Smart and sustainable city logistics: Design, consolidation, and regulation

Abstract

Growing e-commerce delivery increases traffic congestion and demands for smart last-mile city distribution systems. In this context, municipalities and logistics service providers aim towards sustainable and profitable city logistics, which are often conflicting goals. Whether to use single-echelon or two-echelon systems with micro-depots and city freighters as well as quantifying the benefits of shipment consolidation between independent providers under different system designs are unanswered questions in academia and practice.We provide a general methodological framework based on continuous approximation theory to study the design of city logistics networks with multiple logistics service providers that choose transportation strategies, each defined by a network structure and specific transportation modes. We provide analytical results on the comparison of different transportation strategies. By providing thresholds on the benefit of consolidated systems, we analytically quantify shipment consolidation effects in city centers. We then embed this continuous approximation into a mixed-integer non-linear program and study parameter sensitivities for a real-world case study.Our results show that higher customer density and longer distances between depots and distribution areas promote 2-tier transportation strategies. Consolidation between logistics service providers allows for emission reductions independent of the transportation strategy and correlate with cost reductions up to 50% on the lower echelon. Outsourcing promotes 2-tier last-mile deliveries with city freighters and in a city with heterogeneous districts, it is beneficial to use a hybrid network that includes both single- and two-echelon strategies using multiple transportation modes for different demand classes.