The Competition and Inefficiency in Urban Road Last-Mile Delivery

Abstract

**Read paper on the following link:** https://ifaamas.org/Proceedings/aamas2022/pdfs/p1473.pdf **Abstract:** The last-mile delivery market is highly competitive and is saturated with numerous small operators. In this context, the fierce competition between operators, joint with the rapid increase in the demand for home-delivery, results in a significant increase in urban freight traffic further worsening congestion and pollution. To resolve these issues, previous research has studied the implementation of collaborative last-mile operations, with organisations sharing resources in the form of inventory space or transportation capacity. However, a common limitation of the proposed models is ignoring the effects of externalities such as network congestion due to the increased number of vehicles from selfish routing, and time windows. This study proposes a framework to quantify the worst efficiency loss in the urban last-mile delivery system by formulating the fully-decentralised and fully-centralised last-mile delivery problem. In doing so, we develop a Multi-depot Vehicle Routing Problem with Time Windows and Congestible Network that is solved using a bespoke Parallel Hybrid Genetic Algorithm that overcomes the non-linearities from modelling endogenous network congestion. The model is evaluated using a case study based on central London to assess the efficiency gaps of a realistic last-mile delivery operation. Our results show that the relative efficiency loss tends to fluctuate the most with a small number of customers until it stabilises to less than 15% for instances with over 100 customers without considering time windows. However, time windows could significantly exacerbate the degradation of efficiency and this degradation is 25% on average.