Micro hubs for macro impact

Author: Edin Osmanovic

The 35th International Supply Chain Conference was held in Berlin on 17/18 October 2018. It is one of the largest events for the logistics industry anywhere in Germany, and I had the opportunity to attend. Over the course of two days, major logistics players and their suppliers and service providers came together to discuss the challenges they face, and possible solutions – some of which have already proven their viability in real-world settings.  

The hassles of the home stretch

One topic that garnered significant attention was last-mile delivery and the hurdles to be overcome during this phase – particularly in congested urban areas. This was the focus of many of the presentations I attended, and it spawned many interesting discussions. This comes as no surprise. It is often the most expensive and time-consuming part of the shipping process. Issues on this front include heavy traffic during peak delivery times – in Germany over 50 per cent of parcels are delivered between 7 am and 12 am – and growing pressure to reduce carbon emissions. Moreover, the costs and inefficiencies of the last mile are compounded by the continuing rise in multiple, low-value e-commerce shipments.

So what can logistics companies do to tackle these problems, and ensure their packages arrive at the recipient’s door in a timely, cost-efficient and eco-friendly manner?

A small change, a big difference

Prof. Uwe Clausen of the Fraunhofer Institute gave an insightful presentation on logistics in major conurbations. Of the potential solutions he showcased, I was most intrigued by micro hubs. These are miniature distribution hubs located within city limits. They present an attractive alternative to the current practice of van drivers traveling to city outskirts to pick up their consignments from large distribution centers and then driving back into inner-city traffic – often repeatedly on a single day.

Instead, larger delivery trucks drop off all packages at designated inner-city locations. Local couriers then retrieve parcels from these micro hubs. They then complete delivery, for example, on foot or by (e-)bike – so no problems with finding a parking space. This helps reduce urban traffic, resulting in a smaller ecological footprint, and cuts travel time for van drivers as they no longer have to leave and then return to the city during periods of peak traffic. Logistics companies also save money and accelerate shipments by minimising the amount of time their truck drivers spend in congested urban environments. I view this as a win-win situation for all sides. Moreover, there is potential to create shared hubs and to pool resources if competitors are willing to collaborate or use facilities managed by a third party.

Micro hubs are not just something that works in theory. This solution is already being tested in Hamburg, Frankfurt, Dortmund and Berlin in Germany. And micro hubs have also been facilitating last-mile delivery in Japan’s densely-populated cities for over 20 years.

There were a number of key topics covered in discussions at the BVL event, far too many for a single blog. Personally, I found the event both informative and insightful – so much so that I will be sharing some more of my thoughts in subsequent blogs.