he global population crowding into cities will almost double from 3. 6
billion in 2011 to 6. 3 billion in 2050, according to the United Nations.
The steepest increase will occur in developing areas of Africa and Asia,
which together will account for 86 percent of the urban population
boom, the UN says.
Congestion in certain megacities is already choking resources. An area of Beijing,
for instance, has 836 stores per square kilometer, with an average of 49 deliveries per
hour to those retailers, according to the MIT Megacities Logistics Lab. While some
metropolises have tried to curb runaway inefficiencies by taxing commercial vehicles
and restricting delivery hours, too many partially loaded trucks continue to ply congested streets.
Many companies have improved urban deliveries by consolidating their multiple
internal supply chains, and some are initiating efforts on multi-company logistics collaboration. Yet these efforts are generally incremental, and not moving at a pace or direction to fully transform urban logistics. Consider, for instance, a consumer packaged
goods com-pany that has multiple product divisions that all service a large retail chain.
These discrete product lines are often shipped via separate channels to the same retail
endpoint, resulting in untenable inefficiencies and congestion. Consolidating the different divisions’ products is a fine first step, but still only represents a portion of the many
product flows into just one retail location.
Beyond internal consolidation, companies may need to accept a shared delivery
approach. Archrivals may need to swallow their brand pride and employ consolidated distribution and transport to load products on the same vehicles for delivery to
the same retail locations. Companies also can achieve more efficient last-mile delivery by use of urban consolidation and distribution centers, which are sprouting up
across Europe and Asia.
Getting goods from distribution warehouses to city centers will eventually require
that private companies and governments develop new trade flows. This will be an ambitious undertaking that may demand unconventional approaches. Consider, for instance,
a proposed high-speed transportation system that would link Los Angeles and San Francisco in 30 minutes. While only hypothetical, this proposal embodies the type of bold
thinking necessary to create efficient new routes into crowded urban areas.
Other forward-thinking examples come from the designers of planned cities like
Astana, the capital of Kazakhstan. The Kazakh government is developing a “smart
mobility” initiative that includes intelligent transport systems, light rail, electronic vehicles, and natural gas powered trucks. Astana also plans to build data-centric central hubs
in which products will be aggregated and delivered via routes determined by real-time
traffic data analysis.
If there is one thing to learn from Astana, it is this: An efficient supply chain will require
data-driven logistics. Cities that understand the importance of data collection and analysis may gain a competitive edge over those that do not.
How is your company rethinking its supply chain strategy to prepare for accelerating
urbanization? Does it have a plan for efficient last-mile delivery in the megacities of
TRANSPORTATION & DISTRIBUTION
Efficient Last-mile Delivery
in Tomorrow’s Megacities
Rapid urbanization is an
unstoppable challenge for
supply chains that must be
reckoned with—and soon. As
more cities swell into megacities, the fundamentals of last-mile delivery, in particular, will
require a rethink. Businesses
will need to consider urban
delivery based on the point of
demand—where the products
are delivered—rather than
point of supply.
—Brad Householder, Principal, PwC’s