“Business concepts in urban logistics”

Rosário Macário

Lima, Peru workshop 19.10.2010

Grant agreement no.: 234061Coordination and support actions (Coordinating)Activity code:SST.2008.3.1.4.: Urban freight delivery systems

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Outline

Objectives of WP2 General overview Methodological approach Final output

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Identify, analyze and compare different business models present in the different case studies (taking also into account the different organizational and institutional settings behind it),

Contribute to the definition and establishment of logistic profiles taking into account the vertices of the triangle that frame those logistic profiles (agent needs, characteristics of the urban area and characteristics of the products/type of delivery).

WP2 General overview

The main goals of this work package

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Approach and description of tasks

Delimitation of cope for business

models and schemes

Definition of logistic profiles

Identification of dynamic mechanisms for business concepts implementation and

transferability

Input from WP1: regional reports

Synthesis of main findings and good practices identification Input to

WP4 and WP5

Interaction with

Workshops

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Scope for business models and schemes (I) Objective: Scope delimitation for business concepts in terms of models and schemes applied and/or expected to be applied.

What is a business model?It is a representation of how a company buys and sells goods and services and earns money.

Examples of business models :• Car pooling• Car sharing• Home deliveries• Taxi freight• Bycicle taxi

• Micro terminal• Bus freight• Tram freight• Freight postal boxes• etc

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Framework methodology: Business models canvas

Segment of customers a company wants to offer value to

Means of getting in touch with the customer

Kind of link a company establishes between itself and the customer.

Overall view of a company’s bundle of products and services that are of value to the customer

Representation in money of all the means employed in the business model

Describes the way a company makes money through a variety of revenue flows.

Voluntarily initiated cooperative agreement between two or more companies in order to create value for the customer

Arrangement of activities and resources that are necessary in order to create value for the customerAbility to execute a repeatable pattern of actions that is necessary to create value

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Example of application: Chronopost ConcordeParis case study

• Chronopost Concorde is an innovative organisation of parcel deliveries in the 7th and 8th boroughs of Paris using clean vehicles as well as a Urban Logistics Spaces (ULS) located in an underground parking lot

• Chronopost developed a new organisation, based on a main approach from a hub outside the city

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Framework methodology: Business models canvas

• Chronopost • Municipality of Paris

other stakeholders involved

• Fire brigade and a national body in charge of police enforcement Role: verifying the conformity to regulation

• Electricity distribution company of France Role: Provide advice in choosing the electric delivery vehicles and to contribute to the provision of the electricity supply devices

• Ademe (French Environment and Energy Management Agency)Role: Provide funding to invest in the electric delivery fleet. It also funded impact assessment studies.

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Framework methodology: Business models canvas

Express deliveries in the 7th and 8th boroughs of Paris. 57% of them are deliveries and 43% are pick-ups

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Framework methodology: Business models canvas

1,90 m1,90 m

1,90 m1,90 m

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Framework methodology: Business models canvas

A key element of this policy is to provide some transhipment facilities within the city walls, the Urban Logistics Spaces (ULS).

A decision was taken to provide some space in underground parking lots and provided public space at a “logistic cost”, i.e. a cost comparable to real estate costs for logistics facilities in the Paris region’s suburban locations. It has a hub outside of Paris and it uses a fleet of electric vehicles for the final deliveries.

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Framework methodology: Business models canvas

Concorde ULS gives Chronopost the advantage of being very close to its clients (city centre). Relations are diverse

This means:• no wasted time in congestion before

delivering the first costumers, • a higher productivity (70 addresses per

route instead of 56 addresses when the route started from a hub outside of the city limits).

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Framework methodology: Business models canvas

A daily shuttle between the Bercy Charenton hub and the underground Concorde facility made with a vehicle which can access the underground facility, limited to a height of 1.95 m. Chronopost has increased the loading capacity by adding a specific trailer to the van.

Before… Currently…To make the distribution trip, two routes per day are organized: one being a 3.5 hour long in the morning and the other a two hour long in the afternoon (two shifts). A productivity indicator is that 70 delivery points (addresses) are served per day per person.

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Framework methodology: Business models canvas

• B2B and B2C• High density commercial

areas customer with express deliveries of parcels up to 30kg and pick up

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Framework methodology: Business models canvas

Chronopost has invested €500,000 in the logistic facility, including civil work.The City of Paris decided to rent the underground logistic facility at the regional average price of logistics facilities (most of them being located in suburban locations at low rental cost). This average price is 60€/m²/year. A reduced price has been applied by the city of Paris during the first years in order to help Chronopost invest in the facility. The contract has been signed for a total of 10 years.

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Framework methodology: Business models canvas

The balance between additional costs and savings (compared to the previous organisation of operations) was null.

Savings made on fuel :41.000 km/year of fuel powered vehicles are saved by using electric vehicles

The average gain for private car parking space location is 80€/m²/year in Paris. So over a 10 year period, the logistic space could have brought 389,600€ to the city of Paris, instead of 182,625€.

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For the analysis of the feasibility of the business model we will use a business oriented framework largely inspired in the Porter model of competitive strengths

Scope for business models and schemes (II)

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Definition and establishment of logistic profiles (I)

Objectives: Based on the business models identified before, this task is going to undertake an assessment of the case studies best approaches and more adequate participation formats, in order to define and establish the logistic profiles and the best solutions for each type

Agents' needs

City area features

Definition of logistics profile

Product characteri

stics

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What is a logistic profile?Homogeneous group with similar logistics needs (Source: Logurb)

• restriction applied: hourly and weekly periods of delivery • size• easiness of handling• special conditions

• urgency of deliveries

• frequency of deliveries

• amounts to be delivered• timeliness of deliveries

Area profile: city area features Product profile: products characteristics

Agent needs'/delivery profile

• fragility

• perishability

• commercial density and homogeneity: number of shops per block, & of diferent shops, etc• logistic acessibility : level of congestion on the streets serving that area, existence of delivery bays, level of access between shop and the parking of freight transport

Step 2: Determine logistic profile according these variables

Step 1: Define logistic needs by defining:

• city area features, • product characteristics, and• agent needs

Definition and establishment of logistic profiles (II)

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Step 3: Determine the best solutions to each logistic profile defined

Source: Logurb

Definition and establishment of logistic profiles (III)

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Dynamic mechanisms for business concepts implementation and transferability (I)

Identify the dynamic mechanisms (“engine”) to facilitate the implementation of measures along the main types of initiatives Operations, Land use and Infrastructure, Environment, Regulations, and Technology.

Specification of relations between agents to identify needs for incentives and regulation. Example: B2B, B2C and R2Ta( regulator to transport agent)

Objective: Define dynamic mechanisms for business concepts implementation and transferability

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Agent Based Modelling (ABM) Approach

Business Models Prototypes

InteractionsEnvironmentCustomersService providersOperatorsProducersAuthoritiesetc

Business RelationshipsTransport Market

Agents

Dynamic mechanisms for business concepts implementation and transferability (II)

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In the end, the final output should identify: Which business models and schemes are best targeted to

urban logistics; Logistic profiles identified in the selected cases; Which dynamic concepts can be applied.

Final output

OutputD2 - Business concepts and models for urban logistics

Released by April 2010

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Thank you for your attention!

TURBLOG team at TIS:Rosário Macário (rosario@tis.pt )Maria Rodrigues (maria.rodrigues@tis.pt )

Phone: +351 21 350 44 00Fax: +351 21 350 44 01