Dynamic pooled capacity deployment for urban parcel logistics

Abstract

Last-mile logistics is regarded as an essential yet highly expensive component of parcel logistics. In dense urban environments, this is partially caused by inherent inefficiencies due to traffic congestion and the disparity and accessibility of customer locations. In parcel logistics, access hubs are facilities supporting relay-based last-mile activities by offering temporary storage locations enabling the decoupling of last-mile activities from the rest of the urban distribution chain. This paper focuses on a novel tactical problem: the dynamic deployment of pooled storage capacity modules in an urban parcel network. It formulates the problem as a two-stage stochastic optimization model with recourse, and incorporates the synchronization of underlying operations through continuum approximation-based travel time estimations. It also develops a solution approach based on a rolling horizon algorithm with lookahead, sample average approximation and Benders decomposition enhanced by acceleration methods, able to solve large scale instances of a real-sized megacity. Numerical results, inspired by the case of a large parcel express carrier, are provided to evaluate the computational performance of the proposed approach and suggest up to 28% last-mile cost savings and 26% capacity savings compared to a static capacity deployment strategy.