Webinar Participants 2

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2 Webinar Participants 2

3 Mechanics of the seminar 3 The webinar is being recorded, the URL will be sent out to participants and posted at Participants from the US and Canada can: Use Adobe Connect to receive the audio (PRIMARY method) Dial , access code International participants can: Use Adobe Connect to receive the audio (PRIMARY method) Use Skype or similar to dial , code Dial (caller paid call) Submit questions using the Chat feature

4 The VREF Center of Excellence for Sustainable Urban Freight Systems (CoE-SUFS)

5 CoE-SUFS 5 Funded by the Volvo Research and Educational Foundations (VREF) Main Goal: To jumpstart an integrative process, involving cities, private sector, and researchers to develop new freight systems paradigms that: Are sustainable Increase quality of life Foster economic competitiveness and efficiency Enhance environmental justice

6 New York City, Albany, USA London, UK Santander, Spain Rotterdam, Netherlands 6 Gothenburg, Sweden Osaka, Japan Santo Domingo, Dominican Republic Toronto, CA Dalian, China Nanjing, China Barranquilla, Bogotá, Medellín, Colombia Sao Paulo and Belo Horizonte, Brazil Bologna, Italy Abu Dhabi, United Arab Emirates Mumbai, India Delhi, Pretoria, South Africa India Chennai, India Singapore, Singapore Melbourne, Australia

7 CoE-SUFS Dissemination Programs 7 Peer-to-Peer (P2P) Exchange to share global best practice cases and real world examples of sustainable urban freight systems Next P2P (July 22 nd, 2014): Logistical Sprawl: Spatial patterns of logistics facilities and their impacts on metropolitan areas Laetitia Dablanca, METROFREIGHT/IFSTTAR Anne Goodchild, University of Washington The Research Exchange to share innovative research on urban freight, and related topics Workshops to bring together public/private sectors and academia, to jointly work to address urban freight issues Upcoming: Colombia and Mexico

8 Urban Consolidation Centers: The UK Experience Prof. Michael Browne University of Westminster

9 Acknowledgements Thanks to Dr Maria Triantafyllou, University of Aegean Dr Tom Cherrett, University of Southampton Danny Luu and Ian Wainwright, Transport for London Nigel Symonds, London Borough of Camden Matthew Linnecar, Gnewt Cargo

10 Points to consider in the presentation 10 Sustainable logistics context Importance of consolidation centers Examples Key issues in consolidation center development and evaluation

11 Sustainable logistics context 11 Freight, logistics and sustainability: Support growth and competitiveness Tackle climate change Contribute to better security, safety, health Quality of life Expectation of longer term growth in vehicle kilometres (especially vans in cities) Many strategies and regulations are national: urban initiatives have to fit in with these Link to partnership approaches and vehicle technology developments

12 Why consolidation centres are important 12 Contribution to core aims of sustainable logistics Opportunity for public-private initiative Now have several years of experience and examples (international comparisons available) Visibility But we need to remember that there is already a lot of consolidation activity in supply chains and freight operations

13 Urban Freight Consolidation 13 What is it? Where it takes place? Why it takes place? Grouping of individual consignments or partloads that are destined for the same locality so that a smaller number of full loads are transported to their destination. (Lewis et al, 2007) In facilities (Urban Consolidation Centers UCCs) situated close to commercial districts, shopping centers or construction sites. Increase vehicle load and reduce empty-running Cut down pollution Alleviate congestion Ameliorate intra-modal conflicts in urban areas Free-up space at stores Offer better product availability & service levels Improve returns & waste management operations

14 Consolidation model 14 Supplier 2 Supplier 1 Supplier 1 Supplier 2 Supplier 3 Supplier 3 Consolidation Centre Source: TfL 2014 Target Area Target Area Main benefits: Reduced emissions Reduced traffic congestion Improved safety Other benefits: Maximising space use (retail, office, loading) Reducing the cost of the final mile Shows environmental awareness

15 Consolidation centres: Routing Options A. Direct shipment of a consolidated load from origin to destination terminal B. Further stops at intermediate terminals to drop and pick up traffic C. Further consolidation in regional/national DCs D. Gradual pick-up consolidation A B C OR B B D B A C B Urban Environment B A B C C C A C OR D C B A D D A B C Source: Triantafyllou et al, 2014

16 UCC Activities Replenishment Consolidation Stock-Holding Cross-Docking Main Activities Value-Added Activities Triantafyllou et al, 2014

17 CONSTRUCTION AIRPORT RETAIL UK UCC Schemes STRATHCLYDE Stage: Feasibility study ABERDEEN Stage: Feasibility study PERTH AND DUNDEE Stage: Trial EDINBURGH Stage: Feasibility study MEADOWHALL Stage: Operational (2002) NEWCASTLE Stage: Operational (2011) SAINTBURY S CONSTRUCTION CC Owner: Saintbury s, EAST MIDLANDS AIRPORT Stage: Operational (2009) MANCESTER AIRPORT Stage: Operational (2007) NORWICH Stage: No longer operating HEATHROW AIRPORT Stage: Operational (2000) NINE ELM CONSTRUCTION CC Owner: DHL REGENT STREET Stage: Operational (2009) BRISTOL (& BATH) Stage: Operational (2004) CARDIFF CONSTRUCTION CC Owner: Bovis Lend Lease BLUEWATER SHOP. CENT. Stage: Operational (2002) PORTBURY COSTRUCTION CC Owner: Wincanton SOUTHAMPTON Stage: Start up 2014 LONDON CONSTRUCTION CC Operational LONDON microccc Stage: Operational (2009)

18 Operational Commercial UCCs NEWCASTLE MEADOWHALL EAST MIDLANDS AIRPORT MANCESTER AIRPORT PARLIAMENT OFF-SITE CENTRE HEATHROW AIRPORT REGENT STREET BRISTOL (& BATH) CAMDEN COUNCIL LONDON microcc

19 Classification of Consolidation Centers 19 Special project UCCs: Construction sites Permanent or fixed period UCCs on single site with one landlord: Airports Shopping centres UCCs serving a town/city (or district of): Geographical area: large or small No. of companies: single or several Consider differences between receiver-led and operator-led consolidation

20 Characteristics of a sample of UCCs 20 Centre UCC type Product type Trial or fully operational London Heathrow Airport Retail Trial then fully operational Use of electric vehicles? Yes Meadowhall Sheffield Shopping centre Retail Trial then fully operational No Bristol (& Bath) Part of urban area Retail Trial then fully operational Yes London Construction Consolidation Centre Camden Council Consolidation Centre Construction Construction materials Trial then continued in new location as a commercial operation Offices and public buildings Stationery and cleaning products Trial No No

21 Construction consolidation 21 Challenges: Large number of deliveries Delays caused by late arriving materials Solution: Consolidation centre Benefits: Deliveries made on time, in-full Improved productivity on site = savings Built quicker = savings Reduced damage and shrinkage - Safer roads Source: TfL 2014

22 London Construction Consolidation Center (2005 Initiative)

23 Retail/office micro-consolidation Reducing and revising mode Challenges: Retail and office within busy area Limited loading facilities Solution: Gnewt Cargo using electric vans and bicycles Last mile multiple drop (next day or same day) Benefits: Fuel saving Quicker deliveries Cost savings from group purchasing Environmental benefits Source: TfL 2014

24 Concept Trial Supply Chain Diagram 24 Source: LAMILO/Camden Council, 2013

25 UCC for Airport Services & Retail (DHL) 25 London-Heathrow Operated by DHL/Exel since 2001 Now serving 380 clients on airport 5,500 m 2 off-perimeter warehouse 40,000 cages processed per month Dedicated loadspace at Terminal % on-time delivery to receivers 70% reduction of delivery trips 85,400 vehicle-km saved in 2009 Source: DHL, 2010/2011/2012

26 Consolidation Scheme for Urban Retail (DHL) 26 Bristol and Bath Operated by DHL/Exel since 2004 Serving 63 outlets in Bristol centre Expanded in 2010 to adjacent Bath Secure warehouse close to Bristol Electric and other green vehicles 100% on-time delivery to receiver 76% reduction of delivery trips Annual savings > 250,000 veh-km Source: DHL, 2013

27 Key issues 27 What impacts are included? Costs and benefits (and who receives them) Understanding the role of the consolidation centre

28 Impacts included in UCC schemes 28 Impacts of UCCs Number of the UCC studies quantifying this (out of the 17 studies identified) Changes in the number of vehicle trips 8 Changes in total fuel consumed 8 Changes in vehicle emissions 8 Changes in the number of vehicle kilometres 7 Changes in the number of vehicles 4 Vehicle load factor 4 Changes in parking time and frequency 4 Changes in operating costs 2 Changes in travel time 1 Goods delivered per delivery point 1 Source: Browne et al. (2005)

29 Evidence of transport impacts 29 Reductions in key measures (e.g. vehicles, trips, kms, utilisation): Savings important at local level Ability to separate trunk and local movements: Alternative modes or vehicle types Focus on improving last mile

30 London Construction Consolidation Centre 30 Key Performance Indicator Reduction in freight journeys Reduction in journey time of supplier deliveries to contractors Target 40% minutes Achieved 60-70% of journeys via LCCC 40% of journeys to construction site 120 minutes Delivery reliability 97% 97%

31 Case Study: WestQuay Sources for Slides on West Quay: Triantafyllou, M, Cherrett, T and Browne, M (2014)

32 WestQuay 32 Retail Complex: WestQuay shopping Centre Location: Southampton, Hampshire, UK Retail Units: ~100 (20 catering, 74 fashion, 2 department stores) Weekly Freight Activity for 92 Businesses: Deliveries: 449 deliveries, 98,068 km travelled, 6,986 items (901 m³) delivered, 1,105kg CO2e produced Waste Collections: Daily central waste collections of mixed waste and recyclables. Source:

33 Results Scenarios Considered 33 Scenarios Mandatory Participation (92 Bus.) Note: Each vehicle figure represents a 10% share out of the total delivery mix. Those partly in grey represent shares smaller than 10% (Artics: 4.9%, Rigid: 5.3%, Vans: 4.8%, D/K: 5%). The red fill represents the vehicles fill rate. Baseline Scenario A Scenario B Scenario C Scenario D Scenario E Scenario F Scenario G BS A1 A2 A3 B1 B2 B3 C1 C2 C3 D1 D2 D3 E1 E2 E3 F1 F2 F3 G1

34 Results Voluntary Participation 34

35 Results Voluntary Participation 35

36 Results Mandatory Participation 36

37 Results Mandatory Participation 37

38 Wider supply chain impacts Many potential benefits Improved management and visibility of supply chain Specific benefits can include: Local stockholding, with pre-retailing and quick response More productive floorspace use at destination Fewer deliveries (and disruption) at destination Returns and recycling

39 Success factors 39 Strong private sector involvement Bottom-up pressure from local interests Supporting regulatory framework Significant existing transport problems in local area Ability to resolve wider logistics problems Availability of start-up support

40 Why consider this now? 42 Links to wider changes Air quality issues, CO2 and noise Allocation of road capacity Optimising use of kerb capacity Time of day of operation Combining approaches/initiatives: Business Improvement Districts Sustainable Procurement Delivery and service plans Trigger points (e.g. London 2012) Reduce, Re-time, re-mode

41 41 Summary Observations José Holguín-Veras, William H. Hart Professor Director of the VREF Center of Excellence for Sustainable Urban Freight Systems

42 The UCC paradox: Experience shows that 42 UCCs have potential to reduce the externalities produced by delivery traffic in congested areas UCCs have the potential to benefit the carriers However, few of them grow and prosper there are more failures than successes Why? This presentation attempts to both summarize lessons learned and reinterpret success and failure factors using game theory and behavior research

43 The Urban Freight System 43

44 This is what we all want 44

45 This is what we need to change Behavior change is the key

46 Question: Who needs to change behavior?? 46 Entire supply chains need to change behavior The shippers The carriers The receivers The Economy

47 The Freight System 47 The conglomerate of all the economic entities involved in the generation, transportation, consumption, and transformation of cargo These are key to Key functions/agents: behavior change Producers, the ones that manufacture/produce the goods Shippers, the ones that send the goods Receivers, the ones that use the goods transported Carriers, the ones that transport the goods Ancillary functions: warehouses, distribution centers, etc. Some of these functions/agents take place in the same company, leading to internalization of impacts

48 Attitudes Toward UCCs

49 Payoffs to the different agents 49 Receivers Get good service why bother? If they push for change, they d be responsible Using UCCs may complicate their supply chains Shippers Lose face time with customers (super important to some) Lose cargo custody (super important) Competitors could identify customers (worst outcome) Carriers Could benefit, if they avoid the expensive last segment Attitude toward UCCs: Neutral to moderately disinclined Power relations: Receivers have power over Neutral to strongly opposed Shippers have power over In favor Carriers please their customers

50 Behavioral Evidence

51 Shippers, at least some, do not like UCCs 51 The Port Authority of New York & New Jersey s UCCs: Created in Manhattan (1949) and Newark (1950) Closed down in 1953 and 1955 The reasons (1) : Opposition from the unions Suppliers reluctance to use the UCC, this quote says it all: In neither case did our planners understand the resistance of private enterprise carriers to government imposed solutions which involved their giving up their private terminals, where they could control the customer service, and using joint terminals where they couldn t. Shippers prefer Staging Areas (3) as they preposition cargo close to customers without the UCC issues

52 Receivers could be interested 52 In Spain (2) : Tax reduction fosters participation Distance to UCC negatively affects participation Guaranteed morning deliveries increase participation for hostelry sector and non-specialized retail Reduction in stock levels fosters Participation of about 20%-24% depending on: Distance to UCC Inventory stock reductions Tax deduction Guaranteed morning deliveries

53 Carriers, at least some of them, like UCCs 53 A survey in the NYC metro (3) area found that: 16-18% of carriers would be highly/extremely likely to participate in an UCC to deliver supplies to Manhattan (18.23%) and Brooklyn (15.82%) Extremely Interested: UCC in Manhattan: Carriers of food, chemical products and household goods, as well as distributors UCC in Brooklyn: carriers of textile and plastic carriers, and manufacturers Opposed to use UCCs: Large companies, and carriers with many deliveries per tour (e.g. parcel carriers) In California (4) : Very similar numbers as 18.7% of carriers are in favor

54 Implications 54 The behavior research conducted indicates that: Sizable numbers of carriers and receivers (about 20%) would be inclined to participate in UCCs, however: Receivers may not be motivated enough to proactively push for UCCs Carriers do not have the power to push for UCCs Shippers, particularly brand name companies, are not enthusiastic about the idea The status quo prevails

55 Other Challenges

56 Cost, space 56 Private costs: Transfer costs reduce financial viability of UCCs Land costs produce the same effect Space requirements: UCC operations require space: One metric ton 25 mt 2 of space needed box trucks need 2415 mt 2 Amount of cargo per capita (NYC): 45 kg/person 1% of cargo 44,000 mt 2 (2.6 Walmart SuperCenters) 30% of cargo 1.32 million mt 2 (80 SuperCenters ) UCCs cannot handle large numbers of deliveries

57 Role of Public Policy

58 Make Sure There Is a Market Failure 58 Too often, we act when we do not need to: If private interest coincides with social interest: Do not do anything, you will make things worse (Government Failure) There are plenty of examples Confirm the existence of the market failure Try to understand why the market does not reach the most efficient solution Once that is done, act based on science and pragmatism Consider the implementation cost Decide on the policy measures to use (or not): Regulation/standards, Pricing/penalties, Incentives Consider all possible technical solutions, UCCs are not a panacea (see Professor M. Browne s presentation)

59 How Could We Change Things? 59 By influencing the key decision maker so that they force a change in supply chains Remember the power relations: Shippers have power over Carriers Receivers have power over Shippers Receivers Shippers Carriers Implication: Convincing the receivers to proactively support UCCs is ESSENTIAL How? Provide incentives to receivers Educate receivers about the impacts of the freight traffic that they create

60 Citizens-Led Change 60 However, we (the Customers) have power over Receivers, Carriers, and Shippers. Let s use it The real power-broker is the customer: Customers Receivers Shippers Carriers Citizens could provide the incentives needed to foster sustainability of supply chains: A certification program that rates the degree of sustainability of the supply chains serving a establishment will Provide information to citizens about what the companies are doing for sustainability Lead citizens to patronize the businesses doing good Ultimately, provide the incentives needed to foster transformation

61 Conclusions 61

62 Key observations 62 Public policy should Assess all possible freight initiatives to select the best ones If UCCs are indeed the best, consider: Incentives and/or engagement of receivers Consider ways to lower the land costs Take a hard look at the implementation costs: if it is larger than the benefits UCCs are not a good idea Take into account that for UCCs to handle a large portion of deliveries in urban areas, large tracks of land are required A certification program that rates the sustainability of the supply chains used by receivers will have a transformative effect on sustainability

63 References (UCC UK Experience slides) 63 Allen, J, Browne, M, Woodburn, A and Leonardi, J (2012) The role of urban consolidation centres in sustainable freight transport, Transport Reviews, 32 (4), pp Browne, M, Sweet, M, Woodburn, A and Allen, J (2005) Urban Freight Consolidation Centres, report for the Department for Transport, University of Westminster, London Camden Consolidation Centre (part of LaMiLo EC project) DHL (2010) Heathrow Consolidation Centre. DHL (2011) Heathrow Consolidation centre see: DHL (2013) Press release about the Bristol and Bath Consolidation Centre. Triantafyllou, M, Cherrett, T and Browne, M (2014) Urban Freight Consolidation Centers: A Case Study in the U.K. Retail Sector. Paper presented at Transportation Research Board 93rd Annual Meeting January 12-16, 2014 Washington DC. Presented in Session 714 and will be published in Transportation Research Record. TRL (2010) Freight Consolidation Centre Study, for the Department for Transport.

64 References (UCC Summary Slides) Doig, J.W. Empire on the Hudson. New York, Domínguez, A., J. Holguín-Veras, and Á. Ibeas. Receivers response to new urban freight policies. Procedia-Social and Behavioral Sciences, Vol. 54, No. 2012, pp Holguín-Veras, J., M. Silas, and J. Polimeni, An Investigation into the Attitudinal Factors Determining Participation in Cooperative Multi-Carrier Delivery Initiatives, in Innovations in City Logistics IV, E. Taniguchi and R. Thomson, Editors, Nova Science Publishers. p , Regan, A.C. and T.F. Golob. Trucking Industry Demand for Urban Shared Use Freight Terminals. Transportation, Vol. 32, No. 1, 2005, pp

65 Thanks! Questions? Michael Browne University of Westminster José Holguín-Veras, Director of the VREF Center of Excellence for Sustainable Urban Freight Systems