Commuter Solutions

Solutions to Overcome the Challenges Faced by Urban Freight Transportation

Due to a rapid increase in population, the demand for urban freight transport is growing as people are consuming more goods and services. The United Nations predicts that by 2050 about three-fourth of population will live in urban areas, while today it is about half. The city logistics industry is facing many challenges such as traffic congestion, transport-policy related issues, parking, loading or unloading problems, customer related problems etc. In our interview, Tobias Merten, Manager Advisory Services of a Global Management Consulting firm explains how urban planners and local authorities can overcome these challenges and how the industry can handle growing transport volumes and freight traffic growth.

What does urban freight or city logistics comprise of?

The term urban freight or city logistics was already coined in the early 1980s and in principle can be best described as collective terms for a variety of concepts for the bundling of urban freight transportation in a collaborative manner.

Most prominent examples in this respect are the Güterverkehrszentren (GVZ) or freight distribution centers in Germany, dry port, logistics center and port centric concepts. The original goal of these concepts was to be the entrepreneurial organization of freight transportation to optimize utilization and minimize the number of trips in urban areas and to improve the economy of scale of the last mile logistics.

However, in times of increasing social demand for reduced environmental impacts and pollution as well as more sustainable solutions within urban areas and the limited public finances, these collaborative concepts offer much more than the original meaning.

Overall, today’s urban freight or city logistic concepts compromise of the intelligent linkage and integration of all areas involved in urban freight transportation and even the overall urban mobility, from the planning phase through the mobility strategy up to the day-to-day operation. These concepts require the close collaboration of different actors with different objectives on different levels.

In particular, these areas include:

• In or outbound logistics (logistics center, port or dry port, airport, rail terminal);

• Planning and maintenance of urban transport infrastructure;

• Urban production or trade;

• Urban population;

• Last mile logistics;

• Mail and parcel service;

• Delivery services (For example, Food and Beverage, supermarkets, etc.);

• Milk run, just-in-time, direct delivery and pick-up;

• Disposal or Waste; and

• Water or Energy or Telecommunication

What is the current situation of urban freight transportation?

The current situation of urban freight transportation is characterized through a liberalized market (partly liberalized in the mail sector), that is polypoly market structure in the transportation sector, oligopoly structures in the parcel service sector and monopoly and partly oligopoly structures in the mail service sector.

In bigger conurbations and metropolitan regions, distribution centers sporadically maybe found in suburbs and industrial or commercial areas close or outside cities within a radius of up to 50 kilometers. As different actors follow individual goals and objectives, it can be assumed that the real potential and synergies of close collaboration are often only rarely used.

What are the challenges faced by urban freight transportation? How can local authorities and urban planners overcome these challenges?

The principle challenges faced by urban freight transportation are cost pressure caused by fierce competition and underutilized vehicles. Furthermore, actors are more and more confronted with dense urban traffic especially in peak times causing delays and additional costs, deliveries in pedestrian areas where access often is time regulated, road charging schematics, limited parking space as well as increasing environmental limitations and no presence of the recipient.

Local authorities and urban planners have various measures on different levels to overcome, and more importantly to pro-actively avoid specific impacts caused by urban freight transportation. Possible measures on the planning level could be the support of co-modality for urban freight transportation and support of alternative delivery systems (for example, cargo cap, S-Bahn or Metro utilization for freight transportation), a linkage of urban hubs with strategic transport corridors (for example, Trans-European Transport Network (TEN-T)) and the overall integration of logistics into urban mobility plans.

On the regulatory level, the use of green vehicles or the use of prioritized freight corridors and Bus Rapid Transit (BRT) systems are considered to be proving instruments for an improved routing of urban traffic. On the executive level, a practical support of city logistics concept through for example, incentives and cross-functional collaboration as well as defined time windows for deliveries including incentive schematics could be envisaged.

How can the logistics industry handle growing transport volumes and freight traffic growth?

With the ongoing trend of urbanization and globalization, transport volumes and corresponding freight traffic is expected to grow continuously. In order to cope with these challenges, the logistics industry might be required to cooperate stronger with competition and even partly give up full economic independence in favor of a more efficient urban logistics system (best practice, Güterverkehrszentren in Germany and city logistic hub in London-Borough).

The key objective among the different actors might be an improved utilization of vehicles and thus, an improved utilization of transport infrastructure through an optimized coordination of cargo routing and cooperation with existing logistic centers as well as the application of “SMART” logistic systems that help to avoid empty trips and reduction of return deliveries.

What is the solution for last mile logistics?

When it comes to last mile logistics, different solutions and approaches might be achieved through a cross-company collaboration that avoids empty trips and enables better vehicle utilization, delivery-on-demand systems where recipients on time can influence the delivery time, online traffic routing systems which on the other hand may require modular vehicles and the usage of electric, more environmental friendly vehicles.

How do you think the logistics industry can provide a sustainable urban freight transportation system? Share your opinions in the comment section.


Please note that this article expresses the opinions of the author and does not reflect the views of Move Forward.

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