Experts’ Responses: Growing complexity of Urban Logistics
Which are the levers that professionals can activate to face this?
By 2025, 65% of the world’s population will live in urban areas
In 1950 there was only one megacity in the world, New York. They were 7 in 1980, among which: Tokyo, México, Sao Paulo, Shanghai, Osaka, Buenos Aires and New York. Today, there are 29 megacities in the world. 65 per cent of the world’s population is expected to live in urban areas by 2025 and more than 80 per cent in developing countries. Moreover, the pace of urbanization is intensifying.
In this context of acceleration and intensification of urbanization, logistics thought and applied for the urban environment faces major challenges.
Urban logistics: multiple players with divergent interests
Urban logistics refers to the best way to transport goods flow entering, exiting and circulating in the city. It highlights complex issues because its scope encompasses multiple elements which have their own characteristics: housing, economic activity, urban management, transportation, ecology, security, road sharing, congestion, noise, etc. In fact, the players involved in urban logistics are as numerous and their interests sometimes difficult to conciliate, these ones include:
- Economic players: contractors, logistics providers, warehouse developers, merchants, arisans, e-merchants, etc.
- Institutional actors: the State, local authorities, public freight transport services and urban logistics.
- The inhabitants and users who stimulate the activity by their demands of services: delivery at home, reassortment in store. However they also suffer from it: noise and atmospheric pollution, congestion.
The context of the last mile delivery for professionals: urban constraints, explosion of e-logistics, economic, environmental and societal costs not negligible, regulation intensifies
In urban areas, the high property costs are putting storage spaces under pressure, which are reduced in favor of sales areas. The practices of just-in-time, stock minimization, are generalized. Moreover, in the city center the delivery areas are almost nonexistent. Therefore this leads roads congestion problems and a tense relationship with the residents.
The last mile delivery, an urban logistics problem, is now omnipresent especially with the e-commerce explosion. This omnipresence is reflected in an increasingly visible footprint:
- The last mile delivery represents nearly 20% of the total cost of the freight transport value chain
- It accounts for about 20% of the traffic
- It occupies the road to the extent of 30%
- It is responsible for 25% of greenhouse gas emissions
The authorities are therefore carrying on to regulate this activity in order to protect the key players from its negative externalities. As a result, this constrains professionals which also have to deal with an urban context that are constantly becoming harder and an increasing customer requirement.
Portrait : Milena Janjevic gives the solutions to answer to the challenges inherent to the Urban Logistics gorwing complexity
Milena Janjevic is a Researcher Engineer at Qalinca, a Chair that has existed since 2007 at the Faculty of Engineering Sciences (Polytech) of the Université Libre de Bruxelles, BEAMS Department: teaching and research in logistics, quality, transport & supply chain management. Doctor, graduated of the Université Libre de Bruxelles in Transport and Logistics Management, Milena also teaches for the Interuniversity Specialization Master in Transport and Logistics. A teaching program that aims to provide an advanced training to students in the field of transport and logistics. Within this teaching program Milena teaches about urban logistics. A topic about which she also made several research works:
- PULSE – Planning Urban Logistics for Sustainable Economy
- Modeling and strategies for the urban freight transport management in Brussels
Milena Janjevic interview: Growing complexity of Urban Logistics: Which are the levers that professionals can activate to face this?
Which assessment about urban logistics can we do in Europe?
“Although different urban freight market segments have specific distribution channels and logistical organizations, we can make highlight some common characteristics of urban logistics chains.
Urban logistics is typically characterized by a highly fragmented operations. Indeed, a large portion of the urban logistics market consists out of frequent deliveries of small quantities which come as a direct result of the many small entities ordering according to just-in-time delivery concepts. Combined with a highly fragmented short-distance transportation market, this often causes suboptimal logistical optimization with low utilization of vehicle capacity.
Urban freight transport is also subject to important spatial and time constraints. Urban environment is characterized by scarcity of access, congested roads, and limited loading and unloading infrastructure with delivery operations typically occurring on the street. Deliveries must often be performed within tight time-windows but operations are subject to many disruptions such as special events (e.g. streetfairs) resulting in access limitations, road works, accidents or congestion.
These specific characteristics combined with the increasing regulatory pressure and high competition put significant pressure on urban logistics players.”
What will be major challenges for urban logistics professionals on 2020 ?
“We can mention several ongoing socio-economic, commercial and logistical trends which are expected to increase the level of demand for urban freight deliveries and therefore increase challenges linked to their successful completion.
First of all, increases in urban populations and continued economic growth in urban areas, result in increasing levels of demand for freight transport services. 1950, 30 percent of the world’s population was urban, and by 2050, 66 percent of the world’s population is projected to be urban.
Secondly, trends such as increased individualization and customization of products and increase in Internet retail business lead to an atomization of deliveries and in consequence to an increased transport volume as well as a rise of delivery frequencies. Companies are required to continuously realign their distribution schemes with the evolving service level expectations, price sensitivity and purchasing behaviour of consumers while ensuring economically competitive operations.
Thirdly, the logistics sprawl (i.e. a tendency for logistics facilities to go further away in exurban locations) results in increased distances travelled by road, additional emissions and growing road congestion.”
What levers can professionals use to make an effective urban logistics strategy and to respect legal and environmental regulations?
“Companies can implement a high spectrum of strategies in order to increase the efficiency of the last-mile operations and adapt to the growing regulatory pressure.
For example, companies can redesign their distribution networks in the urban areas by adding an additional transhipment points as a consolidation centre or a mobile warehouse. The introduction of these additional logistical platforms can allow to consolidate or deconsolidate freight flows and to employ last-mile vehicles respective of local environmental regulations. The main barrier, however, remains the additional transhipment cost.
Silent off-hour deliveries are another solution that allows to avoid the traffic rush hours and therefore improve the use of the existing distribution network, while avoiding conflicts of the use of the road network with the passenger transport.
Companies can also improve the efficiency of their operations through increased vertical and horizontal collaboration. Vertical collaboration with their supply chain partners and in particular with freight recipients is a prerequisite for the reorganization of the logistics activities (such as off hour deliveries) and can also drive further delivery rationalization, for examples through the adjustment of the delivery frequency. Horizontal collaboration between logistics providers is seen as a way to remedy the suboptimal logistics by sharing logistics capacity between several actors. In this area, ICT innovations are expected to be a major driver of collaborative transportation solutions by enabling dynamic freight assignment and routing.”