The Future of Megacity Logistics
Overview of Best-Practices, Innovative Strategies and Technology Trends for LastMile Delivery
By Daniel Merchán and Dr. Edgar Blanco
Megacity Logistics Lab • MIT Center for Transportation & Logistics • September 2015
ABSTRACT
As cities grow in size and complexity, last-mile distribution networks need to evolve to
provide enough efficiency, flexibility and resilience to operate in such multifaceted
urban settings. Our research suggests that this evolution process will lead companies
towards deploying multi-tier distribution systems, in which different combinations of
strategies, urban logistics spaces and vehicle technologies are utilized based on specific
business needs and urban context patterns. In this report, we provide practical insights
to design and operate these type of multi-tier networks, based upon selected case
studies.
ACKNOWLEDGMENTS
The authors would like to acknowledge the contributions of Dr. Matthias Winkenbach
and Dr. Sergio Caballero of the MIT Megacity Logistics Lab, who provided critical advice
to frame this report and made numerous suggestions.
This report has been partially sponsored by Anheuser-Busch InBev.
CONTENTS
1
Urban Logistics Networks of the Near Future ........................................................................... 3
1.1
2
3
4
5
6
Multi-tier Distribution Systems ............................................................................................... 3
Urban Logistics Spaces For Multi-Tier Last-Mile Distribution .......................................... 4
2.1
Urban Consolidation/Transfer Centers ............................................................................... 6
2.2
Micro-deconsolidation Platforms ............................................................................................ 7
2.3
Micro-consolidation Platforms (MCP) .................................................................................. 8
2.4
Delivery Bays .................................................................................................................................... 9
2.5
Automatic Parcel Terminals ................................................................................................... 11
Emerging Vehicles for Last-Mile Vehicles ................................................................................ 12
3.1
Cargo-cycles .................................................................................................................................... 12
3.2
Electric Trucks ............................................................................................................................... 13
3.3
Mobile Warehouse ....................................................................................................................... 14
3.4
Autonomous and Semi-autonomous Vehicles ............................................................... 15
Complementary Last-Mile Distribution Strategies .............................................................. 16
4.1
Off-hour Deliveries ...................................................................................................................... 16
4.2
On-demand (Crowd-sourced) Last-mile Services ........................................................ 17
4.3
Last-Mile Delivery Using the BRT/Subway System ..................................................... 18
Additional Technologies ................................................................................................................... 19
5.1
GPS Sensors and Data for Logistics ..................................................................................... 19
5.2
m-Payments .................................................................................................................................... 19
5.3
Packaging ......................................................................................................................................... 20
References................................................................................................................................................ 21
MIT Megacity Logistics Lab
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The Future of Megacity Logistics
Overview of Best-Practices, Innovative Strategies and Technology Trends for LastMile Delivery
By Daniel Merchán and Dr. Edgar Blanco
1 URBAN LOGISTICS NETWORKS OF THE NEAR FUTURE
Last-mile distribution systems are naturally conceptualized as networks: a collection of
nodes (i.e. distribution centers) and links (i.e. roads) over which goods flow using
specific vehicle technologies. Traditional urban logistics networks have been designed
to serve customers directly from distribution centers (main node), using a fairly
standard vehicle fleet. However, as cities grow in size and complexity, last-mile
distribution networks need to evolve to provide enough efficiency, flexibility and
resilience to operate in unpredictable, constrained and diverse urban settings. In
practical terms, this evolution implies implementing additional infrastructure, devising
new distribution strategies and adopting emerging operational technologies to serve
urban areas.
Our research suggests that reaching customers in large and complex urban contexts
will require a multi-tier distribution system, in which different combinations of urban
logistics spaces, vehicle technologies and strategies are used based on different criteria
such as customer density, traffic congestion, available road network and regulations.
1.1 Multi-tier Distribution Systems
Fundamentally, multi-tier systems imply using: 1) different freight transportation
modes along the delivery route, and 2) intermediate logistics platforms or urban
logistics spaces to consolidate and/or transship freight. Such systems allow companies
to still leverage economies of scale from larger warehouses and shipments in the
outskirts of the city, but also to comply with regulations that aim at reducing the
environmental and social footprints of logistics operations in constrained urban areas.
Robust decision making process to design and operate multi-tier distribution networks
are generally informed by analytical frameworks as well as by practical experience.
This report seeks to provide insights on the practical perspective, by surveying multiple
case studies on different aspects of last-mile distribution systems. We refer the reader
to the work by Winkenbach, Kleindorfer, & Spinler (2015) for a detailed reference on
analytical frameworks to design these kind of networks.
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Multi-tier distribution in practice: a brief case study
Coca Cola’s local bottler in Rio de Janeiro, Brazil, used
to deliver in the Copacabana area using rigid trucks.
After a parking ban in the zone, the company has
devised a new distribution approach: A truck will
reach the area early in the morning (around 7 am) and
park in one of the few on-street authorized locations.
From there, motorcycles will complete the deliveries
to stores. On average, a motorcycle will execute five
delivery trips per day. The company operates a
network of 30 motorcycles to serve 50 routes.
So far, key positive outcomes for the company include
compliance with parking regulations, and flexibility
to cope with demand peaks, intense congestion and
other unexpected events. Furthermore, recent
evaluations have estimated a reduction of
approximately 50% in CO2 emissions (Fernandes,
2014). However, one the greatest challenges
continues to be the coordination between trucks and
motorcycles drivers.
Figure 1. Multi-tier last-mile in Rio de
Janeiro. Source: Fernandes (2015)
In the following sections, we review key urban logistics practices relevant to multi-tier
distribution systems. These practices range from well-known urban logistics spaces
such as urban consolidation centers to emerging technologies, such as semi-autonomous
delivery vehicles. Not all practices and solutions reviewed might be directly applicable
to specific operational settings. Still, these practices have been included in the report to
ensure that most potential technology investments and strategies are explored.
2 URBAN LOGISTICS SPACES FOR MULTI-TIER LAST-MILE DISTRIBUTION
In the urban freight literature, the term urban logistics spaces (ULS) encompasses all
types of ‘nodes’ in last-mile distribution networks. ULS range from large distribution
centers or warehouses generally located in the outskirts of the city; platforms nearby
city centers to enable freight transfer from trucks to light-freight vehicles (LFVs), often
referred to as urban consolidation centers; urban freight-dedicated spaces at the
neighborhood level, such as the micro-deconsolidation platforms; solutions at the block
and building levels, such as automatic parcel terminals (e.g. the DHL “Packstation” in
Germany) and urban logistics boxes1
Figure 2 summarizes the key characteristics of each type of ULS, such as approximate
surface area and range of coverage, along with the vehicle and operational technologies
generally used. A description of each ULS follows in the subsequent sections.
1
This progression of ULS was adapted from Boudoin et al. (2014).
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Warehouse/DC
Urban
Consolidation/
Transfer
Center
Micro
Consolidation/
Deconsolidation
Platform
Loading/
Unloading Bay
Automated Pack
Stations
Mailbox
Surface (ft2)
10,000+
2,000 - 5,000
500 - 1,000
100
50
10
Location
Logistics Industrial
Park
Outer City Core
Inner City Core
Street
Retail /
Transit Node
Building/Home
Range
Citywide
District
Neighborhood
Block
Flexible /
Flow Driven
Dwelling
Inbound Vehicle
Large Truck
Truck
Truck/Van
Truck/Van
Truck/Van/
Bike/Pedestrian
Truck/Van/
Bike/Pedestrian
Outbound Vehicle
Truck/Van
Van
Bike/Pedestrian
Pedestrian
-2
-2
Material Handling
Technology
Fully Equipped
Racks, Forklifts,
WMS, Handhelds
Carts, Handhelds
Carts
Lockers
None
Handling Level
Pallet
Pallet/Carton
Carton / Box
Box/Unit
Unit
Unit
Storage
Yes
≥24 hours
Yes
≤ 24 hours
No
No
Yes
≤ 48 hours
Yes
≤ 48 hours
Figure 2. Comparing Urban Logistics Spaces
There is not a predetermined outbound vehicle managed by the logistics operation, but instead it is selected by the end customer or client. It is often a
personal vehicle or carry-on.
2
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2.1 Urban Consolidation/Transfer Centers
Description
Urban Consolidation/Transfer Centers have been a popular urban logistics solution,
particularly in Western Europe. Motivated by the need to make better use of load
capacity of freight vehicles, these logistics platforms have been implemented to
consolidate and transfer freight coming from external locations onto smaller, lessdisruptive vehicles adapted for dense city districts (Allen, Browne, & Leonardi, 2012).
In general, these ULS are located in the outer-city core and product storage, if any, does
not overpass the 24-hours range.
Urban Consolidation/Transfer Centers can be divided in two categories:
 Urban Consolidation Center (UCC): Used for freight consolidation and transfer
from multiple carriers to a unique UCC operator, that also executes the final
delivery.
 Urban Transshipment Centers (UTC): Space used for transshipments, without
consolidation across carriers. Each carrier executes its own transfer and
distribution process.
Relevant Case Studies
Urban Consolidation Centers. Multiple examples of UCCs and different implementation
formats can be found across Western Europe and Japan. The examples of CityPorto in
Padua, CEMD in Lucca, the Motomachi UCC in Yokohama, or the DHL-operated UCC in
Bristol represent the “traditional” UCC system, in which a consolidation center and the
fleet of LFVs are administered through public-private partnerships and operated by a
single logistics service provider (Merchán & Blanco, 2015).
Legazpi Transshipment Center – Madrid. Leveraging the spaces of the old produce
market near downtown Madrid, this UTC was deployed by the city as an incentive for
companies
willing
to
implement
environmentally friendly last-mile solutions.
Three companies joined this pilot project,
Seur, TNT and Calidad Pascual, and they are
using this center to de-consolidate freight
from large trucks into electric vans and
tricycles to access Madrid’s low emissions
zone. Additional incentives for these three
companies include extended time-windows,
relaxed vehicle-size restrictions, free
charging stations, tax incentives, among Figure 3. Electric tricycle and electric van at the
Legazpi Transshipment Center in Madrid
others (Ponce & Gonzalez, forthcoming
2015).
Benefits
 Overall, consolidation/transfer centers increase the load factor and reduce
externalities of freight vehicles in dense urban zones.
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
Operational and tax-incentives might be available for carriers joining
consolidation/transfer centers.
Limitations
 These logistics spaces generally require strong financial and political support from
local governments, due to high cost and limited availability of space in congested
urban areas.
 The additional cost of transshipment and changes in operational procedures
generally surpasses the financial benefits of consolidation, which implies that
additional incentives for carriers need to be devised (Verlinde et al., 2012).
 UCCs, in particular, limit carrier’s flexibility by establishing specific operational and
delivery processes, not always consistent with the carrier’s own distribution
strategy. This top-down approach has undermined the interest of carriers that
generally prefer to closely monitor the last mile operation. In this regard, UTCs offer
much more flexibility for carriers.
2.2 Micro-deconsolidation Platforms
Description
Micro-deconsolidation platforms (MDP) are ULS designed to enable freight transfer
between different freight vehicle types, to access congested/restricted urban areas.
These platforms operate on a smaller scale compared to UCCs, no freight consolidation
occurs across suppliers and the last-mile operation is not outsourced. In deconsolidation platforms, the space is only used to enable freight transfer between large
trucks and smaller, light-freight vehicles (LFVs).
Two main types can be observed:
 Private MDP: space owned and operated by a specific carrier (an urban microwarehouse)
 Shared MDP: shared spaces operated by multiple companies (using on-street or
off-street parking spaces/lots)
Relevant Case Studies
Case studies regarding private MDPs have not been extensively documented in the
specialized literature, mainly because these are fairly recent developments. However,
we have observed this solution in Bogota, implemented by companies such as
Colombina, Coca-Cola and Argos; and in Mexico City, implemented by Pepsico (MIT
Megacity Logistics Lab, 2015). Amazon has also been exploring micro-warehouses for
fast deliveries in London and several major US cities over the last 2 years (Phillips,
2015).
As of shared MDPs, the concept was observed in Rio de Janeiro (see section 1.1 for
further details).
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Benefits
 Company retains control and visibility of the last-mile operation.
 No unique delivery approach is imposed and companies can choose the locations,
vehicle types and operating times that best fit their logistics strategies.
 Infrastructure requirements at each transshipment space is minimal. Only space for
vehicles parking and basic weather protection are needed. No storage equipment is
required, as products will be kept in the truck until they get transferred to the
smaller vehicles.
 Investment needed (either private or public) to enable MDP is marginal
 No complex partnerships need to be enforced. MDPs only require simple rental
agreements
 Since MDP leverage ubiquitous infrastructure such as public parking lots, this
solution is fairly transferable to other dense or restricted areas within the city.
Limitations
 Additional coordination protocols between truck drivers and the delivery crew are
needed
 Product safety and handling challenges need to be considered, as companycontrolled surveillance might not always be available
 Transshipment operations always increase product handling which adds costs and
risks of product damage.
 In the case of shared MDPs, operators of parking lots might not find profitable to
rent the space out for freight operations.
2.3 Micro-consolidation Platforms (MCP)
Description
Micro-consolidation platforms consist of underground or surface parking lots, and onstreet spaces for freight consolidation and transshipment from multiple carriers to a
single operator, at the neighborhood level. Additional equipment needed includes a
small (15-20 m2) cabin for administrative purposes. From these spaces, last-mile
deliveries are executed using handcarts or bi/tricycles (Dablanc, 2011). Conceptually,
micro-consolidation platforms can be described as a smaller-scale version of UCCs.
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Relevant Case Studies
Nearby Delivery Areas - Bordeaux. Nearby Delivery Areas were first introduced in
Bordeaux (espace de livraison de proximité) in 2003 as a public initiative and in 2005
the company La Petite Rein became the private
operator. Over the past years, similar solutions
have been implemented in other cities including
Paris, Dijon and Rouen (Dablanc, 2011).
City 100 – Beijing. In 2011, the Municipality of
Beijing partnered with the Express Service
Association launched this joint deliveries
initiative. City100 stores act as consolidation
points for parcels coming from multiple couriers.
Then, the consolidated final delivery (last 100meters) is carried out by City100 personnel. This
Figure 4. Nearby Delivery Area in Bordeaux,
initiative is being expanded to all first-tier cities
France. Source: BESTUFS
in China (Jian & Liu, 2015)
Benefits
 Compared to other consolidation soluctions (ie. UCCs), MCP require lower
investments and are easier to replicate.
 MCP are best suited for parcel delivery systems
Limitations
 Limited coverage area
 Low flexibility in last-mile operation for carriers since the delivery operation is
outsourced to the MCP operator.
 Reaching the necessary agreements to enable consolidation across companies is
not trivial, particularly when competitors are involved.
 In emerging markets, this consolidation might be even more problematic. It is
common that the driver will collect payments from customers and actively
engage in marketing and sales efforts. Therefore, the nature of this channel
requires that companies completely oversee the last-mile operation,
diminishing the possibility to engage in consolidation efforts.
2.4 Delivery Bays
Description
Delivery bays are on-street parking spaces for unloading/loading operations, typically
located at a walking distance from stores. In general, delivery bays are the most costeffective parking solutions for freight vehicles in congested areas. These spaces are
designed and implemented by public officials, but private carriers could design and
operate similar parking solutions within private ways (e.g. shopping malls). Typical bay
dimensions range between 7-12 meters in length and 2-2.5 meters in width, and three
major layout alternatives are generally observed (Figure 5) (Dezi et al., 2010) (Paris
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City Council, 2005). Maximum parking time allowed can range between 15-20 minutes
(Merchán, Blanco, & Bateman, 2015).
Relevant Case Studies
Technical Guideline – Paris. In 2005, the municipal authority
of Paris introduced a comprehensive technical report to
guide the implementation (or redesign) and operation of
nearly 10,000 delivery bays in the city. Overall, 15% of the
on-street parking space in the city has been allocated to
freight.
Multi-use lanes – Barcelona. Multi-use lanes allow flexible
use of constrained infrastructure. The city of Barcelona
implemented this solution in 3 major road segments,
supported by variable message sign technology to inform
the usage policy over the day.
 8 am - 10 am: general or bus traffic
 10am - 5pm: loading/unloading operations
 5pm - 9 pm: general or bus traffic
 9pm - 8am: residential parking
Figure 5. Layout alternatives for
delivery bays. Source: Dezi et.al
(2010)
Benefits
 Delivery bays are generally considered the most cost-effective infrastructure to
enable freight operations in urban areas.
 Externalities such as double-parking and side-walk parking are greatly reduced if a
network of delivery bays is available.
 At the same time, loading/unloading operations are much safer and efficient in
these dedicated spaces.
 As observed in Barcelona, delivery bays need not to be dedicated spaces thorough
the entire day, multi-use policies can be implemented.
 Delivery bays can be combined with electronic reservation systems to monitor
usage, plan operations and maximize utilization
Limitations
 Overall, proper location, capacity provision and enforcement remain as the greatest
challenges to devise a network of delivery bays. Specifically,
o For carriers, delivery bays might not always be located close to the targeted
customer, which might increase service time due to additional walking.
o Due to poor enforcement, delivery bays are frequently used by passenger
cars.
o Quantifying the sufficient capacity of a network of delivery bays is complex
and no guidelines/recommendations for policymakers are readily available
(MIT Megacity Logistics Lab, 2015).
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2.5 Automatic Parcel Terminals
Description
Automated Parcel Terminals (APTs) are networks of lockers conveniently located for
parcel pickup, as an alternative to home delivery. The concept of locating pick-up
lockers is not recent, however advances in information technology have enabled further
services and have increased the potential usage of this system. APTs have been mostly
used for B2C, within e-commerce frameworks, achieving important results in terms of
distribution efficiency and service effectiveness.
Relevant Case Studies
 Packstations – Berlin. Packstations are automated on-street parcel counters
operated by Deutsche Post DHL and are used for parcel pickup, drop-off and other
related services. DHL recently integrated its
ATPs with its online grocery store so that
customers can place an order directly from
the Packstations using their cellphones.
 Amazon Lockers – New York. Amazon Lockers
offer a similar convenient pickup service
with SMS or email notification. However,
Amazon’s service differs in two aspects. First,
the lockers are located inside establishments
such as grocery, convenience or drug stores.
Secondly, the stations are owned by the
Figure 6. DHL Packstation in Berlin, now
retailer (i.e. Amazon), as opposed to including online grocery shopping. Source: i-qi.net
Packstations that are owned by the courier
company.
Benefits
 Significant gains in last-mile delivery efficiency: studies on APTs suggest more
than 35,000 trip-km saved per year for a mid-sized German city (Dablanc, 2011)
 Reduced response time, convenient location, extended hours of operation and
service reliability have been identified as the most beneficial aspects for users.
Limitations
 The vast majority of APTs have focused on B2C applications. In particular,
potential application of B2B in the food and beverages industries remain
unexplored.
 The investment required for implementing an extended and interconnected
network has hindered a faster expansion of this service.
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3 EMERGING VEHICLES FOR LAST-MILE VEHICLES
3.1 Cargo-cycles
Description
Given increasing access restrictions, congestion and limited parking infrastructure in
certain inner-city areas, last-mile distribution using two or three wheelers is being
increasingly explored. Cargo-bikes have been used for many years for mail and parcel
deliveries; however, companies in the consumer packaged goods (CPG) industry have
started to use these vehicle types. The payload generally ranges between 100-250 kg:
 Two-wheelers: 100 - 150 kg. Payload can be increased by either using electric bikes
or motorbikes.
 Three-wheelers: 200 - 250 kg.
Relevant Examples
Figure 7. Several examples of cargocycles: left, Pepsico/Fritolay using bike deliveries in Dowtown Bogota
(Source: GoogleStreetView); center, motorbike deliveries in Rio de Janeiro (Source: Ferandes, 2015); right,
cargocruiser for parcel deliveries in Germany (Beier, Menge, & Gruber, 2015).
Benefits
 Low fixed and operational costs
 Fewer access restrictions and increased maneuverability in congested/restricted
areas
 Environmentally friendly last-mile solution
 Most suited for areas with large customer density
Limitations
 Limited payload
 Safety concerns for drivers (crime and accidents)
 Two and three wheelers are particularly sensitive for insurance policies
 Operational range: limited area of coverage.
 To deliver “heavy” products, such as beverages, electric/motor bikes will be needed.
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3.2 Electric Trucks
Description
Although many alternatives of vehicles powered with electricity are nowadays
available, those most relevant for freight distribution are hybrid vehicles (HEVs), plugin electric vehicles (PEVs) and plug-in hybrid electric vehicles (PHEVs). HEVs and
PHEVs are powered by both, a combustion engine and an electric motor. However,
PHEVs can be recharged from external sources (plug-in stations) whereas HEVs can
only be recharged through regenerative braking. On the other hand, PEVs are solely
powered by an electric motor and need to be charged using an external source (De Los
Rios & Nordstro, 2011).
These vehicles differ in driving ranges as follows:
 HEVs, PHEVs: 20-40 miles with electric engine and longer distances with the
combustion engine.
 PEVs: Approximately 100 miles. Range cannot be expanded due to unavailability of
alternative power source (De Los Rios & Nordstro, 2011).
Relevant Examples
Figure 8. Several examples of electric freight vehicles: left, Femsa’s electric truck in Bogotá (Source: Colombia.com); center,
DHL’s electric and hybrid vehicles in NYC (Source: FleetFinancials.com); right, Plug-in station for Calidad Pascual’s electric
vans in Downtown Madrid (Source: Ponce & Gonzalez, (forthcoming 2015))
Benefits
 Reduced green-house gasses emissions are the major benefit of electric vehicles
 Reduced operational costs with ranges of reduction varying by type of electric
vehicle. TNT reported an average cost of approximately $ 51 US dollars per week to
power an electric vehicle versus approximately $ 258 spent on diesel fuel
(Nesterova et. al, 2013).
 PHEVs offer greater flexibility in terms of power source and recharging.
 Carriers incorporating any electric vehicles may have access to funding, incentives
and subsidies. In the UK, Seymour Green reported average yearly savings of $ 5,200
– 6,500 dollars due to reduced congestion charges, road taxes and fuel savings
(Nesterova et. al, 2013).
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Limitations
 Overall, the cost of electric vehicles is higher in the short term (acquisition, parts
and maintenance), which has undermined their adoption. Nonetheless, recent
studies suggest a potential lower total cost of ownership for electric vehicle in the
long run. Unfortunately, the lack of primary market data has limited the possibility
to undertake comprehensive financial assessments.
 The acquisition cost of electric vehicles is generally larger compared to conventional
fuel counterparts. Pilot projects have reported acquisitions cost three to four times
larger (Nesterova et. al, 2013).
 Maintenance cost are also higher due to cost of parts. Savings, however, are achieved
due to simplified maintenance (De Los Rios & Nordstro, 2011) (Nesterova et. al,
2013).
 In the case of PEVs and PHEVs, public recharging stations are not available,
particularly in emerging markets. Private charging stations are generally needed.
3.3 Mobile Warehouse
Description
Several recent last-mile solutions have emerged from adapting the truck-trailer for
multi-tier distribution. One of these includes adapting the truck trailer as a mobile
warehouse to feed light-freight vehicles at micro-deconsolidation platforms.
Relevant Examples
 TNT - FreightBus (Combi-Fret),
Lyon. Piloted in 2012 by TNT,
this solution combines trucks,
light-freight
vehicles
and
modular containers. The trucks
leave the distribution center
carrying a set of modular
9. Left, TNT's truck carrying 3 modular containers; right,
containers, and, at a micro- Figure
adapted van for last mile delivery carrying a single container
deconsolidation platform, each
(Source: city-log.eu)
container is picked-up by a
light-freight vehicle (i.e. van) to deliver within inner city areas. (Thebaud et. al.,
2012)
 TNT - Mobile Depot, Brussels. A similar
concept was also tested by TNT in
Brussels. In this case, instead of carrying
modular containers, the truck is
equipped with cages. Parcels in each cage
are then transferred to a cargo bike for
last-mile delivery.
Figure 10. TNT Express' Mobile Depot at a
transshipment point (Source: TNT)
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Benefits
 Overall reduction in congestion and pollution within inner city areas.
 Light-freight vehicles ease driving and parking in dense inner zones
Limitations
 Limited availability of secure, well-sized spaces for transshipment operations
(Thebaud et. al., 2012).
 Transshipment time: in the case of FreightBus, transshipment operations added
close to 45 minutes to routes, which were not compensated by time saved due to
congestion or unloading (Thebaud et. al., 2012).
 High investments needed to adapt/acquire the necessary fleet. Exploratory
research suggests that these solutions might be financially sustainable only if the
multiple high-density areas need to be served (MIT Megacity Logistics Lab, 2015).
3.4 Autonomous and Semi-autonomous Vehicles
Description
The potential use of (semi) autonomous aerial and terrestrial vehicles for logistics has
received increased attention over the past years. Although applications using terrestrial
vehicles seem more likely in the near future of last-mile deliveries, companies such as
Amazon are increasingly expanding research efforts to include unmanned aerial
vehicles (i.e. drones) in their portfolio of delivery solutions. Still, preliminary research
suggest that terrestrial vehicles might be more suited for urban operations, whereas
aerial vehicles might be a better fit for deliveries in sub-urban or remote locations.
Relevant Examples
Most efforts to include autonomous or semi-autonomous vehicles for logistics have not
surpassed the research or pilot phase, and therefore, limited information is available.
Two relevant examples are discussed:
 Truck platooning. Consists of a caravan of autonomous trucks guided by a lead
vehicle. All vehicles are equipped with a set of radars, laser scanners, cameras and
antennas for inter-vehicle communication and obstacle detection.
 On-demand, multipurpose autonomous bikes. Leverage unused passenger
transportation capacity for package pick-ups and deliveries at the neighborhood
level. This technology is being prototyped at MIT.
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Figure 11. Left, caravan of semi-autonomous trucks in Japan (source: BBC); right, on-demand multiuse autonomous
bicycle (source: MIT Megacity Logistics Lab, 2015)
Benefits
Truck platooning:
 Reduced emissions and increased fuel economy
 For drivers, key benefits include reduced workload and safety
Autonomous bikes:
 Flexible, on-demand delivery and pick-up service
 Leverages unused capacity from passenger transportation
Limitations
 Most autonomous or semiautonomous vehicles face market and acceptance
challenges.
 Furthermore, legal and institutional frameworks for autonomous vehicle
operations are in the early stages of their development.
4 COMPLEMENTARY LAST-MILE DISTRIBUTION STRATEGIES
4.1 Off-hour Deliveries
Description
Facilitate operation of freight vehicles during off-peak hours, particularly at night
time, to avoid traffic congestion. Special vehicles, equipment and driver training might
be needed due to noise legislation.
Relevant Case Studies
Night Deliveries – Barcelona. In partnership with supermakets/carriers as Mercadona
and Condis, the municipality implemented a night delivery program for the city center.
Key lessons learned include: two large 40-ton trucks at night replaced, on average, 7
mid-sized day trucks; one-hour time reduction per trip; 15-months payback period for
investments in equipment and 36-months for investment in adapted trucks.
Compliance with the targeted 60dB noise limit was only partially achieved. Over the
past years, Mercadona has expanded this distribution strategy across multiple cities in
Spain. (Dablanc, 2011)
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deliverEASE – Manhattan. Running since 2011, this
program introduced unassisted deliveries between
the off-hours of 10pm to 6am. In 2013, 150
companies had joined this program. Participant
businesses received a $2,000 cash incentive
(Rensselaer Polytechnic Institute, 2013).
Benefits
 Significant savings in delivery trip time and CO2
emissions could be achieved.
Figure 12. Unassisted night deliveries in
Manhattan. Source: citylab.com
Limitations
 Store operation hours prevent night deliveries, particularly in emerging markets
 Increased drivers’ safety concerns
 Financial and/or tax-based incentives might be needed to attract participants
 Night deliveries require significant training and specialized equipment to comply
with strong noise regulations.
4.2 On-demand (Crowd-sourced) Last-mile Services
Description
Mostly focused on the B2C market segment, these on-demand delivery services aim to
bridge the gap between urban retailers and consumers in fast (same-day) delivery
settings, by leveraging mobile phone technology,
Relevant Case Studies
Deliv, several US cities. Deliv has partnered with
retailers across multiple sectors, which traditionally
did not offer home delivery services. Deliv’s
competitor Postmates also offers pick-up services.
Similar business models have been developed by
Instacart in the grocery industry and Drizli for
alcohol deliveries. Most of these companies have
been rapidly expanding across the United States.
Figure 13 Postmates mobile app. Source:
Postmates
Benefits
 Users highlight convenience and flexibility as the primary benefits.
Limitations
 These strategies are fairly recent and comprehensive assessments are still needed
to better understand their limitations and potential within urban freight systems.
 To the best of our knowledge, no on-demand B2B delivery services have been
introduced.
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4.3 Last-Mile Delivery Using the BRT/Subway System
Description
Urban transportation systems, particularly bus rapid transit (BRT) and/or subway
systems, can be leveraged for freight transportation purposes. Alternatives include
either adding dedicated cars to the existing system, or designing mix-used cars.
Relevant Case Studies
Monoprix, Paris. Implemented rail logistics as part
of the distribution chain. Goods are moved by
train from a suburban warehouse to a train station
located within Paris. From these stations, lastmile deliveries are completed using CNG trucks.
City-Cargo, Amsterdam. Utilized dedicated cars
and the existing tram infrastructure. This private
effort was abandoned due to large investments
needed.
Figure 14. CityCargo in Amsterdam
Benefits
 Large freight transportation capacity
 Unrestricted access to dense areas
 Various fields of improvement:
o Fuel consumption and greenhouse emissions - on average, rail emits 66%
less carbon monoxide than trucks (Haulk, 2001).
o Congestion - in Paris, nearly 12,000 trucks per year have been taken off the
road during peak traffic hours.
o Safety – the rail transportation injury rate is about half that of trucks.
(Spraggins, 2003)
Limitations
 This strategy leverages existing tram/subway infrastructure and equipment. Still,
large investments are required to acquire equipment and to adapt stations. These
are the reasons why the City-Cargo project was abandoned.
 Loading and unloading operations become more complex and time consuming,
particularly in subterranean stations. Space is needed to de-consolidate freight and
transfer it to light-freight vehicles. In the case of Monoprix, cost per pallet increased
by approximately 35%.
 Routes, times and station locations are fixed.
 Usage constrained to non-peak passenger travel time periods.
 Space for freight operations at selected stations might not be available.
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5 ADDITIONAL TECHNOLOGIES
5.1 GPS Sensors and Data for Logistics
Description
The adoption of GPS technologies for freight
vehicles has been rapidly growing over the
past years. However, its applications remain
mostly focused on asset surveillance and
maintenance. Opportunities have been
identified for developing logistics-specific
applications, which could ultimately improve
performance of freight operations.
Impacts
GPS data can be used to better estimate
metrics such as average speed per zone at Figure 15. Visualization of a delivery route using GPS
different time periods, trip distance, stops traces. Source: MIT Megacity Logistics Lab (2015)
duration per type of customer, trip duration
and CO2 emissions. Using these metrics, logistics planners can better assess operational
efficiency and service levels. Furthermore, GPS data contain information about the
dynamic urban context, which can enhance modeling techniques for robust network
planning and enable real-time decision making.
5.2 m-Payments
Description
Leveraging the massive spread of mobile
phone technology, companies in the CPG
industry in Bogotá are testing a mobile phonebased solution for payment collection from
nanostores.
This solution has been
particularly useful in cash-dominated
contexts, where payment collection adds time
and risks to the delivery operation. The
company DDDedo developed the app and has
partnered with major CPG companies, such as
Grupo Nutresa.
Figure 16. Store-owner in Bogota using his mobile
phone and the DDDedo app for payments
Impacts
 Delivery time savings.
 Reduced risk for drivers.
 Payment flexibility for store-owners.
 The adoption rate, however, has been slow and significant training to nanostore
owners has been needed.
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5.3 Packaging
Although not directly related with urban logistics networks, packaging design affects
the productivity of loading and unloading operations, as well as the in-transit integrity
of the product.
Nanotechnologies are a promising area of innovation in the field of packaging. Adding
clay particles at the nano-scale level is the most common application in industry,
accounting for nearly 70% of the market (Silvestre, Duraccio , & Cimmino S., 2011). This
additional layer, provides a protective film that stiffens packaging and reduces gas
exchange. This layer can be applied to bottles or containers directly, potentially
eliminating the risk of breakage all together even in adverse handling conditions.
The number of units per case and/or per pallet, can also be optimized and translates
into higher urban logistics productivity, including more efficient use of vehicle capacity.
A CPG company in Colombia was able to reduce close to 9% of logistics costs by
rationalizing pack sizes when delivering to small fragmented retailers in Colombia
(Gámez, Soto, Mejía, & Sarmiento, 2015).
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