Making the ‘on demand economy’ radically sustainable
Decentralized logistics? Sounds like a nightmare to every haulier. ImagineCargo founder Nick Blake sees a lot of benefits.
By Nick Blake
There are plenty of potential downsides to the logistics industry’s responses to customer demands for faster and more flexible delivery — poorer vehicle utilization, more small truck traffic and poor social conditions for drivers and riders. I believe that there are significant potential upsides too as these new demands are starting to make decentralized logistics solutions the natural way to meet requirements — something we haven’t seen in the business for many years. These decentralized solutions are perfect for deployment of low-impact transport giving us the chance to make supply chains more responsive AND sustainable.
Centralization has been a core theme during most of my career in the transport business — fewer, larger distribution and storage facilities giving the lowest per-unit cost, especially of course if one ignores external costs. In many countries these facilities have tended to be located well away from urban areas and connected by motorways — cheap long-distance trucking has therefore been the transport solution of choice. Even with this centralization trend improvements in process, systems and transport planning meant that overnight delivery was still possible.
Decentralization is the way to go
ImagineCargo focusses on essentially de-centralized logistics solutions. Both their bike/train/bike sameday express services and their new city logistics development rely on a totally decentralized approach to the supply chain.
In launching city logistics services ImagineCargo identified retail stores seeking to offer e-commerce and other home delivery services as a very important segment. These retailers are responding to rapidly changing customer behavior and in doing so can also defend against threats from large-scale pure e-commerce platforms. Those that choose to do this through a centralized supply chain approach would be difficult for sustainable transport operators to serve, hence ImagineCargo focused on decentralization.
ImagineCargo’s team thought they’d need to do an awful lot of persuading to encourage these retailers to consider using their existing store inventory capabilities to serve both customers who continue to visit the store as well as those who prefer to have delivery to their door.
In fact ImagineCargo discovered that a number of large-scale innovative retailers have been thinking along exactly the same lines them — making for some exciting ‘meetings-of-minds’. Even ‘edge-of-town’ retail locations can provide fast and responsive home delivery services to customers within the city using rail shuttles, cargo bike and cargo trike transport.
The simulation map shows the 30/60 min catchment area of cargo bike/trike operations at two edge-of-town locations near Zürich.
Newly found advantage for retail stores
Clever retailers are seeing the massive potential of this hidden capability to quickly get them into the on-demand e-commerce business with no need for a central facility, and no explosion in local fossil-fueled transport either. Plus they can increase utilization of their own effectively de-centralized logistics infrastructure inbound to the stores. Independent retailers may even suddenly find themselves in a superior competitive position with respect to global e-commerce players with no physical retail network of their own.
These hyper-local logistics solutions are perfect for the deployment of large-scale cargo bike and cargo trike fleets, replacing the need for 3.5t class trucks entirely. Fast, clean and flexible transport options can become the norm, and can continue to operate even in cities that in the future have to ban or severely reduce diesel-fueled vehicle movements in order to meet legal limits on CO2, noise, particulate matter and NOx.
Vehicles like these are key to the decentralized approach:
In countries that have retained a rail cargo capability the combination of rail with city logistics solutions also offers an alternative to the long-distance trucking component of centralized networks. In an operational scenario where imposition of appropriate higher carbon and other previously externalized costs becomes a reality, long-distance road solutions will inevitably become less economical — and will need to be minimized. In this situation the decentralised approach using rail transport will start to become much more cost-competitive than is the case today.
Dirty diesel problem
Perhaps technology will come to the aid of the trucking industry? There’s still no cost-effective alternative to diesel for high-weight long-distance transport…electric trucks with sufficient range and power in the 44t class seem far away. Self-driving trucks may not be the complete answer either if the power source is still a Diesel engine. However clean fast wagon-load rail cargo transport can easily fill the capability gap.
Thus rail transport over longer distances, some use of electric trucks in the 20t class for out-of-town deliveries and cargo trikes in the cities could well be the new ideal supply chain configuration as part of a decentralized logistics approach. And this while also meeting the higher levels of service of the on-demand economy.
Some might say that adopting a decentralized approach is a step into the past… I’d rather say it’s ‘back to the future’!
