Authors: Dr. Jean-Paul Rodrigue and Dr. Laetitia Dablanc
City logistics is the means enabling freight distribution in urban areas and the strategies that can improve its efficiency while mitigating externalities such as congestion and emissions. It involves managing the movement of urban goods and providing innovative responses to customer demands.
1. Defining City Logistics
City logistics is inherently interdisciplinary, trying to reconcile several domains of inquiry and analysis. Freight movements are a function of economic activities and their spatial organization, which are within the domains of urban geography and economics. They are also a function of consumer demand, which is within the domains of economics, and sociology. Freight mobility is managed by competing transportation and logistics service providers constantly seeking new efficiencies, which is within the logistics domain. This mobility is also a function of sourcing, procurement production, and distribution, the domain of supply chain management. Finally, freight mobility is affected by the provision, quantity, and quality of infrastructure and public policies, the domains of urban planning, and engineering.
The complexity of urban freight distribution and potential conflicts between key stakeholders requires a comprehensive approach. These stakeholders are each able to influence and shape city logistics:
- Cargo owners. Need freight moved as part of their commercial or manufacturing activities. They are mainly concerned with the cost, capacity, and reliability of deliveries.
- Residents. The main recipients of urban deliveries. Residents expect easy access to consumer goods and the prompt removal of refuse. They also expect not to be affected by truck traffic, noise, and pollution.
- Retailers. Need to receive products and have refuse removed. They are mainly concerned with consistent and reliable deliveries that minimize inventory costs.
- Distributors. Carriers move the goods and try to implement strategies to improve efficiency and reliability. They are concerned by factors impacting their operations, particularly congestion and parking difficulties.
- Planners and regulators. Implement policies to mitigate the negative impacts of city logistics. They are trying to reconcile the often-conflicting interests of the many stakeholders within their jurisdiction.
Freight distribution maintains a set of core relations with urban areas in terms of the footprint of freight activities and the strategies put in place to ensure its efficiency. City Logistics enables urban freight mobility by transporting goods by or for commercial entities in an urban area. It is a strategy ensuring efficient freight movements and innovative responses to urban customer and business demands. As an emerging field of investigation, it was brought by the challenges of the commodification and massification of production and consumption.
Still, city logistics and supply chain management are distinct processes focusing on separate issues. Store inventory levels have shrunk, and businesses are increasingly supplied on a just-in-time basis. The number of different products sold has increased considerably, and inventories change several times a year. With the rise of the service economy, the demand for express transport and courier services is also soaring. These factors have made urban economies more dependent on transportation systems, with more frequent and customized deliveries.
The above incites a higher intensity and frequency of urban freight distribution and improved forms, organization, and management. Accurate figures are difficult to come by, but urban goods movements account for 20 to 30% of all vehicle kilometers within a metropolitan area. There is a complex relationship between the spatial and functional structure of city logistics, where the organization and density of land use interact with various forms of transport infrastructure to influence the location of logistics activities.
2. Main Driving Factors
Although city logistics appears to be an issue taking place at the local (metropolitan) level, a comprehensive understanding of its drivers and dynamics requires the consideration of core driving factors, many of which are external to the city itself. They impact the scale and scope of city logistics.
Cities present a variety of forms and levels of density, each associated with specific city logistics patterns. Since the mid-20th century, the world’s urban population has more than doubled and now accounts for more than half the world’s population. This transition is expected to go on well into the second half of the 21st century, a trend reflected in the growing size of cities and the increasing proportion of the urbanized population. By 2050, 70% of the global population is expected to live in cities, underlining the growing importance of the urban market as a point of distribution.
Global urbanization is compounding the challenges of city logistics since the share and the level of concentration of the global population living in cities is increasing. Further, the setting or urban regions imply a variety of contexts in which city logistics is taking place; from high-density central areas to low-density suburbs. In less developed countries, rural migration and population growth have led to rapid urbanization, while the public supply of infrastructure and transport services has lagged, impairing the efficiency of urban deliveries. Historically, the generation and attraction of freight have dominantly taken place in cities, but with the Industrial Revolution and subsequently, with globalization, this share has increased. Cities dominate the national economic output as they account for the bulk of the production, distribution, and consumption.
Changes in consumption patterns
Socioeconomic factors, such as rising income, the declining relative price of goods, and consumer preferences, should also not be neglected. The global rise in average income and living standards supports the growth of a material economy based on providing goods and services. For example, in the 20th century, food affordability as measured in the equivalent number of hours worked, increased on average between 2% and 2.5% per year.
The growth of the urban population and changing consumption patterns create a multiplying effect on the demand for freight circulating in urban areas. This incites the development of retail facilities and the supporting infrastructure of distribution centers. Many developing economies have reached middle-income levels after which consumption is becoming increasingly diversified and sophisticated. In addition to basic items such as food, discretionary consumption implies a range of retail goods, which drive additional urban freight volumes.
Further, the growth of e-commerce in advanced economies has opened an entirely new system of consumption with online purchases resulting in home deliveries and deliveries at alternative locations such as offices or locker banks. This new paradigm is driving a new system of urban freight distribution, which is also permeating in developing economies.
Global supply chains
Global processes of procurement and manufacturing are imposing local forms of adaptation to ensure that freight is delivered in a timely and reliable fashion. Outsourcing and offshoring have contributed to the setting of global supply chains where freight distribution activities taking place within an urban area cannot be effectively explained by the regional economic structure. Supply chains go beyond a single city.
Metropolitan areas have become distribution nodes for global supply chains. Since the distances involved in supporting global supply chains have increased, the function of distribution has taken a new significance, particularly with the setting of large terminal facilities such as ports, airports, rail yards, and distribution centers. They are handling movements originating from, bound to, or simply passing through a metropolitan area; an interface for global freight distribution. With containerization as a tool supporting the bulk of international trade, intermodal terminals have become a notable element of the urban landscape.
With the growth of valuable cargo carried over long distances, airports are also active nodes interacting with urban freight distribution. Along with their attached freight distribution facilities (e.g. transloading facilities and warehouses), large terminals form a fundamental element of the interface between global distribution and city logistics.
Further, pressure to have supply chains being more efficient, timely, and responsive is impacting urban freight distribution. Customers such as retail stores or individuals for home deliveries are expecting their orders to be fulfilled within a shorter lead time and with a high level of reliability. Urban areas have been associated with novel approaches to freight distribution to improve its performance.
3. Emerging Concerns
Most of the early applications of city logistics were undertaken in Japan and Western Europe as these cities were more constrained by the lack of available land and had an established tradition pertaining to urban planning. Up to the 21st century, the consideration of urban freight distribution within the planning discipline remained limited. This implies that urban planning generally does not pay much attention to issues related to urban freight distribution.
Urban planning usually deals with activities where the public sector is actively involved in terms of ownership and operations, such as public transit and land use zoning. Freight distribution is dominantly a private endeavor where public actors are not directly involved outside the regulatory framework. Yet these issues are linked with externalities and growing concerns by private and public interests to address them:
- Private concerns. Actors directly involved in urban freight distribution are mainly concerned by its constraints, such as congestion, since it imposes additional costs and delays in their operations. Also, restrictions on street access by trucks, as well as for pickups and deliveries, provide additional challenges. Urban logistics becomes a competitive factor that needs to be addressed since it impairs the cost and efficiency of the last mile (or first) of global supply chains. For parcel deliveries, the last mile usually accounts for about 50% of distribution costs.
- Public concerns. Actors involved in the oversight of urban freight distribution as well as urban residents, in general, are concerned by its externalities. Congestion and noise impact residents, particularly their commuting and social interactions, as well as the general livability of a city. Therefore, passengers and freight flows are subject to conflicts. Environmental concerns such as air pollution are recurrent in many cities. City logistics is becoming a salient urban sustainability issue.
Urban governments have responded to these concerns with a variety of regulations trying to enforce existing traffic and parking ordinances, imposing tolls and fees on vehicles, particularly trucks, and restricting deliveries during peak hours and in congested areas.
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