J. Service Science & Management, 2010, 3 : 72 -77
doi:10.4236/jssm.2010.31008 Published Online March 2010 (http://www.SciRP.org/journal/jssm)
Sustainable Logistics Networks in Sparsely
Populated Areas
Wei Deng Solvang*, Moulay Hicham Hakam
Department of Industrial Engineering, Narvik University College, Narvik, Norway.
Received August 17th, 2009; revised November 17th, 2009; accepted December 24th, 2009.
ABSTRACT
A logistics network is the ‘connective tissue’ in a comprehensive supply chain and often the decisive factor for the
chain’s ultimate success. Logistics networks in sparsely populated areas are facing different challenges than those that
operating in relatively densely inhabited ones. This paper discusses, firstly, various critical success factors of a logistics
network in order for it to sustain in sparsely populated areas. The challenges of establishing and operating a logistics
network in sparsely populated areas are then identified and discussed. A case study has been conducted in the context
of a region in Northern Norway where the average population rate is 4.3 persons each square kilometer. The paper
suggests that, by combining reverse logistics n etworks with forward ones, social, economic and environmen tal sustain-
able logistics networks can be achieved. The challenges of integrating forward and reverse logistics networks in North-
ern Norway are discussed in the final part.
Keywords: Logistics Network, Sparsely Populated Areas, Sustainability
1. Introduction
A logistics network is traditionally defined as a set of
resources which interactively connected with each other
purposing of timely and cost-effective transfer of mate-
rial and products to specified places. The definition itself
doesn’t limit the objects being transferred along the net-
work, may it be material, products, services or even the
end-of-life products which are also termed as waste.
Currently, challenges to logistics networks can often
be seen in the context of globalization, individualiza-
tion/mass customization and needs for economic devel-
opment. The increasing globalization which is motivated
by taking geographical advantages i.e., low-cost labor,
easier access to necessary technology and local markets
[1] often places huge challeng es to logistics network due
to, for instance, large distance among geographically
scattered resources. Moreover, the increasing individu-
alization [2] leads to the needs to mass-customized
products. This requires that logistics networks which
associated to these products are also able to provide
mass-customized services. Further, the increasing public
concerns on climate changes, environmental degradation
and energy crisis as well as continuously strengthened
international environmental and energy regulations lead
to that a logistics network can no longer survive by tak-
ing only economic and operational performances into
consideration [3–5]. That leads to the fact that economic
sustainability needs to be offset by environmental sus-
tainability in both shorter and longer terms.
Harris and Startup [6] state that all organizations at-
tempting to provide universal geographical coverage face
difficulties in supplying the populations of sparsely
populated areas. The enlargement of the European Union
has also accentuated differences between peripheral
/sparsely populated areas and centrally/heavily urbanized
areas in Europe. EEA EFTA states “that EU internal
market legislation and other policy instruments should to
a larger extent reflect such regional differences such that
actions and legislation at EU level do not contribute to
reduced competitiveness of industries in peripheral and
remote areas” [7].
Currently, literatures that related to population sparse-
ness and sustainability of its logistics networks are lim-
ited. Sandow [8] emphasizes the critical importance of
labor mobility for regional competitiveness and sustain-
ability in sparsely populated areas and further pointed
that “a well functioning transport (logistics) system” is
vital for securing this mobility of competent labor. Nils-
son et al. [9] present another Swedish study which fo-
cuses on challenges of current low heat density areas to
competitiveness of district heating in sparsely populated
areas. They stated that, in order to improve the economic

Sustainable Logistics Networks in Sparsely Populated Areas 73
sustainability of district h eating in less densely populated
areas, the rate of expansion in the detached-house seg-
ment needed to be increased. Muilu and Rusanen [10]
document an increasing urbanization in Finland from
1970 to 2000. Same trend can be confirmed in Norway
and Sweden. According to Muilu and Rusanen [10], as
Finnish population continuous to increase, the number
and proportion of young people have declined in rural
municipalities. This resettlement of young people from
peripheral areas to the built-up ones resulted in a di-
chotomy between the sparsely and densely populated
areas which further accentuated by the distortion of
population st ru cture a n d gen d er rati o .
According to Neto et al. [11], the increasing focus on
climate changes and pollution reduction from both pub-
lics and governments in recent years has aroused great
interests of as well as large pressure on how logistics
networks should operate. They proclaim that the objec-
tive in design a logistic network has changed, from cost
minimization only to cost and environmental impact
minimization. Tsoulfas and Pappis [12] propose some
environmental principles for companies to be able to
obtain a sustainable supply chain. Their argument is that
by obtaining sustainable functions inside, outside and
among companies along the chain, a competitive supply
chain can be achieved in a long-term perspective. The
logistics function is defined as one of five focuses in
their research. Unfortunately, the study is still on con-
ceptual level and hasn’t provided any practical measures
that can be used for logistics networks to achieve their
sustainability.
This paper aims to shed light on challenges to eco-
nomic and environmental sustainability of logistics net-
works in sparsely populated areas. The economic and
environmental sustainability are interrelated and need to
be detailed into some manageable concepts. Therefore
three critical success factors are explored and discussed
in the section that followed. A review of forward and
reverse logistics n etworks is conducted purposing to pr o-
vide the theoretical background for a case study of cur-
rent logistics networks in Northern Norway. Based on the
analysis on current logistics networks, the authors give
several suggestions on how economic as well as envi-
ronmental sustainability might be improved in these
networks.
2. Critical Success Factors for the Success of
Logistics Networks that Operating in
Sparsely Populated Areas
A logistics network is a critical element for national, re-
gional and community development, especially in a frag-
mented landscape with high demographic sparseness.
Providing necessary level of logistics excellence in such
an area prevents depopulation from the region and is vital
for the region’s economic development. Comparing with
logistics networks in densely populated areas, those in
sparsely populated areas are facing different strategic and
operational challenges.
Generally, an organization may sustain when compet-
ing with any of three advantages, namely, overall cost
leadership, differentiation and focus [13]. The first factor
is concerned with cost-effectiveness; the second repre-
sents the uniqueness of the product as perceived by the
customer. As for the third factor, the key idea is to serve
a particular target very well.
One of the most significant differences between
densely and sparsely populated areas is the size of popu-
lation a logistics network aims to serve. A densely popu-
lated area has usually large enough concourse which
provides necessary basis for the network to take the ad-
vantages of both economy-of-scale and economy-
of-scope. Logistics networks in sparsely populated area,
however, usually do not possess necessary prerequisites
for taking these advantages.
Another difference is the distance. A logistics network
in a densely populated area is less distant between two
resources (i.e., between a distribution centre and a re-
tailer). This may easily enable, for example, the network
to achieve more mass-customized logistics service with
diverse focuses.
The third difference is that a sparsely populated area is
usually situated in a peripheral region of a country. De-
veloping logistics networks that connecting sparsely and
densely populated areas needs to be viewed in conjunc-
tion with offering universal geographical coverage for
social and economic development as well as sustainable
regional development in whole territory. By doing so,
risks such as social degradation and depopulation can be
prevented or m i nimized.
Different strategies needs to be applied to handle the
challenges mentioned above. The critical success factors
for logistics networks operating in sparsely populated
areas are therefore:
 Cost-effectiveness: refers to the extent to which
customer requirements are met given a limited level of
cost.
 Cost-efficiency: a measure of how economically a
network’s resources are utilized when providing a given
level of customer satisfaction.
 Eco-efficiency: the efficiency with which re-
sources are converted into product.
3. Forward and Reverse Logistics Network
As mentioned earlier, a logistics network links difference
resources in the way that tangible or intangible objects
(i.e., material, parts, products, service and waste) being
transferred within the network and towards a clearly de-
fined destination. While a forward logistics network
brings raw material or new products from origin (e.g., a

Sustainable Logistics Networks in Sparsely Populated Areas 74
raw material supplier) to end-customers, a reverse net-
work refers to the network structure dealing with the
end-of-life products from end-customers (Figure1, made
based on [14]).
Reverse logistics is the process of moving goods from
their typical final destination to another point, for the
purpose of capturing value otherwise unavailable, or for
the proper d i sposal of the pr o d uct s [14].
In recent years, the term ‘closed-loop supply chain’
has becoming a topical issue as increasing attention has
been attached to pollution prevention and minimization
rather than end-of-pipe pollution control [4]. A Closed-
loop supply chain can be regarded as a system without
waste. The primary material flow of forward logistics
network has been linked with material flow of reverse
logistics network through waste dis charge and manage-
ment system (direct treatment, indirect treatment and
purification). The closed-loop supply chain system can
also achieve high level of logistics excellence as capacity
of forward and reverse logistics network can be utilized
optimally.
4. Case study
Norway has especially fragmented territory and Norwe-
gian territorial structure can be characterized as [15]:
 Long distance to main markets
 Extensive mountain areas
 Insular and coastal reg ions
 Isolated border regions
 Arctic and sub-arctic climate
 Demographic sparseness
 An extremely diffused urban system with sharp
differences regarding settlement structures, functional
profiles and centralities
Norway is ranked 214 out of 241 countries according to
average population density based on data for 2005 [16].
Figure 1. Forward and reverse logistics networks
The population density is 15.4 persons per each square
kilometer (Table 1). Areas with less than 12.5 persons
per square kilometer cover 87% of the land area. 286 of
430 municipalities has population density lower than
12.5 persons per square kilometer.
Norway has nineteen counties. Among which, three of
them are in Northern part of Norway (Nordland, Troms
and Finnmark, as shown in Table 1). Th e area of th is part
counts up to 106,715 km2 and is over 35% of total Nor-
wegian territory. In 2007, less than 10% of Norwegian
population is resident in this part and population density
is 4.3 persons per square kilometer. This extremely low
population density places huge challenge to the devel-
opment and sustainability of the logistics networks
within this region. The long distance between the North-
ern and Southern parts of Norway also places fierce
challenge to sustainability of their connecting logistics
networks.
4.1 Current Logistics Networks that Link North
with South
4.1.1 Staple Goods and Fishes
Currently, the main stream of staple goods (i.e., food,
mail) from south to north is carried by Arctic Rail Ex-
press (ARE) which is an established service offered by
CargoNet [17]. Yearly, up to 23,500 containers (either
twenty feet or twenty-five feet container) are carried by
ARE train from Oslo Alnabru to Narvik through Swedish
territory (Figure 2). The whole journey takes 27 hours
Table 1. Population density in Norway (2007 data)A
Unit Population Area (km2) Density
Norway 4681134 304280 15,4
Northern
Norway 462237 106715 4,3
- Nordland 235436 36074 6,5
- Troms 154136 24884 6,2
- Finnmark 72665 45757 1,6
Figure 2. ARE train

Sustainable Logistics Networks in Sparsely Populated Areas 75
and total length of railway is 250 km. These goods are
further distributed to three main regions (Tromsø, Har-
stad and Narvik) by third party logistics providers (3PL)
(i.e., Schenker and Nor Cargo). These further transporta-
tions are conducted on road. 55% (approx. 13,000 con-
tainers) of the staple goods travel around 250 km to
Tromsø, 10% being transported 135 km to Harstad, and
35% being distributed in local Narvik area (Figu r e 3).
According to CargoNet, the back loading rate of ARE
is barely 60%. Of which the majority is raw fish and fish
products. This means that nearly 9,500 containers return
empty from Narvik back to Oslo. There is no doubt a
considerable potential in cost-efficiency improvement.
The ARE runs twenty-two trains each week. That is
eleven trains in each direction. Together with other 3PLs,
ARE satisfies basic demands (food, communication) of
Northern Norway with a population of nearly 470,000.
Eco-efficiency is satisfactory considering the transporta-
tion is mainly on railroad.
4.1.2 Wastes
It is said that the waste amount is increasing as the
economy is accelerating in a region. Since 1995, the en-
tire amount of wastes in Norway has been increased by
nearly 30% and has already reached 9,6 million tons in
2006 [18]. Recognizing this, the Norwegian government
has, since 1970s, been working systematically in estab-
lishing a sustainable waste management system.
In Norway, the enactment of Product Control Act in
1976 and Pollution Control Act in 1981 as well as Prod-
uct Responsibility Act in 1988 estab lished the fundament
for crystallizing the ‘polluter pays’ principle to entire
nation. Various environmental legislations are enacted
since 1980s with purpose of promoting pollution preven-
tion and pollution minimization (through reuse and recy-
cling) and avoiding waste being deposed in landfills.
Currently, sixteen waste management companies are
established in Northern Norway handling up to 900,000
ton wastes per year (the volume is calculated based on
data from Statistics Norway). Take one of the waste
management companies in Northern Norway as an ex-
ample, Hålogaland Ressursselskap (HRS) is an in-
tra-municipal companies which owned by twelve mu-
nicipalities. Its activities consist of collecting, sorting,
transportation and treatment of household, industrial and
special wastes (Figure 4).
Its current waste is categorized as:
 glass and bottles
 timber
 iron
 food waste
 paper
Narvik
Oslo
Alnabru
Suppliers/
Importers in
southern pa rt
of Norway
Tromsø
Harstad
Retailers in
Tromsø
area
Retailers in
Harstad
area
Retailers in
Narvik area
…
Lofoten
Fish
expor ter s
Staple goods flow
Fish flow
Figure 3. Main material stream south-to-north and north-to-south with Narvik as intersection
Landfill
Private or
commercial
users
Collecting Sorting T ransportation Treatment
(recyclin g, reu se, etc.)
Energy recovery
Parts
Reusable
material
Figure 4. Reverse logistic processes

Sustainable Logistics Networks in Sparsely Populated Areas 76
 corrugated cardboard
 plastics from industries
 beverage pape rboard box
 waste of electrical and electronic equipment
(WEEE)
 hazardous waste
Most of the waste goes to recycling, nearly 90% in
2005. Taking this as key f igure, the recycling volume can
be estimated up to around 800,000 tons in Northern Nor-
way.
Currently, large portion of the recyclable wastes is
transported to the Southern part of Norway where the
majority of recycling facilities are. The transportation is
mainly on road with trucks or semi-trailers.
4.2 The Potential and Challenges of Integrating
Forward and Reverse Logistics Networks
It is undoubtedly that there is a huge potential of inte-
grating forward logistic network (of staple goods and fish)
with reverse logistics network (of wastes) with Narvik as
the junction point. By doing so, the biggest gain is the
reduction of empty container back to Oslo. This will, to a
large extent, increasing cost-efficiency of both logistics
networks. This will also lead to the reduction of trans-
portation price. Together with regular as well as frequent
transportation between south and north, a cost-effective
logistics network can be achieved. Further, as the inte-
gration will ‘lift’ goods from road to track, significant
environmental profit (i.e., less pollution and noise) and
social gains (i.e., less traffic accidents) can be obtained.
However, challenges for this integration are many.
First of all, current waste management system has ob-
tained itself an exclusive logistics network. Take Elretur
AS for example, as one of four take-back companies ap-
proved by Norwegian Pollution Control Authority (SFT),
Elretur AS collects over 76,000 ton WEEE in 2007. The
company cooperates with seven 3PLs for collectin g from
entire Norway [19]. One of these companies is Østbø AS
which has full authority and responsibility for collection
of WEEE in Northern Norway. Østbø AS has its own
closed system for transporting WEEE to treatment plan ts
in Southern part of Norway. The transportation from
Northern Norway to Østbø AS and from Østbø AS to
Southern Norway is mainly on road.
Secondly, the hygienic requirements of transporting
foods and other staple goods from south to north may
place the challenge to return wagons loaded by wastes.
The traditional perception of waste may also create scep-
ticism at staple good s owners and therefore may result in
reduced logistics flow from south to north.
5. Summary and Discussion
The paper presents a conceptual study on logistic net-
works in sparsely populated area. As opposite to densely
populated areas, sparsely populated ones place larger
challenge to their logistic networks. The limitations of
such areas include that the demand volume does not jus-
tify economy-of-scale or economy-of-scope. Larger dis-
tance between two resources within a network is also a
significant challenge. That a sparsely populated area
usually situated in a peripheral to den sely populated on es
place also the challenge to the logistics connection of
these areas.
This paper proposed three critical success factors for
logistics networks operating in sparsely populated area.
By conducting the case study, the authors argued that, in
order to achieve cost-efficiency, cost-effectiveness and
eco-efficiency of main logistics network that connecting
Northern Norway with the Southern part, the potential of
utilizing existing south-north logistics network (for staple
goods and fish) for north-south transportation of wastes
is considerably large. However, currently exclusive
waste management systems and traditional perception of
waste may place the largest challenges to this possible
solution.
Benchmarking of performances in terms of cost- ef-
fectiveness, cost-efficiency, and eco-efficiency of cur-
rent logistics networks (separated networks for staple
goods and waste) with that of suggested logistics net-
work (transport waste with logistics network of staple
goods) need to be conducted in order to provide the
quantified justification for the suggested solution. The
authors also suggest that a study that mapping all goods
flows at a more detail level should be conducted in or-
der to provide an overall optimal logistics solution in
Northern Norway.
6. Acknowledgment
The authors have received great support from different
organizations and companies during this study. Here we
would thank especially Jan Viggo Fredheim at CargoNet,
Line Dalhaug at HRS and Ole Viggo Svendsen at Elretur
AS for enthusiasm and information.
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