Exploring decision-making mechanisms for the metro-based underground logistics system network expansion: An example of Beijing

Abstract

In facing “big-city diseases”, using urban underground space to build a stratified transportation system is crucial for the sustainable development of the social economy. In recent years, underground logistics systems (ULS) receive broad attention but developing a purpose-built ULS in megacities faces difficulties due to high costs and risks. As a cost-effective alternative, the metro-based ULS (M-ULS) initiatives provide new visions for the city-wide underground transport integration of passengers and freight. This paper explores the decision-making mechanisms of M-ULS network expansion based on multi-source data collection and mathematical programming. A model with three interrelated modules is proposed and applied in the Beijing city case. First, a monetary evaluation framework with 13 flow-based indicators is established to quantify the comprehensive benefits of M-ULS in terms of logistics economics, environment, transportation, urban space expansion, and emergency supplies. Second, correlations between metro freight service pricing and market purchase willingness are formulated based on surveys and interviews. Investment budgets and government subsidies are modeled as scenario variables affected by the project’s benefits and operating profits. Third, a mixed integer programming model is developed to optimize the multi-period facility location, allocation, and pricing during network expansion. Simulation results show that M-ULS has the ability to fully eliminate the road-based e-commerce distribution in city centers. The urban underground logistics businesses are expected to make metro operations profitable and recover the construction costs of both M-ULS and original metro lines. The project’s external benefits are equivalent to 0.8% of the city's GDP, where the most salient contributions come from breaking freight access restriction, energy-saving, efficiency upgrading, pollutant reduction, and traffic mobility improvement. Increasing funding support at the project’s early stage can significantly accelerate the system expansion. More findings related to M-ULS facility deployment, pricing mechanisms, and incentive strategies are disclosed.