C.4 – Urban Logistical Challenges

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

City logistics requires an understanding of urban geography and supply chain management. Urban freight distribution has a unique array of challenges as a multidisciplinary field. It reflects many dimensions of contemporary logistics, such as route and delivery sequence selection. It also exacerbates its constraints, such as on-time deliveries in an environment of a scarcity of road access.

1. Congestion and Parking

Passengers and truck movements are not interacting efficiently as freight and passenger circulation are a zero-sum game; road capacity taken by freight transportation is at the expense of capacity available to passenger transportation (and vice versa). They share the same road infrastructure and peak hours due to commuting exacerbate the difficulties of freight distribution. Several cities are seeking to limit trucking as pressures keep mounting up. In many jurisdictions, limits on heavy trucks in urban areas are in place, and there are restrictions on the times of delivery and pickup, which in some European cities extend to the exclusion of all trucks in the urban core during daytime hours. The question remains about to what extent constraining urban freight circulation impairs the economy.

City logistics, like logistics in general, depend on consistent and reliable deliveries. The urban environment that tends to have high congestion levels is challenging since it creates delays and unreliability for deliveries. To avoid congestion, deliveries can take place during the night (or off-peak hours) if possible. Urban freight distribution is characterized by smaller volumes and high-frequency deliveries, which is in contradiction with the consolidation of loads. This is not prone to economies of scale and involves higher delivery costs.

There is limited parking capacity to accommodate deliveries in high-density areas, implying that parking remains one of the core city logistics issues. Delivery vehicles cope with this challenge by double parking, thus seriously impeding local circulation. Freight parking areas mid-street are less disruptive to local circulation since street intersections are the most prone to disruptions. Parking fines can become part of the cost of doing business for urban deliveries. For instance, in Manhattan, a delivery truck can accumulate, on average, $750 worth of parking tickets per week. The curbside is a contested space between pedestrians, cyclists, residents, delivery vehicles, and store owners.

2. Land Use

Land use patterns determine many features of the urban movement of goods, where the pattern of industrial, commercial, and logistics facilities has a direct impact on the nature and flow of commercial goods. Higher density has commonly been advocated as a sustainable strategy for cities. However, for urban freight distribution, higher densities involve higher costs and lower reliability, which contradicts the conventional wisdom. Further, higher density areas make retail space at a premium, inciting a lower level of in-store storage and, therefore, more deliveries are required.

Logistics sprawl has been a dominant land use change of the last decades, with the relocation of logistics facilities towards peripheral areas at faster rates and greater distances than any other economic activity. Suburban logistics has become relevant to city logistics, with an emerging set of issues, such as congestion near major distribution facilities in peripheral areas.

3. Green Logistics

City logistics is facing renewed environmental challenges. Road transportation is the most polluting mode per unit of distance traveled, but there are limited alternatives to the road to provide for urban deliveries. A positive trend has been the decline of air pollution due to better engine designs and the phasing out of leaded fuel in most countries. Diesel trucks still account for a significant source of particulate matter and NOx emissions, an issue compounded by their use as urban delivery vehicles. Urban freight distribution is, on average, twice as polluting than intercity freight transport, particularly because of the following factors:

  • Vehicle age. On average, urban delivery vehicles are older, and it is common practice to use trucks at the end of their service life for short-distance drayage. This problem is compounded in developing countries, where vehicles are even older and thus more prone to higher emissions and accidents.
  • Vehicle size. On average, the size of vehicles used for urban deliveries is smaller, particularly in areas that have high density, limited street parking, and can have clearance issues (low bridges). This implies that the advantages of economies of scale cannot be effectively applied to urban freight distribution. Smaller delivery vehicles must undertake more travel to deliver a similar volume of freight than a regular truck.
  • Operating speeds and idling. The conditions pertaining to urban freight distribution are such that vehicles are forced to have lower driving speeds, regular stops, and acceleration (e.g. traffic signals), as well as much more idling than a vehicle operating in an uncongested environment. Additionally, driving restrictions such as one-way or car-only streets often make the usage of the shortest path unfeasible. The result is more fuel consumption and pollutant emissions. There are also safety concerns since urban areas have high densities of pedestrian movements and trucks have wider dead angles than automobiles.

While cities are major consumers of final goods, there are also reverse logistics activities related to the collection of waste and recycling. There are several contradicting trends since, as incomes increase, populations tend to consume more and also discard more waste. Concomitantly, wealthier societies tend to impose more regulations concerning the use and discard of waste. Still, the trend towards a greater share of recyclable materials in the share of manufacturing inputs is offering new opportunities for reverse logistics strategies in urban areas.

4. E-commerce

The growth of e-commerce has been significant since 2000, averaging 10 to 20% per year for online retail. In Europe and the United States ecommerce accounted for 9% of retail sales, thus becoming a significant component of final consumption. The emergence of distributional consumption implies that final consumption is contingent on delivery to the consumer. As such, e-commerce is related to new forms of demands and new forms of urban distribution with a growth in the home deliveries of parcels. Large online retailers such as Amazon and Alibaba have been able to capture a significant share of e-commerce transactions. While the concerned volumes were relatively small, the diffusion of information technologies has impacted the urban distribution structure of retail goods. This has been accompanied by a growth in parcel deliveries but also higher rates of delivery failures (e.g. consignee not at home). In turn, this has incited the development of new strategies to complement home deliveries with alternate solutions such as pick-up points and automated locker banks. For large apartment complexes, the lobby has essentially become a small freight distribution center.

Online purchases are also characterized by higher rates of returns, implying reverse distribution strategies. Further, consumer preferences lean towards fast delivery times, often the next or the same day, putting intense pressure to improve the performance of urban deliveries. E-commerce is shaping a new urban geography where the distribution centers of e-retailers are playing a greater role.

5. Regulations

The urban space is prone to conflicts between different stakeholders, as high population densities are related to a low tolerance for infringements and disturbances. There are also opportunities for collaboration as city logistics open new realms of engagement for urban planning, but with diverging priorities according to the urban setting. Ensuring an adequate circulation of freight flows in urban areas can involve specific strategies that can be done at the level of the individual firm or as a concerted urban planning effort. Municipal governments are increasingly incited to regulate freight distribution components under their jurisdiction, such as parking and access to specific road segments.

Commonality across metropolitan areas and numerous municipal governments leads to a regulatory fragmentation that can adopt, at times, conflicting urban freight regulations. However, careful consideration must be placed on the impacts of such regulations as arbitrary decisions may have negative and unintended consequences. For instance, imposing limits on truck size on some road segments (or areas) may force distributors to change their routing and load configurations, with substantial additional costs. Therefore, city logistics is better serviced if it is part of an overall strategy trying to comprehensively address a range of freight issues in urban areas, including their potential impacts.