Last-mile logistics report says 'free delivery' mentality must be stopped

A new report commissioned by the Independent Transport Commission (ITC) has found that the general public’s belief that delivery is free is something to be challenged urgently if urban distribution is to remain viable.

ITC director Matthew Niblett said: “People are waking up to the fact that freight produces a large and increasing portion of daily road miles, particularly during the peak hours.

"With online retail delivery volumes increasing by 10% in 2016, we need individuals, businesses and public organisations to break out of the free delivery mindset.”

He added: “The government, metro mayors, transport authorities, local authorities and other public bodies need to get on the front-foot to drive change through a combination of actions.

"These include establishing a conducive regulatory framework, interrogating their supply chains, harnessing new technologies, and seed funding consolidation centres until the necessary scale is achieved to allow these to operate independently; all the while encouraging behavioural change from all quarters, including suppliers, customers, the logistics operators and staff employed by public bodies."

Key challenges cited in the report, How can we improve urban freight distribution in the UK?, include congestion, poor air quality, noise and timing of deliveries, and the last-mile conundrum – all highly emotive factors the haulage industry finds itself both contributing towards and falling victim to.

But what should cities be looking to introduce to tackle them? ITC focuses on three case studies that could help to improve city logistics.

Retiming

First, it looks at retiming deliveries, with a snapshot of a successful shoulder-hour delivery trial (deliveries outside peak hours but not necessarily overnight) carried out by DHL Supply Chain with one of its retail customers in Camden High Street, North London.

The store used in the two-month trial was located on a busy high street with deliveries only possible to the rear of the building, down narrow streets.

Multiple vans per day had to be deployed, parked up some distance from the store on double yellow lines with roll cages pushed along the street by the driver.

Residents complained about the noise, PCNs were regularly incurred, and – arguably – far more vehicles were used than necessary to meet the store’s stock demands.

The trial saw deliveries shifted to 8.30pm, outside of peak hours, a time agreed with both the retailer and TfL. Deliveries were rerouted to the front of the shop, which allowed larger trucks to be used, and removed the noise nuisance to the residents at the rear, with special dispensation granted to DHL to allow it to park in a bus lane.

As a result of the trial, significant cost savings were made: 13.4% in road miles (delivery vehicles were halved); 13.1% in drivers' wages; 3.7% in time efficiency; and 32.9% in PCN avoidance.

The operation is now permanent.

ITC concluded the trial had demonstrated clear benefits to urban policymakers and hauliers, such as improved safety, reduction in congestion and vehicle journeys as well as their resultant emissions.

However it said retiming remains a slow process, with many parties involved to make it a success.

ITC urges players to share their experiences with other businesses and hauliers, with a call to government to find new ways of conveying these messages to the wider industry.

Urban consolidation

A second case study explored the successful model of the London Boroughs Consolidation Centre (LBCC), still in operation today, managed by DHL following a competitive tender in 2015.

By streamlining deliveries to council-owned sites, major supply chain savings were made as well as a reduction in congestion.

The ITC believes urban consolidation centres can offer an important opportunity to reduce freight movements, however the widespread take-up of such models face the challenge of scale and cost.

Local government subsidies are often needed – for example the LBCC still receives around £65,000 from the mayor’s Air Quality Fund – yet with increased volume such models should become self-sustaining.

Procurement is seen as a valuable tool to driving volume, as are local authority incentives or, on the flipside, penalties for non-use.

Alternative modes

You have no doubt seen recent media coverage of autonomous delivery robots scooting around town delivering food and parcels, but are they really a viable player in the last-mile delivery sector or just a gimmick?

Launched by the creators of Skype, the Starship Technologies robots are designed to operate 99% autonomously at pedestrian speed on pavements and deliver goods within 30 minutes.

They can carry up to 10kg of goods and have so far proven 100% tamper-proof, fitted with an array of security sensors, GPS tracking and on-board cameras.

This has been the case over the 35,000km driven in total, of which 5,000km were in the UK and at least four million people encountered one on the streets (as of spring 2017).

With these robots, Starship seeks to address the cost of the last-mile delivery, which is estimated by the ITC to be around £6-£12 (the main cost being the driver’s wage). If the company achieves the scale it desires, then it targets a cost for this last mile of £1 per delivery, around 10% the cost of a human-based operation.

A small corner shop, retailer or restaurant can hire a robot for their deliveries – similar to a lease agreement – place goods inside and dispatch it to the customer, who then enters a secure code from an app to unlock the unit.

This business model is fundamentally different to other autonomous delivery methods on trial, as Starship is selling a service, rather than a product: owning both the model and the liability solves a key issue facing the autonomous sector, according to the ITC.

Starship has also been pushing hard with countries’ governments to develop legislation to help grow this new sector.

In the UK, the company has been in talks with the DfT and the chancellor to secure a regulatory framework for what they call a Personal Delivery Device, with an expansion of its business built on the assurance this would be in place this year.

Conclusions

The ITC pulls together some key messages from its research:

• Collaborate to succeed – it is clear that the success of urban freight solutions depends on the wide range of parties to work together and make compromises for a common good, as well as cost savings.
• Behaviour change – at the root of all case studies was the need to change expectations and mindsets of businesses and consumers.
• Understand the trade-offs – addressing one urban freight issue might negatively affect other objectives.
• Support innovation – financial and/or regulatory support from policymakers is important.
• Scale – sufficient scale is often essential to the economic viability of new schemes, such as consolidation centres.
• Regulatory frameworks – new legislation may be needed for new technology to justify ongoing investment.

The ITC is an independent research charity that focuses on improving policy on UK transport, land use and planning.