Consolidated parcel deliveries: a good plan?

The consolidation of parcels for metropolitan areas have long been discussed as a concept that could achieve significant reduction in traffic movements. But is this correct in reality? According to industry association the Federal Association of Parcel and Express Logistics (BIEK) in Germany, the answer is “No”. At least, this is their overall answer based on a quantitative study of consolidated delivery in the last mile using the example of consolidation of two companies in the cities of Nuremberg and Munich.

The study found that consolidation reduces the number of delivery vehicles only by about 10% of the fleet, and that the shorter stop distances actually in part decreases the logistics performance of the routes. A significant issues that came forth from the research is that the competitive position of both companies deteriorated, especially of the one that sold the parcel delivery.

Based on the research BIEK emphasizes meaningful, alternative approaches to reducing traffic, including the following: better interaction with the parcel recipients, route optimization, loading zones, desk deliveries, micro-depots and cargo bikes, white-label parcel stations, parcel shops and optimized packaging. “These measures and concepts guarantee efficient and low-bureaucratic delivery,” said BIEK chairman Marten Bosselmann. According to BIEK, cooperation in attempts to consolidate will only produce results if the entire supply chain is reviewed end-to-end and not just in the last mile.

At SMART CITY GROUP we believe in consolidated deliveries, and we agree with the findings that in order to achieve that, there is the need to cooperate not only in the last mile, but to cooperate in the whole supply chain, starting at the first mile. By sharing data as well as physical and digital infrastructure the desired outcomes of reduced traffic movements as well as profitability will be achieved. One of the challenges of consolidation on such a level is that it initially may require early write-offs of existing real-estate and material handling systems. However, the gains following consolidation and restructuring will be well worth it.

Our position is that in order for parcel delivery companies to reduce their share of traffic movements and its impact on the quality of live in urban areas, a fresh and innovative approach is needed; an approach that transforms the sector, making it more future-proof and where new revenue streams are created. In order to achieve that goal it is imperative that we look beyond just parcels.

As a new and neutral third party, our vision is to co-develop the SMART CITY 360º logistics network™ as a As-a-Service platform. This will allow competing parcel companies to start consolidating deliveries, using GS1 address labels, containerization and easy to implement technical integrations. As the SMART CITY 360º logistics network™ will also integrate other types of supply chains, there will be possibility for address consolidation on the highest level, which will lead to the maximum achievable reduction of vehicle movements in urban areas. For development of this highly efficient logistics network parcel companies can opt to co-invest and share in its gains.

The full research report by BIEK can be downloaded here.