SIEMENS

A supermarket in Tianyi Square in downtown Ningbo, a coastal city of six million inhabitants on China’s eastern seaboard. Each night an endless chain of trucks pulls up to deliver everyday goods: bread, toys, crockery, sweets. It’s not unusual for all of the dock positions to be occupied. The only option then is for drivers to wait somewhere in the neighborhood because the supermarket itself doesn’t have a parking lot. During the day, the situation is even worse since traffic speeds in downtown Ningbo average below 20 km/h. Besides, trucks are, with very few exceptions, banned from the city center. In response to such restrictions, many companies have switched to smaller delivery vans or even standard automobiles. As a result, the number of vehicles traveling through the city by day has, if anything, increased – and the traffic situation has deteriorated.

Add to all of this the fact that Ningbo is growing, and it becomes clear why city planners are looking for a long-term solution. For instance, logistics operator DHL has joined forces with Siemens to come up with innovative options for improving the transport of goods within the city. “These proposals will now form the basis of a pilot project,” explains Dr. Norbert Bartneck, who is responsible for City Logistics at Siemens’ Mobility and Logistics Division. “There are a lot of cities like Ningbo in China. They all have much to learn when it comes to logistics. At the same time, they are all capable of implementing measures to remedy such problems.”

The linchpins of this new concept are urban consolidation centers (UCCs) – warehouses where all the goods destined for retailers in a city are first consolidated and then shipped according to a district or even a street. This enables better utilization of truck capacity, thereby reducing the volume of traffic without needing to build new roads or rail lines. One such hub has already been implemented at London’s Heathrow Airport, for example. This UCC has substantially improved efficiency, reducing truck usage by some 250,000 kilometers per year.

Other metropolitan areas are following suit. Mexico City, for example, has plans to build a number of UCCs. Situated in the suburbs, these will serve the city’s many corner stores, thereby reducing traffic and streamlining the supply of retail goods. For a bustling city such as Ningbo, Siemens and DHL are proposing a package of measures based on one or more UCCs to be built on the outskirts of the city. Although a number of companies already use IT applications to track and control the transport of goods, these systems are, as a rule, incompatible with one another. As a result there are often several trucks on the roads at any one time, delivering goods that could quite easily be transported by one vehicle.

Creation of a UCC – coupled with an IT platform that enables control of the entire flow of goods – would provide a welcome solution. The UCC itself would be largely automated: Delivered on pallets, the goods are taken by forklift to a central storage area. As orders from retailers arrive, the goods are removed from bays and placed on conveyors, provided with a delivery address, and bundled with other shipments destined for delivery to the same part of town.

However, not all goods can be stored and transported together. Pharmaceutical products and foods, for example, have completely different requirements from those associated with furniture. “It’s easier and cheaper to store consumer durables rather than perishables such as fresh fish, meat, or vegetables,” says Siemens manager Dr. Zhang Lei, who helped to draw up a white paper for Ningbo. The solution here is to use either one large multipurpose UCC or a number of warehouses, each tailored to the needs of a precise class of goods. “But it would be enough of a challenge, for a start, just to cover all the goods from small producers and other suppliers that are destined for the wholesale food markets in downtown Ningbo,” says Zhang Lei.

At the same time, transport efficiency can be improved through the use of navigation systems that take real-time traffic conditions into account and plan routes accordingly. In addition, it is more environmentally friendly to use electric or hybrid vehicles. As a way of alleviating surface traffic, Siemens and DHL also suggest using the city’s metro system, which is currently under construction, to transport goods. This, however, presupposes that the goods can be easily transferred from metro stations to their final destinations. The entire system would be coordinated by a City Logistics Platform. Developed by Siemens, this IT platform utilizes RFID labelling and satellite navigation to manage the flow of information between suppliers, shipping companies, and retailers.

Consolidated Deliveries? Many system elements need to be optimized before such a system can operate in a truly coherent fashion. A UCC must, for example, be located in such a way that it has good transport links to the city center without impairing the smooth flow of downtown traffic. It is also important to ensure that the legal, regulatory and tariff framework promote this kind of logistics operation. “Each solution therefore needs to be tailored to a city’s unique requirements,” says Bartneck.

Another area with room for improvement is the delivery of purchases to private individuals. Bulky goods such as furniture are often too big for customers to take home from the store. Here, too, experience shows that when people refurnish their homes, they often shop at a number of outlets. And, once again, there are smart solutions for this final stretch from the store to the customer. Instead of dispatching a number of furniture trucks to the same address, DHL and Siemens Ningbo are proposing to consolidate goods in such a way that delivery is possible using just one vehicle. Another option for getting deliveries to end customers involves the use of special package stations. The latter make it possible for customers to collect or mail packages at any time of the day or night.

Such systems offer a glimpse of the future. For instance, with refrigerated stations positioned on every street corner or in large apartment blocks, people would be able to collect perishable foods. Naturally, these would be delivered by electric trucks.