The Geography of Transport Systems
THIRD EDITION
Jean-Paul Rodrigue (2013), New York: Routledge, 416 pages.
ISBN 978-0-415-82254-1
City Logistics
Authors: Dr. Jean-Paul Rodrigue and Dr. Laetitia Dablanc
Dr. Dablanc: French Institute of Sciences and Technology for Transport, Development and Networks (IFSTTAR), Universite de Paris-Est.
1. Freight and the City
Freight transportation maintains a set of core relations with urban areas since a city is an entity where production, distribution and consumption activities are using scarce land. Elements of the urban landscape such as commercial districts are important generators and attractors of freight movements. The global urban and economic system has also become functionally specialized, permitting a global division of production and its associated freight volumes. City Logistics, as a strategy ensuring efficient freight movements and innovative responses to urban customer and business demands, is an emerging field of investigation that was brought by the challenges of the commodification and massification of production and consumption.
City logistics / Urban logistics. The means over which freight distribution can take place in urban areas as well as the strategies that can improve its overall efficiency while mitigating congestion and environmental externalities.
Urban economies are evolving rapidly towards a higher level of material intensiveness. Store inventory levels have shrunk and businesses are increasingly supplied on a just-in-time basis. The number of different products sold has increased considerably, and inventories change several times a year. With the rise of the service economy, the demand for express transport and courier services is also soaring. These factors have made urban economies more dependent on transportation systems, with more frequent and customized deliveries. All this incites a greater intensity and frequency of urban freight distribution and correspondingly improved forms, organization and management. Accurate figures are difficult to come by but urban goods movements account for 20 to 30% of all vehicles kilometers. There is a complex relationship between the spatial and functional structure of city logistics where the organization and density of land uses interact with various forms of transport infrastructure influences on the location of logistics activities. Therefore, although city logistics appears to be an issue taking place at the local (metropolitan) level, a comprehensive understanding of its drivers and dynamics requires the following:
  • Global supply chains. A salient issue relates to urban freight distribution in the context of global supply chains as global processes are imposing local forms of adaptation to insure that freight is delivered in a timely and reliable fashion. Offshoring has also contributed to the setting of supply chains where freight distribution activities taking place within an urban area cannot be effectively explained by the regional economic structure.
  • Global freight distribution. Since the distances involved in supporting global supply chains have increased, the function of distribution has taken a new significance, particularly with the setting of large terminal facilities such as ports, airports, rail yards and distribution centers. They are handling movements originating from, bound to or simply passing through a metropolitan area. With containerization as a tool supporting the bulk of international trade, intermodal terminals have become a notable element of the urban landscape. With the growth of valuable cargo carried over long distances, airports are also active nodes interacting with urban freight distribution. Along with their attached freight distribution facilities (e.g. transloading facilities and warehouses) large terminals form a fundamental element of the interface between global distribution and city logistics.
  • Urbanization. Global urbanization is compounding the challenges of city logistics since the share and the level of concentration of the global population living in cities is increasing. Historically, the production and consumption of freight has dominantly taken place in cities, but with the industrial revolution and subsequently with globalization this share has increased. Cities also present a variety of forms and levels of density, each associated with specific city logistics patterns. Socioeconomic factors, such as rising income and consumer preferences should also not be neglected.
Most of the early applications of city logistics were undertaken in Japan and Western Europe as these cities were more constrained by the lack of available land and had an established tradition pertaining to urban planning. Up to the 21st century the consideration of urban freight distribution within the planning discipline remained limited. This implies that urban planning generally does not pay much attention to issues related to urban freight distribution. Yet these issues are linked with externalities and growing concerns by private and public interests to address them:
  • Private concerns. Actors directly involved in urban freight distribution are mainly concerned by its constraints such as congestion since it imposes additional costs and delays in their operations. Also, restrictions on street access by trucks as well as for pickups and deliveries, provide additional challenges. Urban logistics becomes a competitive factor that needs to be addressed since it impairs the cost and efficiency of the last mile (or first) of global supply chains.
  • Public concerns. Actors involved in the oversight of urban freight distribution as well as urban residents in general are concerned by its externalities. Congestion and noise impacts residents, particularly their commuting and social interactions, as well as the general livability of a city. Passengers and freight flows are therefore subject to conflicts. Environmental concerns such as air pollution are recurrent in many cities. City logistics is becoming a salient urban sustainability issue.
2. The Diversity of Urban Freight Distribution
A city is supplied by an impressive variety of supply chains servicing a wide array of economic activities such as grocery stores, retail, restaurants, office supplies, raw materials and parts, construction materials and wastes. The level of economic development is linked with the level of urban freight activity as income and consumption levels are interdependent. Because of the divergence in built environments and the diversity of urban economic activities, each city around the world has different freight transport and logistics activities and level of intensity. This brings the question about the specific size threshold after which urban freight distribution problems, such as delays and congestion, become more prevalent, which requires a concerted approach. Using the United States as evidence, congestion starts to be a serious issue once a threshold of about one million inhabitants is reached. For cities of less than one million, city logistics is less likely to be a problem and may be localized to specific areas such as the downtown or the port or other terminals areas.
The unique and often non-replicable conditions of each city are influencing the nature and intensity of congestion in its urban freight distribution system. The share of public transit use, land use pattern and density and income levels are common factors relatively unique to each city. Considering the growing level of material intensiveness related to the functions of production, distribution and consumption, cities above 4 million inhabitants should have planning and circulation management schemes where urban freight distribution is preeminent. Cities of smaller size can also proactively be involved at mitigating specific and localized urban freight distribution activities.
The intensity of urban freight distribution depends on local economic, geographic, and cultural characteristics, which leads to different objectives and preoccupations in urban freight distribution. For instance, world cities have each a diverse array of concerns:
  • Paris aims to limit the environmental footprint of freight distribution so that the quality of life of its residents can be maintained and improved. The city's status as one of the world's leading cultural and touristic hub has a notable impact on the strategies and priorities accorded to urban freight distribution.
  • Mexico City tries to cope with the contradictory demands related to the dual presence of both modern (motorized) and traditional forms of urban distribution in terms of infrastructure provision and regulations. Modern logistics services are as vital to the urban economies of developing countries as are more basic freight activities serving street vendors or home based manufacturing workshops.
  • Chicago aims at maintaining its role as a major rail hub and freight distribution platform for North America with concentration of distribution and manufacturing activities. The metropolitan area is the point of convergence of the rail lines of the Class I carriers, but the different terminal facilities are in separate parts of the city and not well connected. This involves truck congestion as containers need to be carried from one terminal to the other.
  • Los Angeles is facing congestion and environmental issues such as noise and air pollution. The city is facing conflicts between its function as a major commercial gateway for the East Asian trade and other functions linked with touristic and cultural activities. Recent initiatives concerns trucking associated with the main port facilities as well as nearby major import-based distribution centers.
  • Shanghai has become the largest cargo port in the world and acts as the main transport hub supporting China’s export-oriented strategies. A significant share of the freight circulating within the city is therefore linked with global distribution processes. Rising standards of living imply growing consumption levels and the setting of city logistics challenges common in advanced economies.
  • Istanbul is coping with rapid urbanization and economic growth, along with unique geographical constraints, namely a scarcity of flat land and the division of the city by the strait of Bosporus. Its commercial function is being strengthened by its role as a platform between Middle Eastern, European and Black Sea commercial interactions. The outcome has been severe constraints for freight circulation in an environment of accelerated economic and urban growth. The city is embarking in large infrastructure projects with a new mega airport and the relocation of manufacturing activities to exurban locations.
3. Forms of Urban Freight Distribution
All urban freight distribution systems involve a wide array of supply chains, each of varying importance depending on the urban setting and the level of development, but coming into two main functional classes. The first involves what can be called consumer-related distribution:
  • Independent retailing. Urban areas have a notable variety of retailing activities, many of which defining the commercial and social character of neighborhoods. More than often they are small single owner stores and in developing countries these retailing activities are often complemented by informal street markets and stalls.
  • Chain retailing. In the contemporary commercial landscape chain retailing (stores directly affiliated to a common brand or franchised from this brand) have become an important element. Like independent retailing, chain retailing covers an extensive array of goods that are supplied by manufacturers that have extensively relied on global sourcing. Chain retail outlets are located in central areas (and being a defining element of urban centrality) as well as in suburban and peri-urban areas (such as "Big box" stores). Shopping malls, many quite large, are set on the principle of economies of agglomeration and the provision of ample parking space. Chain retailing tends to rely on the expertise of third party logistics services providers to mitigate urban freight distribution challenges, but mostly to organize complex multinational sourcing strategies for mass retailers. Large stores are commonly accessed through dedicated delivery bays where they are resupplied on a daily basis through their own regional warehousing facilities.
  • Food deliveries. Since most food products are perishable, a specialized form of urban distribution has been set to supply outlets such as grocery stores and restaurants. The outdoor market (central markets offer enclosed facilities) also take an important role in supplying urban populations with perishables, particularly in developing countries. This may be linked with informal forms of distribution where food producers deliver their production to urban markets. Limited information is available about urban food consumption levels but high levels of spoilage are observed, in the range of 50% of all the food consumed. Since food deliveries commonly involve perishable goods, the reliable transport of refrigerated goods (often referred as cold chain logistics) is an important component in improving this relative poor performance.
  • Parcel and home deliveries. Globalization and the setting of advanced services such as insurance, finance or corporate management (head or regional offices) are linked with a growth in the movement of parcels. While some are serviced by local companies, large parcel carriers have established services covering the majority of the world's main commercial cities. They maintain a network of strategically located distribution centers where shipments are consolidated or deconsolidated. International shipments are often taken care of by parent companies, namely air freight integrators. Online shopping (for retail goods but also for groceries) has grown significantly, a trend which is associated with the growth of home deliveries.
The second functional class of urban supply chains is related to producer-related distribution:
  • Construction sites. Urban infrastructures, from roads, residences to office and retail spaces, are constantly been constructed, renovated and repaired. Such activities are intensive in material use and must be supplied on an irregular basis both in terms of the time and location of the deliveries.
  • Waste collection and disposal. Urban activities generate large quantities of waste, namely paper, paperboard, food, plastics, metals and glass. These materials must be collected and carried to recycling or disposal sites. In particular, recycling has become an important activity taking place in urban areas and involve specialized vehicles and dedicated pick-up tours. As standards of living are increasing across the world, the amount of waste generated by cities has grown accordingly.
  • Industrial and terminal haulage. Cities are zones of production as well as gateways for the circulation of goods. Large transportation terminals such as ports, airports and railyards are dominant elements of the urban landscape, including logistics zones where freight is distributed to extensive markets. Transport terminals and logistics zones are also generators of goods movements that may impact urban circulation (the last mile). Gate access at large intermodal terminals such as ports can lead to congestion (queuing) and local disruptions.
Two actors, private and common carriers, are handling commercial freight transportation. Private carriers are at the same time beneficial cargo owners (manufacturers or retailers) using their own transportation assets (fleet and workforce). They can also subcontract this function to an independent carrier. Common carriers service any customer on a contractual basis, which also leads the opportunity to consolidate cargo and deliveries, which can benefit smaller users. The share of private carriers is dominant for urban freight distribution in developing countries while in developed countries common carriers account for about half of urban deliveries.
The issue of dualism remains prevalent in urban freight distribution as it underlines different modes of operation between distribution systems that are integrated to globally-oriented supply chains and distribution systems linked with informal activities that are more related to the local or regional economy. This is best represented by owner-drivers, or small independent truckers acting as sub-contractors to large carriers for the final distribution of goods in urban areas. Dualism is therefore illustrative of a co-existence of modern and traditional means of freight distribution within the same metropolitan area. Another aspect of dualism is related to an active informal transportation sector that supplies the needs of lower income segments of the population, a very important component of city logistics services in developing countries.
4. The Externalities of Urban Freight Distribution
Modern freight distribution systems operating on the global urban landscape are generators of environmental and social externalities. In less developed countries, rural migration and population growth have led to very rapid urbanization, while the public supply of infrastructure and transport services has lagged behind, impairing the efficiency of urban deliveries. Road transportation is the most polluting per unit of distance travelled, but their are limited alternatives than the road to provide for urban deliveries. A positive trend has been the decline of air pollution due to better engine designs and the phasing out of leaded fuel in most countries. Diesel trucks still account as significant sources of particulate matter and NOx emissions, an issue compounded by their use as urban delivery vehicles. Urban freight distribution is on average twice as polluting than intercity freight transport, particularly because of the following factors.
  • Vehicle age. On average vehicles used for urban deliveries are older and it is a common practice to use trucks at the end of their service life for short distance drayage. This problem is compounded in developing countries where vehicles are even older and thus more prone to higher emissions and accidents.
  • Vehicle size. The size of vehicles used for urban deliveries is on average smaller, particularly in areas that have high density, limited street parking and can have clearance issues (low bridges). This implies that the advantages of economies of scale cannot be effectively applied for urban freight distribution. Smaller delivery vehicles must undertake more travel to deliver a similar volume of freight than a regular truck.
  • Operating speeds and idling. The conditions pertaining to urban freight distribution are such that vehicles are forced to have lower driving speeds, regular stops and acceleration (e.g. traffic signals) as well as much more idling than a vehicle operating in an uncongested environment. Additionally, driving restrictions such as one ways or car-only streets often make the usage of the shortest path unfeasible. The result is more fuel consumption and pollutant emissions. There are also safety concerns since urban areas have high densities of pedestrian movements and that trucks have wider dead angles than automobiles.
A common characteristic of cities in developing countries is that motorized and non-motorized traffic are sharing the same infrastructures, which leads to congestion and vehicle operation problems. The urban environment of many cities in the developing world is characterized by street vending (petty trade) supplying the urban population a range of basic necessities. This is particularly the case for shantytowns that tend not to be supplied by formal supply chains and are thus serviced by forms of urban freight distribution about which little is known.
5. Key Urban Logistical Challenges
Addressing city logistics requires an understanding of urban geography as well as supply chain management, which tends to be an uncommon set of skills. Urban freight distribution thus has a unique array of challenges as a multidisciplinary field. Urban freight distribution reflects many dimensions of contemporary logistics such as route and delivery sequence selection. It also exacerbates its constraints such as on-time deliveries. Among the most salient challenges of city logistics:
  • Commuting and peak hours. Passengers and truck movements are not interacting efficiently as freight and passenger circulation are a zero-sum game; road capacity taken by freight transportation is at the expense of capacity available to passenger transportation (and vice versa). They share the same road infrastructure and peak hours due to commuting exacerbate the difficulties of freight distribution.
  • Congestion. City logistics, like logistics in general, depend of consistent and reliable deliveries. The urban environment that tend to have high congestion levels is challenging. To avoid congestion, deliveries can take place during the night (or off peak hours) if possible.
  • Parking. There is limited parking capacity to accommodate deliveries in high density areas, implying that parking remains one of the core city logistics issue. Delivery vehicles cope with this challenge by double parking, thus seriously impeding local circulation. Parking fines can become part of the cost of doing business for urban deliveries. For instance, in Manhattan a delivery truck can accumulate on average $750 worth of parking tickets per week. The curbside is a contested space between pedestrians, cyclists, residents, delivery vehicles and storeowners.
  • Cargo load contradictions. Urban freight distribution is characterized by smaller volumes and high frequency deliveries. This is not prone to economies of scale and involves higher delivery costs.
  • Land use. Land use patterns determine many features of the urban movement of goods, where the pattern of industrial, commercial and logistics facilities has a direct impact on the flow of commercial goods. Higher density has commonly been advocated as a sustainable strategy for cities. However, for urban freight distribution, higher densities involve higher costs and lower reliability, which contradicts the conventional wisdom. Further, higher density areas makes retail space at a premium, inciting a lower level of in store storage and therefore more deliveries are required. Logistics sprawl has been a dominant land use change of the last decades with is the relocation of logistics facilities towards peripheral areas at faster rates and greater distances than any other economic activity. Suburban logistics has become as relevant as city logistics.
  • Reverse (green) logistics. While cities are major consumers of final goods, there are also reverse logistics activities related to the collection of wastes and recycling.
  • E-commerce. Involves distributional consumption, implying that final consumption is contingent to delivery to the consumer. As such, e-commerce is related to new forms of demands and new forms of urban distribution with a growth in the home deliveries of parcels. Large online retailers such as Amazon and eBay have been able to capture a significant share of ecommerce (30% in the United States as of 2012). While the concerned volumes were relatively small, the diffusion of information technologies has impacted the urban distribution structure of retail goods. This has been accompanied by a growth of parcel deliveries and new strategies to complement home deliveries with alternate solutions (pick-up-points, automated locker banks). For large apartment complexes, the lobby has essentially become a small freight distribution center. Online purchases are also characterized by a higher rate of returns, implying reverse distribution strategies.
The urban space is prone to conflicts between different stakeholders, as high population densities are related to a low tolerance for infringements and disturbances. There are also opportunities for collaboration as city logistics open new realms of engagement for urban planning, but with diverging priorities according to the urban setting. Insuring an adequate circulation of freight flows in urban areas can involve specific strategies that can be done at the level of the individual firm or as a concerted urban planning effort. Municipal governments are increasingly incited to regulate freight distribution components under their jurisdiction such as parking and access to specific road segments. However, careful consideration must be placed on the impacts of such regulations as arbitrary decisions may have negative and unintended consequences. For instance, imposing limits on truck size on some road segments (or areas) may force distributors to change their routing and load configurations, with substantial additional costs. Therefore, city logistics is better serviced if it is part of a overall strategy trying to comprehensively address a range of freight issues in urban areas, including their potential impacts.
6. Freight Distribution Strategies for City Logistics
From a freight distribution perspective, a city can be considered as a bottleneck where transportation resources are scarce relative to the potential demand and are thus highly valuable. Freight, is competing for the use of the urban space. As a distributional strategy, city logistics can take many forms depending on the concerned supply chains (e.g. retailing, parcels, food deliveries, etc.) as well as the urban setting in which it takes place. Urban freight distribution strategies are however difficult to implement as they systematically imply higher costs and additional delays. The mitigation strategies that are the most considered concern three interrelated realms of engagement:
  • Rationalization of deliveries. Relates to adjustments about how freight is delivered (or picked up) in urban areas so that externalities, namely congestion, are minimized. Such a strategy tries to better use existing assets. One of the simplest strategies is to regulate access to specific parts of the city, such as forbidding daytime deliveries in central areas or implementing off peak delivery schemes such as distributors opting for night deliveries or at least extended delivery windows to avoid peak hour traffic. A key issue about nigh deliveries concerns noise since local residents are likely to have lower tolerance for noise than during daytime. There is an array of information technologies that are increasingly being used to manage urban freight distribution systems. The most used technologies relate to global positioning systems that improve vehicle tracking and urban navigation as well as load management applications that can assist in building routes and delivery schedules. Under such circumstances it becomes more effective to match trip sequences, such as deliveries and pickups to strive towards forms of collaborative distribution. Still, urban freight distribution remains highly imbalanced as deliveries are more numerous than pickups and the most significant relation concerns very different supply chains; retail deliveries / garbage disposal. Still, there are successful examples of being able to combine retail deliveries and backhaul movements involving recycled goods (e.g. cardboard, plastics and bottles).
  • Freight facilities. Relates to the development of freight distribution infrastructures that are better adapted to the urban context. This can involve the setting of designated parking areas for deliveries, as well as the usage of urban freight distribution centers and local freight stations. The later are small facilities trying to service a cluster of urban freight demand (e.g. a neighborhood) or a single large facility such as an office building. Since these facilities imply additional costs that can only be justified if there is a sufficient volume and concentration of deliveries within an area. Urban freight facilities can thus be a value proposition in large cities (or high density areas) while for smaller cities such initiatives would drive up costs and unreliability. If the opportunity arises, such as the availability of a brownfield site in proximity to the city center, urban logistics zones can be developed, which can provide a counterweight to logistics zones that have emerged in the periphery of most large urban agglomerations. Urban consolidation centers (UCC) specifically provide a bundled and coordinated delivery service. A UCC is a logistics facility located close to the city center from which consolidated deliveries are carried out, and which provides a range of other value-added logistics services. Land prices however constitute an important obstacle to the urban siting of freight facilities. Up to 200 such terminals existed in European cities in the 1990s and early 2000s. Due to operating costs, most of them closed down when municipalities could no longer provide subsidies. 
  • Modal adaptation. Relates to the usage of adapted vehicles for urban freight distribution. Smaller vehicles tend to be better suited for urban deliveries because of their lesser footprint, their ability to maneuver and their higher than average load factor. Yet, a similar amount of freight would require move vehicles to be delivered. Regulations can therefore be enforced concerning the permitted size of delivery vehicles (with a chosen limit permitting medium size trucks to operate) and even their age if environmental concerns such as emissions and noise are salient. Innovative strategies such as CNG vehicles, electric vehicles and even bicycles have been successfully implemented and underline a good potential for modes to adapt to the diversity of the urban landscape. Electric delivery trucks are a promising technology adapted to the urban environment since they have low emissions, particularly noise. However, there are several drawbacks to their widespread use, particularly higher acquisition costs (and no secondary resell market), range constraints, charging time and less load capacity. As such, early adopters of alternative modes and distribution strategies may place themselves at a disadvantage in regard to competitors using conventional delivery vehicles. The usage of the existing public transit systems has also been considered for urban freight distribution. However, there are no cost and logistically effective strategy to date. Urban transit is not well adapted to freight distribution and often involves additional load break and costs. Attempts at developing "cargo-trams" have failed, such as the ambitious cargo-tram project in Amsterdam, which went bankrupt in 2009.
Although each of these strategies has its own advantages, there are also drawbacks that are commonly related to higher distribution costs and additional delays. City logistics is facing the paradox of being incited to look at sites located at the urban periphery where land availability is less an issue while most consumers and activities tend to be located in more central areas. For instance, a high density and congested central city can be serviced by an independent freight distribution system calling from an consolidation center (UCC) located at a location in proximity to the city center, often a brownfield site that served an abandoned function (e.g. rail yard, industrial area). The vehicles used to service customers (either for deliveries or pickups along a flexible route) are likely to be cleaner (electric, CNG) and thus better adapted for distribution in an urban environment.
The urban freight distribution center can be a neutral facility interfacing with a set of distribution centers, each being connected to their respective supply chains. Thus, a wide array of supply chains connected to the city can achieve a better distributional efficiency within the central city. Few projects for urban consolidation centers (such as the Motomachi UCC in Japan) have met success even because of their operating costs since they involve high rents and additional handling before final delivery. There were attempts to establish UCC in several cities, but many such projects turned out to be unprofitable and ceased operations once subsidies dried up.
Urban areas remain congested areas where space utilization comes at a premium and where the presence of many stakeholders imposes concerted efforts to insure that urban markets remain serviced in an effective and environmentally friendly fashion. The future is indicative of a transition towards greener forms of city logistics since the current situation appears unsustainable in many cities that are facing rising congestion and environmental externalities. Since each city represents a unique setting with its own prevalence of transport infrastructure and modal choice there appears to be no single encompassing strategy to improve urban freight distribution, but a set of strategies reflecting challenges that are rather unique for each city. As underlined, a salient difference relates to city logistics between developing and developed countries.