Urban logistics: a major challenge for the supply chain
Published on 7 October 2019
Urban logistics is one of the biggest issues of the day when it comes to professionals working along the Supply Chain. As it involves managing goods flows in already congested cities, the Supply Chain holds a preponderant place and has begun to worry a wide range of industry players: from distributors to transporters to logisticians—not to mention local authorities and inhabitants—how can these challenges be met? Midway between economic development, quality of life and urban construction, demand is as high as limitations are great, and those involved are not currently teaming up to seek out new solutions. The door to some solutions has already been opened, with use of pooled and multimodal transportation as well as managed urban services dedicated to logistics activities. These represent both action drivers worth emphasizing and those further developed to streamline logistics actions in cities in order to ensure proper functioning both now and in the future.
The surefire success of urban logistics
Multiple phenomena have led us today to structure urban logistics that are best suited to the limitations of distribution. This blocks flows through cities and helps change consumption habits.
Originally a trucking problem
Faced with rising populations in major urban centers, brands have been obligated to react by adopting a reconciliation strategy with their clients. As a result, the number of sales points has increased majorly in city centers. At the same time, in-store references have multiplied, reducing storage capacity for products at retail locations. At a time when back stores have been reduced—even eliminated—and demand for fresh, custom products is at its apex, major efforts must be agreed upon to improve stock rotation. To combat concentrated automobile flows and transportation during the day, it has become invaluable to rethink delivery methods within city limits.
Changing purchase behaviors also cause for concern
The field of logistics is also changing under pressure from consumers who are increasingly desirous of home deliveries and online purchases for current consumption goods. According to the French federation of e-commerce and distant sales (FEVAD), today, 37.5 million French people make online purchases and 500 million packages are delivered every year through e-commerce channels. This volume increase coupled with rising deliveries in the urban environment with a greater divide between packages and is an even higher nuisance with respect to traffic allocation in city centers.
Urban logistics: major challenges to take on
In a logic of local commerce protection and urban traffic regulation that has become too much to handle, the urban logistics sector has begun a transformation. Supply Chain professionals must, however, increasingly turn their attention towards these topics in order to take on emerging difficulties of large size and efficiently meet economic, societal, and environmental worries.
The cost of last-mile delivery
The final link in the logistics chain is the most costly and represents about 20% of the overall cost itself. This is particularly true today because consumer requirements push e-commerce and the Supply Chain to review their distribution processes. As such, the goal for logistics companies is to get as close as possible to the very heart of cities.
Multiple environmental constraints
The transportation sector is considered today to be responsible for 35% to 50% of greenhouse gas emissions with a proportion of 15% to 20% for goods transportation. After going after passenger transport emissions, public policies have been extended today to the point of reducing freight in the transportation sector. The urban logistics sector is particularly exposed to environmental policies which show to be increasingly limiting over time.
In the Île-de-France region, goods transport in urban centers is responsible for 15% of vehicle movement when said vehicles drive on roadways with a 25% occupation rate. Goods transiting through Paris represent a weight of 55kg per French passenger per year, i.e. a total of about 219 million tons per year for the entire population. These staggering figures alone explain why local authorities have begun going after pollution and noise disturbance.
That does not include the major issue of managing transportation policy, parking, and installations that only add to pollution and to noise disturbance. Parking policy is set out on a community level, which obliges transporters to adapt things from one city to another. The job of players in the logistics division is even more complex.
Difficult urban involvement
Logistics warehouses require serious rights of way to be granted and safety rules to be complied with, and logistics warehouses are currently difficult to have registered in urban areas. Additionally, the French Commercial Code requires the presence of a recipient for goods delivery, which restricts the possibility of delivering at unusual hours.
The various levers for action in urban logistics
In this difficult context, players in the urban logistics racket have shown remarkable inventiveness. In partnership with local authorities, they are experimenting with various solutions that mix together pooling, multi-modal transport and innovative logistics solutions.
Pool resources for better organization
Pooling is a choice strategy to meet the challenge of urban logistics. For several years now, multi-modal transport and pooled logistics platforms in an urban environment are also part of particularly interesting experiments. The principles are simple, but nonetheless ambitious: increase vehicle fill coefficients, share storage and delivery costs, encourage mass use of flows and railway and river transport.
Use of multi-modal transportation
To bring together the best of both urban logistics and quality of life, many brands have already tested different multi-modal transport strategies, following in the footsteps of Monoprix and Franprix.
To supply stores in Paris proper, Monoprix, for example, chose to combine rail and road transport. Using its system, goods are first sent via rail, from warehouses to a logistics platform based in Bercy. Then, gas-powered trucks equipped with anti-noise systems and later on, electric vehicles deliver consumer goods directly to their homes.
Via a partnership between the transporter XPO Logistics and the companies Ports de Paris and Voies navigables de France, the stores Franprix from the Casino Group themselves chose to opt for river transport via the Seine.
Other multi-modal transportation experiments are led by operators and municipalities. This is the case for example when delivering heavy materials via river transport, as done by the Belgian operator Blue Line Logistics or when transforming a former tram into a freight transportation track, a project undertaken by the intercommunal structure Saint-Étienne Métropole.
Manage vehicle access to delivery areas
Delivery areas that make up first-rate urban logistics equipment are unfortunately too often still occupied by personal vehicles, which requires that delivery people park illegally. To prevent such problems, solutions are actually being evaluated, such as parking control done by specialized brigades or technology systems.
Investing in logistics real estate
This sight cannot be unseen: the logistics function has slowly separated itself from city centers due to unreasonable real estate prices. Reconstituting logistics real estate in city centers is without a doubt a part of the strategic paths to explore when making goods flows in urban areas more fluid. This strategy requires identification of land reserves and availability in spaces with the necessary surface area at affordable prices.
Developing urban hubs
Among the solutions likely to provide an interesting response with respect to urban logistics are several interesting answers relating to urban logistics. These include some innovative logistics hotel concepts or multifunction city hubs. This means putting multiple complementary functions together in the same space via a sustainable development approach: unloading bays for trains and trucks combined with loading bays for light delivery vehicles, storage and preparation spaces, office spaces… all of which meet stringent high quality environmental standards.
Multiple urban areas already support and host this type of structural project. In the Grand Lille metropolitan area, it is a multi-activity logistics space split up over a surface area of 8 ha that found its place within the harbor area. In Saint-Étienne, the city chose to pool its distribution platform to deliver goods in the city center using electric vehicles. In Paris, the Chapelle International project is a significant test including the construction of a 45,000 m² logistics hotel in a former railway brownfield located at Porte de la Chapelle in Paris’s 18th arrondissement.