NMW Panel

The Future of Urban Logistics

Dec 5, 2018

City streets are clogged with delivery vehicles, but our shopping habits are becoming more and more online-based, so the trend of online purchases is set to increase, and with this also bring increasing problems for logitics in urban areas.

The future of urban logistics

How will the future of urban logistics be pushed by smart on-demand transport solutions, automated delivery, integrated drive systems and the TCO-optimised usage of modular zero-emission vehicles? During the session at the NMW 18, hosted by the Knowledge Partner McKinsey, speakers elaborated on this problem and highlighted the possible solutions. 

Zalando Premium Logistics

Dr. Jan Bartels, VP Customer Fulfillment & Logistics at online retail giant Zalando, spoke of how despite company being known as an overall fashion platform, it has to be an enterprise that focuses on the intersections between tech, fashion, and operations. With 100 million parcels being sent out every year, Zalando has to be an all-inclusive solution. 

In addition to delivery trucks in streets causing congestion, there are problems on the driver market: due to an enormous lack of drivers, parcel delivery companies compete for drivers as the quality of the drivers diminishes and prices for deliveries increase. Zalando is thus building platforms to solve this. Since Zalando itself is a platform where different fashion players are connected with consumers, they aim to do same thing for delivery players. 

The means of transportation is of significance here as there is no one-size-fits-all solution for logistics. Ranging from delivery vans to cargo bikes to electric vehicles, new mobility solutions are changing the face of logistics. For instance, electro scooters that can use bus lanes in the evening hours and that can be parked on sidewalks don’t just add a new vehicle to the array of options, but also factor in different times and locations. 

The Zalando solution: atomising the last mile and then reassembling it via technology. Here the customer chooses her wares via an app or the website, with the stock then coming either from a local store or from a warehouse. Linehaul transport brings it to a local sorting hub, from which the products are sorted, labelled and dispatched onto the last mile. Returns are then also handled by the local parcel hub.

Jan Bartels
Dr Jan Bartels of Zalando on stage at the NMW 18.

With the use of dynamic dispatching, Zalando has managed to pick up parcels in Paris within 7 minutes. They are cooperating with newspaper companies for different timings and orchestrating everything though their use of tech, meaning that Zalando is also able to integrate deliveries of other partners in the platform. 

Zalando logistics
The Zalando logistics platform.

What Cities Want

Dr Susanne Leifheit (Volkswagen Nutzfahrzeuge) and Stefan Klatt (MANTruck) presented the “What Cities Want” study. Here citizens, mayors, and economic player were given the opportunity to discuss possible solutions that go beyond electric mobility by offering up four possible scenarios for future logistics. 

The study can be found here: What Cities Want (in German).

Every day, 140.000 courier, express and parcel delivery vehicles are on the road to six million customers throughout Germany. In 2015, the CIP service providers delivered a total of around three billion shipments. By 2021, this is set to change to four billion. Thus logistics in cities become an immense challenge – especially for the quality of life and development in the cities of tomorrow.

In total 175 mayors and 2000 citizens were presented with four possible future scenarios. These scenarios were created by experts and laypeople. 

Scenario 1: Utility  Logistics

A communal parcel service handles the intra-city delivery of parcels, goods and groceries. Within the cities, this means fewer vans that are filled to capacity. Thus one white label company optimising the stream of traffic and how well the vehicles are being used (are they full, are their routes most effective, etc). 

Scenario 2: The Logistics Cooperative

All logistics service providers cooperate voluntarily and involve the population in the delivery processes, for example through bulk orders. The cities then create attractive conditions to maintain this solution. 

Scenario 3: The Logistics Lab

Municipalities and industry develop new logistics concepts in an innovation lab. For example, in addition to people, public transport could also transport parcels and goods in the future and thus increase the attractiveness of cities for trade and citizens.

Scenario 4: Tunnel Logistics

Almost all passenger and goods transport take place underground. For this, the underground system will be expanded with tunnels under tunnels being equipped with conveyor belts. On the surface, the inner cities are then reserved for pedestrians, cyclists and taxis.

Of the suggested scenarios, scenario 2 proved most popular.

How to Rethink Inner-City Transport?

Joachim Drees (MAN) addressed the suffocation in cities, increasing gridlock, and the rapid changes needed to be made in urban environments if 70% of the population is set to live in cities by 2030. Although more individual and goods transportation is needed, public transport is already pushed to its limits. This also leads to increased air and noise pollution. 

In order to avoid this, a collaborative effort on all parts is needed, from including the public more to having companies commit to rules and regulations, to policy-makers providing the framework for such an effort to succeed.

An example of the changing landscape of urban logistics is the rise of ride– and carsharing services. Although most private cars stand around most of the time, car sharing does not really have an impact because shared cars mean less public transport usage. So it might lead to fewer cars in use, but necessarily less traffic. 

As The Guardian reports, the privatised transportation system of ridesharers may do more harm than good if cities allow public transport to deteriorate: Ridessharing and AVs are especially dangerous because the technology is continuously advancing, in contrast to outdated public transport offerings. The Boston Consulting Group even predicted that a shared AV carrying three people could cost operators less on a per-mile basis than rail, effectively making public transport obsolete in its current form.