Leveraging public transit for robust last-mile distribution

Abstract

In many cities, public transit has been struggling to maintain service quality and increase ridership levels, leaving many systems in dire financial state. Simultaneously, urban centers are increasingly stringent on package carriers to decrease the negative externalities of vehicular traffic which they amplify, such as pollution and congestion. This thesis develops a robust methodology for identifying, at the strategic level, whether using public transit to perform part of last-mile parcel distribution in a capacitated environment is feasible and economically viable for both the transit agency and the carrier. A mathematical model to solve the transit-enabled multi-echelon location routing problem (TE-ME-LRP) which leverages continuous approximation (CA) for route cost estimation is presented. First, we defined the model as a static and deterministic problem. Then, we augment it to include demand uncertainty and model the problem as a two-stage stochastic program.

In a case study for the Boston area, we find that the excess capacity in the Massachusetts Bay Transportation Authority (MBTA) subway network far exceeds the package capacity needs for a large scale commercial package carrier. In an extensive set of experiments that aim to assess the model sensitivity, we find that operationally, this is an economically viable business model under certain vehicle types. Additionally, incorporating demand stochasticity sets the stage for more robust operations, as measured by the expected daily operating cost of the system, and enforcing last-mile delivery (LMD) service consistency only marginally impacts the bottom line. Lastly, we explore the impact of a pay-as-you-go payment scheme for the satellite facilities and conclude that this flexibility allows the carriers to respond more effectively to changes in demand patterns, yielding reduced operational expenditures.

If designed under favorable conditions, the use of transit-enabled last-mile delivery (TE-LMD) results in significant savings for the carriers, a new revenue stream for the transit agency, and a reduction in pollutant emissions.