Micro facilities

Micro-hubs, sometimes called “micro-distribution facilities”, “micro-consolidation centres” or “micro-depots”, are last mile consolidation and distribution nodes, located in or next to urban neighbourhoods.

Last update February 23, 2022 by Heleen Buldeo Rai.

Next to local storage of consumer goods, micro-hubs are mostly used for cross-docking vehicle loads from one vehicle to another. Because of their location, they enable the utilisation of environmentally-friendly transport modes, such as cargo-bicycles, electric vans and pedestrian transport, which have shorter travel ranges than conventional diesel and petrol delivery vehicles (Katsela et al., 2022).

Kim and Bhatt (2019) illustrate three distinct micro-hubs uses: independent (i.e., each company does its own deliveries from its own micro-hub), shared (i.e., each company does its own deliveries from a shared micro-hub) or consolidated (i.e., one company makes all the deliveries for all companies from its own micro-hub).

Locating a micro-hub is an important tactical decision in the micro-hub planning process. The outcome of a facility location choice needs to minimise operational costs and difficulties for stakeholders, while satisfying regulatory requirements and community concerns. Katsela et al. (2022) list several locational parameters, which are weighed against logistical conditions (e.g., vehicle distance travelled, speed, cost, fleet composition):

• variables for demand (e.g., residential demand, commercial demand, employment density);

• infrastructure considerations (e.g., pedestrian infrastructure, bicycle infrastructure, road classifications, pedestrian zones, traffic-calming measures); and

• land-use restrictions.

Buldeo Rai (2021) lists the conditions for micro-hubs used for deliveries. In terms of supply, roads around the micro-hub require access for trucks; a 20 to 25 metres turning area with a slope of less than 12%, allowing trucks to turn; and attention to aesthetic and noise considerations for the neighbourhood. The micro-hub itself requires access via ramps that can accommodate a truck, as freight elevators impose more technical maintenance and risk; a minimum height of 3.5 metres; a higher load capacity for storage activities; and access to welfare facilities, ventilation and natural light, a safe environment. Requirements are less stringent in terms of delivery, although the slope to exit in underground spaces is important to consider when using cargo bikes. According to data from La Poste and Amazon, one truck supplying parcels to a micro-hub translates into 50 to 60 cargo bikes. Between 10 to 15 electric vans are estimated per 1,000 m² for urban logistics.

In the City of Paris, some micro-hubs are already operational for years, with Chronopost’s transformed underground parking spaces “Concorde” and “Beaugrenelle” as examples. Other micro-hubs disappeared, such as the ones from Geodis’ “Distripolis” project. Nonetheless, it is this type of logistics facility that surged most in Paris in recent years. Making use of existing buildings, they serve logistics activities in spaces between 500 and 5,000 m2. Next to former car parks and garages, also used are offices, train stations, stores and storage places. For the delivery of fresh and frozen products, Chronopost inaugurated in 2018 a 4,000 m2 logistics facility in the basement of an office building.

Some developments are hybrid, in a temporary or transitory sense. The first is exemplified by an experiment of “time-sharing”, in which Amazon and Chronopost use bus terminals for cross-docking e-commerce parcels when buses are out on rounds. The second is employed by bicycle delivery company Swoopin, which looks for short-term rental contracts in sites that are waiting an authorisation for redevelopment. In this way, they are occupying several facilities for cross-docking activities, with the advantage of lower rents. Other developments are mobile, such as UPS and Stuart using trailers that are placed in public space.

In the shadow of the ring road in Paris’ 19th arrondissement, Sogaris together with architectural firm SYVIL, has developed an urban logistics facility, called “P4”. In a space that was previously lost to the city and its inhabitants, delivery company Ecolotrans occupies the nearly 800 m2 space for its last mile logistics activities. CNG trucks are unloaded early in the morning by a team of about thirty employees, who then supply the north of Paris with small electric vehicles or three-wheeled bicycles.

In the United States and Canada, a company called REEF creates neighbourhood hubs for goods and services from parking spaces. They currently dispose of 8,500+ locations, also their presence in Europe is growing. By transforming underutilised urban spaces and what they call “the power of proximity”, REEF provides services for retailers, logistics service providers and restaurants.

In their proposal to improve the quality of life in Toronto, and other global cities by extension, Sidewalk Labs (2019) designed a 24-hour neighbourhood freight system able to reduce the negative impact of urban goods transport. Their plan is visualised in the figure below and centres around a hub located on the perimeter of a neighbourhood. Using automated locker banks, autonomous delivery dollies and a system of underground tunnels, the hub coordinates all deliveries including waste while managing services for borrowing and storage as well.

The concept of micro logistics emerged in the United States, where it was first developed by the pharmaceutical industry. Facilitated by vertical modular solutions, automation and robotisation, micro logistics serves as a way to improve the productivity of picking operations. Under the impulse of online retail giants such as Amazon, Google and Walmart, such technologically advanced micro logistics facilities emerged in cities as well (Chasle, 2020). In this way, it follows the urban warehousing phenomenon that is being developed in the United States and beyond.

In fact, tiny logistics facilities have been found for many years in Asian cities, often constituting not more than a garage space. Chinese start-up Missfresh owns more than 1,500 mini-warehouses and would be on the verge of raising 500 million dollars, according to Bloomberg (Dekonink, 2020). Extreme prices and the scarcity of land are pointed out as the two key factors. Research on urban and suburban logistics in cities such as Tokyo explicitly includes facilities with floor areas as small as 400m2, a lower threshold than the one used in similar North-American or European research initiatives (Sakai et al., 2015).

Amazon Prime hubs are among the most well-known examples of micro logistics. The table below shows a selection of urban logistics developments in Germany (Bulwiengesa, 2017). Yet Amazon is far from the only one interested. As the pandemic has created a surge in online consumption, urban warehousing is considered a key trend for the future, with rising prices as a result.

Rents for 2015 are noted by CBRE: globally prices range from €80 to €140 per square metre per year for high quality buildings, parcel hubs that are less adapted and further from cities can be limited to €50 per square metre per year but can reach €150 per square metre per year for the best adapted premises. The average rent for inner and outer rings in 2015 was €96 per square metre per year. For renting well-located logistics spaces within Paris, CBRE notes even €200 square metre per year (Boïco, 2016).

According to 2020 data, logistics warehouses in and around Brussels record rents of €55 per square metre per year (Verledens, 2020). Before the pandemic about a fifth of Prologis's warehouse construction was for e-commerce, while the share is now as high as 40% (Economist, 2020). Despite the environmental benefits that are associated with placing logistics real estate in cities, architecture professor Nico Larco found appropriate regulation and neighbourhood support lacking (Soper, 2020).