Metro Moves: Urban Logistics Shippers Get Creative

Urban logistics lies at the intersection of private industry and public life. That intersection is heavily trafficked, unpredictable, and richly complex. For those companies managing supply chains in dense cities, a sense of control may be elusive.

In a warehouse, a logistics company or shipper can dictate how to use a space with precision and efficiency. On a city block, however, one must contend with competing and pressing interests in every direction.

“Urban areas are challenging for logistics because companies are trying to operate in an efficient, cost-effective, competitive business manner in an area that’s filled with other people with other demands,” says Anne Goodchild, founding director of the Urban Freight Lab at the University of Washington. “In urban areas, you don’t build or manage the infrastructure, but you exist in it. You don’t control it, but you’re measured on how well you perform in it.”

Urban logistics gets a bad rap because of its inherent complexity, but density brings with it many advantages. In fact, rural deliveries are significantly more expensive than urban deliveries and offer less opportunity for growth, Goodchild notes.

“Customer density is important for logistics,” she says. “That’s how you’re able to keep costs low enough that the amount customers are willing to pay covers your costs.”
Still, urban logistics is not getting any simpler.

The rapid rise in ecommerce during the pandemic increased the number of addresses receiving regular individual deliveries, leading to fewer packages per dropoff and heightening the complexity of urban logistics in the process, says Adam Bryant, COO of Jitsu, a last-mile delivery service provider based in Berkeley, California. Growing ecommerce also has altered traffic patterns and intensified curb demand.

Growing congestion in urban areas continues to complicate deliveries. “We now have huge numbers of small delivery vans, cars, and trucks delivering more than just small packages,” says Frank Granieri, COO of supply chain solutions for A. Duie Pyle, a transportation and logistics provider based in West Chester, Pennsylvania.

“Customer expectations regarding delivery times have compounded these effects, as well,” he adds. “It’s difficult to get anywhere in an urban environment and not see at least one van or truck double-parked in an attempt to make a delivery. This is just one evolution among many, but it stands out due to the severity and impact of the shift.”

The not-so-simple parking problem

For all the sophistication of the modern supply chain, the obstacle of parking scarcity in dense cities tops the list of urban logistics challenges, according to Goodchild. Delivery drivers rarely have the luxury of a reserved parking space or ample parking in general. It makes for a demanding environment and a heavy daily mental load for drivers.

“One of the top stressors for urban delivery drivers is trying to figure out where to park their vehicle,” Goodchild says. “Every time they stop, they have to look around, see what’s available, and navigate that space. Parking is the primary challenge.”

Parking capacity often is indicated with simple, straightforward static signage at the location, such as with paint colors on the curb. Digital solutions are available and in ongoing development, using tools such as video cameras, Bluetooth sensors, and RFID sensors. Parking lots, for instance, are sometimes able to share capacity information with arriving drivers.

“Digitizing the curb” to give commercial drivers real-time parking availability and load-zone information could reduce their ‘cruising’ time by nearly 30%, according to an Urban Freight Lab study.

However, the business case for cities to invest in these technologies is not clear, Goodchild explains. These technologies tend to come with high costs to install and maintain—with damage, vandalism, and theft as ongoing concerns.

In addition, “there are some practical challenges to most of these technologies—including their accuracy in varying conditions—that need to be addressed and worked through” before cities likely are ready to invest in them, she says.

‘Messy’ challenges and the importance of flexibility

Parking challenges aside, urban deliveries are still anything but efficient or straightforward. In fact, these drivers spend approximately 80% of their time outside the vehicle.

“Drivers have to find the package in the back of the truck, navigate the curb with their dolly, find the door, get the right code or the key, take the elevator, and find the right person to sign for the package,” Goodchild says. Trying to solve those out-of-vehicle challenges is “messy,” she adds.

Precise coordination and execution from multiple parties is necessary to manage congestion and parking challenges, but even then “urban logistics will never be perfect,” says Granieri. “As a carrier, we can plan for the base case and prepare contingency plans, but in reality, once the dominoes start to fall, plans need to be flexible.”

“Logistics employees, especially those with experience in urban settings, are accustomed to adapting to the many variables that affect their day: delivery restraints, parking restrictions, suboptimal delivery windows, appointment requirements or drastic changes in traffic patterns at a moment’s notice—all to end up having to pallet jack the freight multiple blocks to the final destination,” he adds.

Ultimately, the biggest challenge is “executing on the plan and staying flexible when the plan is thrown out the window, so all parties are as satisfied as possible, day in and day out,” Granieri says.

Ongoing innovation efforts

In urban logistics, companies are increasingly focused on innovative solutions, particularly tech-driven tools, to streamline the final mile—or even the last 50 feet—of the delivery process.

Drones and other robotics are among the tools being considered. Urban environments are especially difficult for robotics delivery solutions, owing to inconsistent infrastructure and a general unpredictability about the conditions in each area. Regulations related to drones are a major obstacle for expanding their use in urban logistics. E-bikes have promise, however, as impactful tools in large cities where parking and traffic can be especially difficult.

Urban areas often present obstacles that divert deliveries onto inefficient “unhappy paths,” Bryant adds. However, leveraging data helps prevent future deliveries from following the same inefficient routes.

Route optimization software also helps enable delivery drivers to take the most efficient paths. For Jitsu, that means collecting end-to-end data throughout the supply chain to refine operations and better handle urban logistics.

“If, for example, we get an incorrect access code, we’ve incorporated mechanisms to be able to correct it, and then call up the correct code for the next delivery,” Bryant says. “Or if we’ve got some particularly challenging addresses where drivers may accidentally find the wrong location, we have ways to dial in that geocode so that the next drop-off can be successful.

“We leverage all the data from delivering tens of thousands of packages daily to be able to consistently respond to challenges,” Bryant adds.

There is also value in considering alternative plans such as off-hour deliveries. “Many cities provide off-hour parking locations if a receiver is willing to adjust their hours to later than 7 p.m.,” Granieri says. “Designated receiving areas with less congestion help reduce the overall cost for everyone, and offer environmental benefits.”

Americans, in particular, have grown accustomed to home delivery, making them less likely to embrace solutions such as lockers or pickup at a physical store, which could boost efficiency.

“We got used to receiving packages at our doorsteps, and it’s hard to beat that,” Goodchild notes. “But we are looking at opportunities for alternative services. It probably won’t be in the suburbs but in dense urban markets where home delivery is inconvenient and customers might be willing to try something else.”

“Headlines and hype” can accompany some innovative solutions for urban deliveries, such as automation, drones, micro-hubs, and e-bikes, Granieri says.

“Promise exists in each of these solutions for a specific subset of urban deliveries, but none are a cure-all,” he notes. “Freight is a people-driven business, and it will take the right people to manage these challenges and coordinate their solutions.

“If you receive freight in an urban environment, you are aware of the many variables that affect how freight is delivered,” he adds. “Whether the delivery comes on a sprinter van from a micro-hub or a Class-8 tractor-trailer, having a person to speak to and receive updates from drastically improves the experience.”

Bringing inventory closer

Another key challenge to urban logistics is dispatch location. Origin points for last-mile deliveries differ depending on their location.

“Urban areas typically have less land, and it’s more expensive than in a suburban area,” says Chris Marti, senior director of business development for Atlanta-based FORTNA, which offers warehouse optimization, design, and automation services. “In suburban areas, businesses are more likely to build larger facilities and ship deliveries directly out of them.”

In dense urban environments, however, limited space changes the equation. “The only land available often can’t support a large distribution center, so we’re seeing the rise of smaller micro-fulfillment centers,” Marti adds. These compact facilities help facilitate last-mile deliveries efficiently by leveraging multiple smaller spaces across urban areas.

The density of cities helps allow for expedient deliveries, but the faster the speed the higher the costs. That’s because it becomes more difficult to queue up other orders to be delivered in the same area during the same time window, preventing consolidation of deliveries and leading to more trips.

“Shippers make moves either by using third-party logistics providers, which are aggregators of volume, or by placing their inventory closer and closer to the edge of the urban area so they can service major cities with much quicker lead time,” Bryant says. “Having that inventory closer helps with the speed.”

In fact, the best opportunity to make urban logistics more efficient and cost-effective will be creating additional micro-hubs that are located close to city centers, according to Marti.

“The biggest focus will be on that micro strategy,” Marti says. “Companies will see who can get closest to the customer because that reduces their transportation costs. The closer they get, the better coverage they get—and the lower their transportation costs.”

A. Duie Pyle is also a proponent of building consolidation centers outside of urban areas to provide the greatest overall benefit for urban logistics operations.

“The whole industry needs to work together to eliminate the number of delivery vehicles in urban areas, especially during peak hours,” Granieri notes. “Using freight consolidation centers that perform advanced receiving outside of urban areas and then deliver into urban areas in off-peak hours seems likely to be the most thoroughly beneficial solution for everyone.”

The power of policy

The difference between identifying solutions for urban logistics and implementing them is stark, and there is a need for all stakeholders in the freight industry to collaborate to achieve mutually beneficial initiatives.

“We need a shift in urban planning at the policy level,” Granieri says. “Shifting to off-peak deliveries and utilizing consolidation centers can reduce congestion, but it comes at a cost. Someone has to pay for the additional handling, security screening, appointment setting—everything entailed in an optimal final-mile operation.”

To prove the concept, he adds, would take one building willing to adjust the way they receive their freight. “That could prove to be a game-changer for that neighborhood, and eventually the whole city,” he says.

Private businesses should not be the only ones working to solve urban logistics challenges, particularly as it relates to positioning products closer to city consumers.

“The public sector should think about how we can support that,” Goodchild says. “Some of the challenge is land use. It can be hard to put what’s classified as warehousing in a commercial district.

“We need to upgrade our land-use codes,” she says, “as well as the way we think about the use of space.”

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