The rise of light electric freight vehicles in the postal sector

In previous decades the postal sector experienced drastic changes. Liberalization and digitization resulted in a continuous mail market decline. Simultaneously the booming e-commerce parcel delivery market requires Postal Operators (POs) to rigorously restructure their delivery networks to reduce distribution costs. POs are evaluating synergy opportunities between the mail and parcel delivery network.

Light electric freight vehicles

A recent development in the postal sector is the use of light electric freight vehicles (LEFV) in urban and suburban areas as a sustainable and cheaper solution for last-mile delivery. Limited research has been performed regarding the impact of LEFV on distribution cost and network design.

A thesis by Ronald Veldman, student Master of Engineering in Supply Chain Management at MIT,  introduces a two-echelon location routing model for POs to determine the optimal network con figuration for mail and parcel delivery in order to minimize total distribution costs using LEFV in their vehicle portfolio.

Location routing problems with LEFV

A mixed integer linear programming model (MILP) is proposed including a multi-depot VRP for the first tier and continuous approximation techniques (CA) for the second tier. Using a real-world application at the Dutch PostNL the impact of merging the mail and parcel network, as well as the impact of introducing LEFV, was established.
Results suggest that adding LEFV to the vehicle eet leads to a distribution cost saving of 3% in the separate mail and parcel network. LEFV is a worthy alternative to vans in dense city areas, due to their high speed on short distances and their maneuverability in city areas.
While merging the parcel and mail network with the current vehicle fleet leads to a distribution cost reduction of 1%, the inclusion of LEFV in a merger scenario leads to a saving of 5%. Therefore, adding LEFV to the vehicle fleet enables POs to seize synergy opportunities between the distribution networks.

Source: Ronald Veldman

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