A NEW SYSTEM for urban LOGISTICS

Cascading logistics systems

Although several aspects of e-commerce are perceived as “virtual”, the distribution and delivery aspects are vital to successful e-commerce transactions. In other words, distributional consumption is a fundamental characteristic (Rodrigue, 2020).

Last update August 25, 2022 by Heleen Buldeo Rai.

E-commerce is thus understood best from a freight perspective. Instead of using the distribution centre as support structure of a network of retail stores, it becomes the anchor (Rodrigue, 2020). In doing so, some stores become obsolete while others are repurposed as showroom, warehouse or collection point, among others.

Because of its operational characteristics, e-commerce has created a new freight landscape. This term is used to describe the spatial distribution of freight activity and intensity in a metropolitan area (Rodrigue et al., 2017). The “e-commerce freight landscape” has four fundamental impacts on freight distribution, in terms of (1) distribution patterns, (2) logistics facilities, (3) real estate footprint and (4) vertical integration. These impacts imply a pronounced physicality and are summarised in the figure below.

In essence, a hierarchy of specialised logistics facilities has emerged to accommodate e-commerce operations and serve consumer hotspots. Rodrigue (2020) proposes a typology of six types of logistics facilities: (1) inbound cross-dock facilities, (2) e-fulfilment centres, (3) parcel hubs and sortation centres, (4) parcel delivery stations, (5) pickup locations and local freight stations and (6) fast delivery hubs.

The inbound cross-docking facility and the e-fulfilment centre are the backbones of the fulfilment process, accounting for the most significant physical footprint. The sortation centre, a medium-sized facility, is the core of the distribution process, allowing to route deliveries within metropolitan areas and to interface with local post offices. It reconciles the apparent contradictions between the need to service high market density in central areas from low-density peripheral locations. The last mile layer either focuses on fast delivery facilities or delivery stations where parcels are assigned on delivery routes (Rodrigue, 2020). While the former two facilities are large and have a national or international scope, the latter four facilities are considered urban logistics.

These logistics facilities function in a “cascading system” - visualised by the figure below. In this system, the larger regional facilities serve as central warehouses to supply the smaller facilities on the urban periphery, who are then used to supply and resupply the network of small and micro facilities in the inner-city. Such small and micro facilities function as so-called “infill facilities”, stocked only with best-selling items and in support of fast delivery, in for example less than two hours.

Within the realm of logistics facilities in the urban area, significant differences remain in terms of location, size, delivery radius and staff. These requirements depend on the city and its structure, the degree of e-commerce market penetration and the delivery concept proposed by retailers and/or logistics service providers. Several studies propose a typology to classify urban logistics facilities, which are spaces intended to enhance delivery of goods in cities from an operational and environmental point of view (Boudouin, 2006). This optimisation is envisioned in two ways: by breaking bulks into more adapted vehicles and by consolidation volumes into optimised flows.

Typologies of logistics facilities

This section describes these typologies and summarises their main features, including dimension, functionality and location of the spaces. The typologies are classified and summarised in the figure below.

Heitz et al., (2019) and Sakai et al. (2020) identify three functions for urban logistics spaces: (1) cross-docking, (2) storage or (3) both. These functions are reflected in the general typology by Meza-Peralta et al. (2020). Based on an extensive literature review intended to go beyond the European context, the authors propose seven types of urban logistics spaces. In doing so, the authors respond to the diversity of denominations in the literature and the lack of clarity about dimensions and volumes (Meza-Peralta et al., 2020).

The typology proposed by Boudouin (2006) breaks urban logistics spaces down in six categories. Three types of space correspond to the previous typology, three types are complementary: (1) the goods reception point, (2) the urban logistics box and (3) the “mobile” urban logistics space. These categories facilitate end-consumers to collect their orders as an alternative to delivery at home. Meza-Peralta et al. (2020) associate these spaces with “passenger logistics” and therefore excluded.

Apur (2016) and Afilog (2017) introduce complementary typologies of urban logistics spaces based on the French context, with a description of implantation and goods volumes on the one hand and functionality and costs on the other hand. Bulwiengesa (2017) builds on German experiences and adds information on market area or radius, manpower needs and periodicity.

Many challenges however remain to introduce logistics facilities in urban areas. Berret et al. (2019) cite four difficulties: (1) high cost of real estate, (2) reluctance from local residents, (3) scarcity of land and (4) competition from other types of real estate (housing, offices, shops, etc.). More research is also necessary on the spatial (e.g., zoning regulations), architectural (e.g., exterior design, interior organisation), organisational (e.g., ownership) and economic model (e.g., functions, rent values) of urban logistics spaces.

Solutions for urban logistics facilities include constructing new facilities on abandoned or underused areas and reconstructing existing facilities by renovation or recycling. While renovation results in redoing everything, recycling implies reusing the existing. Xiao et al. (2021) discuss constructing logistics facilities on former industrial sites in Shenzhen, while Dablanc (2022) provides examples of reusing underground municipal car parks in Paris. With the slowing growth rate of commercial property sales and the accelerating vacancy rate of commercial properties (Zhang et al., 2016), these types of spaces are also increasingly used for urban logistics.