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7 min

Urban logistics: the challenges facing cities

Part 1 of our Urban Logistics series:

Commuters, parking and planning

Our cities are under pressure. Urbanization is on the rise around the world, traffic is increasing, and space is becoming scarce. As consumers, we contribute to the problem in our own way through our contradictory expectations. But what can be done and how would it affect us? And what does the “last mile” have to do with it?


“We shape our buildings and afterwards our buildings shape us,” is a popular adage among architects which was first coined by British Prime Minister Winston Churchill. Its sentiment could also be applied more widely: We shape our cities and afterwards they shape us. After all, it has become clear that how cities evolve has an impact on each and every one of us.

Around the 1960s, the idea took hold in numerous industrialized countries that residential and industrial areas should be separated and, initially, that had many benefits. Both industry and delivery traffic for retailers create noise and air pollution and generally lead to a lower quality of life than in a purely residential area. But this separation also has its drawbacks, such as increasing the number of individuals commuting each day. A phenomenon such as rush hour only exists because so many people are criss-crossing the city at the same time.

Stuck in traffic for 272 hours every year

The latest edition of the annual INRIX Global Traffic Scorecard Report lists record figures for traffic jams in cities around the world. In Colombia, every Bogotá resident spends an average of 272 hours stuck in traffic; in Rome it is 254 hours, in Paris 237 and in Berlin and Boston more than 150 hours. People are spending hours of their lives waiting bumper to bumper.

An increasing number of factors contribute to these jams: In addition to commuters on their way to work, the list now also includes a number of delivery services. In Germany, the revenues from courier, express and parcel services has roughly doubled in just 15 years. Individuals who live in Germany, the UK and the US receive around 20 packages annually, while in China, the figure is an astounding 70 per person. One of the reasons is the acceleration of e-commerce. It is a megatrend which sees KION Group also benefiting from it since warehousing and supply chains have become increasingly important.

Though e-commerce grew by a remarkable 8 percent worldwide in 2015, it is closer to 20 percent today, with a forecast of even faster growth. And online retailers will be expanding their product ranges even further in the future, including developing their food offerings. What is often forgotten in all this is that package companies account for just a portion of all delivery traffic. “They get by far the most media attention, but the package delivery companies actually only represent about 20 percent of delivery traffic,” says Markus Schmermund, a vice president of Automation & Intralogistics Solutions at Linde Material Handling.

More and more factors are contributing to jams: In addition to people on their way to work, the list now also includes numerous delivery services.

The ‘last mile’ is the most expensive

The other 80 percent includes construction traffic and deliveries for retailers, pharmacies and restaurants. In a major German city such as Hamburg, around 800 food retailers alone receive deliveries every day. And 800 car garages receive multiple deliveries a day, as do more than 400 pharmacies. Over 2,000 newspaper and magazine vendors also receive deliveries every morning. The list goes on and on.

This is a stress factor for delivery drivers. The ‘Last mile’ is the term given to the final stage of delivery when end customers receive their orders and it is the most expensive step in the logistics journey. It is the final stretch for products that often will have been transported from around the world. Yet, while manufacturers can calculate and optimize the time it takes to manufacture individual parts down to the last second, logistics providers still struggle for that level of control over the last mile. Handing over the goods in person at the door is still very much an analog process. If the recipient is not at home, the delivery driver might have to do come back again, adding to the traffic numbers. One solution is to use packing stations more efficiently. In this respect, there is still room for package logistics providers to cooperate even better across the board. Alternatively, municipalities and local governments need to establish a clear framework with precise guidelines.

‘Last mile’ is the term given to deliveries within urban areas. It is still a challenge for logistics providers.

How do you go about urban planning?

This leads us next to urban planning, a complicated and long-term process where basic needs compete with the quality of life, and where environmental and commercial interests almost always collide. Not everything can be planned for, and not every plan evolves as expected; the separation of residential and commercial areas is a good example. And then there are developments that seem paradoxical at first glance. Who would have thought a few years ago that online retailers would suddenly be opening city-center stores and that retail trade would return to the city from out of town? What’s more, urban planners have to deal with conflicting demands from residents. “People want to live in a city worth living in, but they also want to get to work easily and have their packages quickly delivered,” notes Christian Jacobi, a managing partner at business and logistics consultancy agiplan, reflecting on these expectations. He is also on the board of the German Logistics Association (BVL), where he heads the urban logistics area.

He believes that part of the challenge is that so many actors are involved in the supply of goods in urban areas: municipal policymakers and administration, residents, retailers, industry and logistics service providers. They all have their legitimate interests and ideas for an effective urban transport system, especially for last mile delivery, that is as frictionless as possible. Policymakers and municipal authorities are working to reduce traffic, noise and emissions in a growing number of cities around the world. The idea of car-free Sundays has taken hold in major urban areas such as Paris and Berlin, bringing the vision of car-free city centers one step closer. Jacobi can understand these measures, but he is wary of drastic regulation. “We cannot completely shut off the cities from the supply chain. Instead, the focus should be on creating holistic solutions for transport and logistics in urban areas and using smart traffic management and new technologies to shape urban traffic,” Jacobi pleads, adding, “But the respective local context must be considered since no two cities are the same. Unfortunately, this means that there can be no template.”

A lot of actors are involved in the supply of goods in urban areas: municipal policymakers and administration, local residents, retailers, industry, and logistics service providers.

What cities can learn from intralogistics

According to the German Wirtschaftsverkehr 2.0 analysis, done by the Frankfurt University of Applied Sciences, a city’s various areas present very different challenges to delivery traffic. In city centers, each vehicle stop involves a particularly large number of trips on foot. The vehicle is used as a kind of depot with the drivers walking most of the time to deliver consignments. It also means that the stopped vehicles are potentially causing even more traffic problems. Particularly in mixed-use areas, there are often very few – if any – available parking spaces, which makes delivery vehicles even more disruptive. And in residential areas, vehicles must cover greater distances between stops, which, in turn, reduces efficiency.

Greater flexibility in route planning could reduce the time spent traveling between customers and there is one industry that is well-versed in this area: intralogistics. Decades of experience in handling millions of orders in distribution and logistics centers have given the industry an excellent foundation in this respect. After all, warehouses have the same goal of getting products as quickly as possible from one point to another and to exactly the correct place so that they can be found when needed. Intralogistics experts such as the KION Group could help to develop a completely new urban management system: “By applying the principles of material flow calculations to urban areas, it is possible to manage highly dynamic processes,” says Schmermund.

In fact, there are several other areas for potential crossover. Electric drive systems have been a feature in intralogistics for a long time, and electric vehicles can help reduce noise and pollution in cities. There are many connections, and KION Group covers many of them with its electric forklift trucks, software solutions, automated vehicles and other new technologies as well as its comprehensive approach. One thought is certainly clear: intralogistics could have answers to many of the challenges that cities are facing.

Coming Soon


Markus Schmermund about solutions that intralogistics may have for the last mile.