Purpose – The purpose of this paper is to analyze the benefits of logistics clustering, with the intent to explain their growth and popularity among private agents and policy makers during the last decade. Design/methodology/approach – Because of limited knowledge about the benefits of logistics clustering a main objective of this paper is theory building. The authors employed a grounded theory approach and conducted 135 open and semi structured interviews with logistics executives, government officials, academics, and chambers of commerce representatives. Findings – Study results revealed that, the agglomeration of logistics firms provides several key benefits to companies. Specifically, it was found that logistics clustering facilitates collaboration-related benefits, offering of value added services, career mobility for the logistics workforce within the cluster, and promotes job growth at multiple levels within the cluster. The authors offer a rich description of these benefits and the mechanisms that facilitate these outcomes. Research limitations/implications – This paper uses a qualitative approach. Further research using a quantitative approach to measure the magnitude of the impacts and benefits of logistics clusters would be desirable. Originality/value – This paper identifies the benefits associated with logistics clustering and thus provides justification for public authorities and private agents to invest in this phenomenon.