What Do Logistics Companies Do & Where Are They Typically Located?
Business moves exceedingly quickly these days. Customers expect lightning-fast fulfillment, and online ordering has unlocked unprecedented access to national and even international demand. The challenges brought about by these shifts are making well-positioned logistics companies more in demand than ever before. But how do you ensure your operation is truly ‘well-positioned’?
In this article, we’ll discuss how different types of logistics companies assist their clients. Then we’ll explore how their physical location impacts their effectiveness. So, if you’re considering getting into the logistics business or starting a commercial real estate hunt for your existing operation, we’ve got the answers you’re looking for.
What Logistics Companies Do
First, for those just starting to explore if a logistics company is right for them, let’s begin with a quick look at everything they can do. The fact is that there’s an incredible amount of complexity involved in storing and transporting goods. Logistics companies let businesses outsource some of that complexity to dedicated specialists. The most common tasks logistics companies help with include:
Receiving and processing orders
Picking, packing, and labeling orders
Managing the transportation of goods
However, the actual services a logistics company offers will vary a lot from one operation to another. To illustrate, let's break things down into the two general categories logistics companies are commonly grouped into.
Freight Brokers
Freight brokers are logistics companies that usually work with businesses on a shipment-by-shipment basis. They act as an intermediary between the businesses with goods to move, and independent carriers that handle the actual moving. By maintaining a strong network of small- to mid-size carriers, freight brokers can provide an agile alternative to larger, less flexible carriers.
Third-Party Logistics (3PL) Companies
If freight brokers are targeted specialists, 3PLs are more like logistics generalists. They may offer any number of a wide range of services, including:
Transportation
Warehousing
Inventory management
Exporting
3PLs are considered a smart choice for businesses whenever the cost of expanding their in-house logistical capabilities is higher than the cost of bringing in an external provider. While a business loses some direct control, it gains expert services and infrastructure that would be prohibitively expensive to establish and maintain on its own.
The Best Locations for Logistics Commercial Properties
Because every logistics company is unique, there’s no one-size-fits-all approach to determining the best location for their property. Each operation, commercial real estate market, and site must be considered separately based on multiple criteria, including those outlined below.
Proximity to Manufacturers vs. Customers
Logistics companies specializing in warehousing and shipping tend to do well when they’re located near manufacturing and industrial parks. These locations make them convenient for manufacturers to use for both storage and distribution. On the other hand, logistics properties that specialize in ‘last mile’ fulfillment may benefit more from proximity to dense population areas.
Choosing the Right City
There are plenty of ‘Best Cities for X Property Type’ lists out there, but once again what actually makes a city a good choice depends on your business needs and priorities. You must balance real estate and operational costs vs. proximity to your key constituents to find what’s best for your operation.
For example, freight brokerage companies may be able to set up shop wherever is most affordable since they’re typically intermediaries who aren’t carrying any goods themselves. On the other hand, warehousing 3PL companies can’t be located too far afield from manufacturing centers, or else they become too costly and inconvenient for their clients to hire. This places greater restrictions on which cities or regions they serve.
Be Wary of Oversaturation
Finally, when choosing the market for your logistics company, it's critical to consider supply and demand. Certain cities have experienced a boom in 3PL companies in recent years. However, blindly following these location trends could backfire if those markets become oversaturated in a year or two. To avoid making a costly mistake, it’s wise to work with an experienced commercial real estate broker, like Modern CRE.
How to Set a Logistics Company Up for Long-Term Success
For logistics companies, a successful commercial real estate search comes down to finding the right combination of location, building efficiency (cubic storage), access, and cost that align with both your services and target market.
The process requires meticulous attention to detail and a seasoned hand.
Fortunately, Modern CRE has extensive experience with commercial real estate site selection for all types of commercial operations, including logistics companies. During this rigorous, highly personalized process, we will:
Assess your needs
Identify potential markets
Evaluate sites
Negotiate incentives
So, if you’re ready to find the ideal home for your logistics operation, let’s get in touch. We’re here to help you advance your business, with absolute confidence in your location choice.
