1. URBANIZATION
10/9/201
5
Analysis Report
Agenda: Analysis of Urbanization and need for City
Distribution Centers/Urban logistics

2. URBANIZATION
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URBANIZATION
A N A L Y S I S R E P O R T
MEGATRENDS- URBANIZATION
According to UN, as of 2014, the percentage of the world urban population was 54 percent,
which is expected to increase to 66 percent come 2050. The largest increases will most
likely come from lower-income countries of Asia and Africa. [4]
According to Frost and Sullivan Analysis, 3 out of 5 people will live in the cities. Hence
following trends will be observed due to urbanization.
IMPACT OF URBANIZATION ON LOGISTICS AND SUPPLY CHAIN
MANAGEMENT
More congested cities means more traffic, so this could account for slower deliveries and
longer lead times. To avoid this, the logistics companies will be forced to have more spokes
in the cities and fewer hubs. Heavy Commercial vehicles will carry goods to big warehouses
at outskirts while Medium and Light CVs will deliver goods to city warehouses.
Also, urbanization will compel the cities to adopt various ongoing and upcoming
alternatives such as:
Mega City
•City with a
minimum
population of 8
million
•35 megacities in
2025
•Example: Greater
London
Mega Regions
•Cities combining
with suburbs to
form regions
•Minimum
population of 15
million
•Example: Delhi
NCR(Noida,
Gurgaon,
Ghaziabad) in
India
Mega Corridor
•The corridors
connecting two
major cities or
regions
•Population>= 25
million
•Example: Hong
Kong - Shenzhen-
Guangzhou in
China
Mega Slums
•1 million urban
poor living in an
area measuring
just 1.5 square
miles

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 2008- Off peak deliveries, Consolidation Centers, Propriety EDI
 2010- Multimodal Deliveries, Locker Boxes, Real time Solutions
 2012- Hybrid/Electric Fleet, Shared Fleet, Self-Collection Points, Smart Trucks with
Sensors
 2015-2020 – Self Monitoring Vehicles, Lifestyle carriers, Cloud Logistics
CURRENT CITY DISTRIBUTION LIMITATIONS
The progress and profitability of the current city distribution centers is limited because of
the following factors:
 Insufficient Infrastructure i.e. Parking difficulties, No space for loading/unloading
of goods
 Traffic Congestion
 High operating costs of warehouses
 Inefficient energy consumption and CO2 emission
 Lack of information sharing and transparency
NEED FOR CITY DISTRIBUTION CENTERS
According to Frost and Sullivan Analysis, 2012,”By 2025, 3 out of 5 people will
live in cities. This implies that 500 million deliveries are expected per person
per day per city.”
This also means that the urban cities requires more freight movement than before. With
the advent of e- commerce/online retail and competitive market, the supply chain is
tending towards agility and providing higher service levels. According to current analysis,
certain mega cities are treated as customers and this will soon become more common with
the increasing number of mega cities. But urbanization poses the following challenges to
the supply chain:
1. Modern supply chain will require closer proximity to consumers’ markets as well as
better consolidation/transshipment facilities.

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2. Greenhouse gas emission and noise pollution pose severe environmental impacts to
the population
3. Congestion due to heavy, medium and light CVs
4. Requirement of dedicated loading/unloading space
5. Flow of information to manage efficient movement of goods
Many cities understand that there is a need to go further than just regulating truck traffic.
[1] Their strategy is oriented towards ‘city logistics’. Thus city distribution centers can
provide efficient and sustainable movement of goods in cities.
ACTIVITIES INVOLVED IN CITY DISTRIBUTION CENTERS[3]
Urban Logistics offers unique tailor-made solutions for the transport of goods
in cities by consolidating & rationalizing the existing logistics platforms &
creating innovative solutions for the future through the use of information
and communication technologies – Frost and Sullivan
Urban logistics activities
ROLE OF OPEN MARKET IN LAST MILE DELIVERIES
City
Distribution
center
Transpotation
and
Distribution
activities
In-Bound
transportation
Outbound
Transportation
Warehousing
activities
Storage
Inventory
Management
Value-added
activities
Planning/Mark
eting
Other
optimisation
techniques

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‘DHL is working together with numerous collaborators and technology providers, such as
the China development Institute, the Logistics Institute of Asia Pacific in Singapore, IBM and
Siemens. Together, they are building the suite of products and solutions that will help
provide transparency, visibility, security and total optimization for last-mile deliveries into
cities. DHL has been operating a consolidation center at Heathrow since 2001, and its
contract was expanded with the opening of state-of-the-art Terminal 5 in 2008. Chilled,
frozen and ambient goods worth about half a billion pounds a year are handled by DHL’s
purpose-built warehouse. Each month, the site receives 200,000 cases from 3,500
suppliers to businesses in Heathrow’s terminals. It cross-docks the goods into 14,000 roll
cages and carries out 490 vehicle journeys and 4,600 secure deliveries to the terminals.
The end to- end solution has resulted in an increase in truck load factors to more than
95 % (from 40 % previously), higher retail sales due to better stock availability and more
time for customers, improved security of goods and more recycling.
In Bristol and Bath, DHL’s consolidation center has reduced delivery trips for participating
retailers by 75 % by servicing 87 retail outlets with high truck utilization at pre-agreed
times. It also collects returns and inter-store transfers, freeing up retailers to focus on their
core business.’[1]
This study showcases examples to show the viability of leaving last mile deliveries to the
open market. With better information flow and transparency provided by logistics solutions,
more parties will have the opportunity to collaborate efficiently- for their own benefit and
the benefit of the city and environment.
ROLE OF AUTHORITIES IN CITY DISTRIBUTION
City governments plan for an urban future through vehicle access restrictions, economic
instruments and special infrastructures which play a major role in city distribution.
 Access Restriction
o Low Emission Zones (LEZ): Different cities across the world have introduced
LEZ to manage air quality in urban areas. Well-known examples include the
“London Low Emission Zone” and the “Umwelt zone” implemented in many
German cities such as Berlin.
o Time Windows: In many countries, transportation of heavy vehicles is not
allowed within the city during peak hours. For example India and Singapore.

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o Vehicle Weight Restrictions: Also in many places there is a restriction on heavy
vehicles entering the city premises.
 Economic Instruments
o Congestion Charging: It is a charge made to drive into an area, typically a city
center that suffers heavy traffic. Some well-known examples of cities where it
is charged are London and Milan.[2]
o Incentives and Subsidies: Sometimes subsidies are required to help shippers
and freight carriers start new initiatives for reducing the negative impact on
the environment, since a huge initial investment is often needed to start new
schemes. If new schemes such as urban consolidation centers and intermodal
freight terminals are financially difficult for shippers and carriers, subsidies
from the national government or municipality should be provided.[1]
 Special Infrastructure
o Freight Lanes: In Barcelona, the municipality has organized traffic in an
innovative way on some of its main boulevards by devoting the two lateral
lanes to traffic during peak hours, deliveries during off peak hours, and
residential parking during the night.[1]
o Urban Consolidation: It refers to policies intended to make better use of
existing urban infrastructure. Example of cities following urban consolidation
are Sydney, Singapore etc.
o Centre Loading/Unloading Areas: The Tokyo off-street parking ordinance of
2002 compels all department stores, offices or warehouses to provide for
loading/unloading facilities when they have a floor area of more than 2,000
m2[1]
APPENDIX
1. Insight on Urbanization : By DHL OneVoice WebLink (PDF)
2. Congestion Charging - Wikipedia
3. Frost and Sullivan Analysis : PPT
4. UN World Urbanization prospects 2014 - PDF

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