Ron van DuinDeurne, 12 – 13 November 2009 1

To be or not to be? A typical city distribution centre question!Research on success and failures in 10 European CDC-cases

Ron van Duin (TUD)Thanks to Alexander Kloppers

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Contents

1. History of city distribution2. Complexity of the research problem3. Survey4. Factors that determine success/failure5. Conclusions6. Research path7. Discussion

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So called ‘Veemhuizen’ anno 1913“Zo oud als de weg naar Kralingen”

• At the edge of town

• Multimodal accessible

• Temporary stock

• Cross-docking

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The last mile delivery

• Environmental friendly(beside drivers and horsesC02-neutral)

• Collection of return flows(‘Voddenman’/’Schillenboer’)

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Freight flows in towns

Deurne, 12 – 13 November 2009 Ron van Duin

habitants

provinces governmentoffices

consumers

constructors

producers

entrepreneurs

carriers

municipalities

public services shippers

Multi-actor field

suppliers

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Problem……..!!!

Instead ofInstead of

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Different policy views on a sustainable cityAccessibility Economic growth

Freight Friendly

Liveability

Coordinated

Minimal space

Sustainable urban goods transport should facilitate a continuing economic growth and meanwhile protecting the environment and ensuring a better quality of life for future generations (OECD, 2003)

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Potential benefits(Huschebeck and Allen, 2005):

•Reductions in the number of vehicle trips.•Reductions in the number of vehicle kilometres.•Better utilization rates for vehicles

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Urban consolidation in literature• Modelling urban freight generation (Ogden, 1977)

• Considerable costs involved with the construction and operation of the transhipments(Button & Pearman, 1981)

• Urban Goods Movement (Ogden, 1992)

• City distribution centers lead a laborious life (Van Duin, 1997)

• City logistics modelling (Taniguchi et al., 2001)

• Innovation Steps Towards Efficient Goods Distribution Systems for Urban Areas (van Binsbergen & Visser, 2001)

• The key concept is that the volume of freight vehicles travelling within urban areas could be reduced through a more efficient utilization of vehicles: higher load factors and fewer empty trips (Crainic et al. 2003)

• GVZ or freight villages have been popular as real estate sources (Klaus, 2005)

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Survey 10 EU cases3 Successes

Bristol 2004La Rochelle 2001Kassel 1994

4 FailuresLeiden 1994Utrecht 1995Nuremberg 2005Malaga 2004

3 Not clear (yet)Nijmegen 2008ThunSiena

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Applied Methods• Literature European CDC

(Morris et al., 1999), (Hesse, 2004) (Köhler, 2004), (Browne et al., 2004),(Browne et al., 2005), (Patier, 2006), (Marcucci & Daniels, 2008), (Van Rooijen& Quak, 2009)

• Experts in the fieldName Company name Date Communication

Birgit Hendriks Binnestadservice.nl 15-05-2008 personal

Vronie van Manen Bureau Binnenstad (Municipality of The Hague) 16-06-2008 personal

Tim Hapgood Bristol city council 29-06-2008 email

Magnus Jäderberg Göteborg city council 03-07-2008 email

Jésus Muñuzuri Universidad de Sevilla 03-07-2008 email

Peter Krichel Universität Kassel 08-07-2008 email

Mark Degenkamp Municipality Utrecht 06-08-2008 personal

Rainier van der Kamp Miles Benelux B.V./Allgreenvehicles 29-09-2008 telephone

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Evaluation aspects

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Comparison (I)

1Co-usage of private DC

1Cross-dock

8UDC

n=10Type of CDC

1Shopkeepers

1Private CDC operator

2Transportation companies

6Municipality

n=10Origin of the initiative

4PPP

4Private

0Public

n=8Organisation

1Shopkeepers

5Transportation companies

6Subsidies

Funded by

2EC subsidies

2National subsidies

6Local subsidies

2No subsidies

Subsidies I

5Structural

3One time

n=8Subsidies II

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Comparison II

2No

1Usage of bus lane

3Pedestrian only area

1Environment zone

5Time windows

n=9Accompanying measures

4Combination conventional and electric

1Carrier cycle and natural gas car

1Electric vehicles

3Conventional trucks

n=9Distribution vehicles

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Survey among 7 EU citiesType of

UCCStakeholder(s) that

initiatedOrganisati

onFunding Subsidies I Subsidies II Acc. measures Distribution

vehicles

Success

Bristol UDC Municipality Private Subsidy EC Structural None Conventional

Kassel UDC Transportation companies

Private Subsidy Local Temporary Pedestrian zone

Conventional

La Rochelle UDC Municipality (agglomeration)

Private Subsidy Local Structural Time windows Electric

Failure

Leiden UDC Municipality PPP Subsidy EC One time Time windows Conventional and electric

Utrecht Multiple UDCs

Municipality Private Transportation companies

- - Time windows, usage of bus lanes

Conventional

Malaga Cross-dock Municipality PPP Transportation companies and subsidy

Local One time Pedestrian zone

Conventional and electric

Nuremberg UDC Shopkeepers Private Transportation companies and shopkeepers

- - Pedestrian zone

Conventional and electric

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Conclusions from the survey

• Ex ante evaluation often too positive• e.g. number of participating companies• seldom ex-post analysis

• Private organisation UCC

• All successful UCC have structural subsidies (as well as local as EC)

• Location of a UCC

Browne (2002) emphasise the importance of choosing a right location. Evaluations of decision making on this issue however many cases the result of what was available at the moment (Hesse, 2004) (Quak, 2008)

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Example of commercial feasibility CDC Den Haag I

Criteria Scenario 0: Current situation

Scenario 1:Full participation,

light trucks

Scenario 2: Full participation,

medium trucks

Scenario 3:Few participants

Vehicle kilometre reduction

0 -2% -8% -0.8%

Net benefit 0 -/- € 50,577 € 118,083 -/- € 220,040

Service 0 ++ + +

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Example of commercial feasibility CDC Den Haag II150,000 m3 goods per year means a participation of

approximately 60%

10.00

11.00

12.00

13.00

14.00

15.00

16.00

17.00

18.00

19.00

20.00

21.00

22.00

25000 50000 75000 100000 125000 150000 175000 200000 225000 250000

m3 of goods delivered via the UCC

Euro

per

m3

BenefitsCosts using light trucksCosts using medium trucks

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CBA – Unbalanced costs & benefits based on (Browne et. al., 2007)

COSTS BENEFITSSupplier

• Not a single “door-to-door” operation • Less time spent making deliveries in cities, leading to reduced operating costs

• Potential to use time savings to generate additional revenue

Transportprovider• Security • Routes involving UCCs allow more deliveries per day• Loss of control over timed deliveries/responsibility • Opportunity for night deliveries• Perceived increase in damage through extra handling • Helps counter WTD driver shortage• Additional handling/delivery charges ● Greater efficiency as no time spent slow running in town/parking

problems etc– could be passed to supplier as “surcharge” • Less slow running = improved fuel usage

Receivers• Additional stage when chasing missing/late deliveries • Improved delivery reliability

• Fewer deliveries/less staff disruption• Ability to call-off orders in parts• Clients able to collect purchases from UCC• Less storage/more selling space• Off-site value-added activities• Improved retailing (street) environment• Continuous waste removal/recycling• Clients avoid travelling to store to collect orders – collect at UCC

LocalAuthority• Cost of policing freight movements • Potential licensing revenue

• Fewer delivery vehicles in zone, leading to cleaner air, less congestion, pedestrian benefits and improved traffic flow

• Potential for alternative fuel vehicles

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CBA – Unbalanced costs & benefits II

UCCOperator

• Multitude of IT & paperwork systems to handle • Profit-making businessbut not if UCC is considered final delivery point andoperator has own system to cover the “last mile”

• Timed deliveries – how to service• Responsibility for identifyinglosses/damages at intake stage

Developer(new retailsites only)

• Cost of establishing UCC if condition of planning consent • A revenue stream, either if managed inhouseor additional charge on rent

• More rentable space as result of centralisedreceipt point and less “in-store” storage space

• Single UCC makes whole site more attractive with fewerfreight vehicle movements

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Conclusions – To be or not to be??Towards research of business models

• Collective sourcing of last-mile transport by joint shopkeepers

• Joint ventures with currentefficient distribution structures

• E-auctionsDuin, JHR van, Tavasszy, LA, & Taniguchi, E (2007). Real time simulation of auctioning and re-scheduling processes in hybrid freight markets. Transportation research part b-methodological, 41, pp. 1050-1066.

Large retailers

Logistic Services Partners?

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So for city distribution centers it means

To be, or not to be: that is the question:

Whether 'tis nobler in the mind to sufferThe slings and arrows of outrageous fortune,

Or to take arms against a sea of troubles,And by opposing end them?