The paradigms of the on-demand economy and e-commerce let emerge, new business models, challenging the success of non-digital native companies. Delivery options are no longer driven by the supplier, but more and more influenced by the customers’ preferences, with a consequent disruptive impact on the delivery process, and city logistics in particular.
Customers have become increasingly connected, informed, and empowered, continually demanding more choice and flexibility in delivery options, raising their expectations for fast (usually within very limited timeslots as 2 hours), and cheap deliveries of purchased goods. To address their needs and provide a faster service, enterprises, and e-commerce giant platforms are moving from a push-driven supply to a pull-driven approach (i.e., demand-driven logistics), completely reshaping the logistic chain and in particular, its last leg, known as the last-mile. A paper by Perboli et. al. looks at the issues of two-tier city parcel logistics systems.
In the last few years, in the field of city logistics, a growing number of studies have investigated the competitiveness of alternative distribution systems architectures. A particularly promising solution is the adoption of a two-tier system. In the first level of this two-layered distribution network, trucks perform deliveries from distribution centers (generally logistic platforms located in a strategic node of the city) to Urban Consolidation Centers (UCCs), also called satellites (generally transshipment points situated in the proximity of a city center). At the second level, customers’ orders are consolidated into small vehicles (also called city-freighters) that can travel along any street in the city center area such as minivans, electric vans, delivery robots, and cargo bikes, and delivered to the final customers. Each city freighter performs the route serving the designated customers and then travels back to the satellite for its next cycle of operations.
Operational issues of satellite-based consolidation
Although satellite-based consolidation approaches aim at enhancing the efficiency of last-mile distribution, still operational issues remain to be addressed. The limited capacity of city freighters and the presence of regulatory measures to reduce traffic during peak hours, like restrictions on the times when freight activity can take place, are some noteworthy examples. The promotion of these more and more popular initiatives is a promising strategy for offsetting the traffic impacts of urban freights, but prompts the inclusion of time-dependent parameters into the system optimization, raising significant challenges to policy and decision-makers. Setting up the coordination of this complex system, that involves multiple stakeholders, such as the courier company, the satellite manager, and the local authority is not a trivial task.
Literature lacks in terms of joint models for satellite management in last-mile and urban delivery. Moreover, one of the distinguishing aspects of the problem is the time-dependent structure of the costs. The latter aspect becomes more and more influential due to the increasing importance of the on-demand economy and e-commerce, which fostered the switch from supply-driven logistics to the demand-driven one.
Shared Satellite-based Last-Mile Delivery problem
The paper provides a broad perspective on the problem, namely the Shared Satellite-based Last-Mile Delivery problem (SS-LM-D), tackling the tactical issues involved in last-mile delivery with heterogeneous vehicle fleet and investigating the efficiency and the viability of the underlying business model. The SS-LM-D is modeled as a new variant of the Bin Packing Problem (BPP) with time-dependent costs, namely the Variable Costs and Size Bin Packing Problem with Time-Dependent Costs (VCSBPP-TD), enriching the vast literature on variants of the BPP.
This approach can guide the decision-maker’s strategies to reduce the costs and to better control the whole process, offering practical insights to manage the last-mile delivery, while taking into account some specific features of the on-demand economy and e-commerce as, for instance, the effects of the customers’ preferences.
Generally speaking, the adoption of the shared satellite with crowdsourced delivery leads to a consistent decrease of the operational costs compared to the traditional delivery, with a gain up to 55 percent in the case of the largest diffusion of the service.
Source: Guido Perboli, Luce Brotcorne, Maria Elena Bruni, Mariangela Rosano (2021), A new model for Last-Mile Delivery and Satellite Depots management: The impact of the on-demand economy, Transportation Research Part E: Logistics and Transportation Review, Volume 145, 2021