This topic has been on my mind for a while now and has re-surfaced in various forms in the media recently again. Each time this topic comes up the fundamental issues with case studies seem to of not been addressed again.
This debate and post was thanks to the guys at velove (maker of the armadillo cargo bike) and an article here about open terminals as a concept, really interesting idea of containerisation of delivery but im more keen to discuss consolidation and Urban consolidation centres
I’d like to propose a new adaptation of the concept of a UCC here though, what if you could have a UCC that operated at a profit without a single parcel ever going through it’s doors? This is what i’m working on in Oxford at the moment
below is a brief explanation of what the current concept is to anyone outside of the logistics world
Urban consolidation center Concept
(UCC) is best described as a logistics facility that is situated in relatively close proximity to the geographic area that it serves, be that a city center, an entire town or a specific site (e.g. shopping center), from which consolidated deliveries are carried out. Multiple vans arrive, the goods are bundled together and usually delivered into the city using one full van or nowadays electric vans or cycle logistics.
Broadly speaking the key purpose for UCCs is the avoidance of the need for vehicles to deliver part loads into urban centers or other large developments. The example below shows the vans entering the city before and after the UCC was tested
(Image from slide show here)
UCC Advantages to cities
This presents economic and environmental advantages, “From an economic perspective consolidation can help to:
- Increase the volume of goods carried on vehicles entering a given urban area; thereby reducing the unit costs of transportation for the final delivery stage.
- Reduce the number of deliveries that have to be received at a location; thereby reducing the disruption and labour requirements associated with receiving multiple deliveries. (City council of Oxford have expressed this as an issue as 3-4 vans can deliver on St Aldates to the town hall at one time causing bad congestion)
- Reduce the time spent driving to the delivery address and accessing the point of delivery by the driver; who may only have a small quantity or a single item to deliver.
From an environmental and quality of life perspective, consolidation can help to:
- Reduce the number of unsuitable goods vehicles and possibly the total number of vehicles operating in the urban area.
- Improve the lading factor and empty running of goods vehicles thereby reducing vehicle movements and distance travelled.
- Reduce the fuel consumed and hence pollutant emissions and noise generation in delivering goods.
- Offer the opportunity to operate environmentally sensitive vehicles on the final leg of the urban supply chain. (electric vehicles or cycle logistics)
- Make the area more pedestrian-friendly.
(Exert taken from DfT here)
There are clear advantages and why a large amount of councils in the UK are jumping at the idea and concept. UCC’s are particularly effective in historic cities with existing pollution, congestion and delivery issues.
UCC CASE Studies
Bristol/Bath, London and Norwich are the most notable projects in the UK as case studies. The UCC’s achieved there goals of considerable co2/nox/pm2 reduction and diesel trips into the city by vans where reduced significantly.
What has confused me for a while is how the councils went about setting up the projects. They get an experienced logistics provider to operate the UCC, in this case DHL usually (seems to be a conflict of interest to consolidate already). Retailers then sign up and pay per pallet/cage so there deliveries are directed to the UCC, then delivered into the city and there business’s via an electric van from there. They seem to sell the idea as an improvement to service as they can know when there deliveries are going to arrive and they are usually met with advantages like the electric vehicle being able to use bus lanes.
UCC’s Issues and why they usually fail
Most of these projects are short lived though, the norwich project which charged retailers right off the bat rather than the bristol model of it being free and then they charge them at a later stage proved to be a really difficult sell. None though seem to be able to be financially viable without public funding and subsides, with most councils on very tight budgets with cut backs, environmental, congestion and pollution benefits are usually thrown out the window as none priorities. There are further issues as well
- Capital and operating costs of consolidation centres.
- An additional handling stage in the supply chain
- IT integration across multiple carriers presents issues
- The security, liability and customer service issues associated with additional companies handling goods.
The set up cost is usually covered by the public funding. The on going cost is more of an issue, there aim was to have retailers pay per pallet and per cage but i think it’s safe to assume most would be very reluctant to pay. Most parcel carriers deliveries, thanks to the extreme competition have very good services and even one hour windows of delivery now. This for me would present no real advantage to my business for using the UCC and the age old rule of no one wants to pay for delivery comes into play.
My idea is why not leave this to private firms? and work alongside them to provide the policies needed such as electric vehicles in bus lanes, congestion charges, low emission zones. My first suggestion would be to operate much like a cycle logistics operator, we invest in the equipment and set up the consolidation centre, we receive goods from the carrier and are paid per parcel to deliver in via cargo bikes. The carrier doesn’t have to invest a penny in changing its fleet, can trial the use of cycle logistics and electric vans and see if the security, liability and customer service is acceptable and it doesn’t cost them anymore than they usually pay a diesel self employed van driver. The UCC pockets the money gained by the increase in efficiency not available to carriers own depots (unless the invest in green vans etc which seems unlikely). Most sub depots for parcel carriers pay there self employed van drivers per parcel they deliver. They can easily pay the same to the UCC for the parcels it delivers or even higher rates for the privilege of having advantages to there services in the city, like the UCC’s can use bus lanes etc. Maybe even the drivers who are self employed by these firms using there own vans may invest and switch to electric vehicles if the council set out the various policys in a stick and carrot way to encourage the change, provide a significant advantage to electric vehicles but i think this is a long way off yet and honestly cities need a solution sooner rather than later.
IT is an issue still across multiple carriers systems but myself and others are working on solving this in time. This style would present a profitable and sustainable model for a UCC. Usually cycle logistics operators also work on replacing local business’s van deliveries too adding in another layer of pollution and congestion saving and first mile collections is certainly possible too. I would almost suggest this could be a city wide freight gateway. Another issue is some carriers are reluctant to consolidate with other carriers parcels but i think if the advantages are significant enough this can be overcome such as savings of not having to run your own sub depot could save upto £60,000 just on the building rent/rates for a carrier per annum.
I’ve taken the example of parcel carriers and local business deliveries. There are supply chains a UCC wouldn’t be an advantage to use. Most forms of Food delivery for instance are very efficient and a UCC wouldn’t be able to store food goods without significant additional costs for cold rooms etc. Out of peak hours HGV’s fully loaded going to supply retail stores or huge supermarkets with specific loading bays, usually at night is very efficient but these forms of delivery don’t usually impact a city like LGV’s delivering in at peak times, like a supermarket doing home deliveries via LGV’s, although admittedly most are now trialling delivery by bikes again including sainsburys and waitrose.
UCC’s Other projects to be trialed
Other projects of a similar nature and to note are TNT experimented with using a mobile depot made up of a lorry trailer with warehousing and cycle logistics running out of it to an area of brussels. It proved to reduce emissions of co2 by 24% and pm2 by 59%. Unfortunately the cost of delivering via this method doubled per parcel and the project was deemed to benefit mostly other stakeholders rather than TNT. UPS seem to of recently re-visited the idea by droping in mobile containers to act as micro hubs whilst cycle logistics goes out ad delivers
UCC thats profitable without even a parcel through the door? well this is a project we are working on and not able to disclose just yet due to commercial sensitivity (sorry all, we will come back to this) but even with just the example we have laid out councils can easily encourage the use of UCC’s to the private sector, claim the credit for helping with policies or sites the for the set up of the UCC that will help aid the development of it and not have to worry about investing or subsidising it. Seems like a win for all stakeholders and is sustainable going forward.
i’m open to this concept being challenged though if i haven’t thought of anything to add in, debate is how these things evolve further