Organisational capabilities include the processes and systems used to effectively deploy resources. These reflect the organisation's ability to succeed in today's highly competitive business environment. The logistics industry provides many examples of firms seeking ways to add value through innovation and the continuous development of organisational capabilities. The research conducted as part of this study included detailed case studies of ten Distribution Centres primarily employing qualitative data collection and analysis methods. The study identified six capabilities evident to varying degrees in the firms, and essential for Continuous Innovation. The firms maintained the need to continuously satisfy customers and stated that by integrating their operations, processes and systems they could effectively implement strategies and manage change. Collaboration with partners also supported Continuous Innovation because of the importance of efficient allocation of resources throughout the supply chain. This study extends the concepts of Continuous Innovation and capability development into the service-based area of logistics. It provides additional insights into the firm-based activities and strategies required to pursue capability development in logistics firms; and provides important lessons for managers who are seeking to build innovative service organisations.