly smaller in overall population and mid-continent in location, grew only 7% over the study time period, the lowest amongst the study areas. Montreal's importance as a regional economic hub has declined over the past decade, and this is reflected in its lower population growth compared to Calgary, Toronto and Vancouver. Halifax is a smaller, regional centre in Eastern Canada and its low population growth reflects the overall economic prospects of the region.

Halifax has a large natural port that gives it a good competitive advantage for being a transloading and processing centre. The small number of warehouses in the area may reflect a lack of supporting infrastructure in the region (InterVISTAS Consulting Inc., 2010). Recently, a Canadian – EU trade partnership was created and local authorities hope that along with the creation of a Foreign Trade Zone in the region, there will be more warehousing opportunities along with a general increase in trade (Atlantic Canada Opportunities Agency, 2015). Out of the three Canadian port cities examined, Halifax has the lowest volumes of freight by far, both containerized and other freight tonnage (see Table 2).

There has been promotion of Montreal's logistics and transportation sector through its economic development company that works with actors in the logistics sector in Montreal to promote the city's capabilities (CargoM, 2015). The Port of Montreal processes a large number of containers, with 1,402,393 TEU's processed in 2014 (Port of Montreal, 2015). The port also emphasizes its importance as a location for liquid and dry bulk cargo.

Winnipeg has the advantage of having a strong presence of both Canadian Railways, and being the traditional consolidation point of agricultural goods from Western Canada heading to Eastern markets. Local governmental organizations are trying to promote the city as an area where goods can be received, processed, and moved along through the supply chain, possibly through a “Free Trade Zone” facility (Centreport Canada, 2015).

The city of Calgary saw large growth during the study period due to its important position in the oil and gas sector, and this is reflected in its population growth rate being the highest amongst the study areas, at 28%. CN railway recently made a large investment in a new intermodal facility in Calgary, but it was completed after the study period, in 2013 (CN Railway, 2015). Calgary has one of the strongest performing economies nationwide and the strongest transportation and logistics industry of any inland city in Western Canada (Calgary Economic Development, 2013). Calgary's strategic location along several major transportation corridors, competitive provincial tax regime, high retail sales, high quality of life, and a highly educated population have all lead to an increased demand for goods and services, and in turn, have attributed to major growth and investment in the city's transportation and logistics sector (Calgary Economic Development, 2013).

The port city of Vancouver is the biggest player in Canada's port environment, leading the way in all shipping categories and playing a major role in North American and global supply chains. While leading in Canada, it has significant competition with other west coast port cities like Seattle and Los Angeles for container traffic. There is a tight supply of land in the Vancouver area due to geographical constraints imposed by mountains and river systems. The lack of space for industrial expansion has been well documented, with one report pointing out that because of limited industrial land, and the limited size of industrial land that is available, distribution centres are not feasible to be built within the Vancouver area. The report suggests that these uses are being moved to cities within the British Columbian interior, or to Calgary (Pacific Land Group, 2014). According to a variety of sources, industrial land supply in Greater Vancouver is expected to run out within 10 years (Kellas, 2006; Pacific Land Group, 2014).

Section snippets

Warehousing data

The process of selecting, cleaning data for the analysis described here is similar to the process described for a previous study, in the Canadian region of Toronto. The dataset utilized is the Enhanced Points of Interest (EPOI) dataset from DMTI Spatial, a provider of geospatial data across Canada. For this study, data for all Canadian Provinces except Ontario was cleaned for inclusion into the study. References to data in the Toronto Area are taken from a previous study by the same authors (

Results

When comparing other Canadian cities to the Greater Toronto Area, the number of NAICS 493 warehouses and ‘Logistics’ businesses classified under SIC 40–47 are much smaller. There are no consistent trends across the different metropolitan areas, with Vancouver not changing its number of warehouses, but these warehouses sprawling. Calgary, a city that experienced considerable economic growth between 2002 and 2012 saw warehouses growing in number and sprawling across its urban sphere of influence.

Conclusions

The competitiveness of regions in global trade is contingent in part on their innate geographical advantages over others, but the geographical importance of regions does not guarantee their desirability as a region for logistics activity. Metropolitan regions can influence the amount of land available for logistics related activities, and this can have the effect of reducing the importance of these regions in the global logistics landscape. In the Canadian context, a lack of space available for

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