Logistics, and specifically freight management, is a growing concern for cities as they address the optimization of their transportation management schema. Three trends are driving this globally:
- The global population is moving into cities and urban areas are becoming more densely populated and larger
- Lowering emissions levels in urban areas by reduction of traffic and optimization of freight transport is a concern for all cities
- Rapid growth in online shopping
- increase in online purchasing and populations access to the internet through smartphones improving worldwide
- consumer behavior changing so that even groceries and fresh produce are being purchased online with services like Blue Apron now competing against local grocers
- online shopping has led to a significant (20-25%) increase in delivery truck traffic in cities, and as more people move into cities and online shopping continues to rise the congestion and emissions from delivery trucks will rise as well
IoT and Autonomy Provide Hope for the Future of Freight Management
The highest level of automation and the most difficult challenge in getting to a fully autonomous vehicle (AV) will be operating in an urban environment. SAE International, an automotive standardization body, has a six-level taxonomy of AV with Level 0 being no form of driving automation and Level 5 being fully autonomous vehicles. While the different levels of automation suggest an incremental increase in functionality to move from one level to the next, the differences will require levels of magnitude increases in capabilities. Truly autonomous trucks will need exponentially greater sensing, decision-making, and computer speed than trucks operating just one level down in the automation hierarchy.
Short city blocks represent the longest leg on the autonomous journey. Kathy Winter, the vice president and general manager of the Automated Driving Division at Intel Corporation, explains it this way. “By their very nature, city streets are exponentially more complex than highways. The variety of objects encountered on a highway drive is relatively limited: cars, motorcycles, trucks, street signs, trees and bushes, guard rails, and a few other possible options. Leave the highway and much more is added to the mix. Humans for example – an infinite variety of humans walking, running, riding bikes, riding skateboards and scooters, riding hover-boards, going the wrong way, jumping out of cars, jumping into taxis.”
Why is this a Concern for Logistics Providers?
Over 25% of the transport costs can be attributed to last-mile problems, the least efficient leg of a supply chain. B2C deliveries often are 1 package per stop, so the congestion of urban environments leads to higher fuel costs and a compounding of last-mile delivery costs. Additionally, the increase in returns and failed deliveries makes matters even worse for these type of B2C deliveries in urban areas.
Retailers Need for Reliable Freight Management Rising
Consumers are finicky, so timely deliveries are essential to maintaining and growing your customer base and establishing repetitive business. A Voxware survey involving 600 consumers that focused on online shopping behavior revealed the following:
- 62% of respondents were less likely to shop with a retailer if an item wasn’t delivered within two days of the date promised
- 68% of respondents said their expectations for on-time delivery were higher during the holiday shopping season
- 43% of respondents expected delivery within three to four days
- 40% expected delivery within five to six days
- 42% of respondents still expected holiday gifts purchased online to be delivered within five to six days
- 59% of respondents stated they’d abandon shopping with a retailer altogether if they received two to three incorrect deliveries
- 55% of respondents would discontinue shopping from a retailer after two to three late deliveries
Consumer expectations are increasing. We are seeing this trend in the manufacturing world as well, where consumers and organizations are both expecting zero defects, so quality control and optimization are increasing in importance. In the second part to this two-part blog series on smart city logistics, we will address strategies for improving freight management in the urban environment.