Urban consolidation centres (UCCs) are a popular measure in city logistics. However, many UCCs strongly rely on government subsidies and are granted a short life because of their inability to reach financial sustainability. Despite the interest from both the practitioners and the research community, there are a limited number of quantitative contributions that investigate the financial viability of UCC schemes.
The concerns with regards to the financial viability of UCC schemes are one of the major elements hindering their development. This research paper by Janjevic and Ndiaye provides a comprehensive theoretical framework for testing the financial viability of UCC cross-docking and consolidation operations and applies it to a specific case of a UCC servicing Brussels (B).
Major cost categories are identified and human resources are pinpointed as a major cost category. The paper demonstrates that profitable operations are in theory possible but that profits are highly fragile and subject to efficient use of resources.
Finally, the paper discusses the influence of the size of vehicles and service area on the UCC profitability.
In order to be profitable, UCC operations require an optimal use of its resources (i.e. human resources, vehicles, equipment and infrastructure). The paper identifies a series of operational metrics that drive the profitability of UCC operations and highlight that the efficient organization of distribution operations has a major influence on its financial viability.
Source: Janjevic, M., & Ndiaye, A. (2017). Investigating the financial viability of urban consolidation centre projects. Research in Transportation Business & Management.