Ti’s Future of Logistics Conference took place last week (June 7th-8th) in London. Speakers, presenters and delegates from across the logistics industry were present to discuss what the future of the industry may hold. Amongst the topics up for debate were urbanisation and city logistics.
Cities are the world’s dominant demographic and economic centres, and the rapid urbanisation seen over the last few generations has concentrated ideas, productive capacity and value creation in these evermore networked locations. In 1950, 30% of the world’s population lived in urban areas, around 750m people, with each sq km of land on earth home to an average 19 people. In 2015, 750m has become 4.15bn, while each sq km now houses 57 people, according to UN statistics. Lagos, Nigeria, one of the world’s fastest growing cities sees its population grow by 85 people every hour, while China already has 15 megacities, each with a population of at least 10m, according to the OECD. And it is this shift – from rural to urbanised, and to higher and denser populations – that presents one of the most significant challenges to today’s logistics industry.
Urban populations, the demand they create and the services they require need logistics support. But cities, both developed and emerging, all too often present inadequate infrastructure and burdensome regulation to those aiming to serve their populations. Add to this the increased volumes and the higher velocity of logistics operations in the e-retail and on-demand era, and the need to innovate and find solutions increases exponentially.
Overcoming the many challenges of city logistics is a priority for LSPs – particularly last mile providers – as well as for retailers and other stakeholders. Solutions, though, require a detailed operational understanding of the specific problem, including the needs of the various clients, customers and communities not only between, but within, cities. Efforts at all levels and across all stakeholders must be coordinated – regulation, for example, can place limits on what LSPs can provide or, with understanding and vision, it can act as a spur for competition and innovation. Infrastructure, too, can be a facilitator. In many cities, though, infrastructure is under-capacity, un(der)developed and underutilised, compounding the challenge of undertaking city logistics in a cost effective or efficient way – one FTL delivery is more efficient than multiple smaller vehicle deliveries, but roads, especially in historical cities, cannot always support larger goods vehicles, and regulation may further restrict access.
Against this backdrop, it is perhaps understandable that many potential solutions have ‘proof of concept’ but why so few have gained widespread traction. Solutions which make use of existing infrastructure provide one avenue for exploration – multi-storey warehousing and XPO’s plans at Chapelle International to transport cargo directly into Paris using rail alongside road vehicles are examples of how LSPs can make better use of underutilised existing infrastructure. Out-of-town consolidation centres have also gained credibility following a number of notable success cases, including at Heathrow Airport in London and at Padova Cityporto in Italy. Alongside these successes, though, are examples of consolidation centres failing to deliver the benefits expected – the additional transhipment can hit profitability, for example – and nor do they necessarily meet the needs of all city-based businesses. Restaurants, which stress the use of fresh, local goods, can be highly resistant to the consolidation centre model.
One result of the complexity of city logistics has been to push the responsibility for innovation onto logistics providers, handing them the challenge of creating a viable business operation in the face of fixed infrastructure and dynamic regulatory and business case challenges. Working in such confined spaces, LSP’s may find the best solutions in smarter practices that make better use of assets.
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Source: Transport Intelligence, June 14, 2016
Author: Nick Bailey