How Newcastle University has learnt to love consolidation

Freightinthecity meets the team behind Newcastle University’s urban consolidation centre trial to see what’s involved, how it is going and what happens next.

Newcastle University is a thriving institution, with 24,000 students and more than 5,000 staff helping to generate an annual revenue of £438.5m.

As part of its Coherent Campus Initiative, ensuring the site is a safe, clean and pleasant environment for students, staff and visitors is a key priority for the university, with a significant reduction in freight vehicle movements at the heart of this vision.

NewRail Freight & Logistics Group – a team of urban logistics researchers based at the university – rose to this challenge and presented the university’s executive board with the best method of reducing freight vehicles on campus: an urban consolidation centre (UCC).

The UCC model had three main purposes: to demonstrate the feasibility of electric vehicles; to reduce congestion by slashing the number of inbound vehicles servicing the campus; and to align with the university’s plans for increased pedestrianisation, improved air quality and a safer campus.

Once buy-in was obtained from the board, a nine-month trial started in September 2014.

The UCC would be trialled through NewRail’s wider work on the Smartfusion project – co-funded by the European Union – a public-private partnership created to demonstrate smart urban freight solutions across supply chains.

Developing the concept

Principal research associate Tom Zunder, who heads up NewRail’s freight and logistics team at Newcastle, says that for any consolidation scheme to be a success, it must have clearly defined aims and ensure intervention in the supply chain is done for the right reasons.

Consolidation centres have always been set up with this intervention at the operator level, he explains. “Someone comes in and says: don’t deliver goods into city centres according to your own network and logistics plans; put them into our consolidation centre.

“However, nobody has put together a convincing business case as to why you would break the cardinal rule of modern supply logistics,” says Zunder, “which is to always reduce the number of times you touch the cargo. Every time you touch the cargo, it runs the risk of being broken, stolen, delayed or costing more to deliver.”

Therefore it was imperative for the team at Newcastle to gain a better understanding of why and how people ordered goods for delivery and to ensure any change to this process brought improvements to the university, while still meeting individuals’ needs. “In other words, we looked at the issue from the perspective of who pays the cheque and who controls the money,” adds Zunder.

For the university, the value from the UCC came from the executive board’s desire to improve the site’s environment. The campus areas had become increasingly pedestrianised over the years, however no consideration had been given to freight during any planning stage. As a result, freight vehicles were forced to park (often illegally) around the edges, or enter the campus when and where they were not supposed to, to deliver goods.

Before the UCC, NewRail’s baseline research highlighted that peak time for freight deliveries was between 8am and 10am – also a prime time for foot traffic.

“This concentrated delivery window says to me we are asking our suppliers for delivery during this time period – but do we need this?” asks Zunder. “The answer was often no. We know from staff interviews and surveys we’ve carried out on purchasing behaviour that most people don’t even know when goods are due to arrive. We found, for example, that the default delivery instruction on all our purchase orders is for next-day delivery, whether this is needed or not.”

Discussions are ongoing with suppliers to see if less frequent deliveries might benefit the university, for example through discounted rates. The uniqueness of the university’s buying power as a single customer has helped with such negotiations. This has created volumes through the UCC quickly, compared with a traditional consolidation centre that would generally require buy-in from multiple retailers and suppliers.

Due to the trial nature of the scheme, changes to existing procurement contracts were not yet necessary, and the majority of suppliers have opted to take part on a voluntary basis.

In the early days of the UCC operation, an average of five suppliers each week was contacted, rather than a ‘big bang’ switchover.

Supplier choice

The type of supplier was also an important consideration, if the model was to drive more sustainable transport movements; for example, those delivering high-density loads were purposely excluded.

“The reason is, when we talked to high-volume suppliers, like Office Depot, it was obvious their supply chain was already very efficient. If we’d put them through the consolidation centre, they would still have needed to run the same volume of vehicles, but they would have been running half empty without the university’s goods; from a sustainability point of view, this made no sense,” says Zunder.

With suitable suppliers identified for the trial, NewRail needed to find a logistics partner to operate the day-to-day running of the UCC and its onward deliveries to the university.

Clipper Logistics – a partner in the Smart-fusion project – was chosen because of its experience in existing UCCs, at Meadowhall Shopping Centre in Sheffield – where it runs a close proximity shuttle service for retailers, and at London’s Regent Street – where it operates two electric vehicles from a UCC 12 miles away.

NewRail’s former Smartfusion project manager Bruce Carnaby, who, since the end of the project has taken up the position of urban freight development manager at Clipper Logistics, says: “Clipper has been working with consolidation schemes for a long time, and has a lot of experience, but was a little tentative at first, as working with a university differed from the traditional model of collecting from retailers such as Meadowhall.”

On trial

During the trial project, Clipper elected to operate the UCC through its existing facility at Wynyard Park, Billingham, 33 miles from the main university campus. Suppliers drop off goods to Billingham, which are then immediately logged on to the Clipper real-time tracking system, to ensure visibility of location at all times.

Original destination addresses are still required on packages, to enable Clipper to deliver them to the correct final destination. It is also possible for suppliers to put multiple single orders inside one package, which can be broken down by Clipper, into individual parcels, at the consolidation centre.

“This is potentially quite useful to some of our suppliers because they pay a per carton rate, so they can send us one carton, which then breaks down at the UCC into 10 cartons. Previously they would have paid for 10 cartons,” explains Carnaby.

Approximately 60 to 80 parcels a day, destined for more than 200 separate university addresses, are bundled by Clipper into nine drop zones, located on a route across the campus; these are then in turn loaded on to an electric vehicle (see box below), for the last leg of their journey. The number of parcels is increasing daily as more suppliers join the scheme.

Success rate

The university has to date achieved a consolidation rate of about 80% with the suppliers that have joined in the pilot scheme; this means that, for those goods, eight out of nine trucks that normally delivered directly to the campus, no longer visit the site.

NewRail says it expects this rate to inevitably drop as the scheme expands to include more than 50% of suppliers; however it predicts that the scheme should still achieve at least a 50% reduction in the number of vehicles. Even by conservative estimates, a full service of the scheme could save about 400 tonnes of carbon each year.

The university’s executive board is evaluating a business case to turn the pilot scheme into a long-term operation. In this scenario, the medium- to long-term plans for the UCC would include siting it closer to the campus, as although the Billingham facility was the most cost-effective option to get the trial under way, it was further away from the university than intended.

The UCC model could be simply applied to any university, or public sector organisation in the UK, the NewRail team believes. “You don’t need to go through the modelling process again, as we have done it – but you have to establish who will pay the cost,” says Zunder.