The Last Mile

Solutions to city logistics Challenges

Modern urbanisation is posing ever harsher challenges. People have high expectations concerning mobility and delivery levels for consumer goods. However, we all want to live in a healthy and safe environment. Most of these challenges come down in the end to emissions and congestion. How are companies adapting their logistics to serve urban customers? What will they have to do differently tomorrow? Eureka’s Gian Schiava delves into the world of city logistics and deliveries in the Last Mile.

While we were researching and writing this article, the United Nations held its Climate Action Summit in New York. Sadly, global emissions keep on reaching new record levels. According to statistics presented, the last four years were the four hottest since records began – and winter temperatures in the Arctic have risen by 3°C since 1990. The leaders of the world gathered to discuss how to reduce carbon emissions before things really get out of hand. Despite earlier agreements, all efforts so far have yielded little results. Even worse, some countries like the United States no longer even attend these gatherings.

Struggles in the city

Whilst politicians struggle with the global situation, on a different level both cities and companies are facing the challenges of increased urbanisation. Transportation causes part of the emission problem, but at the same time e-commerce has boomed and we have all become used to the luxury of goods being delivered right to our doorstep. Even better, if we don’t like them, we can send the goods back to the retailer, and thus we have created a completely new flow in the supply chain: reverse logistics.

Ordering online is here to stay and will only continue to grow. This means new forms of urban distribution are necessary, with fewer logistic movements and lower emissions. But how is that possible? We can do it by organising transport differently, adapting the regulations, and applying new technology, smart procurement and sustainable procurement. There are several interesting ongoing developments in those areas.

Ordering online is here to stay and will only continue to grow.

The experts’ advice: collaborate

What do the experts think should be done? Walther Ploos van Amstel, Professor in City Logistics at the University of Amsterdam, works together with students, governments, knowledge institutions and entrepreneurs to shape the solution. He sees potential for various factors to deliver their promise, including: electric freight vehicles; smart use of data with advanced information technology; compact hubs (transfer points for lorries) on the city outskirts; and innovative entrepreneurs and governments.

In an interview with Logistiek.nl, he sets out five pillars for governments to use as the basis for improving city logistics. First, he would make electric transport in the city compulsory from 2025. Today the technology may still be costly, but if electric transport gets a monopoly then costs will diminish through economies of scale.

Then, local authorities should share data from traffic management systems with logistics service providers. For example, if lorries can communicate with traffic lights, this will lead to optimal and safe traffic flows.

The third element is more related to safety but has an immediate effect on congestion as well. Lorries with blind spots should no longer be allowed to drive into city centres. Many accidents can be eliminated by doing this. In the UK, for example, lorries with poor visibility will be banned from London’s roads by 2020.

The fourth pillar is that, as far as possible, city logistics should only be handled by specialist companies. Today, most movements are still carried out by companies with their own vehicles. The downside of this is that these vehicles have an average of four times less cargo than those of a specialised company. As you would expect, professional carriers have much higher efficiency levels with much fewer traffic movements per package.

The last pillar is about urban design. Ploos van Amstel believes neighbourhoods should be structured in such a way that supplying residents can only be done with light electric vehicles.

A most interesting initiative is called CITYLAB. This pan-European project is a combined effort with participation from London, Rome, Brussels, Southampton, Oslo, Paris and various private companies like TNT and Procter & Gamble. Each city defines its own priorities, but all participants support each other with ideas and innovative solutions, often in collaboration with scientific researchers.

For example, London prioritises use of electric vehicles, Rome wants direct and reverse logistics to be integrated, and Oslo encourages shopping centres to use common logistic functions. Amsterdam, being famous for its bike traffic, sees transport in the near future being achieved using electric cargo bikes in combination with a widespread network of small warehouses throughout the city. The overall goal of the CITYLAB project is to realise CO2-free logistics by 2030.

Mastering the Last Mile

In practice, deliveries are most difficult in the Last Mile. It is increasingly difficult to keep that track affordable, practical and sustainable. From an environmental point of view, this is the mile in which most waste (packaging) and emissions are generated. But there are hopeful initiatives.

The Scandinavian company Repack aims to increase recycling through its reusable packaging. Consumers who purchase something through web stores can – after receiving their online order – return the empty Repack package via mail. In return, they receive a voucher! Beer producer Heineken has announced that it will use only electric vehicles when entering cities.

Some companies go a more daring way: reversing the trend of pleasing the customers by reducing choice. Dutch retailer Picnic offers far fewer delivery slots than the market leader but explains to customers that delivering at some times of day has a negative impact. Sometimes customers are asked to make a little effort. Instead of receiving goods or groceries at home, they may have to stop at a hub on the way home (such as a gas station) to collect them. Other experts believe we should restrict times of delivery to evenings only and eliminate unnecessary traffic during the day.

All in all, consumers seem to respond positively to a reduced service level when it is properly explained. For instance, many passengers on air flights are happy to make a small extra payment on top of the flight ticket price to make the journey climate-neutral. After all, don’t we all want a better planet?