Sometimes, supply chain network optimization innovations come as a city or a urban system. 

In May 2015, consultant Arthur D. Little distributed the White Paper:  “How to unlock value from last mile delivery for cities, transporters, and retailers “, underlining the need for comprehensive urban logistics strategy.

“Many cities have started to understand and address the challenges associated with passenger mobility issues by developing urban mobility visions and strategies for passenger transportation at regional or city level. On the other hand, comprehensive strategies for last mile delivery of goods at city level are often missing,” they state.

A comprehensive supply chain optimization strategy requires a series of solutions. “The complexity lies in selecting the right combination of solutions, taking into account the local context and the solution’s contribution to the defined objectives at local level.”, where they classify four main categories. One of them is city planning.

Some cities have integrated innovative solutions to reduce congestion, improve transportation efficiency and cut carbon emissions. Some help the effectiveness of urban deliveries, while some other ones have challenged the way the supply chain industry and third party logistics (3pl) parties have done their business.

The Berlin Low Emission Zone

According to Little, some cities can impose access restrictions to selected small areas or roads for transportation vehicles based on emissions, weight, size or age.

Since 2008, Berlin implemented low emission zone (LEZ) in two stages, to cover a central city area of 85 km2 around the local railway ring, triggered by a “widespread non-compliance with European air quality standards along major roads”. Private and transport vehicles have different levels of access, depending on their level of emissions.

The transport and logistics sector faced challenges. Martin Lutz, from the Senate Department for Urban Development and Environment Directorate IX, Environment Policy, explains that the zone was a “selection of most densely populated central city area delimited by light rail ring”. It has a size that is “sufficiently large to avoid pushing traffic in adjacent areas”, and that “there were many exemptions needed for commercial traffic”.  

Cecilia Cruz and Antoine Montenon talk about some of the issues behind this implementation with fleet management officials and transport operators:

“The LEZ boosts the process of modernization of the fleet that was already begun. Although there is a national scheme, road haulers would like there to be more harmonization between cities (…) Another difficulty that has been highlighted during the creation of Low Emission Zones in Germany is the short amount of time that elapsed between notification of the measure and its application (...)this very limited time frame generates additional difficulties, for example, that of finding a sufficient number of vehicles for every transport company.”

Paris City Center Time slots per truck load capacity

Little has discussed the policy of opening and shutting parts using specific time periods for different kinds of trucks.

According to Metrans UTC, a Transportation Center created by the  University of Southern California and California State University, “Transport operators are often restricted in their last mile operations according to vehicle size and weight restrictions. When large trucks are restricted, transport providers are forced to implement lighter, and thus additional, vehicles into their last mile operations in order to comply with the increase in demand in frequency for goods delivered to urban retailers”.

For instance, there is a driving ban for heavy load vehicles weighing over 7.55t in specific times of days. There are also bans on certain portions of access to and exit from Paris and the Paris Province. There are exceptions for trucks carrying perishable or refrigerated products, trucks for sport events or trade fairs, and a few other cases.

Exclusive zone for suppliers of Heathrow Airport

Some areas are exclusive for a limited numbers of transportation companies. DHL is the only fleet operating the London Heathrow Consolidation Center (HCC). According to the company, this consolidation of inbound logistics “creates significant reductions in congestion and carbon emissions as part of the Heathrow City Logistics strategy."

The facilities are based very close to the airport, where retailers deliver inbound packages. "DHL cross-docks merchandize, manages a booking system and security screening process and delivers to both landside and airside stores. The process enables retailers an easier and quicker turnaround of stock as the HCC manages all airside security with deliveries made direct to stores.”

Creating distinct zones for retail and logistics

Some cities have created clusters of retail and logistics areas within urban land planning. One of these is the Italian city of Bologna, that created the Interporto Bologna freight village. According to its site, over 100 companies, such as freight forwarders, road haulers, couriers, intermodal operators, rail companies, customs brokers and logistics operators, have chosen it.

Its value, according to the Interporto, is a “high-quality and customized real estate offer, the security and additional services provided, the strategic position along the main national and European transport routes.”

According to the McMaster Institute for Transportation and Logistics, these villages help optimize land and transport needs, returns to scale in freight flows, and helps pursue value added and profitability.

According to Little, an “urban distribution center (UDC) collects shipments in a specialized warehouse at the edge of the city, where they are consolidated before being shipped into the city for last mile delivery. The objective is to increase truck usage to optimize the total distance traveled by trucks, which benefits the city’s congestion level and air quality.”

We will continue discussing urban logistics innovations in selected cities around the world.

How would your company adapt to these measures?