The Future of Urban Logistics

Seminar Paper 2019 18 Pages

Business economics - Supply, Production, Logistics


Table of content

Table of abbreviations

1 Introduction

2 Analysis
2.1 Urban logistics – A topic of increasing importance
2.2 Future transportation types
2.3 Impact of demographic changes on urban logistics
2.4 Labor shortage in logistics – Digitalization as a chance
2.5 Critical discussion of the concept “Post 4.0” by Kunze (2016)
2.6 Procurement and production impacted by logistics trends

3 Conclusion


Table of abbreviations

Abbildung in dieser Leseprobe nicht enthalten

1 Introduction

Urban logistics is a topic of increasing interest to both research and practice (Lagorio, Pinto, & Golini, 2016). Reasons for this are diverse: Population growth in urban areas is expected to continue, meaning that by 2030, 79% of the German population will live in these areas (Roland Berger, 2018, p. 4). This, in turn, has an impact on the already growing e-commerce which is a major driver for parcel delivery. As a result, parcel volume is expected to reach 5 billion pieces per year by 2026, equaling a growth of 100% since 2016 (Joerss, Schröder, Neuhaus, Klink, & Mann, 2016, p. 6). With a growing volume, not only the complexity of routes and business scalability increases, but also environmental problems, which are already the focus of various stakeholders anyway. Thus, logistics companies are required to develop innovative solutions, such as those derived from the possibilities of digitalization, in order to meet the increasing and changing demands of stakeholders.

This paper deals with a selection of the most important future-oriented questions in the field of urban logistics. It analyzes the relevance of urban logistics, examines transportation types of the future and discusses the impact of demographic change and labor shortage on the logistics market. Further, the concept "Post 4.0" is critically questioned and it is reflected to what extent the fields procurement and production logistics are influenced by the global trends. Lastly, a conclusion summarizes the most important findings and introduces additional research fields.

2 Analysis

2.1 Urban logistics – A topic of increasing importance

Major trends like globalization, urbanization, and digitalization exacerbate the im- portance of “last mile” logistics. In order to analyze why urban logistics is important and what reasons and drivers are underlying, the perspectives of the main stakehold- ers (public authorities, customers, retailers, transporters) are reviewed.

Public authorities mainly focus on environmental aspects and providing a healthy economic infrastructure, driven by the trend of urbanization and sustainability. While ca. 77% of Germans live already in urban environments, this percentage is expected to increase to 79% by 2030 (Roland Berger, 2018, p. 4). With greater population comes more freight transportation which in urban areas makes up for 20% of the road traffic, 30% of the road congestion, and 30% of CO2 emissions (JCDecaux, 2016). Policy makers want to create a sustainable environment for businesses and the popu- lation, differentiating themselves from other cities by providing appropriate regula- tions in order to reduce congestion, air pollution, and noise. Additionally, since over 80% of global gross domestic product (GDP) is created in urban areas, it is reasonable for public authorities to increase freight transportation efficiency in order to strengthen further economic growth (The World Bank, 2018).

In the context of the exponential growth of e-commerce, customers are most con- cerned about delivery speed and price. According to a study by McKinsey & Com- pany ca. 25% of customers are willing to pay an extra in order to get faster or even same-day delivery. 70%, however, value a cheap price the most (Joerss et al., 2016). Due to the increasing comparability with online shopping, customers regain market power, leading to high pressure on retailers.

In order to fulfill customer needs, retailers are concerned about increasing the service quality and managing costs effectively. Collaboration is one key for small and me- dium-sized retailers to profit from new joined delivery and infrastructure solutions (Van Audenhove, Durance, & De Jongh, 2015). Additionally, retailers demand increasing logistic services too since they want to be more flexible in terms of product stocks in warehouses which also results in an increase in freight transport (Roland Berger, 2018, p. 4).

Logistics companies and transporters are thus motivated to deliver the services that the stakeholders demand. Due to the expected cost efficiency, environmental efforts, and an increasingly heterogeneity of delivered goods, logistics companies need to make use of innovative IT-solutions such as artificial intelligence and data analytics in order to optimize routes in real-time and utilize personnel and resources in a more efficient way (Jeseke, Grüner, & Wieß, 2013).

In conclusion, the perspectives of all stakeholders illustrate why urban logistics is an important topic. Trends like urbanization, digitalization, and environmental aware- ness but also changing customer demands make it necessary to deal with urban logis- tics and give impetus to working together on innovative, holistic solutions.

2.2 Future transportation types>

In the author’s opinion, there will be one prevalent transportation type for long dis- tance logistics and one prevalent transportation type for short distance logistics resp. urban logistics in the near- to mid-term future.

Regarding long-distance logistics, the author predicts electric autonomous vehicles (EAVs) esp. in the form of trucks to be prevalent in western countries in the future. EAVs have the potential to reduce the logistic cost by 47% in 2030 due to dispense of operational costs, e.g. for drivers. EAVs can also lead to safer roads because they can monitor all their surroundings and eliminate human distractions. Furthermore, cloud-based autonomous vehicles could lead to less traffic due to an efficient real- time route optimization. Lastly, EAVs can be considered as environmentally friendly since pollution is minimized and traffic gets reduced (Strategy&, 2018).

In order for EAVs to be prevalent in long-distance freight transportation, multiple requirements have to be met. Firstly, the underlying technology on which autono- mous driving is based on has to be developed sufficiently. That includes full deploy- ments of necessary sensors on both the vehicle and the streets as well as the provision of a cloud-based IT-infrastructure. Secondly, in order for electric vehicles to be run profitable, fuel prices have to increase by a substantial amount so that a switch to electricity as a source of power is economically justifiable. Alternatively, appropriate regulations by the legislator might incentivize the change to electric vehicles. Thirdly, issues with battery capacity and a lack of recharging infrastructure have to be solved. Lastly, insurance and (cyber-)security concerns must be clarified and set aside.

Urban logistics or “the last mile” logistics have other demands than long-distance logistics. In the author’s opinion, a combination of bikes resp. scooters and crowd logistics will be the prevalent type of transportation in towns and cities in the future. There are a couple of reasons for that. Firstly, crowd-sourced “last mile“ logistics by (e-)scooters and bicycles offer a cost and time efficient win-win-win situation for the consumer, the driver, and the service company (Kunze, 2016, p. 292). Secondly, this type of transportation can be considered as very environmentally friendly and there- fore desirable, given that freight transportation makes up for 30% of CO2 emissions in urban areas (JCDecaux, 2016). Lastly, crowd-sourced logistics offer high flexibil- ity since scooters and bicycles are uncostly assets (and are usually even owned by the driver) and the allocation is done via sophisticated IT-systems.

However, to be a prevalent transportation type in the future some requirements have to be met. Firstly, the necessary IT-infrastructure has to exist and issues like cyberse- curity have to be solved. Secondly, crowd-sourced logistics with a scooter or bicycle are not a solution for delivering large freights. These types of parcels need to be trans- ported by normal (e-)vehicles which shows that other types of transportation will not omit in the near future. And thirdly, for these businesses to flourish appropriate growth strategies have to be developed and implemented (Hüsing, 2014).

2.3 Impact of demographic changes on urban logistics

There are three main drivers for demographic change in Europe: low fertility, increas- ing life expectancy, and migration (Haustein et al., 2013). Firstly, fertility in the Eu- ropean Union is comparably low with an average of 1.6 in 2016 due to social and cultural factors and increasing wealth (Eurostat, 2018). Secondly, while life expec- tancy generally increases, it is observable that life expectancy varies with countries and multiple socio-economic factors. In 2015, life expectancy in the European Union at birth was at 83.3 years for women and 77.9 years for men (Eurostat, 2019). Thirdly, migration can have a substantial influence on a country’s demographics, e.g. immi- grants are generally younger than the population of the European Union, hence low- ering the average age of the total population (Vasileva, 2010).

It can be expected that the demographic change will intensify the rapid growth of e- commerce due to two main reasons: more acceptance towards online shopping and lower mobility of the elderly (ATKearny, 2013). Since online shopping will further grow it can be expected that service-to-shop (S2S) services are likely to be less de- mand in the future compared to other types of delivery services. Additionally, due to a decrease in mobility of the population (since the total population gets older), it is likely that face-to-face home & office delivery service (F2F) as well as non-face-to- face home & close-to home delivery services (N2F) will experience increased de- mand.

Retailers and logistics companies need to prepare for the expected increase of F2F and N2F services. Compared with S2S services those two types of logistics have higher demands in terms of flexibility and speed. Thus, transportation services need to consider lowering their warehouse capacities and work on much more flexible but efficient transportation solutions.



ISBN (eBook)
Catalog Number
Urban Logistics Digitalization Future Urbanization Parcel Delivery Paketversand Logistik Shipping Versand Versandarten Transport Stadtlogistik City-Logistik Post



Title: The Future of Urban Logistics