According to a 2018 United Nations report, 55% of the world’s population lives in urban areas, and is expected to rise to 68% by 2050. This translates to 4.2 billion people living in urban areas in 2018 and an estimated 6.7 billion by 2050.
An eighth of this population resides in megacities, like Tokyo, home to more than 10 million residents, and is just one of the 43 megacities located around the world.
Increasing population creates additional pressure on an already congested supply chain. Truck, van, rail, and shipping transportation methods are all feeling the pinch:
- 275,000 – Average daily number of passengers that pass through the world’s busiest airport, Hartsfield-Jackson Atlanta International Airport (ATL).
- 40% – Expected growth percentage of urban freight delivery by 2050, according to the 2017 MHI Annual Industry Report.
- $500 million – Lost revenue in San Diego because of customs inspection wait times at the U.S./Mexico border.
- 9.3 million – Small containers handled by the Port of Los Angeles in 2016.
- 1,300 – Number of freight and passenger trains traveling daily through Chicago.
- $2 billion – Cost of a commercial vehicle-only lane project on I-75 in Georgia, intended to alleviate freight congestion by creating the first smart commercial vehicle corridor in the U.S.
Supply Chain Pressures
Traditional logistics solutions must be re-designed to cope with increasing congestion and consumer pressure for immediate delivery. Historically, distribution centers were built in outlying locations and focused on efficiencies in procurement, inventory, and distribution – but with today’s congested infrastructure, delivery is more difficult.
Transporting large loads to small retailers or residential locations within cities has increased the cost and complexity within the supply chain. Delivery vehicles compete with commuter traffic on already congested highways during peak time periods, not to mention the shortage of qualified truck drivers and a delivery system at full capacity.
The most critical issue is the “last mile” to the urban consumer. Long travel times in congested traffic combined with outdated city planning codes, parking restrictions, and load limitations introduce additional complexities.
Finally, crowdsourced delivery is another trend can actually hamper transportation operations. While seen as a way to use vehicles who were “already going that way,” for-hire vehicles have increased from 50,000 to 130,000 vehicles in New York City since 2011; this new travel option further exacerbates the vehicle congestion problem.
New Logistics Solutions Emerge
The good news is that manufacturers, distributors, researchers, and other professionals are creating innovative solutions to address the increased urban congestion.
The use of data analytics is becoming more prevalent; GPS data, expected vs. actual travel times, and route maps are all analyzed to identify problem areas likely to cause delivery delays. In some cases, customers may expect drivers to unload and stock deliveries, creating unexpected delays. Once identified, companies can implement new processes and procedures to reduce delivery times.
Using smart lockers is an efficient way to deliver multiple shipments to a central location. The use of mobile warehouses within cities allows companies to reduce reliance on large, remote distribution centers and offer quicker delivery and inventory restocking.
Additionally, delivery times are no longer limited to an 8 am to 5 pm schedule. Working with customers to deliver in off-hours or overnight allows for more efficient transportation. Automated vehicles are also on the horizon, allowing driverless deliveries that reduce labor costs while improving efficiency.
Drone usage is also increasing and proving to be especially beneficial for critical items with a high value and short shelf life. Drones are now being used to transport medical supplies, like blood and lab samples, between hospitals and offsite labs, allowing for quicker, safer delivery compared to delivery services. Drones are also used for remote or emergent deliveries as in the case of natural disasters and fires where traditional transportation methods may be dangerous if not impossible.
Harnessing Data, Technology to Improve Logistics
As urban congestion continues to worsen, companies will depend on data analytics and supply chain visualization to improve all aspects of the supply chain. Mapping tools allow companies to visualize their supply chain, collect data, use advanced data analytics, and report key indicators that prove where and how the supply chain can be improved. Advanced data analytics, AI, and visualization will continue to help the supply chain evolve as our growing world increases in complexity.