Urban Delivery: Getting Into the Grid
Traffic congestion and infrastructure limitations complicate delivery in major cities, but expedited carriers use network engineering, communication tools, and contingency planning to ensure they meet shipper needs.
In the buildup to the 2012 Olympics and Paralympics, much discussion centered around how London, notorious for congestion, would manage an influx of visitors during the summer. For local businesses and transportation providers, it became a major obstacle—a logistics Olympiad.
For a company such as global expedited carrier DHL—which typically handles about 50,000 deliveries in the city each day—it was only natural to turn to runners for help. In May 2012, the expediter announced it was partnering with U.K. foot-courier JogPost to help carry critical parcel shipments during the Olympics—and perhaps beyond.
JogPost couriers helped DHL transport products on foot and via public transportation, making final-mile deliveries in areas left inaccessible by the Olympics route network or congestion—which the company expects to increase by 30 percent on London's core routes. In addition, DHL established a dedicated operations control center to monitor and adapt services for issues such as network changes and localized congestion.
Planning for any major event in an urban area is by no means business as usual. But the hyper-hurdles that inevitably surface bring to bear familiar challenges shippers and service providers encounter daily in major cities across the world. Network engineering, on-the-fly communication, and contingency planning are critical differentiators when time-sensitive shipments are on the line.
Nowhere to Turn
Concern about congestion around U.S. cities and ports has increased over the past two decades, but the focus has amplified considerably in recent years. Transportation infrastructure is failing, sustainability has become a rallying call, and traffic-related costs are accumulating. While the recession brought some repreive, researchers at the Texas Transportation Institute (TTI) see a daunting trend that began with the rapid growth, then decay, of President Dwight D. Eisenhower's U.S. Interstate System.
"The only way U.S. companies have been able to keep their products competitive in the face of increasing traffic congestion and rising transportation costs is to squeeze every ounce of efficiency they can out of their supply chain," says TTI research scientist David Ellis. "But efficiency has its limits, and without additional transportation capacity, freight costs will increase significantly. The result will be higher prices and lost jobs."
TTI's 2011 Urban Mobility Report, which has become the bible for urban logistics research since it debuted 29 years ago, details some troubling developments. In 2010, the congestion "invoice" for the cost of extra time and fuel in 439 urban areas reached $101 billion ($23 billion of which was due to trucks). By comparison, it was $79 billion in 2000 and $21 billion in 1982.
"Congestion is becoming a bigger problem outside of rush hour, with about 40 percent of the delay occurring in the midday and overnight hours, creating an increasingly serious problem for businesses that rely on efficient production and deliveries," the report states.
For these reasons, DHL's U.S. engineers spend a great deal of time and effort planning where best to locate service stations in urban areas. While the German conglomerate shuttered its U.S. domestic delivery operation in 2009—a consequence of the global economic downturn and a failure to compete with FedEx and UPS in the domestic express delivery market—it has since turned its attention to the international side of the business, which has always been a strength.
Today, DHL operates a hub in Cincinnati, five gateways (New York, Miami, Los Angeles, San Francisco, and Cincinnati), and 100 service centers.
"The first thing we look at when locating a station is how to take advantage of opposite traffic patterns," says Don McCutcheon, director of industrial engineering at DHL Express. "A major challenge in urban logistics is outbound and inbound traffic movement in the morning, and the reverse in the afternoon. We work to ensure locations in and around urban areas are positioned against those patterns."
DHL also studies data from external sources to identify the most efficient routes, and has invested in vehicle monitoring and communication technologies that enable stations to support drivers with up-to-date instructions and directions—which are especially critical when an exception occurs with a time-sensitive shipment.
But the greater challenge for any urban delivery company—and some commuters—is beating rush-hour traffic.
"The objective is to get into cities prior to main traffic congestions," explains McCutcheon. "That helps on all points, from delivering earlier to reducing carbon emissions. We use expedited shuttles to move shipments from our stations to certain meet points within the city. This reduces the number of vehicles in traffic."
Instead of sorting and dispatching five vans in the morning, DHL uses one shuttle for delivery. It can get that vehicle out earlier and faster in the morning because there is less individual driver preparation. The shuttle then moves to a central point where DHL vans can pick up loads. Apart from fuel cost savings, using a hub-and-spoke delivery model supports DHL's green efforts by reducing carbon-emitting vehicles that might otherwise sit in traffic.
"We also use walking routes in dense locations—generally major metro areas where you can park or move a shuttle to a central point, then have couriers make deliveries," McCutcheon explains. "But you need the right density to make that approach work."
Serving the Big Apple Core
New York City has that kind of density. The metropolis is growing much faster than the infrastructure necessary to support it. "Urban area demand" in the New York City metro area is outpacing roadway growth by more than 30 percent, reports TTI. The Big Apple isn't alone—it shares that distinction with 39 other major U.S. cities.
"New York City's population is 8.2 million—2.2 times that of Los Angeles, the next-largest city," explains Chip Napier, director of engineering at UPS. "Population density is a challenge. The New York City area has grown 9.4 percent during the past 20 years—the equivalent of 680,000 people—without many infrastructure changes.
"Compared to other cities, New York has an average geographical area—303 square miles. But it's far denser and more congested than most other cities in the world," he adds.
The Borough of Manhattan spans 23 square miles, and is home to 1.6 million people, which equates to 70,000 people per square mile. More than one million people visit the city daily, comprised of commuters and tourists. On average, 113,000 people per square mile occupy Manhattan on any given day. This type of density creates challenges.
UPS operates three facilities in Manhattan—one in midtown at 43rd Street, one called UPS Manhattan South, and another termed UPS Manhattan North. Every morning, each facility receives inbound tractor trailers, which are processed, then dispatched for delivery. The reverse process occurs in the evening.
While the north and south facilities are primarily used for local sorting, the 43rd Street operation is an eight-story hub that occupies one city block and employs 500 drivers. Five floors are operational, and UPS has the ability to unload and load tractors on multiple levels. Two other hubs are in close proximity—one on Long Island, and another across the Hudson River in New Jersey.
Access: an Obstacle
One unique obstacle UPS and other trucking companies encounter delivering freight to and from New York City is a lack of access points.
"The tractor-trailers in our feeder network can only go across the George Washington Bridge," says Napier. "Shorter trailers can go through the Lincoln Tunnel, but they can't use the Holland Tunnel or other area bridges. Ninety percent of our freight has to travel the George Washington bridge—the lone access point."
On Long Island, the Long Island Expressway is the only road UPS tractor-trailers can travel, because of overpasses. If a shipment is delayed 15 minutes in the morning, then gets caught in rush-hour traffic, the impact can be considerable—especially for time-sensitive shipments.
"Multiple contingencies are necessary," says Napier. "If a major accident clogs the Lincoln Tunnel, we have to divert trucks across the George Washington Bridge. We need on-the-fly communication to make these changes."
When Therapath started operations on West 45th Street in Manhattan in 2004, it immediately began working with UPS. The company provides comprehensive diagnostic and consultative muscle, nerve, and neuropathology services to medical centers and practicing physicians across the United States. And New York City is home to some of the best in the world.
Each day, Therapath sends out specimen collection kits to customers and receives tissue samples in return. Deliveries and pickups occur in the morning and evening, respectively—via overnight delivery.
"Every evening, we receive a report from UPS detailing the next day's packages," says Sean Honahan, director of operations, Therapath. "When an air bill is activated, it shows up on the report. We review that overnight. Then, once the packages arrive in the morning, we inspect them, check tracking numbers, and match each one to the report. If a shipment doesn't arrive at our facility, we work with our local UPS representatives to find the package in the system."
Most packages are shipped in a Styrofoam cooler with a standard icepack. "We rarely receive dry-ice packages with flash frozen samples," says Geoff Whitehouse, manager of client services, Therapath. "We mostly deal with fresh tissue that we try to keep cool during transit. That's why we use overnight shipping."
The time-sensitive nature of Therapath's shipments adds an extra level of importance and customer service to the process. Every priority package the company sends out has a laboratory pack, return label, and UPS contact card inside. And, because UPS delivers priority overnight Monday through Saturday, Therapath has been able to grow its business with weekend delivery.
"We provide customers with a telephone number to call for the pickup," explains Honahan. "Therapath not only provides the laboratory service, but also the delivery. When a customer calls a dedicated UPS representative for pickup at 5 p.m., it happens. We don't have to walk the logistics beat at Therapath. We leave it up to the customer to work with UPS to make sure the pickup occurs when they request it."
Therapath also takes advantage of the fact that in New York, UPS picks up shipments until 5:30 p.m., which gives it a full day to fill orders. That doesn't happen in other parts of the country.
In New York City, UPS delivers between 7:30 a.m. and 8:30 p.m. Sometimes it provides off-hours service, but that's an exception. Still, UPS will go out of its way—in other ways—to meet customer demand.
"Parking and dock space are limited in the city, especially in Queens and Brooklyn," Napier explains. "A manufacturer might only operate one dock. We have to get shipments in and out within two-hour windows throughout the day."
UPS can't get into some places with a tractor-trailer. If a customer requires skid deliveries and pickups, UPS may have to visit a location six times a day, and pick up five skids on a 24-foot van. In other parts of the country, the expediter might drop and spot a trailer, then come back to pick it up at the end of the day.
UPS drivers carry handheld units that can communicate alerts if a premium shipment needs to arrive at a consignee's location within a specific timeframe. In Manhattan, where it often takes three drivers to service one city block, UPS has developed some practical solutions to meet those needs.
"We put two drivers in a van—one delivers to the right side of the street, the other delivers to the left," says Napier. "This saves us from dealing with parking congestion and enables quicker deliveries for time-sensitive shipments.
"We also use drivers who deliver morning shipments to hold parking spaces for drivers in critical areas where we know we have time-sensitive deliveries," he adds. "Parking logistics in New York City is challenging."
Parking often is a factor UPS drivers can't control. Maintaining good relationships with city officials, ticket agents, doormen, and even elevator operators is important—that's how drivers get in and out of locations.
"When a 50-story building only runs two freight elevators, and you don't have a good relationship with the operator, it's a problem," says Napier.
If TTI's 2011 Urban Mobility Report is any indication of the challenges that U.S. commerce faces in the coming years, the United States will require Olympic-like dedication, focus, coordination, and planning to repair the ills that currently plague transportation infrastructure. And urban logistics will continue to be an area that shippers and services providers focus on to create greater efficiencies, streamline costs, and reduce carbon footprints.
Even as the economy improves, history suggests the U.S. transportation and logistics sector cannot be complacent about dealing with current and looming congestion concerns in and around major demand centers.
"Previous recessions in the 1980s and 1990s saw congestion declines that were reversed as soon as the economy began to grow again," states the report. "And we think 2008 was the best year for mobility in the last several; congestion was worse in 2009 and 2010.
"Anyone who thinks the congestion problem has gone away should check the past."