Research: viable business models for city logistics

Pålsson and Katsela published a paper with the title ‘Viable business models for city logistics: Exploring the cost structure and the economy of scale in a Swedish initiative’ in Research in Transportation Economics journal. This paper addresses the challenge of achieving profitable city logistics initiatives.

A case study examines the financial continuity of one such initiative in Sweden by exploring its cost structure, the relative importance of its revenue variables, and the variables that determine the economy of scale. The results show the potential of obtaining a viable business model and provide new insights into the economy of scale for city logistics.

The paper presents a detailed cost-benefit analysis of the implementation of a six-month pilot program for a city logistics initiative. SamCity is a city logistics initiative carried out in the City of Malmo, Sweden, in a commercial city center undergoing a transition from an industrial city to one of knowledge. SamCity focused on efficient and environmentally sound urban freight transport services in the city center.

The initiative combines the consolidation of transportation of goods for both private enterprises and municipalities, and shows that the relationship between goods volumes and profitability is not linear, but rather follows a logarithmic shaped curve. A sensitivity analysis highlights the impact of goods volumes and pricing on the financial performance of the business model.⁣
The paper presents a detailed cost structure for a city logistics initiative. This helps to gain a deeper understanding of the challenge to obtain a viable business model for city logistics. It emphasizes the processes and activities in which city logistics initiatives need to be efficient.

Source: Katsela, K., & Pålsson, H. (2020). Viable business models for city logistics: Exploring the cost structure and the economy of scale in a Swedish initiative. Research in Transportation Economics, 100857.

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