The number of city dwellers is growing. According to Frost & Sullivan, by 2025 three out of five people will live in cities globally. This in turn will drive a change in supply chain.
As urban populations grow, delivering goods into cities becomes more challenging, and the cost of (last mile) logistics grows. Already over the past two decades, an increase in traffic jams has resulted in expensive logistics bottlenecks and greater pollution levels. The cost of congestion today in terms of time wasted in traffic and fuel consumption is estimated at almost 200% more than it was in the 1980s.
As cities grow, people will change the way they shop. Many will leave their cars in favor of public transport and do their shopping online. This will create a shift in the supply chain that is already being felt today. Previously, one distribution center delivered to a retailer, and customers went to the retailer to purchase goods. But today, as people increasingly shop online, one flow has become multiple flows.
This trend will only expand in the future. Currently, an average city dweller from a developed city generates about 0.1 deliveries per day. Assuming the same ratio for 2025, that is a minimum of 500 million deliveries per day. This enormous shift will increase the need for short term stocks and urban logistics centers.
City Logistics: three steps in the right direction
Transporters looking to move to an urban logistics center may benefit from a solution like City Logistics from bpost. City Logistics is a three-step solution for transporters for the delivery of goods on behalf of (r)e-tailers within a city. The first step of this project consists in collaboration with transporters/carriers and building a network with city authorities (including ports, chambers of trade, merchant organizations, etc.). Using City Logistics, goods haulers can drop cargo at a specially equipped depot on the city outskirts and bpost will then make a same-day delivery using its own fleet.
Once City Logistics gets to critical mass, e-tailers and retailers that want to utilize such a solution may benefit from the second step: cheaper stock delivered to their doorstep in a very short time- lapse (in some cases less than one hour). Stores with retail space may benefit from more space in their store as a result. Additional space could open up the possibility of new uses for that space (rent, use for extra activities, extra services for clients, for example).
Finally, in the third step, the final customer will get the best of both worlds: shopping is conducted online, yet the customer still receives products very quickly and can return them effortlessly. It’s like “tangible e-shopping” – a novel and futuristic idea! Next to that, when the customer goes into town by public transport, he doesn’t have to take his purchases with him but receives them very quickly either at his doorstep, in the trunk of his car which is parked outside the city or in a cash & carry system.
Advantages of urban logistics centers
There are several advantages for transporters, e-tailers and retailers that make the shift to urban logistics centers. First, they are closer to their customers, so mobility is optimized and they can deliver to customers faster. That also enables a faster return flow, allowing an e-tailer and retailer to quickly restock and resell items that are in heavy demand.
In addition, the transporter, e-tailer and retailer that leverages an urban logistics center may be considered more “green” compared to competitors that deliver from far-away locations. Urban logistics centers mean less traffic, less pollution, and fewer trucks tearing up the roadways.
As city populations grow, e-tailers and retailers will increasingly need better solutions for delivering goods within them. Fortunately, urban logistics centers like City Logistics can help them consolidate and rationalize existing logistics platforms and create innovative solutions for the future.