Transshipment networks for last-mile delivery in congested urban areas

Abstract

This work develops a systemic approach for enabling transshipment operations in congested urban areas, based on two fundamental city logistics needs: efficient utilization of existing infrastructure and flexibility for logistics operators. Specifically, this research introduces the concept of urban transshipment networks (UTNs), a collection of strategically located urban logistics spaces, for efficient and flexible last-mile delivery operations in congested urban areas. By implementing the UTN framework, logistics operators can select the transshipment locations, vehicle types and operating schedules that best fit specific distribution strategies, and, simultaneously, comply with access restrictions and overcome some of the logistics complexity of dense urban zones. This concept is particularly relevant for retail dynamics observed in large metropolitan areas in the emerging world. A two-echelon location-routing model formulation is proposed to address the UTN design problem. The formulation combines a mixed-integer programing model with a closed-form routing cost approximation. The model was tested through a consumer goods distribution case study in Latin America. Results suggest that, given proper fleet type and capacity, UTNs can significantly improve delivery process efficiency in highly congested districts.