Every fleet manager is aware of the current delivery dilemma facing major cities in the U.S. To underscore the problem, growth in U.S. online sales continues to gain traction, which means more vehicles are needed to deliver goods purchased online. According to CBRE, e-commerce sales totaled over $453 billion in 2017, reflecting a 16 percent increase from 2016. Additionally, deliveries are anticipated to double over the next five years.
In a recent Fleet Owner webinar, Anne Goodchild, director of supply chain transportation and logistics center at the University of Washington and Mike Becker, director of routing transformation at PepsiCo, weighed in on this issue. The presentation outlined why it can be so difficult to get a proper handle on deliveries in a metropolitan area and how businesses can mitigate some of these issues in the future.
Here are some of the major takeaways from the webinar:
Roadblocks to Metropolitan Deliveries and Routing
Competition for curbside spots and loading/unloading spaces is becoming fierce in major cities throughout the U.S. The main factors contributing to this problem include:
- Residential Parking: A 2017 curb parking utilization study in the City of Seattle indicated 90 percent or higher occupancy rates in Commercial Vehicle Load Zones (CVLZs). This means that residential parking is rapidly taking over areas normally designated for delivery drop-offs and pick-ups.
- On-Demand Passenger Services: Ride-hailing services such as Uber and Lyft are significantly impacting curbside availability and can often prevent delivery trucks from getting to their designated spots to unload goods. Even with Lyft aiming to have 50 percent of all trips be shared by 2020, this still adds 2.2 miles for every mile foregone in personal autos.
- Lack of Technology: Many commercial loading areas are designated by yellow or white paint. This outdated approach to designated parking spaces is leaving delivery drivers high and dry with no organized vehicle capacity system in place.
- The ‘Final 50 Feet’: The ‘final 50 feet’ is similar to the last mile concept in that goods need to move a short distance in a timely manner. Dr. Goodchild’s research concludes that the final 50 feet starts when a truck driver parks in a load/unload space and then ends inside towers where they make the final delivery. Many skyscrapers and tall, high-density buildings in urban areas like New York City were developed before motor-powered cars hit the road, so it’s evident that the future of truck deliveries was not factored into the design of these buildings. Running to various floors within a large skyscraper can add more time to each delivery. In the City of Seattle alone, 87 percent of city buildings rely solely on deliveries from curb and alley load/unload spaces. To further the problem, some city streets and alleys are not wide enough to accommodate more than one truck at a time.
- Delivery Times: Becker explained how crucial time windows are when it comes to setting delivery routes. Consider the fact there are approximately 1.3 trillion possible sequences for a 15-stop route: If one location needs an item delivered by 10 a.m., but another location in the opposite direction needs an item delivered by 11 a.m., it causes the sequence to change. That’s why it’s so important to have this data organized. Bad data creates bad time windows and bad geocodes, leading to increased miles and fuel costs, lost sales volume, and dissatisfied customers.
How to Optimize Delivery Routes and Capacity
When it comes to deliveries, cities want trucks to be able to move along quickly to reduce dwell time and failed first deliveries. The less time a truck is parked in a load/unload space, the more efficient the delivery process becomes. Reducing the amount of failed first deliveries would also improve the customer experience, lower traffic congestion, and cut down on theft.
During the webinar, a number of solutions were discussed:
Geocoding: Companies use geocoding to determine where deliveries need to go within a certain neighborhood or city (map to the right from PepsiCo). It’s crucial that geocodes are plotted correctly so that driver routing is accurate and supports the fastest, most direct route — saving both time and money. Technology can also help drivers identify where to park in order to deliver four to five packages in one shot, instead of just one. Fleets can leverage routing technology like Omnitracs Roadnet Anywhere to help with routing, dispatching, telematics, proof of delivery, and analytics.
- Non-Competitive Partnerships: These types of partnerships are becoming more important as curb space issues worsen, especially for smaller, private fleets. The 2018 NPTC Benchmarking Survey reports that 92 percent of private fleets rank customer service as most important, which means these fleets cannot trust just anyone to deliver their goods. They need to work with trusted companies in order to maintain the level of customer service they pride themselves on while staying competitive by delivering more goods.
- Locker Systems: Anne explained that buildings can install locker systems (i.e. mini-distribution nodes in buildings) that would allow deliveries to be streamlined in one central location for each building. This system is already being piloted in the Seattle Municipal Tower.
- Uberization of the Curb: The concept that the “curb is underpriced” is sparking conversations about alternative ways of pricing by time of day, type of delivery, etc.
- Technology Advancements:
- Automation: More automation is happening, but Dr. Goodchild explained that drivers do a lot more than simply drive. They move goods, navigate spaces, make decisions about the best way to handle the delivery, etc., so a human will almost always be involved in the process.
- Applications: Apps like Waze and Google Maps can also help drivers better predict traffic patterns to determine when is the best time to make deliveries.
- Integrated Solutions: UPS, which is a part of the University of Washington’s Urban Freight Lab, built a street space database, integrated freight and loading data in its transportation system and launched coded loading zone signs that allow for payment via smartphone.
The biggest takeaway? People are buying more goods online, forcing the transportation industry to find creative solutions to accommodate the volume of deliveries. The good news is many initiatives and plans are underway in metropolitan areas, and as more buildings are developed, they are starting to factor in how to handle the uptick in deliveries.
To wach the webinar on demand, go here.