How to create value with urban freight transport solutions?

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1 How to create value with urban freight transport solutions? A comparison of consolidation solutions Susanne Balm Consultant Logistics Sustainable Transport and Logistics TNO Delft, The Netherlands

2 Demonstrations and partners STRAIGHTSOL Today: a comparison of consolidation solutions Storage buffer Mobile depot Urban consolidation center

3 Content of today Introducing the solutions Comparison Business model changes Effects and requirements Value for different stakeholders and willingness to pay

4 The STRAIGHTSOL demonstrations DHL s urban consolidation center near Barcelona TNT s mobile depot in Brussel Source: Stovner Senter s storage buffer in Oslo

5 Urban consolidation center Mobile depot Storage buffer

6 Business Model Canvas Key partners Who are the organisation s key partners and suppliers? Which key resources are we acquiring from partners? Which key activities do partners perform? Key activities What key activities do our value propositions, distribution channels, customer relationships and revenue streams require? Key Resources What key resources do our value propositions, distribution channels, customer relationships and revenue streams require? Value proposition What value does the organisation deliver to the customer? Which one of our customer s problems are we helping to solve? Which customer needs are we satisfying? What value is created? Externalities Which environmental and societal impacts does the business model cause? Customer relationships What type of relationship is established between the organisation and the customer? What type of relationship does each of the Customer Segments expect? Channels How do the customer segments want to be reached? How does the organisation reach the customer now? How are the channels integrated? Customer segments For whom is the organisation creating value? Who are the most important customers? Cost structure What are the costs associated with the business model? Which key resources and key activities are most expensive? Revenue streams For what value are the customers willing to pay? For what do they currently pay? How are they paying? How would they prefer to pay? and is it financially viable?

7 Key Partners Key Activities Value Proposition Customer Relationships Customer Segments Key Partners Key Activities Value Proposition Customer Relationships Customer Segments 1. City Retailers Council or local Providing 1. Dissemination space and and A more 1. One attractive time delivery shopping by 1. Improved Personal relationships cooperation with with the Retailers 1. B2B, / the shop retailers owners Subcontractors Express services Both short term en long term and B2C Mobile administration depot LSPs manufacturer Delivery services promotion and to pick shops. up by bundling and several business shipping shop relationships retailers owners. both for are More the established. acquisition service. (receivers)(b2b) in the commercial Internal Tricycle LSP company (Securitas) Scanning tricycle Customer Deliveries Collecting or electric and acquisition controlling vehicle and environment. 2. Less parking Improved problem in Focus More on specific and satisfaction. support client needs. mall and in the city center (Ecopostale) Value handling 3. Enrollment added at service. of UCC the front of the shop, easier 2. Participation agreement 2. In the second phase also pickups goods arriving by tricycle to the logistic system. Personnel Owner of the parking shipments in the UCC operations the municipality buildings relationship with DHL location SC Spain) 4. instead buffer 1) Store storage goods. Planning and of vans in the operation in Possibility to deliver the of 3. Green image shopping 2) Combined Internal the terminal city. mall. Buffer goods to retailers when in daily basis 4. Free advertisement via city customers > Contact and in the Shortest delivery 1) Efficient time possible storage Combination Transport delivery transport for some to to with of the 3 hours MD other they council ask for on it. municipal Could offer cooperation city centre delivery. internal On time delivery and in perfect until 3. Handling DHL the retailers shops. supply city at chains asks for MD. newspaper short Bundled time and delivery storage. 2) website condition Storage Partners for the goods. Distributing service mobile depot, the goodsto the retailer. 3) Attractive property. shopping area (support by dissemination and promotion, free advertisement) 2. LSP s (since they deliver to Tricycle LSPs courier company Key Resources Key Resources Drivers, warehouse and mobile 1. A Key good depot Resources urban personnel, terminal. Good location, infrastructure, distribution Extra Mobile property center, depot, offices, for management system mobile space, 2. Urban fleet storage. depot, electric adequate to the tricycles and vehicles service RFID tricycles requirements scanning, > HR 3. Extra employee 1) Storage personnel; equipment. driver for and handling. administrative space, Cell phones Place or for 2) Space charging. HR and for access to get the consolidation messages equipment < fuel. from EPICS. for HR storage for buffer and storage transport. service. Cost Structure Mobile depot, vehicle fleet (electric cars and tricycles), personnel, Cost Structure subcontractors, insurance, locations and buildings, parking location. Cost Structure Investment in mobile depot, insurance, space, Investment (dissemination in scanning equipment and promotion) for RFID tags. Costs electric for tricycles, acquisition, personnel. Cell phones or access to read messages UCC, IT from GS1 due to the < combination technology costs for of EPICS. the fuel. supply chains Costs for internal storage and transport Training of personnel. Rent for buffer storage space, personnel and equipment for internal transport of goods in the shopping mall. 1. Investment costs: Extra arrangements in DHL facilities for UCC (IT and engineering) Labour cost for development of the solution, customer acquisition 2. Operating costs: Extra staff UCC, IT/engineering costs, Less transport costs Externalities Externalities Less emissions, less 1. Reduction of traffic and contribution Externalities to congestion, packaging, Indirectly. < emissions waste Less Less emissions 3. per Less disturbance < space ton visual delivered and and noise emissions occupancy nuisance of (un)loading Less disturbance trucks < disturbance in front of the of mall. of vehicles parking 2. Less space/parking problem Channels Channels Telephone, internet website, face 1. to Personnel face Channels contact for acquisition with delivery 2. Change their address Shop owners person are located 3. Last-mile delivery provided by within DHL the SC center. Spain Additional Face to contact face both when internal in LSP first phase delivers and goods 1) SMS and for to stores 2 ) Face delivery to face contact with internal LSP Revenue Streams > B2B in city centre Council buildings Usually, the receiver does not pay TNT, this is done by the Sender (TNT's Revenue Streams customer). Depending on their volume, frequence, destinations etc., TNT No revenue streams Express and the Revenue client mutually Streams agree on the price. Rent from shop owners. No extra payment for new services yet.

8 Key Partners Key Activities Value Proposition Customer Relationships Customer Segments 1. City Council or local 1. Dissemination and 1. One time delivery by 1. Personal relationships with the 1. B2B, the retailers administration promotion bundling several shipping retailers both for the acquisition (receivers) in the commercial (support by dissemination and 2. Customer Collecting acquisition and 2. Less parking problem in and support mall and in the city center promotion, free advertisement) handling 3. Enrollment at of UCC the front of the shop, easier 2. Participation agreement Personnel 2. In the second phase also 2. LSP s (since they deliver to shipments in the UCC operations relationship with the municipality buildings DHL SC Spain) 4. Planning and operation of Combined the terminal in daily basis 3. Green image 4. Free advertisement via city customers in the 5. Combination delivery to with the 3 other council on municipal city centre DHL supply city chains newspaper Bundled and delivery website LSPs Key Resources 1. A good urban terminal. Good location, infrastructure, management system 2. Urban fleet adequate to the service requirements > HR 3. Extra personnel; driver and administrative Space for consolidation Cost Structure 1. Investment costs: Extra arrangements in DHL facilities for UCC (IT and engineering) Labour cost for development of the solution, customer acquisition (dissemination and promotion) 2. Operating costs: Costs Extra staff for UCC, acquisition, IT/engineering UCC, costs, Less IT transport costs due to the combination of the supply chains Externalities 1. Reduction of traffic and emissions 2. Less Less space/parking emissions problem 3. per Less ton visual delivered and noise nuisance Less disturbance of parking Channels 1. Personnel for acquisition 2. Change their address 3. Last-mile delivery provided by DHL SC Spain Face to face both in first phase and for delivery Revenue Streams No revenue streams > B2B in city centre Council buildings Key Partners Key Activities Value Proposition Customer Relationships Customer Segments Retailers Providing space and A more attractive shopping Improved cooperation with Retailers / shop owners LSPs Internal LSP (Securitas) services to shops. Scanning and controlling goods arriving to the buffer 1) Store storage goods. in the and business environment. Improved logistic system. Possibility to deliver the shop owners. More service. More satisfaction. (B2B) shopping 2) Internal mall. Buffer goods to retailers when > Contact and 1) Efficient storage transport for some to hours they ask for it. Could offer cooperation internal delivery LSPs until the retailers shops. asks for the goods. Distributing the goodsto the retailer. Key Resources Extra property for storage. RFID scanning 1) Storage equipment. space, Cell phones or 2) HR and access to get the messages equipment from EPICS. for HR storage for buffer and storage transport. service. Cost Structure Investment in scanning equipment for RFID tags. Cell phones or access to read messages from GS1 technology EPICS. Costs for internal storage and transport Training of personnel. Rent for buffer storage space, personnel and equipment for internal transport of goods in the shopping mall. short time storage. 2) Storage service 3) Attractive shopping area Channels Shop owners are located within the center. Additional contact when Externalities internal LSP delivers goods 1) SMS and Indirectly. Less to stores 2 ) Face to face disturbance and contact with emissions of (un)loading trucks < disturbance internal LSP in front of the of mall. vehicles Revenue Streams Rent from shop owners. No extra payment for new services yet. Key Partners Key Activities Value Proposition Customer Relationships Customer Segments Subcontractors Express services Both short term en long term B2B and B2C Mobile depot manufacturer Delivery and pick up by relationships are established. Tricycle company tricycle 1. Deliveries or electric vehicle and Focus on specific client needs. (Ecopostale) pickups Value added by tricycle service. Owner of the parking instead of vans in location city. Shortest delivery time possible 2. Transport of MD delivery. On time and in perfect Partners for 3. Handling at MD. condition mobile depot, property. Key Resources Channels Tricycle courier company No compensation for the costs! Drivers, warehouse and mobile depot personnel, distribution Mobile center, depot, offices, mobile space, depot, electric tricycles tricycles and vehicles, employee for handling. Place for charging. < fuel. Cost Structure Mobile depot, vehicle fleet (electric cars and tricycles), personnel, subcontractors, insurance, locations and buildings, parking location. Investment in mobile depot, insurance, space, electric tricycles, personnel. < costs for fuel. Externalities Less emissions, less contribution to congestion, packaging, < emissions waste < space occupancy Telephone, internet website, face to face contact with delivery person Revenue Streams Usually, the receiver does not pay TNT, this is done by the Sender (TNT's customer). Depending on their volume, frequence, destinations etc., TNT Express and the client mutually agree on the price. Not (directly) financially viable

9 Environmental and societal effects CO2 emissions Air quality Employee satisfaction Customer satisfaction Urban CC Mobile depot Storage buffer / / / /- n/r = most effective

10 Requirements for successful implementation Proximity of receivers Number of receivers Participation of stakeholders Small goods Urban CC Mobile depot Storage buffer +/ Receivers LSP Authority Receivers LSP / = most depended

11 Value creation Stakeholder Value Urban CC Mobile depot Storage buffer Receiver Shipper / transport operator Authority Society Bundled delivery and storage Delivery time savings Liveability of the city / shopping area

12 Willingness to pay Stakeholder Value Urban CC Mobile depot Storage buffer Receiver Shipper / transport operator Bundled delivery and storage Delivery time savings n/r n/r Authority Society Liveability of the city / shopping area

13 Conclusions and recommendations Consolidation solutions improve the logistic system and therefore the liveability of the urban area in terms of pollution and disturbance The solutions improve efficiency for the transport operator and receiver. Though, these stakeholders are often not willing to participate, pay or share their benefit. A more equal and transparent distribution of costs and (social) benefits is essential. Key for successful implementation: UCC: Participation of receiver, shipper and transport operator and transparency of costs and benefits. Mobile depot: support from city authority Buffer storage: shipper / transport operator should take part in the investment, transparency of costs and benefits. Integration of IT supports operational performance.

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