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.

Without a doubt, urban logistics is both complex and challenging. Though there’s no one-size-fits-all solution, there are several key success factors to achieve an optimal urban logistics solution. In this article, I’ll share with you eight crucial success factors for creating effective last-mile solutions in urban areas. In particular, a key ingredient for success that encompasses all aspects of urban logistics is interoperability. This includes physical, operational, and digital interoperability. Indeed, interoperability is vital in compressed urban environments for sharing scarce assets, fostering stakeholder collaboration, and efficiently exchanging information. So, let’s take a look in detail at the eight success factors needed to effectively implement an urban logistics, last-mile solution.

1. City Leadership Committed to Advancing Urban Logistics.

Smart City And IoT – The Best Opportunities And The Challenges

Today, most cities do not plan for logistics unless there is a major event like hosting the Olympics. However, a crucial shift is needed: cities must start planning for logistics infrastructure just as they currently do for mass transit or Smart City / IoT initiatives. For example, cities can establish policies and incentives that promote efficient logistics while rigorously prioritizing public safety and wellness. Indeed, governments play a pivotal role, enabling sustainable urban logistics through measures like green vehicle subsidies, shared facility incentives, and favorable zoning. 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.

“… a crucial shift is needed: cities must start planning for logistics infrastructure just as they currently do for mass transit or Smart City / IoT initiatives”

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. See below for details.

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

a. Need to Share Information: Supply Chain Visibility and Situational Awareness.

Especially in an urban environment, logistics providers need up-to-date information on road conditions, delivery locations, and other factors affecting goods movement. Further, all urban logistics operations need real-time situational awareness of shipments using software tracking tools, IoT devices, and advanced data analytics to achieve total visibility. See my article, Emerging Tech For Supply Chain Visibility: The Best Innovations Available Now To Empower Businesses for more details.

b. Need to Share Logistics Services and Facilities. 

Without a doubt, cities and logistics organizations increasingly must collaborate to share resources, facilities, and services, creating an ecosystem that supports logistics activities. One way to do this is by leveraging a 3rd Party Logistics (3PL) provider, which specializes in providing shared services and facilities. In most cases, this is more attractive than having cities directly manage logistics activities. 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

“… in a constrained urban environment, two of the most important resources for logistics organizations are timely information and access to cost-effective facilities.”

3. Increase Operational Interoperability to Enable Collaborative 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. The bottom line: cities, businesses, and logistics organizations need to collaborate to create effective policies, contracts, and procedures.

However, to collaborate, urban logistics stakeholders need operational interoperability. In particular, this requires clear information exchanges, formal procedures, and resource sharing. For instance, business systems and IoT devices generate a lot of data, but in many cases it is not shared. In other cases the data is shared, but its insights gets “lost in translation” between organizations and stakeholders. To achieve real operational interoperability, urban logistics leaders need to agree on common logistics terms and procedures. 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.

“… to collaborate, urban logistics stakeholders need operational interoperability — this requires clear information exchanges, formal procedures, and resource sharing.”

4. Improve Physical Interoperability for Seamless Urban Transshipments.

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

Physical interoperability includes standardizing containers and handling systems, enabling the smooth transfers between transport modes in compressed urban areas. 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?

“… Physical interoperability includes standardizing containers and handling systems, enabling the smooth transfers between transport modes in compressed urban areas.”

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, shared logistics facilities in urban areas 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 shared micro-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.

“… shared logistics facilities in urban areas hold the promise of reduced CO2 emissions, efficient use of resources, and improved service levels.”

6. Maximize the Loads on Logistics Vehicles.

In compressed urban areas, it is imperative for logistics providers to maximize the shipment loads on their transport vehicles. In fact, focusing on maximizing shipment loads increases efficiencies as well as costs. Also, with emerging technologies coupled with increased collaboration, operators have more opportunities to consolidate shipments, leverage trans-shipment facilities, and reduce “air” in shipments to maximize loads on urban vehicles. See below for details.

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

• Consolidating Shipments. For instance, logistics providers can implement real-time, dynamic routing algorithms to minimize the number of vehicles on the road. This includes operators leveraging real-time traffic conditions and time-slot deliveries. 
• Shared Trans-shipment Facilities and Equipment. In this case, there would be more opportunities to reduce the number of trucks entering urban areas. Moreover, this coupled with shared standardized containers would add even more synergism to maximize vehicle loads.
• Reduce “Air” in Shipments. For example, operators can leverage cartonization software to maximize the amount of goods that are packed in both shipping boxes and reusable containers. For more details, see my article, The New World Of Package Dimensions: Need High Tech And Expertise To Stay Cost-Competitive.

“… with emerging technologies coupled with increased collaboration, operators have more opportunities to consolidate shipments, leverage trans-shipment facilities, and reduce “air” in shipments to maximize loads on urban vehicles.”

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 policies 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.

“… companies … are introducing ebikes and electric vans … 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 work together to improve data interoperability and reduce miscommunications. Also, logistics providers need shareable digital IDs for both container and shipment loads to unify shipping data and increase collaboration in dense urban areas. See below for more details.

a. What Is Needed to Advance Data Interoperability: Three Components.

Today, we have a logistics data interoperability problem, not just within urban logistics, but for all supply chains. In fact, too many supply chain digitization initiatives get stalled because our systems can’t communicate and exchange data effectively. To solve this data interoperability problem three components are needed. See below:

• 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.

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

• 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.
• Shareable Shipment Load ID: Shipment loads, not just the container, also need a unique ID. Moreover, in a collaborative environment with many stakeholders, there is a need for a shipper-generated Transport Load ID (distinct from carrier tracking numbers) to unify shipment data across the supply chain network. Besides enhancing visibility and proactive decision-making, a shipper generated Transport Load ID enables efficient use of shared urban logistics assets. 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.

“… stakeholders in urban logistics must work together to improve data interoperability and reduce miscommunications. Also, … need shareable digital IDs for both container and shipment loads to … increase collaboration.”

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

Unlock Your Outbound Logistics – How To Make Your Customers Rave

Are you looking for an innovative solution to make your supply chain systems work together? I’m Randy McClure, and I’ve spent many years solving data interoperability and visibility problems. As a supply chain tech advisor, I’ve implemented hundreds of successful projects across all transportation modes, working with the data of thousands of shippers, carriers, and 3rd party logistics (3PL) providers. I specialize in proof-of-concept and operational pilot projects for emerging technologies. If you’re ready to modernize your data infrastructure or if you are a solution provider, let’s talk. To reach me, click here to access my contact form or you can find me on LinkedIn.

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