Urban Logistics as a Service (ULaaS): the Next Frontier of Last Mile Logistics

The COVID-19 pandemic accelerated the pace of the on-demand economy.

Consumers are increasingly making small orders each day, while expecting immediate or next day deliveries, increasing the number of vehicles in urban areas with severe impact on cities’ quality of life. Freight transport makes up about 25 percent of traffic in cities but takes up 40 percent of road space and creates 40 percent of transport-related emissions[1].  According to the World Economic Forum[2], Urban last-mile delivery emissions are on track to increase by more than 30 per cent by 2030 in the top 100 cities globally (by population). Without intervention, these cities’ emissions could reach 25 million tons of CO2 annually by 2030.

            On the supply side, innovations and digital technologies are contributing to make this possible: home deliveries and pick-ups done by individual drivers, for example, usually the same drivers working for the Transportation Network Companies (TNCs) like Uber, are making same day deliveries a reality.  Tracking capabilities provided by cell phones and GPSs are providing more visibility for truckers and clients, enabling better planning for orders and deliveries. It is not without consequences though, that the last mile logistics is getting more active and important. The transportation of small units more frequently are increasing the number of vehicles in the streets and so congestion and emissions.

We probably cannot revert this trend as customer behavior might have changed permanently, however, we can make that better, and use the same technologies that are enabling these trends, to make it more efficient and sustainable. This is the main idea we want to share in this post.

            From our perspective, the opportunity is to expand the use of technologies beyond solving specific problems, toward improving the last mile logistics as a whole.

The menu of digital innovations that can contribute to this task are broad: Internet of Things, Blockchain, Artificial Intelligence, Cloud computing are some of the technologies that, if put together, can improve the urban logistics system.

Here is our proposal:

The proposed concept for ULaaS (Urban Logistics as a Service) is the “Integration of various form of urban logistics services and assets into a single digital platform accessible on demand and based on the concept of sharing economy”. The integration of the different services and stakeholders of Urban Logistics in a single platform allows the provision of service on demand, and at the same time, constitute as a “control tower” for traffic authorities, policymakers and for the shippers themselves, improving the efficiency of logistics movements, reducing congestion and emissions.

We don’t need to go far to see how an integrated approach for transportation based on technology can be disruptive. The well-known concept of Mobility as Service (MaaS) is built upon this vision and inspired our proposal.  The key concept behind MaaS is to offer travelers mobility solutions based on their travel needs[3]. This is enabled by combining transportation services from public and private transportation providers, through a unified gateway that creates and manages the trip, which users can pay for with a single account. Users can pay per trip or a monthly fee for a limited distance.

The concept of ULaaS includes several dimensions and each one can be prioritized according to the needs of a city or area, namely:

1. the main goals of the urban logistics system (for example: reduce congestion or increase safety)
2. stakeholders
3. processes to be managed
4. technology to be applied

Dimensions are grouped in two levels, strategic and system & components. The strategic level has a strong link to policies and regulations, and the system level to the different activities that take place in the logistics of the last mile.

To understand the value proposition of ULaaS, let’s revisit some of the biggest challenges of the last mile and how our solution solves that.

• Variety of stakeholders and interests (everybody meet at the last mile!) including shippers, carriers, retailers, and the population that consumes the products and use the transportation system).  -> ULaaS will constitute a digital Platform to integrate urban logistics stakeholders (shippers, carriers, retailers).
  • Scarcity of space and infrastructure in urban areas. IoT components implemented in the infrastructure, vehicles, and cargo (when applicable) to synchronize the deliveries and enable real time planning and adjustment.
  • Poor vehicle capacity utilization. Manage carriers ‘on demand’ including not only truck drivers but ridesharing drivers and independent couriers using scooters, bikes, or other means of transportation,
  • Complex decisions in a short period of time. Utilization of data science concepts and AI to guide decisions by policy makers and stakeholders
  • Lack of Sustainability of the solutions of Urban Logistics. Funded by the public sector and developed with local startups, ideally integrated with traffic management activities in the city to guarantee sustainability and, in the medium term, exploring public-private partnerships.
  • Disconnect between policies and implementations of solutions. Use Policy Labs to transform information into Policies and Regulations.
  • Urban Logistics environmental externalities. The UlaaS platform allows non-motorized transportation to be incorporated in the portfolio of services available on demand, using the available infrastructure and leveraging the sharing economy, while reducing the carbon footprint of logistics movements in the city.

The concept is not completely new, as similar initiatives are being deployed in Europe as we speak, like ULaaDS in Europe, but our proposal is to rely heavily on technology to streamline processes and integrate stakeholders.

We have the opportunity to develop a solution tailored to Latin America and The Caribbean and most importantly, tailored to each city.

We believe that the ULaaS platform can help policymakers to leverage technology to organize the urban logistics system; while accelerating the engagement of small firms and startups into this task. By using principles of sharing economy, the platform will contribute to increase efficiency while generating new businesses opportunities. The idea is launched. In our next blog post we will deep dive in each component of the ULaaS solution as well as discuss a roadmap for its implementation!

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[1] “Framing Sustainable Urban Logistics in Cities – ICLEI Sustainable Mobility.”  https://sustainablemobility.iclei.org/framing-sustainable-urban-logistics-in-cities/.

[2]“The Future of the Last-mile Ecosystem analysis”. World Economic Forum, January 2020 http://www3.weforum.org/docs/WEF_Future_of_the_last_mile_ecosystem.pdf

[3] Glasco, Jon. “Mobility as a Service: A Blueprint for Disruption?” Accessed May 5, 2021. https://hub.beesmart.city/en/solutions/smart-mobility/mobility-as-a-service-a-blueprint-for-disruption.