Profitable last mile delivery: daily trade-off when using city logistics

Posted by Dr. An De Wispelaere on 28/01/2016

The world of logistics is evolving faster than ever. The key to competing in the logistical race is to collaborate and use all available networks. Customer demand, challenging delivery times, traffic jams and driver legislations are increasing the complexity in controlling distribution costs on a day-to-day basis.

 

CityLogistics for Last Mile Delivery

 

City logistics

The demand for urban freight transport has increased due to the growing concentration of
the population in urban areas in combination with the rising popularity of e-commerce and home delivery. Driving a trailer into the city center, however, is a nuisance for everybody involved.

The proposed answer: City logistics.

According to Wikipedia City logistics is “The process for totally optimising the logistics and transport activities by private companies in urban areas while considering the traffic conditions, congestion issues and combustible consumption, with a view to reduce the number of vehicles in the cities, through the rationalisation of its operations.”

Examples of applications of this process are CityDepot and Bubblepost in Belgium, Binnenstadservice in The Netherlands and CityLogistics in France. 

 

BubblePost City logistics

 

Trade-off

The trade-off in making use of such a third party logistics provider should not be decided based on rules of thumb: in general it is very hard to make the last mile delivery profitable in urban areas, but due to the volatility in customer demand the marginal cost to go into the city center varies based on your surrounding volumes and the customer specifications.

Advantages and disadvantages

Short delivery or pickup times, poor accessibility, congestion and restrictions on vehicle size all play in favour of making use of such solutions. The extra cost, the lead time to take into consideration, the loss in customer intimacy and giving away your delivery flexibility are some of the downsides to this advantage. Both cost and lead time agreements are based on a number of parameters, making it even more challenging to objectify the entire concept. Is it to my advantage or not, am I getting a good deal or not?

Our opinion

Why decide in advance, while you can take all these considerations into account and
optimise your distribution challenge on a day-to-day, or even order-to-order basis. We love to dream but we believe in numbers! Let the numbers, or better yet the exact marginal cost, tell you whether or not to use city logistic partners and for which order. 

According to Peter Hinssen, one of Europe’s thought leaders on the impact of technology on our society, the network always wins. You need to speed up your reaction time, beat the clock of your competitors and anticipate consumer trends before they even happen.

Route Optimization - The network always wins

Conundra’s optimization solution integrated the use of any partner network. Whether it is a simple outsourcing agreement or making use of city logistics, any cost and service level agreement with the customer and partner is taking into account to determine your optimal distribution plan.

Take back control and make sure your organisation has everything in place for the networkisation of our environment. With Conundra’s Optiflow you will be ready:

Our network always wins!

Conundra Optiflow: the integrated solution to your distribution !

Visit www.conundra.eu to learn more about our transport solutions. Or ask us for a demo. 

GET A DEMO OF OPTIFLOW


“Take back control and make sure your organisation has everything in place for the networkisation of our environment”

Topics: Route optimization

Dr. An De Wispelaere

Written by Dr. An De Wispelaere

An is co-founder and managing director of Conundra. She has over 10 years of experience in mathematical optimization and is the experienced and creative spirit on many of Conundra’s breakthrough systems. An has a PhD in mathematics and has numerous publications within this field.