By Dr. Beatriz Royo, Associate Professor at ZLC and Dr. M. Teresa de la Cruz, Project Manager at ZLC.
Digitisation is having one of the major impacts on the business models of national postal operators. Letters have been replaced by e-mails, and more and more people tend to share their experiences trough the social networks rather than sending postcards. Meanwhile though, the growth in e-commerce has seen a huge rise in the volumes of parcels and small packets offered to the postal system.
The packet and parcel business is becoming more representative despite the fact this business is fiercely competitive as reflected by the numbers of carrier and courier vehicles to be seen on the streets .
The volume of heavier and bulkier packets and parcels has meant that previously pedestrian postal delivery rounds have often had to be motorised, adding yet more vehicles to the delivery traffic congesting and polluting urban areas.
The expected population growth foresees a big impact on the cities mobility with more commuters and parcels deliveries, therefore cities need to redefine the city model for mitigating the negative impact and guaranteeing its liveability and sustainability. Municipal authorities are tackling this through increased policies, regulations and investments. For example, pedestrianising streets or limiting the hours permitted for vehicle access, or banning large or particularly polluting (ie diesel) vehicles in particular streets or entire zones. This has an inevitable impact on postal service operations, and ZLC has for the last year been working with Correos, the Spanish postal service operator, to explore how its business models and working practices can contribute to sustainable urban mobility while continuing to offer a competitive and timely service, looking particularly at the city of Madrid. Correos is of course a very visible and recognisable presence on the streets of Madrid and is eager to improve its sustainability performance.
Like many postal and courier companies, Correos sees part of the solution as moving to a new business model that combines different solutions. The use of the popular parcel-lockers and the fleet replacements are the most common ones. The latter is based on incorporating different kinds of electric vehicles, from electric bikes to 3-4 wheeled electric vehicles that needs for urban consolidation/ deconsolidation centers known as “micro-hubs” to shorten final delivery distances and facilitates vehicle shift. The results of the work have reaffirmed that the traditional postal model (based on the extensive network of small delivery units known as micro-hubs in the city centres) allows soft modes for distribution, for which Correos is a pioneer using these types of facilities.
These microhubs are locations closer to the final delivery points to which packets and parcels, shipped out in bulk from the sorting depots in larger vehicles, can be transhipped to the last mile whith eco-frendly freight vehicles..Although this transhipment requires minimal infrastructure and no storage equipment; howeverit introduces a discontinuity and handling operations which adds damage risks time may affect the service quality.
ZLC and Correos have been working intensively to analyse and gather data on the current Madrid delivery network in the framework of an European Project founded by INEA called POSTLowCIT. The result is a mathematical model that is able to determine the number of resources required to serve both networks designs, either the business as usual one or the new business model using micro-hubs and other types of vehicles, and assess the economic, environmental and operational impact.
The mathematical model was implemented in a tailored, parametrized software tool that allows Correos simulating many possible scenarios, for any of which the company needs to be able to estimate operational costs as well as impacts on environmental and service quality goals. It considers a large amount of variables: different types of vehicle, varying levels of demand, capacity (how long a round can be served by one load on one tricycle?), vehicle speeds – affected not just by congestion but by whether the vehicle is motorised or pedal-powered and by the terrain. Additionally, the tool allows Correos to reflect all the relevant restrictions and regulations affecting permitted routes and vehicle types. These are constantly changing as municipal authorities refine their own approaches to the mobility and sustainability problems, and so the model will need to be re-run frequently to analyse new scenarios.
The tool has been tested at ‘desktop’ level across several scenarios that have yielded important considerations and insights. These will be taken into account before implementing ‘live’ pilots that will further validate the mathematic model is based on.
The results should mean that Correos is better placed to improve last mile delivery in ways that improve efficiency, maintain service quality and reduce overall logistics costs, whilst contributing to reduce Correos’ environmental impact and improving city’s mobility and life-quality.