C.13 – Freight Distribution Strategies for City Logistics

Authors: Dr. Jean-Paul Rodrigue and Dr. Laetitia Dablanc

From a freight distribution perspective, a city can be considered a bottleneck where transportation resources are scarce relative to the potential demand and are thus highly valuable. Freight is competing for the use of urban space.

1. Rationalization of Deliveries

As a distributional strategy, city logistics can take many forms depending on the concerned supply chains (e.g. retailing, parcels, food deliveries, etc.) as well as the urban setting in which it takes place. However, urban freight distribution strategies are difficult to implement as they systematically imply higher costs and additional delays. The mitigation strategies that are the most considered concern three interrelated realms of engagement.

The rationalization of deliveries relates to adjustments about how freight is delivered (or picked up) in urban areas so that externalities, namely congestion, are minimized. Such a strategy tries to better use existing assets. One of the simplest strategies is to regulate access to specific parts of the city, such as forbidding daytime deliveries in central areas or implementing off-peak delivery schemes, such as distributors opting for night deliveries or at least extended delivery windows to avoid peak-hour traffic. A key issue about night deliveries concerns noise since lower noise levels are usually regulated during nighttime, and local residents are likely to have a lower tolerance for noise for night operations.

There is an array of information technologies that are increasingly being used to manage urban freight distribution systems. The most used technologies relate to global positioning systems that improve vehicle tracking and urban navigation, as well as load management applications that can assist in building routes and delivery schedules. Under such circumstances, it becomes more effective to match trip sequences, such as deliveries and pickups, to strive towards forms of collaborative deliveries. Still, urban freight distribution remains highly imbalanced as deliveries are more numerous than pickups. The most significant relation concerns very different supply chains; retail deliveries/garbage disposal. There are successful examples of being able to combine retail deliveries and backhaul movements involving recycled goods (e.g. cardboard, plastics, and bottles).

2. Freight Facilities

The development of freight distribution infrastructures that are better adapted to the urban context is an important challenge. This can involve the setting of designated parking areas for deliveries, as well as the usage of urban freight distribution centers and local freight stations, including locker boxes. The latter are small facilities trying to service a cluster of urban freight demand (e.g. a neighborhood) or a single large facility such as an office or residential building. These facilities imply additional costs that can only be justified if there are sufficient volumes and concentration of deliveries within an area.

Urban freight facilities can thus be a value proposition in large cities (or high-density areas), while for smaller cities,+ such initiatives would drive up costs and unreliability. If the opportunity arises, such as the availability of a brownfield site in proximity to the city center, urban logistics zones can be developed, which can provide a counterweight to logistics zones that have emerged in the periphery of most large urban agglomerations. Urban consolidation centers (UCC) specifically provide a bundled and coordinated delivery service. A UCC is a logistics facility located close to the city center from which consolidated deliveries are carried out, and which provides a range of other value-added logistics services.

The urban freight distribution center can be a neutral facility interfacing with a set of distribution centers, each being connected to their respective supply chains. Thus, a wide array of supply chains connected to the city can achieve better distributional efficiency within the central city. Few projects for urban consolidation centers have met success even because of their operating costs since they involve high rents and additional handling before final delivery. There were attempts to establish UCC in several cities, but many such projects turned out to be unprofitable and ceased operations once subsidies dried up.

However, land prices constitute an important obstacle to the urban siting of freight facilities. Up to 200 such terminals existed in European cities in the 1990s and early 2000s. Due to operating costs, most of them closed down when municipalities could no longer provide subsidies. The case of London is illustrative with the setting of the London Construction Consolidation Centre (LCCC), offering an accessible central storage and sortation center, and was able to reduce the number of deliveries going to construction sites by a factor of 60%.

3. Modal Adaptation

The usage of adapted vehicles for urban freight distribution is another strategy. Smaller vehicles tend to be better suited for urban deliveries because of their lesser footprint, their ability to maneuver, and their higher-than-average load factor. Yet, a similar amount of freight would require moving vehicles to be delivered. Freight integrators in parcel deliveries are increasingly advocating for longer trailers, particularly because parcel transportation related to e-commerce tends to have a higher volume-to-weight ratio than standard freight. Like its container transportation equivalent, parcel transportation and deliveries tend to “cube out” before it “weights out”. Extending the length of twin 28-foot trailers to 33 feet would allow them to carry about 18 percent more freight per haul, with the related benefits in fuel consumption and less vehicles on the road.

Therefore, regulations can be enforced concerning the permitted size of delivery vehicles (with a chosen limit permitting medium size trucks to operate) and even their age if environmental concerns such as emissions and noise are salient. Innovative strategies such as CNG vehicles, electric vehicles, and even bicycles have been successfully implemented and underline a good potential for modes to adapt to the diversity of the urban landscape.

Electric delivery trucks are a promising technology adapted to the urban environment since they have low emissions, particularly noise. However, there are several drawbacks to their widespread use, particularly higher acquisition costs (and no secondary resell market), range constraints, charging time, and less load capacity. As such, early adopters of alternative modes and distribution strategies may place themselves at a disadvantage in regard to competitors using conventional delivery vehicles.

The usage of the existing public transit systems has also been considered for urban freight distribution. However, there are no cost and logistically-effective strategies to date. Urban transit is not well adapted to freight distribution and often involves additional load breaks and costs. Attempts at developing “cargo trams” have failed, such as the ambitious cargo tram project in Amsterdam, which went bankrupt in 2009.

More recently, a variety of autonomous delivery vehicles have been developed. They range from automated trucks able to carry normal loads to drones and delivery robots for carrying small loads. The latter enables access to difficult locations (crowded or remote areas) but requires a substantial information technology support system for their operation. They can also be difficult to operate when weather conditions are challenging (rain, snow, high wind).

Although each of these strategies has its own advantages, there are also drawbacks that are commonly related to higher distribution costs and additional delays. City logistics is facing the paradox of being incited to look at sites located at the urban periphery where land availability is less of an issue. At the same time, most consumers and activities tend to be located in more central areas. For instance, a high-density and congested central city can be serviced by an independent freight distribution system calling from a consolidation center (UCC) located at a location in proximity to the city center, often a brownfield site that served an abandoned function (e.g., rail yard, industrial area). The vehicles used to service customers (either for deliveries or pickups along a flexible route) are likely to be cleaner (electric, CNG) and thus better adapted for distribution in an urban environment.

Urban areas remain congested areas where space utilization comes at a premium and where the presence of many stakeholders imposes concerted efforts to ensure that urban markets remain serviced in an effective and environmentally friendly fashion. The future is indicative of a transition towards greener forms of city logistics since the current situation appears unsustainable in many cities that are facing rising congestion and environmental externalities. Since each city represents a unique setting with its own prevalence of transport infrastructure and modal choice there appears to be no single encompassing strategy to improve urban freight distribution, but a set of strategies reflecting challenges that are rather unique for each city. As underlined, a salient difference relates to city logistics between developing and developed countries.