The surge in ecommerce and urbanization has dramatically intensified in the last couple of years. As a result, there is an increasing need to figure out how to cope with urban logistics and last-mile delivery. Today, cities grapple with significant hurdles like congested road networks, noise, and air pollution. Adding to the challenge, more city residents are opting for online shopping, resulting in a surge of deliveries of hot food and small parcels to urban homes. Consequently, city dwellers are increasingly demanding last-mile deliveries that are fast, reliable, affordable, and eco-friendly.

So, what does it take for urban logistics to meet these challenges? Well, there’s no one-size-fits-all answer, but several key success factors will help us to achieve an optimal solution for our urban logistics. In this article, I’ll discuss 8 important success factors for creating effective last-mile solutions in urban areas. Interestingly, a key ingredient to assure the success of urban logistics and for all supply chains is interoperability. Thus, many of these success factors for urban logistics will include the sharing of logistics assets, collaborating with stakeholders, and sharing information. To sum it up, focusing on any of these eight success factors will offer a great return on investment. So, let’s get started!

1. City Leadership Committed to Advancing Urban Logistics.

Currently, most cities do not plan for logistics unless there is a major event like hosting the Olympics. Increasingly, what is needed is for cities to also plan for logistics infrastructure just as they do for mass transit or smart city / Internet of Things (IoT) initiatives. For instance, this can include funding and incentives for policies and initiatives that promote efficient logistics while prioritizing public safety and wellness.

Indeed, Governments play a crucial role in enabling sustainable, effective urban logistics. This includes offering subsidies for green vehicles, incentivizing shared facilities, and implementing favorable zoning regulations. However, policies must balance logistics efficiency with public safety and wellness, such as noise restrictions and low-emission zones. In fact, many of the same city planning initiatives for smart cities and mass transit also can advance urban logistics to make cities better for its inhabitants. For more on smart city / IoT initiatives, see my article, Smart City And IoT – The Best Opportunities And The Challenges.

Smart City And IoT – The Best Opportunities And The Challenges

2. Increase the Sharing of Information and Logistics Resources Within Constrained Urban Areas.

From a logistics perspective, cities have many constraints to include congested streets and limited facilities such as loading zones and facilities for drivers. Also, especially in high-density residential areas, real estate is expensive. In comparison, most of these factors do not exist outside the city. For instance, there are rest stops for truck drivers, less expensive real estate for distribution centers, and plenty of space for loading / unloading. So, in a constrained urban environment, two of the most important resources for logistics organizations are timely information and access to cost-effective facilities. So, to achieve these goals, urban logistics stakeholders will need to do a better job of sharing information and assets. See below for details.

Types of Shared Information and Resources Needed for Urban Logistics

Emerging Tech For Supply Chain Visibility: The Best Innovations Available Now To Empower Businesses

a. Shared Supply Chain Visibility / Situational Awareness Tech. 

Especially in an urban environment, logistics providers need real-time information. For instance, this includes information about changes in road conditions, access to delivery locations, loading / unloading zones, and any other information affecting the movement of goods.

Further, logistics stakeholders need tracking tools and information so that they have total visibility and real-time situational awareness of the urban environment. Specifically, visibility technology that can help include tracking software, IoT devices, data integration tools, data standards, and data analytics to name a few. See my article, Emerging Tech For Supply Chain Visibility: The Best Innovations Available Now To Empower Businesses for more details.

b. Shared Logistics Services and Facilities. 

Increasingly, there is a need for cities and logistics organizations to work together to identify ways that logistics activities can share resources, facilities, and services. Just as with mass transit, there is a need for an entire ecosystem to support logistics activities effectively.

Now, sharing resources does not mean that cities need to manage logistics activities as is done in many cases for mass transit. For instance, either a consortium of logistics organizations or the city itself could leverage a 3rd Party Logistics (3PL) provider to facilitate the sharing of scarce resources. One major advantage of using a 3PL is because these types of organizations specialize in providing shared services and facilities. For more information on 3PLs, see my article,  What Is A 3PL? Compare Types, Capabilities, Tech, Best Value.

What Is A 3PL? Compare Types, Capabilities, Tech, Best Value

3. Increase Operational Interoperability and Collaboration for Urban Logistics.

Achieving Logistics Interoperability: The Best Way to Breakthrough The Tangle Of Dumb Data Integrations

Fostering partnerships between logistics providers, retailers, and municipalities can lead to more efficient operations. As discussed above, companies can collaborate on consolidated deliveries or on the use of share facilities such as urban crossdock hubs. Additionally, logistics organizations and businesses can work with cities on dedicated delivery windows and loading / unloading zones.

Also, cities, businesses, and logistics organizations need to collaborate to create effective policies, contracts, and procedures. Moreover, urban logistics stakeholders require clear information exchanges, formal procedures, and resource sharing. For instance, business systems and IoT devices generate a lot of data, but it often gets “lost in translation” between organizations and even within departments. To achieve real operational interoperability, urban logistics leaders need to agree on common logistics terms and definitions. This is essential for coordinating and sharing meaningful information. See my article, Achieving Logistics Interoperability: The Best Way to Breakthrough The Tangle Of Dumb Data Integrations for details.

4. Improve Physical Interoperability for Seamless Urban Transshipments.

The Way Of The Physical Internet: Innovative Logistics To Under Cut Costs, CO2 Emissions, And More?

Standardizing containers and handling systems enables smooth transfers between different transport modes. For example, logistics service providers can use standardized, interoperable containers that facilitate seamless movement of goods from trucks to vans to cargo bikes. Also, it is key that these standardized containers have other features such as being collapsible for backhaul and equipped with IoT technology to support logistics visibility and security. 

In fact, this concept of physical interoperability is the vision of a revolutionary supply chain initiative known as the Physical Internet (π). This initiative reimagines the physical movement of goods that promotes both collaboration and interoperability. Currently, there are several large initiatives on-going globally in urban areas to pilot and prototype this exciting concept, the Physical Internet. For more details on the Physical Internet, see my article, The Way Of The Physical Internet: Innovative Logistics To Under Cut Costs, CO2 Emissions, And More?

5. Increase Use of Shared Urban Facilities to Transfer Cargo from Inbound Trucks to Lighter, Emissions-Friendly Transportation.

Establishing shared transshipment facilities such as crossdocks are crucial to advance optimal urban logistics solutions. Indeed, these types of facilities hold the promise of reduced CO2 emissions, efficient use of resources, and improved service levels.  These transshipment facilities will enable logistics providers to transfer shipments from larger trucks to smaller vehicles such as electric vans and cargo bikes. For example, companies like DHL and UPS have set up urban depots where shipments are consolidated for final delivery via electric vans or bikes. 

Also, Governments can help promote the use of these shared facilities by offering incentives such as subsidies or preferential land use. Further as discussed previously, the use of standardized containers will enable the smooth transfer between transport modes within these urban transshipment facilities. Additionally, shared urban logistics facilities like these encourage logistics organizations and businesses to work efficiently, increasing operational interoperability for all stakeholders. 

For a more detailed discussion on transshipment, see this Physical Internet paper,  TOWARDS A PHYSICAL INTERNET, and its depiction of π-Nodes to facilitate the seamless transfer of standardized containers to different modes and carriers.

6. Maximize the Loads on Logistics Vehicles.

The New World Of Package Dimensions: Need High Tech And Expertise To Stay Cost-Competitive

Consolidating shipments and implementing real-time, dynamic routing algorithms can minimize the number of vehicles on the road. For instance, companies can use data analytics to optimize vehicle routes based on real-time traffic and time-slot deliveries. 

Additionally as discussed previously, encouraging the use of shared transshipment facilities can reduce the number of trucks entering urban areas. This coupled with shared standardized containers can add even more synergism to maximize vehicle loads as well as minimize transportation costs and CO2 emissions.

Another way to maximize the loads of logistics vehicles is to reduce the “air” in shipments. This includes maximizing the amount of goods that are packed in both shipping boxes and reusable containers. More and more shippers are leveraging cartonization software to minimize air in their shipment. For more details, see my article, The New World Of Package Dimensions: Need High Tech And Expertise To Stay Cost-Competitive.

7. Reduce Use of Fossil Fuel in Last-Mile Delivery Vehicles.

Reducing the use of fossil fuels is already an objective for many businesses. Further, Governments at all levels are implementing green regulations that affect us all to include logistics organizations. So, transitioning to electric or hybrid vehicles is already having an impact on most logistics activities as a way to decrease emissions and meet regulatory requirements. For example, companies like UPS, Amazon, and FedEx are introducing ebikes and electric vans for final deliveries. Additionally, logistics providers are exploring alternative modes of transport like drones or autonomous delivery robots for select routes.

8. Increase Digital Interoperability to Make Urban Logistics More Proactive, Flexible, and Cost-Effective.

For achieving digital interoperability, two key factors are essential for improving urban logistics. First, stakeholders in urban logistics must collectively work to advance data interoperability. Second, digital IDs for container and shipment loads should be used to unify shipping data. Please refer to the discussion below.

a. Advancing Data Interoperability.

Today, we have a logistics data interoperability problem, not just within urban logistics, but for all supply chains. This has become more of an issue in the last few years because most logistics organizations are in various stages of digital transformation. In fact, many of these digitization efforts are stalled because systems can’t communicate and exchange data effectively. To solve this data interoperability problem three components are needed. See below:

The Three Components of Data Interoperability

• Data Communications Channels. Capability to exchange data between systems and devices. Click here to find out more about methods to transfer data.
• Common Data Terminology to Share Meaningful Information. Supply chains must have standard terms and knowledge frameworks (ex. business glossaries) to effectively assure that the data transmitted is understood. Click here to find out more about semantic interoperability and methods to send data that is understood.
• Method to Achieve Mutual Trust.  Logistics organizations need to leverage digital identity technologies to achieve both confidence in the data exchanged and to trust digital network partners, software agents, and devices. Click here to find out more about digital identity technologies and methods.

So, data interoperability is critical to advance an optimal urban logistics solution. For a more detailed look at data interoperability, see my article, Logistics Data Interoperability: Advice To Make It Understandable, Usable, Secure.

Logistics Data Interoperability: Advice To Make It Understandable, Usable, Secure.

b. Need Digital IDs for Both Transshipment Containers and Shipment Loads to Unify Shipping Data Effectively.

Besides data interoperability, urban logistics needs a common method to ID both containers and shipment loads. This is especially needed in a collaborative environment where different logistics providers will handle shared containers and use shared facilities to transship loads. See specifics below.

• Shared Container Digital ID. As mentioned previously, the use of Physical Internet shared π-containers will require the use of a  permanent, digital ID for each π-container. Ideally, these π-containers will need an IoT device to share data about the container’s location, status, and its ID. This will assure shared visibility of transshipment containers.
• Universal Load ID.  Besides shared containers needing a digital ID, the shipment loads themselves need an ID. This ID is not a tracking number generated by each transportation carrier, but a Load ID generated by the shipper or its representative. The compelling reasons for this are twofold. First, a Universal Load ID, assigned by its shipper or representative, will unify data for a given shipment load, not just a leg of its journey. Thus, this will improve data interoperability and shipment visibility. Further, it will unify shipment data across the supply chain for improved decision-making. Second, a Universal Load ID for shipments will enable the seamless, efficient use of shared transshipment containers and facilities within a constrained urban environment. For a detailed discussion of the Universal Load ID concept, see my article, Better Shipping Data Analytics Results: Use Of Load IDs To Achieve The Best Efficiency, Visibility, And Financials.

Better Shipping Data Analytics Results: Use Of Load IDs To Achieve The Best Efficiency, Visibility, And Financials

More Urban Logistics References.

• Milos Milenkovic’s article, Physical Internet: disruptive innovation for a sustainable supply chain
• Georgia Southern University’ paper, Urban Parcel Logistics Hub and Network Design: The Impact of Modularity and Hyperconnectivity
• WIRED’ article, It’s Time for Cities to Ditch Delivery Trucks—for Cargo Bikes
• Transportation Research Procedia’ paper, Physical Internet Enabled Hyperconnected City Logistics
• My article, Is The Physical Internet Logistics Concept Risky? Trade-offs With This Innovative, Awesome Way To Share Assets
• URBANE project’s deliverable,  framework for optimised green last mile operations
• Georgia Southern University’ paper, Urban Parcel Logistics Hub and Network Design: The Impact of Modularity and Hyperconnectivity
• Aalborg University’s project report, Cargo bikes for freight in Inner City Copenhagen

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For more from SC Tech Insights, see the latest articles on Supply Chains and Interoperability.