Sustainable and Efficient City Logistics

Abstract

This article is discussing the basic trend and challenges in city logistics operations. The role of each actor in city logistics has been highlighted. The actors have enabled city logistics to generates the main benefits for the city logistics operations need to focus. Critical trends and challenges that contributed towards city logistics development has shown that city logistics efficiency need to be addressed to ensure sustainable impact to the cities. Different approaches in making the city logistics operations were implemented to ensure that the customers get their possession according to the stipulated time. The usage of new technology has also assisted in enhancing the efficiency of city logistics deliveries. By providing the right strategies, the objective of achieving sustainable city logistics can be obtained.

1. Introduction

The city logistics has become an important development in urban freight development. With the numbers of trucks keep on increasing, the congestions become much worst and the environment also become deteriorate. City logistics enable to achieve the efficiency of delivery system in the city center. One of the main focus of city logistics is sustainability. Green logistics and reverse logistics are the main focus of the concept. City logistics need to serve varieties of customers which stays in different kind of environments. Other types of facilities available in the cities also need to serve. The complexity of city environment has made the logistics services much more complicated and difficult to arrange [1]. Delivering perishables item to the city center would require the delivery being done in a short period of time. Frequent and adequate delivery services must be made available to ensure that the citizen can be served properly. Logistics delivery in the cities need to adhere to the restriction of truck movement during a specified time. Even though such regulation may restrict the delivery process, but it needs to take into considerations for the logistics delivery to be much more efficient and effective. City logistics have to plan strategically in order to achieve the economic gain in sustaining the environmental aspects of the cities.

In 2020, the urban world populations are 56%. More than half of the world populations is residing in the city area. Almost 68% of the upper middle-income group is staying in the urban area. European Union enjoy among the highest population in the urban area with 81% of its populations. However, in developing countries, the populations that lives in the urban areas is around 35–45% of the populations are residing in the urban areas. The world bank data shown that many people are preferring to stay in the urban area hence the city logistics has become important to fulfill the needs of its residents [2]. The rapid growth of cities in the world has contributed towards the increase challenges in logistics operations. It was argued the big cities population has made the logistics operations much more difficult than other cities [3].

2. Actors in city logistics

Actors involve in city logistics can be categorized as follows: (a) shippers, (b) freight carriers, (c) receivers (d) residents, (e) other road users and (f) administrators [4]. The actors can be further divided into private and public sector. The public sector usually is the government administrators either the national or local government. The shippers, freight carries and residents can be considered as the private group [5]. Each of these actors has their own interest and responsibilities. There are differences between these actors and it need to be considered in planning for the city logistics activities. Shippers can be categorized as retailers, wholesalers and manufacturers. Shippers would require a high frequency of deliveries in order to meet the objectives of the company. In order to meet the objectives, shippers would require a quality service from the freight carriers. Shippers would inform the required delivery time however the service providers would determine the timing and routing for the delivery. The service providers need to consider many factors especially the delivery windows set by the receivers and also to adhere any restrictions imposed in the city center. It is a complex task for the service providers since they have to fulfill the needs of both suppliers and also the receivers [6]. The service provider would focus on reducing the operating costs while making any delivering and collecting of cargo in the city center. Even though obtaining a high profit might be the main objectives of services providers, they would not compromise with the service quality provided to their customers. The citizen who stays in the cities would definitely would like to experience less trucks operations in the city thus would be able to reduce the congestions and also the pollution in the cities. The citizen would love to control the externalities for a sustainable city. The receivers would set an agreement with the service providers in determining the time for delivery to their premises. The main determination of the receivers is to receive the goods on time, with reliable, cheap safe and door to door service. The government need to establish policies that not only acceptable to the citizen but also to the shippers and also service providers. The government have to consider all the actors before implementing those policies since it would have impact to the actors. On the hand, the actors and the government involve have to work together to ensure that the city logistics operations would be at the acceptable level of service and costs, so that it would remain competitive and also sustainable for the cities. Addressing the environmental impact such as congestions and pollution need to be the main concern of the actors in ensuring a sustainable city logistics operation.

The main focus for every actor in relation to the city logistics are totally different form one and another since every approach taken have contribute to the logistics activities [7]. The public sector main focus would to reduce the pollution, congestions and also to improve the road safety in the city centre since many freight vehicles moves in the city [8]. The shippers would focus on service efficiency and reliability [9]. As for the receivers in the city center mainly would like to have a comfortable and sustainable living environment with less hassle in moving in the city. The freight carriers need to reduce the cost of the deliveries and at the same time developing new distribution network for more efficient operations [10].

With the different stakeholders in the city logistics operations, it is important to discuss the objectives while planning for city logistics operations. The objectives can be divided into (a) public objectives and (b) private objectives [11]. The public objectives are concerned in ensuring the public needs are being taken care and the city logistics operations would affects their quality of life. The public objectives also looking into the economics sustainability. The private objectives which usually covers the need of the shipplers and service providers would be focusing on the operations efficiency and also ensuring the they would be albe to increase their profits. The different objectives have made it difficult to developed a policy which would fulfill the interests of all stakeholders [12]. To develop the right strategies, all the stakeholders have to work together in finding and implementing strategies that would benefits all stakeholders. They must be involved in every stage of strategies development so that whatever understanding and concern they have can be embedded in the strategies. By working together, the public and private objectives can be comprehended to ensure the urban mobility environmental sustainability and economic sustainability can be achieved. The stakeholders have an effect towards each other. Hence it is critical to ensure the balance between the different requirement of each actor.

3. Trends and conditions of city logistics

3.1 New platform in commercial business

The development of e-commerce has changed the supply chain than logistics design in the city. Before e-commerce, the turnover of inventory is longer and can easily be predicted. E-commerce has changed the expectation of the receivers in the city center. E-commerce has changed the way for the traditional retail business to increase their profit [13]. It has also urged the retail company to sought for a new and more dynamic business models in order to their business to be more sustainable. UNCTAD estimated e commerce sales at $25.6 trillion in 2018, increased by 8% compare to the year 2017. The development of digital business and solutions contributed towards these figures. The biggest countries with the highest sales in e commerce business are the United States of America, China and United Kingdom. From that figure the e commerce value for B2C e commerce sales was $4.4 trillion which representing 17% of the total e commerce sales. Compared to $1.9 trillion in 2014. It was estimated more than 1.4 billion people shopped online and it comes from all parts of the world [14]. With these numbers, it has become very much more critical for the citizen to be more involve in determining the city logistics concept in their respective cities. Price, quality of service time and other quality aspects need to be focus especially for the last mile delivery in the city center [15]. With the current trends, it is expected the last mile delivery to consumes residents will become very much more important comparing to the delivery process to the retail outlet in the city center. Small parcel delivery will be more significant with the need to have small trucks, van or motorcycle for deliveries and more frequent delivery would be the new trends in last mile deliveries.

3.2 Timely delivery

Quick and fast delivery has become critical and the service providers need to adapt to the changes of the supply chain, Many service providers need to offer 1 day delivery service in order to fulfill the customer requirements. Operational excellence has become important in supporting the ecommerce development. The logistics services need to be closer to citizen population. The traditional logistics services need to change to be more dynamic to service the citizen [16]. The traditional supply chain would deal with a longer inventory replenishment. With the younger generation dominating the cities, more online shopping has occurred and they really needed the quick and fact delivery from the service providers. With many cities has increase the speed of its internet connection, the online shopping also has increased gradually [15]. The last mile delivery is made either to the home of office of the receivers. This has made the service providers need to delivered the goods to different buildings and environments which has required them to change some of the traditional delivery methods.

3.3 Economic view

The development of technology and apps has made sharing economy become an important element in city logistics development. A shared economy model allows consumers to share creation, production, distribution, trade, and consumption of goods and services [17]. The main element in economic sharing is mutual cooperation. With the development of digital approaches especially with the introduction of apps, it has allowed everyone to be connected which enable them to share either service or products. E-hailing and p-hailing (parcel hailing) services are the examples of economic sharing model which has so successful for the past 5 years. The users use the platform to orders a service from a supplier or food provider and a third party perform the delivery which being chosen from the app’s platform itself. In some occasion, the services can be share between different users for split the cost of using the services [16].

Two important differences in performing the sharing economy model are collaborative consumption and collaborative business [15]. Collaborative consumptions is a process where people share the access to products or services without having to own the product or services. This can be done by using the platform provided by the internet. In other perspective Collaborative consumption can be defined as the peer-to-peer-based activity of getting, providing, or sharing the accessibility to goods and services, through a coordinated community-based online services [18]. As for collaborative business, it focusing on sharing the same infrastructure and services with its competitors. Again, with the usage of technology, the logistics providers are able to share any available assets and capacities among the competitors in order to give more options to the customers [19]. Sharing of resources would need a greater requirement for consolidation of goods and this will enhance the percentage of capacity utilization. This sharing concept can reduce the number of cargo movements, number of fleets required and also to reduce the empty leg journey between the participating logistics providers. The new economic concept would base to the on-demand concept and efficient usage of internet will allow to match the demand and supplier in more effective manner. The concept of making the service to be available instantly can be achieved [20].

The firm involving with the total supply chain have to alert with the new trends that might be available in the near future. Since the Covid 19 pandemic in the beginning of 2020, many new trends have taken place. Pharmaceutical product such as self-test kit for detecting Covid 19 has become a critical product in many cities and countries. To ensure the sustainability of the city logistics operations, aggressive information collection on the new activities that has an impact towards the customer buying behavior have to be identified. The new buying behavior would be the new trend to ensure the sustainability of city logistics services. Failure to understand the new trend in purchasing power of the customers, would delay the improvement that city logistics operators need to implement. Hence it would affect the sustainability of the city logistics operations itself.

4. Challenges of city logistics

Cities all around the world needs to protect the sustainability of its cities. The logistics regulations and polices implemented usually would be looking into solving these challenges which are environmental sustainability, social sustainability and economical sustainability [6]. The environmental sustainability is on air pollution, social sustainability are the fatalities, noise road safety and economical sustainability is about unreliable services and delivery delays. Improving the efficiency for the goods movements has been the main focus of city logistics. City logistics has an affect towards the citizen living in the cities such as accidents and pollutions, the service providers which reducing their revenue because of the restrictions of movements and the world, based on the contribution of transport to global warming [21]. Restrictions on trucks in the city center has been one of the most effectives ways to reduce the challenges in the city. The restrictions are seen as the best way to reducing number of trucks during the peak period hence would help in alleviating the pollution. It has also avoided the trucks to compete with other modes in using the limited space available. However, this restriction has also impeded the trucks operations which would jeopardize the service level of the service providers hence would affect the delivery time to the citizen.

The last delivery to the receivers is known as the last mile delivery. Apart from the sustainable challenges, city logistics also need to deal with the last mile problems. The receivers might receive many deliveries per day. This would create a difficult delivery process. The receivers may receive its goods from several vendors, if consolidation between vendors can be done, it would reduce the number of deliveries to the respective receivers. Restrictions on deliveries has also created many challenges in city logistics operations. Many receivers would not approve if the deliveries to be made at night, thus this would increase the number of congestions during peak period during the day [22]. If the receivers are at home, the delivery might be inefficient since the delivery involve small parcels. However, with the development of ecommerce, small parcel deliveries have become very much critical.

The most crucial challenges in city logistics are the restrictions that have to be obeyed by the logistics service providers. The focus is to ensure the effective movement for the last and first mile delivery [23]. A lot of rules, regulations and restrictions need to be adhered by any service providers. Failure to fulfill these set of regulations will affect the city logistics deliveries. The regulations would different from one city to another [24]. However, the comments challenges are the window for making the deliveries, green zone area, predestination or active transport zone areas and much ore. This would make some destinations not accessible for the service providers. To ensure the last mile deliveries can be performed efficiently, the service providers need to consider the diversity of the receivers in the city centre. Different types of houses, office locations and industrial areas has enhanced the complexity of deliveries [11]. The last deliveries to the inner cities have become very much difficult due to the restrictions and it requires small parcels to be delivered more frequently in order to fulfill the demand.

The main challenges in providing city logistics deliveries are to ensure that the unsustainable impact can be minimize. However, transport and logistics has always been known has a negative impact on sustainability aspects. The negative impacts usually go the environmental issues. The environmental issues lie on people, profit and planet [11]. With many actors involves in the city logistics activities, many conflicting decisions on its operations may arises. Traffic congestions, pollutions and noise might have a severe effect on people in the cities. The restrictions on regulations for the deliveries will have an impact towards the efficiency of deliveries which will reduce the profitability of the service providers and the planet will be affected through the global warming and pollutions [25]. The diversity of actors in city logistics operations has indicated the differences on the needs of each actor in making the cities more sustainable. The administrators’ main objective is to develop and maintain a livable city. Reducing the traffic congestions, reducing the air pollutions and reducing the noise level are the main target of the administrators. So, the regulations and restrictions implemented is to achieve the objectives. As for the carriers and logistics providers, their main objective to ensure the delivery of products can be done as efficiently as possible. They need to plan the deliveries according the regulations and restriction imposed by the administrators of the cities. With different regulations in different cities, the utilization of the capacity of the vehicles used may have an impact towards planning the delivery operations. Hence, the cost of delivery also may increase [26, 27]. The shippers would definitely need their product to be delivered on time since this will enhance the image of the shippers. The receivers of the city logistics service would require a reliable and efficient logistics service providers to delivery their products but with a minimum disruption to the environment. The other residents need to have a city with less pollutions and acceptable noise level from the transport that make the deliveries.

Another main challenge in city logistics is to understand the changes in consumer behavior. It is critical to understand consumer behavior since it consists of how the consumers choose and set priority on the products or services they consume. With the e-commerce has become an important trend in city logistics, it has increased the globalizations aspects of products that reach in any cities. Technology and the internet have changed the consumer behavior. Ordering process can be done at any time and any place [28]. The deliveries are expected to be done as quickly as possible. Thus, this has made the increase of demand which requires a flexibility in supply of the product. The e-commerce has demanded a new distribution channel and the last mile distribution has become very much complex and need to handle in effective manner. The number of parcel delivery logistics companies has been increasing since the rapid development of the usage of internet. This has also changed the type of product being delivery through this company. Food and groceries have been included in the last mile deliveries of city logistics which previously more focus on books, clothing and appliances.

With these challenges, the city logistics need to ensure that the policy that supports the operations of the trends need to be available. The administrator of the cities needs to carefully plan the type of policy that have to be updated. In certain situation, some new policies might need to be introduced to ensure that the city could support the new trend development. For the city to be sustainable, new logistics operations approaches have to be in place since the new trends might require a fresh type of logistics handling. The sustainability aspects are not only for the city logistics operators but also for the receivers benefits since the operations of city logistics would depends on the continuous buying from the receivers in the city center. The policy and regulations need to benefit not only the city logistics operators but also to the receivers. If the receivers are not satisfied with the services provided, repeat purchase might now happened and it would affect the sustainability of the city logistics operations.

5. Facilities in city logistics

Logistics facilities can be categorized as any buildings that is used for storage and warehousing activities. These facilities need to have a good accessibility infrastructure, in order words the buildings need to close to transport infrastructure. As for city logistics, it needs to be close with road network [29]. With the rapid development in city logistics operations, the density city of the warehouse is varying. It could be a huge building to a small office just to cater for a specific area for deliveries. The huge warehouse facilities usually located at the outskirt of the urban areas. This would enable the sorting and consolidating activities to be conducted. Then the service providers would establish a smaller office for the delivery of the specific locations. The hub for these areas has been developed in order to have a more effective delivery system [30]. The hub and spoke concept have been one of the concepts for the delivery process. Figure 1 illustrate the hub and spoke concept for the delivery in the city center.

Figure 1.

Hub and spoke concept for city delivery.

The main different these hubs facilities are the size of the hub. Since city logistics would require delivery to houses and offices, the last mile deliveries usually would focus on van or motorcycles. The deliveries from the hub and the city hub would be done by trucks. The city hubs would be located at the outskirt of the cities. It would help the hub to determine the right city hub to be delivered to [1]. Parcel hub need to be located as close as possible to the receivers. Since it is located in the city itself, the parcel hub usually would small in size due to the cost of land or owning the building.

Smaller local distribution centers like the parcel hub can ensure the receivers to get their cargo faster and efficiently. Based on the Figure 1, the last mile delivery from the parcel hub to the receivers would be the important link to complete the supply chain. The last mile delivery has become more varieties nowadays. The last deliveries are no longer to house of office premises, but there are also box facilities which can be located strategically. The box facilities or also known as parcel lockers could basically a short-term solution for the delivery to be made to places where the receivers are not available at a particular time The box facilities can be located at strategic places such as petrol stations or supermarket nearby by to the residents’ houses. This would definitely reduce the problems in the last mile deliveries [31]. These boxes would enhance the contactless deliveries especially during the COVID 19 pandemic since its outbreak in end of 2019. However, the use the boxes facilities, the logistics service providers need to informed the receivers. The main communication tools would be through the mobile phones which and application (apps) can be developed for the communications between the relevant parties. Self-pickup points from e-commerce purchases have also become very much common nowadays. Even though it not a new trend in delivering products, this would reduce the number of products not being delivered. The self-pickup point also should be located near to residents’ populations [32]. With the growing numbers of self-pickup points, the logistics service providers need to ensure that the mobility and accessibility of the self-pickup points so that the delivery can be done efficiently. In countries such as Germany and France, almost 20% of parcel deliveries, 91% of the populations have the access to the self-pickup points within 10 minutes of their houses [28].

6. City logistics: moving forward

The city logistics efficiency would highly be depending on the efficiency of the last mile delivery. The receivers in the city need to have quick, easy services and the service providers have to fulfill these requirements to remain competitive in the industry. The usage of the latest technology has been seen as one of the tools for the service providers to have competitive advantage in the business. The technology enables the service provider to obtain as much relevant data as possible and analyze the data in order to make improvements in their services. The big data concept has help service providers to understand the requirements of the customer much better. Technology would enable receivers to enjoy real time tracking information, monitoring the movements of cargo, can receive information if delay occurs and other relevant information which would make the receivers feels that the cargo is always with them all the time [16]. New services can be introduced by using technology for examples crowdsourcing from drivers can be done and this would assist small companies to compete with huge organization.

As the main objectives of city logistics is to remain the sustainability of the city, a few strategies can be implemented to help to sustain the environment. Introducing a specific requirement on type of trucks that can operate in the city center can be one of the approaches [21]. Trucks which fulfill the requirements will be given some identification so that they can operates in the city center. Apart from that developed specific regulations to manage urban freight movements should be in place. By managing the urban logistics, freight deliveries can be effectively rather than implementing strict restrictions for the deliveries. New zoning system can be incorporated to manage the freight deliveries. Locating the right locations for urban distribution center and also parking area can assists the effectiveness of the last mile deliveries. By having pick up and drop off boxes in strategic area, can reduce the number deliveries to houses and also office premises. This means the need of consolidating the cargo need to done and the concept of parcel hub before the last mile delivery process can be done successfully. Another difficult task to perform but will provide good result is encouraging deliveries during off peak period. This means the services providers need to change its operations time. However, this need to be agreed between the service providers and also the receivers. This approach can be effective if the government provide incentives not only to the service providers but also to the receivers as well.

The new strategies in the city logistics, could be more effective and efficient with the introduction of the new technologies to support the changes. The development of IR4.0 has made city logistics very much vulnerable to changes. City logistics need to embrace digital changes for the operations to be very much efficient. It is well known that big data, automation and digital connectivity has become the new crucial way in performing excellent city logistics operations [16]. The acceleration of cargo volume, velocity, the differences in real-time data which continuing very high important information has become the main focus. With this acceleration, the need to change all the data in meaningful decision making has become a reality and a critical technological enhancement to improve city logistics [33].

City logistics requires innovation in delivering and receiving of cargo if the new strategies implementation to be successful. A synchronous movement of cargo by separating the delivery time from the time cargo receive by customers. With development of IR4.0, automated and autonomous delivery system in the city logistics operations has been developed rapidly. The delivery by using drones, droids and automatic vehicles has been connected with automation efforts. Drones has been one of the latest approaches in making delivery in the city environments. It has been proven that drones are able to reduce the C0₂ emission in the city center [34]. However, to make drones delivery very much more practical, and integrated movement between road vehicles such as van and small trucks would enhance the efficiency of city logistics delivery since drones can be used for the definite last mile delivery. Even though drones can be seen as an interesting way of performing the very last mile delivery, there a few challenges that the drone’s operators need to overcome. One of the problems, drones could be efficient for a very small package delivery. Ina research study, a number of 16 drones are needed to make a delivery for a van operation. Apart from that, a minimum space for landing and take-off must be available at the receivers’ locations. If the receivers live in high rise apartment, this space might not be available. Other issues also need to adhere such as the security aspects, noise pollution, changing the current air space regulation and difficult to operation during bad weather could jeopardize the efficient operations of drones [35].

Apart from drones for the last mile delivery, many firms have the initiates to introduce road base autonomous vehicle deliveries or AVs. Many studies have been conducted to deliver different kind of product from pizza, grocery and medical supplies. Many types of AVs have been develop [36, 37]. These new delivery systems are estimated to reduce the delivery costs by 50% also and reduce congestions by 4% since the AVs are able to provide with better driving attitude with a good navigation system [38]. The usage of robot has also been another new technology alternatives in making deliveries. Is has also reduce the number of environmental issues, Congestions and also the delivery cost.

All the new digital technology implemented for making last mile delivery has shown that it will help to make the city center more sustainable. Air pollution, noise pollution, congestions and also cost of operations has been indicated can be reduced by using these new technologies. However, the initial cost of capital needs to plan so that the cost is not too expensive for the operators and firm to invest since it would attract more company to invest on the new digital system if the initial cost is not too high. This would be crucial for cities that are located in developing countries since capital investment will be one of the important criteria to make the investment decision, even though the system will benefit the firm operations in the long run. For the automation to successfully implemented in the city logistics operations, the development of internet of Things need to in place. IoT would enable cloud computing, artificial intelligent and data collection to assists the city logistics operations. These new technologies would ensure the real time information analysis can be further used in city logistics operations [39].

A new concept in introducing Interconnected City Logistics has the aim to improve economic, environmental and societal efficiency. The concept of Interconnected city logistics is supported by the physical internet. Physical Internet is aspired by the internet itself where information and communication technology help data to travel as quickly as possible. Physical internet is developed by redesigning the logistics activities which suites the efficiency and sustainability challenges [40]. Interconnected City logistics is focusing on nine core concepts. These concepts need to synthesize with the digitalization to make is more successful. The core concept is [41]:

1. cities as nodes of the world’s logistics web

2. cities by system standardization

3. the multi-faceted activities of city logistics

4. city logistics networks in a city web architecture

5. the multiplicity of urban logistics centre

6. city logistics stakeholders into an open system

7. goods through modular logistics containers

8. people mobility and freight logistics in the city

9. city logistics with urban planning

One of the tools to ensure this concept is successful implemented is the usage of internet of things. Digital platforms need to be available to ensure that the connectivity is efficient which would assist in making better decision regarding city logistics delivery in the digitalization era.

7. Conclusion

Sustainable city logistics has become a global challenge. A good operations and management of city logistics has been a great important in many cities. Rapid growth of the population, increasing online business and more complex logistics demand had contributed to the enhancement of city logistics challenges. The development in social, environmental and economic has also contribute towards the city logistics activities. The new trend and challenges have challenged the capabilities of the city logistics providers to meet the new demand from the customers in the city center. Last mile delivery has undergone new changes and local parcel hub has become more desirable for deliveries since the receivers are not at home especially during weekdays delivery. The need to cater for the new demand has made the logistics operators to be more agile in making the last mile delivery.

With the new developments, new infrastructure and better utilization of space in the city center need to be upgraded. If this focus not been addressed, it would affect the efficiency of the logistics activities such as the, loading g and unloading activities for the last mile deliveries. The implemented of smart technology could assists in enhancing the efficiency of the city logistics operations. Internet of things (IoT) artificial intelligent, drone deliveries and other relevant technologies need to be the important investment for the logistics operators to operate efficiently in the city center. Apart from technology, the collaboration between the actors in the city logistics operators also be the main factors from the success of city logistics.