An Agent-Based Simulation Study on the Effectiveness of Urban Consolidation Initiatives

With this study, we assess the effectiveness of urban consolidation centers (UCCs) under a variety of governmental policies and company-driven initiatives. The inefficiency of urban freight transportation contributes to external costs such as congestion, emissions, and noise hindrance. Furthermore, inefficient transport reduces the profitability of the parties in the supply chain. To address these problems, there is a strong interest in city logistics initiatives. For a recent literature review on urban logistics, we refer to Bektas et al. (2015). They report that most studies describe and evaluate existing initiatives. A number of papers adopts an operations research perspective, mainly contributing to (i) the positioning of UCCs and (ii) solution methods to one-echelon or two-echelon routing problems. The use of a UCC characterizes most urban logistics initiatives. The key concept is that inbound trucks no longer enter the city center, but instead unload at a UCC, typically located at the edge of an urban area. Subsequently, goods can be bundled at the UCC, such that efficient tours can be made for the last-mile distribution. Furthermore, environment-friendly vehicles can be dispatched. Particularly for independent low-volume, high-frequency deliveries, UCCs could substantially improve performance. Browne et al. (2005) provide an elaborate overview of UCC projects, and report that only few UCC initiatives remain in operation for multiple years. A key success factor is the involvement of commercial parties that share a common objective. UCCs yield the best results when involving a sufficiently large number of small, independent shippers and retailers, where low-volume, high-frequency orders are the norm. Government administrators are typically required to cover the capital expenses of the UCC. Gains from policies could (partially) cover operational expenses. However, UCCs depending primarily on subsidies are unlikely to succeed in the long run, as profit margins in logistics are small. To achieve norms on external costs, administrators encourage or enforce the desired behavior of actors in the supply chain by implementing policies. Common policies are