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Urban logistics

As urban landscapes evolve and populations surge, the logistics industry finds itself at the forefront of innovation, tackling the complex challenges of modern urban environments. In our quest for streamlined delivery solutions and sustainable practices, we unveil the most impactful urban logistics industry trends in 2024 and beyond. 

AI and Analytics

Operators are increasingly leveraging AI analytics to streamline deliveries. Dynamic routings, powered by real-time AI data analytics and predictive algorithms, optimise freight routes, enhancing efficiency and reducing congestion. By analysing traffic patterns, weather conditions, and other factors, logistics companies can identify the most efficient routes and modes of transportation. The implementation of dynamic routing based on order volumes and delivery times can improve truck flow, reduce congestion, save time and reduce costs.

For example, Amazon uses AI analytics systems to employ ‘anticipatory shipping’ which predicts when, where and which items will be purchased by customers based on the history of buying habits in any given area. When an Amazon customer orders a popular product, it will be dispatched from a local hub – increasing trip efficiencies. With predictive analytics, logistics companies can forecast demand accurately, optimise inventory levels, and minimise stockouts. 

Load Pooling

Another logistics technology trend shaping the year ahead is Load Pooling. Vans often operate at part load or are driven empty. Load pooling consists of matching, through an online platform, the commercial vehicles of couriers with available space for goods with the needs of shops or logistics companies to ship a package. The algorithm receives information from the couriers about the available space and the route, and from the customer the product to be shipped, the delivery windows and the destination. After receiving the information, it provides both with an optimized route and dynamic pricing based on the alternatives chosen. 

By using Load Pooling, couriers can operate at full load and to maximise the density of delivery of goods. The World Economic Forum (2020) estimates that this practice could reduce emissions by 5% and delivery costs by 8%.

Balancing Customer Satisfaction and Operational Cost

Retailers strive to provide exceptional customer service to foster loyalty and retention. Failure to meet customer expectations may lead them to seek alternatives.  And in today’s landscape, customers have heightened demands, expecting more from their shopping experiences. They want deliveries that are free, quick and sustainable. Research from McKinsey reveals that 66% of millennials routinely look for one-hour delivery options and the ‘Amazon effect’ has led to more consumers expecting free delivery. With this increasing demand for instant gratification by customers, retailers are trying to find a balance between serving the customer and managing their costs.

Sustainable Logistics

Heightened regulation, including road charging, congestion zones, and low emissions zones, is compelling logistics operators to adopt more sustainable practices. Consumer preferences are also shifting towards sustainable brands, prompting retailers to adapt. A study conducted with Mexico’s largest retailer revealed that 30% of initially reluctant consumers would opt for delayed delivery upon learning about the environmental impact of fast delivery. Consequently, retailers are actively seeking sustainable delivery solutions to meet evolving consumer demands.

One key trend in sustainable logistics is the adoption of alternative fuels and energy-efficient transportation. Electric and hybrid vehicles are gaining popularity as they offer lower emissions and reduced dependence on fossil fuels. Companies are also exploring the use of renewable energy sources, such as solar and wind power, to power their warehouses and fulfillment centers.

Wal-Mart is one company adopting sustainable logistics practices. The businesses has developed a service using their employees back-to-home trips to deliver online purchases to customers’ homes. Other on-demand delivery services allow customers to pick up their orders placed online in a given physical place, be it a supermarket, a shop, or a dedicated pick-up point. Amazon, for instance, promotes self-service parcel delivery/return service where customers play an active role in either retrieving or returning orders from/to Amazon Lockers. It is estimated that Parcel Lockers could reduce emissions by 70% due to lower overall mileage and reduce costs of 35% in more densely populated cities than in a home delivery scenario. 

The “try & buy” concept is gaining momentum, offering customers a unique shopping experience. After making an online purchase, products are shipped to designated stores where customers can try their selected items. The Czech company Zoot is a forerunner, having noticed that try and buy encouraged higher value-added purchases. Similarly, Zara pop-up stores operate on a similar principle, allowing customers to test products in-store, make purchases online, and have them delivered to their homes.

Rise of Microhubs

Microhubs help solve one of the main challenges of the delivery process: the last mile. Microhubs, as small urban warehouses of around 350m2 located in strategic places near high-intensity distribution points, can optimise urban logistics operations, allowing the final recipients to be served quickly and efficiently using light and sustainable modes of transport. Therefore, they can lower the volume of traffic significantly by centralising deliveries which ultimately leads to a lower volume of delivery vehicles.

One of the most successful cases is that of the logistics company Binnenstadservice (BSS) in the Netherlands. BSS provides a service reserved to small retailers. At the request of the retailer, the goods are transported by external couriers to the BSS hub, rather than directly to the store. They are then delivered with electric vehicles to the retailer. In this way the retailer, rather than receiving many separate deliveries from different suppliers, receives a consolidated one, saving time and money. Similarly, couriers avoid frequent and near-empty deliveries in the city and share (on a voluntary basis) some of the costs saved with BSS.

Robots, Drones and Self-Driving Vehicles

No list of logistics technology trends would be complete without mentioning robots and drones. In a 2020 survey of over 200 logistics industry experts, 45% believe robots, or automated ground vehicles (AGVs), will be delivering parcels at scale within the next five years. Online food shop Ocado is developing self-driving vehicles, including a range of trucks and drones, for use in and around its customer fulfillment centres. Amazon has used a robot to deliver small and medium sized packages in Washington state and Southern California. The town of Milton Keynes in the UK has been trialing a fleet of small robots which deliver food or groceries. And FedEx has launched a robotic delivery vehicle that allows retailers to accept orders from nearby customers and send them directly to the consignee’s home.

Unmanned Aerial Vehicles (UAVs) or drones have, for a number of years, been seen as the solution to logistics congestion. They will likely play a role but for very specific cases – they won’t serve everyone. The main challenges with drones are the extremely small load they can carry, the need for a minimum space of two square meters for landing, lack of security, noise pollution, the need for good weather conditions, lack of energy efficiency, regulation of air traffic and social acceptability issues.

Repurposing and Multi-Use

In numerous urban cities across Europe, there is a scarcity of available land, leading to limited options for suitable sites. These locations face fierce competition from alternative uses and are often governed by stringent local policies favoring residential development. Consequently, many operators are exploring the repurposing of existing assets for urban logistics. Dark stores, once traditional retail spaces, are now transformed into local fulfillment centers, facilitating rapid and reliable localised delivery while remaining inaccessible to the public. Dark stores boast significantly lower operating costs compared to high-street supermarkets and grocery stores, requiring fewer staff and optimising space usage. 

In the realm of multi-use sites, it’s crucial to ensure that any new logistics activities don’t disrupt existing operations. For instance, if a unit combines residential and logistics spaces, it’s essential to prevent disturbances to residents from late-night deliveries or road blockages caused by vehicles. Similarly, when integrating logistics with retail spaces, it’s important to avoid inconveniencing shoppers or causing disruptions at restaurants due to delivery drivers. ‘Marshaling areas’ within multi-purpose units can provide an effective solution to these challenges. Centralising all deliveries to a designated area at the back of the building streamlines pick-ups and drop-offs, minimising disturbances to surrounding activities.

Navigating the Future: Efficiency, Sustainability, and Customer Satisfaction in Urban Logistics 2024

In conclusion, the urban logistics landscape of 2024 is marked by a dynamic interplay of technological advancements, sustainability imperatives, and evolving consumer expectations. From the integration of AI and analytics optimising delivery routes to the rise of microhubs revolutionising the last-mile challenge, the industry is undergoing a profound transformation. 

Retailers are navigating the delicate balance between customer satisfaction and operational efficiency, driven by the ever-increasing demands of today’s consumers. Sustainability has emerged as a key focal point, with regulatory pressures and shifting consumer preferences pushing logistics operators to adopt eco-friendly practices. In essence, the urban logistics industry trends of 2024 reflect a concerted effort to navigate the complexities of modern urban environments while striving for efficiency, sustainability, and customer satisfaction. 

To discover more urban logistics industry trends and insights, get access to our REILE 2024 on-demand content:

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