28 April 2020

A better urban environment, more efficient transport, and fewer disturbances from many deliveries. A new thesis at LiU shows that
shared freight terminals can make huge and important differences – both for the recipients and society in general. But they face one major problem.

Henrik Johansson.
Henrik Johansson about half an hour before his public disputation, partly held via Zoom. Photo credit: Mikael Sönne

Last mile delivery

The end of the transport chain to a shop or other recipient – last mile delivery – is often carried out by half-empty vehicles that deliver one type of goods to several different recipients. For logistics companies that means having to make many journeys, and difficulties filling the vehicles with one type of product, while for the recipients it means many small deliveries throughout the day. In some cases, they receive around 20 a week.

And what about the urban environment? Noise, air-borne pollution and traffic queues.

“The transport of goods in cities is not only inefficient: it also has a serious impact on the environment. This was my starting point”, says Henrik Johansson of the Division of Logistics and Quality Management.

Few disadvantages. . . 

In his thesis, Customer Benefits in City Logistics – Towards Viable Urban Consolidation Centres, he investigates how what are known as “consolidation centres” located at the outer edges of cities can solve these problems. Distributors would be able to collect goods from different suppliers and transport them in a unified delivery to the recipients. A small grocery store, for example, would receive bread, milk and kitchen rolls in a single delivery instead of three.

From a societal perspective, the benefits are obvious: less traffic, less noise and a better urban environment. The recipients would have fewer deliveries and thus fewer interruptions in their work, and the employees would experience a better work environment. The suppliers would have fewer journeys with half-empty vehicles, although another result may be that these companies employ fewer people. (The role of the logistics companies has not been studied in the thesis project.)

Henrik Johansson also points out that the system would have several positive secondary effects for the recipients: some of the storage capacity could be transferred to the terminals, which saves space, while unpacking could be transferred from the shop to the terminal. It would also be easier to decide delivery timings.

. . . but one problem

However, in spite of all these advantages, Sweden has only a few commercial consolidation centres. The trials carried out so far have often stumbled over the same problem: money.

“Such a system often involves more expense for the individual companies, and the big question then is who is to pay. However, this doesn’t consider that there may extra services that create value. Nor does this way of thinking consider the whole picture and how the urban environment is improved”, says Henrik Johansson.

So what you’re saying is that everybody wins, even from a purely economic point of view?

“Well, you have to do a detailed cost analysis, of course, but there’s a great potential for it, at the very least. And then it’s always difficult to set a price on environmental improvements and a healthier work environment.”

The role of municipalities

The successful consolidation terminals that are in operation are often run by municipalities. Around 40 Swedish municipalities in 2019 worked with what they termed “coordinated goods distribution”, in which the terminals played an important part. The effects are often dramatic: in Eskilstuna, for example, the number of deliveries was reduced from 24,000 to 9,000 when the new system was introduced.

Henrik Johansson believes that in the future municipalities can take an active role in commercial distribution systems.

“Indeed. And not least because many of the positive effects are felt by the complete urban area. The change can take place in different ways: the municipality can in some cases own the terminal, in others contribute to the financing, or introduce regulations and legislation that facilitate it."

"My primary starting point has been the recipients. I show that they also gain from it, even though it costs more.”

Translated by George Farrants


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