Urban Logistics as an On-Demand Service: making the last mile sustainable and flexible

by David Fernández & Ignacio Magallón

The Future of Urban Logistics

With a growing global population concentrated in cities, urban freight transport (UFT) – defined as all movements of goods into, out from, through or within the urban area – is broadly recognised as a fundamental part of economic trade. This growing number of vehicle and transport needs in urban areas is having a severe impact on cities’ quality of life. According to ALICE (Alliance for Logistics Innovation through Collaboration in Europe), urban freight is a major component of traffic (10-15% of vehicle equivalent miles), emissions (25% of urban transport CO2 and 30 to 50% of NOx and particles) and noise in cities.

At the same time, consumers habits are shifting towards on-demand solutions that are able to satisfy their needs for faster delivery, putting even more pressure on the current logistics solutions. This trend is confirmed by the increasing numbers of e-commerce. Miebach Consulting analysed this situation in their white paper The Urban Distribution of Goods: Challenges and Solutions, and found that in Spain alone, the market share of e-commerce has grown by 37% in the last 3 years, representing up to 8.9% of total sales in 2017 and expecting to grow up to 11.4% by 2020. This same study shows also that the growth of urban deliveries is highly influenced by the increasing habit of customers making small orders each day while they demand more immediacy – same day or less than 2 hours – between the purchase and the receipt of their orders.

Under these circumstances, urban freight services need to quickly react and explore new concepts and developments. The roadmap of the two main European networks, ALICE and ERTRAC (European Road Transport Research Advisory Council) clearly define what the proposed solutions need to focus on:

  • Increasing energy efficiency, to therefore improve the sustainability and livability of cities
  • Improving reliability of systems, increasing customer satisfaction
  • Increasing safety and security, reducing the risk of road injuries and fatalities

What is the path for cities to make Urban Logistics more sustainable?

At Bax & Company, we see that the path towards greener, flexible and secure UFT requires the deployment of innovative, efficient and sustainable solutions for all components of the system: vehicles, infrastructure and services. This includes two main lines of work:

  1. The efficient integration of urban freight in the urban transport system

Currently, UFT is an activity that tries to find a place in an environment that is not specifically designed for it. Logistic activities have to better integrate into the urban transport system, a process which needs new out-of-the-box ideas that combine the development and adaptation of delivery vehicles and solutions, with the implementation of horizontal and collaborative business models.

Collaborative last-mile delivery services (zero/low emission, shared and crowdsourced) offer a solution for the “last-mile” delivery of goods to customers and businesses in a flexible, cost-effective, practical and sustainable way. A clear step in this direction is the implementation of interoperable standard modular solutions for delivery logistics in inner-city areas, which contribute to the optimisation of load units, as well as inter-connectivity with physical movement throughout the complete supply chain, aspiring towards the Physical Internet concept philosophy.

Bremen based start-up RYTLE understood this need and translated it into an innovative modular concept, integrating e-cargo bicycles with modular containers and mobile depots, that can be easily integrated into the cityscape.

The operation of these kinds of solutions needs to be supported by long-lasting new cooperative business models. When choosing from a pool of diverse solutions (from freight-share to the decoupling of delivery and reception), decisions taken need to ensure that the adopted schemes are actually sustainable and cost-efficient. Horizontal collaboration models for sharing infrastructure and assets are some of the most effective ways to achieve optimal use of urban land space and increase load factors.

This approach requires new concepts of consolidation and distribution centres, with the potential to operate as multimodal cross-dock micro platforms, integrating mobility functions with urban freight delivery functions. They can easily be built upon the existing transport hub, such as the mobil.punkt or mobihub concept, which provides a smart point in the transportation network that seamlessly integrates different modes of transportation through multi-modal supportive infrastructure; including carsharing parking slots, bike-sharing docks, public or collective transport stations and EV-chargers.

These consolidation schemes also offer an operating ground for the dual integration of freight and passenger transportation. The confluence of mobility and logistics is already a reality among the automotive industry 1, due to its great potential to optimise the use of city infrastructures in space and time. This contributes to the creation of attractive business opportunities, as the same transportation needs can be met with fewer vehicles, alleviating traffic and congestion problems. The integration of people and cargo can also contribute to making on-demand transport options socially accepted – affordable and accessible for all users – in an economically viable way. Many initiatives are already starting to explore these solutions by multiple means: autonomous electric vehicles , ride-sharing vans, or public transport.

  1. Policy actions to drive change

For cities and local authorities to achieve more sustainable and liveable cities, sustainable policy-making and mobility planning are crucial steps.

The Sustainable Urban Mobility Plan (SUMP) is a “strategic plan designed to satisfy the mobility needs of people and businesses in cities and their surroundings for a better quality of life” 2

For SUMPs to effectively assimilate the complexity of UFT, specific guidelines for the integration of the UFT environment in mobility planning have to be developed. This package of measures and policies is often described as a Sustainable Urban Logistic Plan (SULP), a “holistic planning strategy for urban freight that ensures efficient and sustainable logistics operations within urban areas.”3

The process of defining a SULP requires engaging with multiple stakeholders, looking at the different transport operations and logistics activities and requirements, both from policy and technical perspectives. This will, in turn, provide evidence to support crucial decision making and planning for urban freight logistics.

To further explore how cities can be adapted to offer cleaner and better transport, reach out to the Bax & Company mobility team.

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