City logistics is more dynamic than ever before. Every month a new startup surprises the market with innovative solutions for the delivery, collection, or storage of goods. In short, city logistics is increasingly influencing the evolution of the modern city. Experts from Roland Berger and RWTH Aachen present their vision on designing city logistics for the future.
Is efficiency going down due to complexity?
One of the things the experts find is that goods deliveries are growing increasingly complex while the efficiency of the logistics network is actually declining: “Established and up-and-coming providers alike are increasingly making direct deliveries, and average vehicle loads, as well as consignment sizes, are falling as a result. In three out of ten cases, direct delivery to consumers is unsuccessful at the first attempt, and the number of complex and expensive returns is steadily growing. All of this ultimately leads to larger vehicle fleets and a bigger environmental impact”.
At the same time, sensor technology or dynamic route optimization are not being used enough to enable transport companies to switch from delivering along fixed routes to flexibly making the trips that are actually necessary. Cooperation is a key driver of innovation? What the experts find in reality is that ambitious projects involving numerous participants too often fail to get beyond the test stages. City logistics today functions the same way as it did decades ago. Only the volumes are significantly larger now, and they are steadily growing.
Thinking of urban logistics as a whole
The experts propose cities to build ecosystems in which the various logistics players are all interconnected with one another. Three things are necessary for that to happen:
- All relevant market participants – from large carriers to bicycle couriers – record their delivery capacities in a central IT platform.
- This platform makes it possible to establish digital, physical, and operational connectivity between the players and to control their actions.
- All of the involved parties agree on certain data and IT standards, and ideally on shipment sizes that are modular so that they can be flexibly combined to enable the interconnection of the different parties to run smoothly.
A platform of this kind would therefore know all of the transport capacities available in the city, in real-time and, what’s more, in advance. The ideal transport capacity would be assigned to each consignment. Established parcel delivery companies would be just as much a part of this system as taxis doing courier trips or trucks delivering to retailers, which instead of returning empty could collect cardboard packaging for recycling. With actual traffic planned in real-time, it becomes possible to manage daily flows and also to react to additional volumes or any disruptions.
Lessons learned from Amazon
Utopian? The real-life success of this kind of approach involving an intricately interconnected logistics ecosystem is demonstrated not just by the numerous startups operating through platforms but even more so by the behemoth that is Amazon, say the experts. Amazon has built up an infrastructure that enables it to determine and accurately forecast all of its logistics demand in real-time. Amazon has an exact overview of its value chain at all times and builds its own urban supply chains wherever it can’t rely on partners to meet the standard it requires.
City logistics should offer more than just efficiency. It needs to be available at the same high quality even in less densely populated areas, be low-emission, offer fair labor conditions, and more. Ongoing investments are necessary to ensure that the market retains its power to innovate and that new technologies can be put to use quickly. The experts: “That is exactly what’s wrong with any system solution provided from a single source. Either we’d have a monopoly created by the sheer superiority of a single company. Or we’d have the state regulating the system by awarding regional monopolies on a contract basis which means that the only investment that would go into the system is what was agreed upon at the start of the contract. Innovation grinds to a halt”. The questions today are: Is there still a way to facilitate the creation of deep system integration that will permanently increase the efficiency of urban networks? And how can requirements beyond profitability be taken into account while at the same time maintaining competition within the system?
The role of cities
The complexity and importance of urban logistics will only continue to grow. Actively designing city logistics for the future seems to the experts to be exactly what’s needed right now. They are convinced that if it were possible to pool the innovation capacity of all city logistics players, the sector would be able to tap a huge amount of efficiency potential. Key to this is the genuine integration of the system initiated and controlled by a city. The city authorities create space for city logistics and grant access to this space to selected companies that meet certain requirements.