Urban Logistics: how environmental and noise pollution can be reduced in times of increasing commercial transport
The amount of vehicles in Germany has increased by around 13% over the past 9 years. There has also been a tangible rise in traffic capacity. Today, 1.2 million passenger cars and roughly 80,000 lorries move on the streets of Berlin which regularly leads to congestion, e.g. during rush hour. This challenge along with mega trends revives urban logistics. New market chances arising for service providers help look past the “City Logistics” projects of the 90s which failed due to a lack of profitability and cooperation (see news article “Urban Logistics: New concepts needed for the efficient supply of urban areas”).
Digitalisation is regarded as the central growth driver for commercial transport in urban areas. This can be traced back to the strong growth in online commerce which leads to an increasing stagnation in stationary commerce. The CEP sector in particular profits from smaller, high-frequency shipments. The above-average quota of returns in online commerce additionally increases transport capacity.
Furthermore, urban commercial transport will be shaped by the ageing population in the future. Older people will live in their own housing spaces for longer and need food and medical supplies even with limited mobility. In addition, these people increasingly live in one- and two-person households. This additionally increases demand for delivery of small, urgent shipments with supplementary services.
The increased traffic load, however, also leads to undesirable external costs such as emissions and noise. This environmental pollution impacts residents’ quality of life.
An “Urban Logistics” concept can bundle shipments across service providers via hubs outside of the city, which can then be delivered using a relatively small number of delivery vehicles for tours with a high degree of capacity utilisation. This would reduce the number of delivery vehicles employed inside the city. But what are the requirements for an “Urban Logistics” approach?
The basis for a project of this nature is a cross-platform cooperation between service providers both online (order planning and processing) and offline (hub operation and utilisation). Furthermore, supporting measures by public authorities in both financial (subsidies for environmental protection) and legal (special provisions for e-vehicles or delivery possibilities) respects are required.
Public authorities, in turn, can profit from reduced traffic loads, which translate to increased attractiveness. Residents also enjoy the advantages of reduced disturbance and an increased level of accommodation.
Increased requirements for collection and delivery services by shipping agents and recipients necessitate regular, high-frequency short-distance tours. This way, shipping agents can reduce their stocks. In the case of chain stores, employees can spend more time with the customer thanks to one scheduled delivery per day.
An “Urban Logistics” project would alleviate the overstrained commercial transport situation in many big cities and entail environmentally friendly effects. However, the project is a challenge for service providers, public authorities, recipients, senders and residents alike due to its complexity in terms of requirement groups and shipment structure.
Institute of Supply Chain Management
Charging network extended to France
DKV MOBILITY SERVICES Group cooperates with charging infrastructure operator Freshmile
The DKV Group together with DKV Euro Service, which contacts and provides services to customers in its own right within the Group, is cooperating with charging infrastructure operator Freshmile Services. This will now allow customers of the fuel and service card provider to charge their electric vehicles at up to 2,500 charging points in France. The charging points are located along the German-French border as well as in Paris and other French conurbations. "We are delighted that we have been able to enter into this cooperative relationship with Freshmile, one of France's largest charging infrastructure providers," says Bernhard Wolters, eMobility Services expert at the DKV Group. "The market launch in France is an important milestone in our internationalisation strategy." With the extension of its Europe-wide supply network to include charging points, DKV has taken into account the rising proportion of electric vehicles and the resulting increased demand for cross-border supply facilities. The charging points can be displayed in the DKV APP and the DKV MAPS route planning tool.
For further information see www.dkv-euroservice.com
Sharing economy in freight traffic: potential with uncertainty?
The seemingly revolutionary approach of making vehicles of various owners accessible to third parties and thus increasing capacity utilisation (see October 2017 Eco Performance Award newsletter) is now also discussed in freight traffic. An “open source approach” such as this appears as a paradigm shift to established players. This begs the question: what is the potential contained in these market changes afflicted with uncertainty?
Areas of sharing economy influence on logistics
In freight traffic, two subareas of sharing economies can be identified: transport by private persons or commercial institutions.
- In CEP services, transport is executed by private persons. Examples for this are Cocarrier and Notime, who utilise “travellers” or bike couriers.
- In the bulk and general cargo transport area, freight carriers are active. Examples for platforms are the digital freight offerings Pickwings and Uberfreight. This far, they have been focussed on full or part truck loads.
Similarly to Uber for taxis, the improved capacity utilisation of the truck resource facilitates a higher level of efficiency. This way, sharing economy applications in freight traffic support more financially attractive transports. How should the involved potentials and uncertainties be evaluated from the stakeholders’ perspective?
Sharing economy-induced changes in freight traffic
While a certain market potential for sharing economy providers is already emerging in the CEP, general and bulk cargo areas, multi-mode CEP transports by “travellers” so far are only tested in pilot projects at the most. The possibility to utilise unused resourced of a scattered community of institutions by third parties is often not yet identified for transport operations. Among other reasons, this is due to the adherence to an exclusive use of resources. What are the uncertainties which prevent the potential of unused idle capacities from being released and utilised? There are questions when it comes to rules for providing unused resources to the public, as well as their utilisation: How is it possible to ensure disposition authority of a stakeholder in the case of a collision of spontaneous and planned transports by several parties? Do third parties agree to the stakeholder using the truck to receive sensitive customer data such as addresses and to present itself to the customer with a truck not marked with the proper brand? How can liability issues in truck utilisation by third parties be handled? The disposition of sharing economy resources, however, is free of uncertainties since it is effected via high-performance ICT platforms. Besides the uncertainties, the sharing economy in road freight traffic also harbours potential such as regional proximity to the customer without the presence of proprietary vehicles on-site or access to a proprietary fleet of vehicles. Through applications like these, the same transport quantity would require a smaller population of trucks due to improved truck utilisation and hence have a reduced environmental impact. The fundamental question is: what are the requirements for initialising such a paradigm shift? The industry has a rather conservative reputation and is not necessarily known to be adventurous when it comes to new business models.
The effects of the sharing economy on freight traffic are yet uncertain
For taxis, the sharing economy has already caused significant changes. The intensive utilisation of resources can be promoted by sharing economy providers in freight traffic. Hitherto unresolved questions are uncertainty, challenge and development potential alike for companies, and can be tackled through research and flagship projects.
Chair of Logistics Management
University of St. Gallen
From car pool centres to a sharing economy
In the year 2007 taking a taxi in New York was only possible with the "Yellow Cabs". Now, 10 years later, many private vehicle owners carry out taxi services in addition to the official Yellow Cabs. The owners usually communicate their trips via smartphone applications such as the service provider Uber.
Uber: the successful start-up transports around 40 million people each month
The start-up company Uber has been offering taxi-similar trips since 2009. Car owners and people can register who wish to offer transport services or request a trip. A smartphone or web-based app establishes a peer-to-peer (P2P) platform enabling Uber to network the pool of offerers and demanders. If the time and location-based requirements of the offerer and demander correlate, these are brought together to enable the trip to be carried out. Uber’s service offers to car owners a more intensive use of their vehicle during times where it would normally remain unused, and the additional utilisation of the car goes to meet a part of vehicle costs via the revenue achieved. In contrast to conventional taxi services, the major part of costs is borne by the vehicle owner and therefore does not burden the Uber user. One result of this is that Uber trips cost less than conventional taxi trips. The personal transportation agent is able to convince increasing numbers of people to use its service and currently benefits from major growth. Last year net turnover was 6.5 billion US dollars (+333% compared to the previous year) and in the first half year of 2017 more than 5 billion US dollars were generated (staff, 13 April 2017; newcomers, 1 June 2017; newcomers, 23 August 2017). Once again large growth is expected for the current fiscal year.
What are the foundation blocks for this concept and what led Uber to economic success?
The idea of car pool centres emerged more than 50 years ago
Trips by car were something special after the war in Germany due to lack of raw materials. For this reason car sharing in the 1950s was "a citizen's obligation" and the first car pools were created to transport several people to work simultaneously. Around one decade later the pooling centres were put on ice due to legal action by the German railway authorities. In the 1980s they were resuscitated with the "Mitfahrgelegenheit" [rideshare] student concept. The "alternative" students sometimes had their own scale of values that today could be identified as "social romanticism" due to their affinity to sharing. The rideshare approach however lacked sufficient momentum to gain popularity until the era of the internet. Although initiatives based the concept could no longer be pushed through, it appeared that the basis of the social trend towards the common sharing of vehicles was indeed laid several decades ago. "Catching a ride" (today also known as the "sharing economy" in the personal transport sector") is therefore a familiar phenomenon. However, what was missing in the "sharing economy" concept to achieve acceptance in the general mass of population?
The "new" sharing economy: enabled via new technologies and established markets
In the decade after 2000, P2P platforms such as eBay were increasingly created, and since that time have undergone continued major development. In the beginning the platforms were complex but now the majority of P2P platforms are easy to use. Application convenience was also improved thanks to the popularity of smartphones. Furthermore, smartphones connect their owners with the internet everywhere and at any time, i.e. with the other users of P2P platforms. These provided ideal preconditions for creation of the sharing economy. Strongly capitalised investors and start-ups also not insignificantly contribute to the creation of the sharing economy. These identified "overpriced" markets where resources have essentially idle capacities, developed P2P platforms and made the most of the market potential using professional marketing concepts. The range of services from the sharing economy competitors are gaining more acceptance in the markets, and this development is also increasingly threatening the established markets. A good example of this is the price pressure in the hotel sector since the market launch of Airbnb, a platform enabling accommodation to be rented by anyone.
Sustainability impact of the sharing economy in road freight traffic
Conventional road haulage companies can economically and ecologically optimise their sustainability with regard to trucks for example by upgrading their fleet with vehicles with higher emissions standards or with electric vehicles. Sharing economy companies on the other hand are able to further expand this already "high" sustainability level. This can take place for example by reducing empty trips with trucks to achieve improved resource utilisation. This is already being implemented by known sharing economy companies in road haulage such as Pickwings and UberFREIGHT. Their impact results in a better economic and improved ecological use of resources (less vehicles needed and less fuel consumption). With this multidimensional orientation to sustainability, sharing economy competitors are high-performance candidates for the Eco Performance Award, a sustainability prize awarded to distribution companies. For more information about the Eco Performance Award and its application process, see eco-performance-award.com.
Department of Logistics Management
University of St.Gallen
The "last mile" from a climate point of view: which distribution channel is the right choice?
Strongly expanding online trade and the trend towards omni-channel, resulting in an ever-increasing blurring between the traditional online and stationary distribution channels, has provided movement in the Swiss consumer goods retail business. The stationary retail trade still plays a dominant role, but B2C online trade has increasingly gained market share in past years. In the future the spectrum of omni-channel variants in the Swiss retail sector will also significantly increase.
The online trade sector is repeatedly subject to criticism based on the factors of increased traffic density on over-burdened road networks and the contribution of traffic towards damaging greenhouse gas emissions. The increasing occurrence of small packages that need to be rapidly despatched to customers as well as the high return quota (particularly with apparel ordered online) are seen as some of the essential causes for the increase in supply traffic. The packaging material used for the transport of these online orders also causes climate-negative greenhouse gas emissions during their life cycle as well as further waste when disposed of. The online trade therefore has climate-relevant impact. It must not be overseen though that the stationary retail sector also causes greenhouse gas emissions due to shopping trips and that packaging material for transporting the merchandise, e.g. in the form of throwaway plastic bags, is also needed. Omni-channel variants such as "click & collect" and "showrooming" add a further dimension to analysis of the climate-relevant impact of distribution channels. Particularly in the last mile, i.e. the last link in the process chain of a product to the consumer, the logistical processes within the various distribution channels differ and therefore also the greenhouse gas emissions caused. In the case of the stationary retail sector, or in particular variants of the omni-channel (click & collect), the consumer himself organises the transport of his shopping along the last mile, whereas with pure online trade or with subsequent online orders for inspecting the product in a store (showrooming), transport is usually assumed by a distribution company. From a logistical point of view, the potentially unplanned self-organisation of individual shopping is contrasted with professionally organised delivery along with corresponding pooling effects that may also include multiple delivery attempts and return transports.
Which distribution channel in the last mile is more climate-friendly in comparison? A current survey carried out by the Chair for Logistics Management at the University of St. Gallen (see box) analyses this issue with specific regard to Switzerland, and is based on diverse previous surveys mainly conducted in Germany and Great Britain.
The "last mile" in the Swiss retail business: a comparison of CO2 emissions in distribution channels
The survey analyses the most important factors of influence upon the climate-relevant impact of distribution channels along the last mile. The basis for data in the survey consists of corporate data from Swiss courier, express and parcel services and retail trade companies, as well as data from the Federal Statistics Office with respect to Swiss mobility behaviour. On this basis, nominal transport-related CO2-equivalent emissions were calculated for online orders and stationary purchases within the merchandise groups 'goods for daily needs, clothing and accessories' and 'consumer electronics' for selected urban and rural regions in Switzerland, and analyses of specific factors of influence were carried out.
The survey was published by the Cuvillier publishing company.
The overall result of the survey can be summarised as follows: there is no precise answer to the question of which distribution channel is the most climate-friendly. The reason for this is that each of the distribution channels has advantages and disadvantages from a climate point of view. Elementary for the extent of caused greenhouse gas emissions in the last mile is customer behaviour, which is complex and which depends on a wide diversity of factors according to the specific situation.
The following statements can be made based on the results of the survey:
- In the online trade the average emissions per order (and therefore also per article) in the more urban settlements are lower than the more rural settlements because deliveries in these urban areas can be organised more efficiently due to their higher population density, and are therefore more climate-friendly.
- In the stationary retail trade, shopping in rural areas results in higher CO2 emissions than in the more urban settlement areas because longer distances need to be travelled for shopping purposes, and because cars are primarily used for this.
- With the efficiency advantage of the "courier, express and parcel services system" with regard to transport pooling, the online trade from a climate point of view enables the purchase of single articles or small order quantities to a greater extent.
- In the stationary retail sector the consumer has a large pooling potential that should be utilised – the bundling of large shopping quantities and combining shopping with other activities significantly reduces CO2
- A high success quota for first deliveries is an important factor of influence on the extent of CO2 emissions in the last mile for the online trade.
- When looking at the averages and based upon the assumptions made, returns of online orders have generally no significant influence on the extent of CO2 emissions in the last mile. When analysing individual cases though a return, according to how it is carried out, can more than double CO2 emissions in the last mile.
- Transport packaging material is important mainly in the online trade and decisively increases CO2 emissions per transaction and article.
- The omni-channel distribution method takes into consideration customer needs with regard to flexibility and individual service, and may therefore cause higher CO2 emissions than traditional distribution channels. An example of this is the "showroom" scenario: an additional transport process is triggered with the customer driving to the store or showroom and with subsequent delivery.
The central recommendation for handling that can be derived from the survey results is mainly addressed to end customers. With every distribution channel it is a matter of the sensible planning and pooling of purchases, orders and articles. Furthermore, stationary retail trade customers can achieve significant CO2 savings by combining shopping with other activities, by combining several shopping trips into a single trip and by avoiding shopping for single products or just a few articles.
The survey also sets an impulse for further research into the climate-relevant impact of distribution channels within the last mile. The online trade still has an efficiency advantage compared to self-organised shopping trips due to utilisation of the "courier, express and parcel services system", but it remains to be seen how increasing customer demands with respect to delivery times and delivery flexibility and the trend towards individual same-day or same-hour deliveries will impact transport pooling effects.
Stephanie Schreiner, Professor Dr. Wolfgang Stölzle,
Department of Logistics Management at the University of St. Gallen, www.logistik.unisg.ch
Digitalisation in pharmaceutical logistics: Stirring up the pharmaceutical supply chain with novel cloud solutions
By now, cost pressure has also reached the pharmaceutical industry: In light of the division of work and globalisation around the world, medications are being produced at the respective most cost-effective locations. The consequence of this is a high logistics intensity, in particular in the distribution of pharmaceutical products. In order to not endanger the production-related cost benefits, a significant efficiency pressure for pharmaceutical logistics was created. The latter is subject to strict rules and regulations that are intended to ensure a high quality and safety in the performance of the logistical processes. All players in pharmaceutical supply chains are encouraged to implement the guidelines of the Good Distribution Practice (GDP). Towards their logistics service providers, the manufacturers have the high expectation that they (more than) fulfil the specific standards – for example the compliance with temperature corridors or hygiene guidelines. The checking of the adherence to these requirements (compliance) requires strict inspections. Therefore, logistics service provider must subject themselves to qualifications and audits time and again. As such, statutory regulations and guidelines constitute significant cost drivers in the distribution of pharmaceutical products, which is why the pharmaceutical industry is almost exclusively being serviced by large companies. Small and medium sized logistics service providers, in particular, are confronted with huge challenges here, since the necessary investments as well as the recruiting of suitable personnel are difficult to manage in light of low margins. The strict regulations make entering into the transportation market difficult for these logistics service providers: Costly special vehicles are needed, distribution networks of their own typically do not exist and therefore need to be established. Furthermore, the intercontinental transportation of pharmaceutical products brings with it a considerable complexity in the design and implementation of an adequate logistical process chain. The reasons for this are the multitudes of players to be integrated as well as the required integration of air or sea freight. In consequence, small and medium-sized logistics service providers in the area of pharmaceutical logistics (outbound) often focus on the operation of warehouses since only selective investments are required here.
At present, there still exist various media discontinuities along the pharmaceutical value-added chain that stand in the way of a contiguous flow of information throughout. Resulting therefrom are, especially in supply chain management, various efficiency losses due to lack of information for planning and control. The utilisation as well as provision of the information generated poses another problem. The internal and external data recorded, for example, frequently originates from sources that are often not compatible with other systems. Since pharmaceutical companies increasingly cooperate with insurance companies or service providers, ever-increasing amounts of data are generated with - at the same time - increasing granularity of data. One reason for this phenomenon is the gap-free traceability required in the pharmaceutical industry which is intended, among other things, to stem the distribution of counterfeit medications. Existing IT platforms in the pharmaceutical industry stand in the way of the cooperation with data specialists, which constitutes an important prerequisite for the analysis of real-time data along the supply chain.
In addition to the increase of the volume and the complexity of the data, an increasing digital penetration of the physical world of goods with digital technologies can be observed. From this, various potentials result for pharmaceutical supply chains. As such, the flow of goods within and between companies can, for instance be designed more efficiently and more transparently via digital solutions (e. g. based on a combination of sensorics, mobile radio telephone service technologies, or Auto-ID technologies) so that the whereabouts and the temperature of the transported goods can be traced back at any time. In order to integrate such systems uniformly into companies, customers increasingly wish for compatible, flexible, and individually utilisable digital supply chain solutions. Open architectures are required in order to ensure a seamless linking with other IT systems related to the supply chain and to ensure interoperability. Furthermore, there is an uninterrupted demand for product safety and reliability of delivery. One solution approach for these requirements is the utilisation of open cloud solutions. They provide companies with the option to not link themselves to one network provider and thereby to one specific solution approach. Open interfaces allow permanent availability of relevant information to all parties involved in the process. A transparency increase via data traffic and a higher degree of utilisation of the data for decision-supporting analyses is achieved via the integration of corresponding formats and solutions. This way, no longer do various individual systems have to be consulted but, rather, overall solutions can be integrated and utilised in an uncomplicated manner. For example, the refrigeration chains of different customers in the pharmaceutical industry can be controlled as a whole without having to utilise different information systems.
The fourth industrial revolution ("Industry 4.0") is - on occasion - pursuing the objective to continuously improve planning and decision-making processes through existing systems or objects that are networked with one another, based on the principle of self-controlling. In the pharmaceutical industry, in particular, the focus is on networking with the environment and therewith on direct exchange with the customers. Under the aspect of digitalisation, the business processes and models to date of the pharmaceutical industry must be redesigned to be smaller and more agile, for example in the form of flexible supplier models. Due to the digital networking between the supply chain players, relevant product data, including serialisation numbers, can be exchanged between one another. Therewith, the tracking of shipments is also ensured. Experts perceive further opportunities to increase transparency in the pharmaceutical value-added chain due to digitalisation in the transmission of GPS information in real-time that is sent directly to mobile end devices. Based on the GPS data, precise arrival data and load details of pharmaceutical products can be achieved, whereby an efficient handling of goods upon receipt and shipment is ensured. However, in order to increase these potentials, an (best case: open) cloud-based software solution must be utilised that can be applied compatibly for any and all supply chain players. In practice, various providers of track-and-trace functions exist which are, already today, capable of capturing varied information and making it available via data clouds. From this, the opportunity arises for the pharmaceutical industry to track shipments in real-time and to identify disruptions in a timely fashion. The problem is, from a current point of view, that existing cloud solutions typically only are available to a limited circle of participants. Especially among the small to medium enterprises of the logistics service provider industry, such solutions have not yet been able to establish themselves nationwide.
The currently low distribution of integrated, cloud-based IT solutions among medium-sized enterprises allows for the conclusion that ensuring a contiguous information flow throughout is so far posing a relatively huge challenge for small and medium-sized logistics service providers. In the context of the digital supply chain, the information technology connection to senders, recipients, and sub-contractors is the next systematic step towards the optimisation of workflows internal to the company and across companies. Therefore, the objective strived for in the future is to offer a generally utilisable open cloud solution that can also be applied at small and medium-sized enterprises in the pharmaceutical industry. Open cloud concepts are required that, based on existing transport management and ERP systems, can be utilised flexibly and without huge capital expenditure also for SMEs of the logistics service provider industry. The targeted provision of information, e.g. based on transport data, as it is currently being captured by telematics systems, is an important first step for the implementation of a digital supply chain management in the pharmaceutical industry. Through the digital networking with business partners based on open cloud solutions, the opportunity arises for medium-sized logistics service providers to strengthen their positioning within the pharmaceutical industry. Therefore, it is important to actively drive forward the development and establishing of open cloud solutions via cooperations of science and industry.
Nane Kieser and Natascha Widmann
Chair of Logistics Management, University of St. Gallen (Switzerland)
Daniel Thommen, founder and managing director
Changes to the truck toll system – A blessing for the traffic infrastructure or a curse for trade/business?
Toll systems in road traffic have become a perennial topic in transport policy discussions. While the passenger car toll is generating enormous public interest, the many different toll systems for trucks in Europe are primarily known to experts. In this, the Swiss toll system for trucks is considered to be one of the most stringent in Europe – both with respect to the amount of the toll rates as well as in terms of the basis of assessment, which happens to be the whole public road network of Switzerland.
Against this background, the question arises first which objectives the toll systems are pursuing in road freight transport. First, a mileage-dependent toll system should contribute to the maintenance and expansion of the transportation infrastructure. Second, a toll can ensure a cost allocation of infrastructure utilisation on a causative basis – optionally also under inclusion of external costs. Finally, a toll system may also provide incentives for investments into low-emissions vehicles by means of a so-called toll spreading.
In Germany, the resolutions regarding the expansion of the truck toll system have just been passed. Since 1 January 2005, there has been a toll for heavy trucks with a gross vehicle weight of 12 t or more. Since 1 August 2012, said toll is also being collected on some sections of four-lane federal roads. This way, the road network of 12,800 kilometres subject to tolls was expanded by 1,135 kilometres. Effective 1 July 2015, the truck toll was expanded to an additional approx. 1,100 kilometres of motorway-like federal roads. Furthermore, since 1 October 2015, the gross vehicle weight limit that is subject to toll has been lowered from 12 tons to 7.5 tons for trucks used in the commercial transportation of goods. A further lowering of this limit to 3.5 tons is under discussion. In mid-May 2016, the federal government toll expansion to the remaining approx. 40,000 kilometres of federal roads was passed which will take effect starting 1 July 2018. The toll payable depends on the distance, the emissions class and the number of axles on the truck. In this, the respective toll amount per kilometre contains emissions-caused and infrastructure-cost-caused shares. For this, the emissions production is subdivided into six categories. The emissions-caused toll amount share can amount to up to 8.3 cents per kilometre, the infrastructure-cost-caused share can amount to up to 13.5 cents per kilometre. As in the past, the toll rates apply uniformly to federal motorways and federal roads. This toll expansion is expected to generate additional income of up to EUR 2 billion.
Switzerland, which is considered the pioneer of the truck toll system, has increased its rates of the so-called performance-dependent levy on heavy goods vehicles (LSVA). Depending on the emissions category, different, in part massive rate increases apply. In this, vehicles of the EURO categories III, IV and V are classified lower. The discount for vehicles of category VI as well as the discount for retrofitted particulate filter systems is not applicable. Dependent on the emissions category, this leads to cost increases between more than 11 % (EURO II norm with particulate filter) all the way to – at the top – more than 28 % in case of EURO III vehicles with particular filter. This jump is second to none in the European environment and is particularly surprising in Switzerland, particularly in light of the fact that ever since the so-called "francs shock", the economy in general and the road freight transport business in particular have been under a lot of pressure. Currently, such increases are likely found in no other cost category of transport businesses. From a transport economics point of view, the toll costs should be passed on from the transporters to the shippers so that the transported products ultimately bear the costs of transportation. To be viewed critically, on the other hand, are the distortion effects: these can occur when road freight is overcompensating the costs it is causing, thereby taking undue advantage of the railway, or if the cost burden cannot be passed on by the business. Ultimately, a toll also should not lead to a disimprovement of the international competitive situation of the Swiss economy.
With an eye on these challenges, the Chair of Logistics Management of the University of St. Gallen carried out a flash survey in November 2016 in cooperation with GS1 Switzerland. In said survey, Swiss shippers, carriers, and logistics service providers were asked for their opinion how they assess the effects of such an increase of the LSVA and the cost increases resulting therefrom via an adjustment of the tariffs, in particular of the cost rates of the Swiss Tariff for Haulage Services (ASTAG).
According to that, 29 % of the companies surveyed believe in a complete passing on of the costs to the customers, and at least 49 % in a partial passing on. Only a mere 23 % are of the opinion that the cost increases cannot be passed on to the shippers. At first glance, this response is quite surprising, but can be explained with the specific Swiss "rules of the game" in the market place: the ASTAG tariff refers to the transportation of general freight, partial loads, as well as wagon load freight within Switzerland, and is based on the total costs of the carriers. At the same time, they also serve as a point of reference for price negotiations with the shippers. Apparently based upon this is the hope that the LSVA-caused cost increases can be passed on to the shippers.
Surprisingly, 89 % of the companies surveyed do not expect any or only minor negative effects of an increase of the LSVA on the competitiveness of the business while 11 % fear a significant disimprovement of the competitive position. Likely reflected in this is also the experience of the past to for the most part be able to pass on cost increases. 61 %, and as such the majority, forecast a shift of transportation to the rail due to the increase of the LSVA and therefore a politically desired shifting of the modal split. On the other hand, 39 % are of the opinion that the amount of the adjustment is insufficient to shift traffic from the road to the railway. In this context it has to be noted that railway, especially in cross-alpine transportation – depending on the relation – already has reached a market share of approx. 65 % and is quite often operating at the capacity limit. As a result, the question is whether transportation policy is also willing to invest in new railway capacities. Taking into account the most recent decision of the Federal Council with respect to Cargo Sous Terrain, currently a very defensive line is being pursued that does not show any courage for groundbreaking decisions with respect to the transportation infrastructure.
Naturally, the companies surveyed have already taken into consideration the possible adjustment options with respect to the LSVA increase. In first place, there are the "classics" of increasing vehicle utilisation (33 %) and reducing the share of empty trips (32 %). Here, it will be interesting to see implementation successes, since the leverage effects are severely limited with the predominating traditional business models. More strategically focused measures such as a modification of the business model (13 %), the utilisation of telematics systems (9 %), or a modification of the network and site structure to reduce trips (7 %) play a subordinate role. If the industry, due to economic stagnation and the cost increase, becomes subject to further pressure, it is going to be interesting to see if disruptive changes will take place.
A pessimistic view also exists with respect to the benefits of road from the anticipated additional income: only 23 % of the companies believe that the Swiss state will perform investments into the road infrastructure with the additional income at a scope worth mentioning. On the other hand, 77 % anticipate that no additional or only marginally more funds will flow into the road infrastructure. The increasing capacity bottlenecks and the dramatically increasing costs of traffic congestion will therefore also burden the industry in the future.
In times when the industry is under massive pressure and when there are also no new insights regarding improper economic advantages of road freight, the toll rates in Switzerland were drastically increased, and a massive toll expansion was passed in Germany. In both countries, the objective is being pursued – through a mileage-dependent toll – to maintain and expand the traffic infrastructure as well as to ensure a cost allocation of infrastructure utilisation on a causative basis. It is going to be interesting to see whether the current transport policy decisions will actually contribute to achieving these objectives.
Prof. Dr. Wolfgang Stölzle, Full Professor
and Dr. Christian Schneider, Senior Advisor
Chair of Logistics Management
University of St. Gallen
Digitalisation in logistics: from Industry 4.0 to Distribution Service 4.0.
Everyone is talking about digitalisation which is deemed to be one of today‘s dominating megatrends. Based on a German federal government initiative, the term „Industry 4.0“ has become a synonym of this trend especially in the German-speaking regions. It essentially implies the networking of machines and workpieces as part of the so-called „factory of the future“. The vision within this „fourth industrial revolution“ is that intelligent planning and decision processes based on the principle of self-control coordinate procedures both in producing companies and throughout complete value-creation networks in real time, and also continuously improve these (see www.plattform-i40.de). In addition to Germany, Switzerland has established the „Industry 2025“ initiative in which the four associations of asut, Electrosuisse, Swissmem and SwissTnet aim at achieving more transparency, greater uniformity and a sense of understanding in the diverse and often diffusely used term of Industry 4.0. The field should be more clearly structured for companies and areas of activity ascertained to achieve a contribution for promoting the competitive capability of Swiss industry in the future (see www.industrie2025.ch).
It has also come to the attention of the distribution and transport sector that high-performance, increasingly intelligent and mobile information and communication technology is penetrating every area of life within our society, and that as a consequence the virtual world of information is becoming increasingly intermeshed with the physical, real world of the Internet of Things. Digitalisation in the manufacturing sector is only one aspect to be considered here as part of a digital „Distribution Service 4.0“. As a derivative branch, i.e. a sector not serving itself but established and driven by the needs of its specific shipper- and recipient clients, the distribution sector must prepare itself for the various changes initiated by digitalisation.
Because the logistics sector primarily consists of small and mid-sized companies though, the branch is just beginning to identify the specific chances and risks of digitalisation. A certain degree of uncertainty exists in the face of almost unlimited possibilities concerning the most suitable path towards Distribution Service 4.0. In this regard it is essential to concentrate on two developments, as outlined below.
Firstly, digitalisation has the potential to transform previous business models in industry and trade. In individual branches digitalisation has already caused tangible disruptions (e.g. downloading and streaming music, the transformation of traditional mail order into online commerce etc.), and changes will continue to take place that must be faced by the distribution sector especially due to its existence as a „derivative branch“. Physical products for example will no longer primarily be sold to customers – these will book the product „as a service“ and access it on demand. In such situations the distribution sector must repeatedly provide physical „access“ at the right time, at the right location and at the right price. This can only function effectively and efficiently if the processes of the distribution company are integrated into the reservation systems of the „shippers“ and also networked with the specific requirements of the recipient. With regard to these changes the logistics sector, in addition to new players, is able to influence the transformation of its shipping and receiving customers by implementing intelligent solutions.
Secondly, digitalisation has the potential to transform the traditional business models of the distribution sector. The topic of digitalisation has already become a part of the logistics industry and its penetration by information and communication technology has been progressing for several years – technology such as truck telematics, track & trace, bar code/RFID identification, integral navigation, scheduling and tour planning as well as mobile data recording and communication are now seen as standards in the branch, and have also significantly increased the level of transparency in distribution processing. Transport capacities can be recorded decentrally and scheduled and controlled in real time. In the face of these increased forms of transparency, new players in the market have been active for some time now such as UberRUSH (USA), notime (CH), placeB (CH), BringBee (CH), tiramizoo (GER), lalamove (SGP), convoy (USA) and Deliveroo (UK/GER). These operators enable the effective and efficient coordination of decentrally distributed capacities based on intelligent algorithms and mobile information/communication technology. It is often attempted to implement Sharing Economy concepts, meaning the identifying of unused capacity with private owners or commercial companies and enabling access to this for secondary use, thereby stimulating additional utilisation. Seen in total, this is intended to achieve the improved utilisation of existing capacity and also lead to the resource-protecting reduction of overall capacity availability. Based on this idea further, higher-level concepts are currently being considered concerning the „Physical Internet“, meaning a comprehensive, collaborative network for the transport and storage of physical goods intended to function in a similar way to the familiar information-based internet (see www.etp-logistics.eu or www.physicalinternetinitiative.org).
Whether and how the roles of players in the distribution market will change has been largely unexplored until now – initial indications can however be seen in the business models of new providers, and the networking of decentral capacities with the use of intelligent algorithms appears to be a key element. Based on these developments, distribution providers are advised to continuously assess their own business model and define possible roles to be targeted as part of the Physical Internet.
Digitalisation with regard to Distribution Service 4.0 finds its expression in the changes taking place with shippers and receivers and in the distribution branch itself. The performance capability of Distribution Service 4.0 is a fundamental precondition for a performative Industry 4.0.
Dr. Thorsten Klaas-Wissing
Vice Director, Chair for Logistics Management
University of St. Gallen
This article was also published in: HSG Focus 2/2016
"Designing the future with sustainability" The 2010 winner draws its conclusions.
In 2009, Hellmann Worldwide Logistics GmbH & Co. KG was awarded the Eco Performance Award in the large company category. The philosophy of „creating the future with sustainability“, a creative overall concept, an extensive environmental management system and the anchoring of the principles of sustainability within its corporate philosophy managed to win over the jury. The following interview was conducted with Mr. Daniel Huelemeyer (Quality and Environmental Management Representative):
What‘s become of the award-winning project/concept? (Where is it now? Has it proved its worth? Was it developed further?)
The award-winning project covers various measures concerning ecological and social sustainability, and mainly measures for reducing CO2 emissions during transport, cooperations with schools and a variety of smaller social projects. As a globally active logistics service provider we focus particularly on our ecological footprint. The company places much value on methods of reducing transport- and business-related emissions. Saving resources and the associated reduction of our environmental impact is a primary ecological and economic target that has maximum priority, particularly in our own truck fleet. A focus is placed not just on technical innovation but also and mainly on the drivers, who learn efficient driving and optimise this with EcoTrainings. The prize-winning school cooperations were expanded in the past years and offer the company a chance to familiarise young people with the distribution sector, and also to provide a commitment with training and education via the internal programmes. The company continues to actively take part in social projects and communicates this in sustainability reports. Hellmann has also been a member of the United Nations Global Compact Initiative since 2012 and has undertaken to comply with ten principles concerning human rights, labour law, environment and compliance. The company also initiates and supports social and ecologically sustainable projects here as well. The „Communication on Progress“ (COP) report informs about this on an annual basis.
How did you invest the prize money?
Hellmann used the prize money to set up a „green classroom“ at the Stüveschule in the Schinkel district of Osnabrück. Pupils can carry out their lessons outside and get to know and experience nature. The open classroom with a canopy construction to protect the pupils from rain was also made greener with a variety of plants and fruit trees – these being planted by the pupils together with Hellmann employees. Another part of the prize money was used to publish and print a book about the urban history and environmental protection of Osnabrück which was then presented during a reading hour in the green classroom and given as a gift to the pupils.
Which positive effects came about for your company by winning the EPA?
Highly positive effects came about not just for the company but also for the Stüveschule in the Schinkel area of Osnabrück. Setting up a green classroom gave the children not only a new, innovative and environmentally-oriented form of lesson but also a special feeling of belonging together. Hellmann’s action also served to improve the social structure in the multicultural classes. The long-term care and support of the „green classroom“ is the responsibility of the pupils, which also promotes their sense of cooperation and community. For Hellmann the recognition of its social activities benefited the location of Osnabrück and also improved the company‘s image. Since the planning and implementation of the green classroom project could be achieved with the integration of social facilities (e.g. the curative educational workshops of Osnabrück), the company gained new contacts and stimulation for its long-term network.
In terms of sustainability, what‘s new in the company? (are there new projects/concepts?)
The company of Hellmann continues to be committed at various levels to sustainability. In terms of ecological sustainability, as well as large projects aimed at saving resources (e.g. field tests with long trucks and liquefied natural gas trucks and the launching of a certified energy management system), there are always smaller projects with groups of trainees, employees and cooperation partners such as a tree planting campaign and constructing an insect hotel. Social sustainability also plays a major role at Hellmann. We continue to cooperate with schools such as supporting a long-term school company („Meet and Eat“) and establishing a „Hellmann“ compulsory course where pupils can take advantage of various offers from the company (for example training for presentations, application training and an environmental paper chase). As mentioned above, in 2012 Hellmann joined the Global Compact Initiative of the United Nations and has obligated itself to comply with ten principles concerning human and occupational rights, the environment and anti-corruption.
Do you have any tips for future applicants?
The Eco Performance Award is a renowned prize regarding sustainability in the corporate sphere and a genuine accolade and confirmation of sustainable actions. It can also act as a tool for a company to increase its awareness level and customer interest.
Even though the company might not win the first prize in the end, the Eco Performance Award is still a superb motivation to keep busy with sustainable measures and implement these in the company.
Professional drivers are the business cards of logistics companies – but is this reflected in terms of the appreciation held for the driving profession in the logistics market and general society?
If shipping companies are asked and if the statements from experts in appropriate surveys are to be believed, then there's common agreement that professional drivers serve as the business card of a company with regard to customers. They take the quality and performance of a logistics company on the road in the true sense of the word, and also deliver it punctually and professionally onto the ramps of the loading or receiving customer base.
However, common opinion is that professional drivers have now become a scarce resource. A wave of retirement for a large part of today's active professional drivers is forecast for the coming years, and less and less newcomers are enthusiastic about the driving profession. Training figures are decreasing continually, dropout rates are increasing, and in some German regions transport companies are mutually poaching each other's drivers.
The reasons for this tangible lack of personnel are diverse, for example working conditions (e.g. poor pay, irregular work times, high work loads or increasing deadline pressure) and a general image problem with the logistics sector.
With regard to demographic developments with professional drivers and serious difficulties in finding young talent, distribution companies also face the increasing challenge of winning qualified drivers as well as keeping and developing them. If drivers are seen as the figureheads of a company, then such a "strategic resource" should also be cared for and managed in the long run. For this purpose, human resource management (HRM) concepts must be tailored for the sector of professional drivers and consistently put into action. Care must be taken that drivers are seen not only as an important element of a sector trimmed towards maximum efficiency, but as people also aiming for personal targets in life related to development and diversification possibilities in accordance with their capabilities and levels of performance within the vocation. Critical questions that must be asked with a view to the sustainability of in-house HRM measures include the following:
- Does the remuneration structure and level ensure payment that rewards performance?
- Which social programs does the company maintain that support drivers, and their families if required, during everyday professional activities?
- Do additional incentive systems exist that have a motivating effect and that financially or non-financially reward good driver performance?
- Does a systematic evaluation of the potential of drivers take place that exceeds the evaluation of operative driving performance?
- Which development perspectives do drivers have in the company? Is there systematic human resources development? Do exemplary development paths exist for professional drivers?
The last point in particular is important for young talent. Not everyone undergoing training to become a professional driver wishes to follow the occupation over his complete working life. The training could, however, represent an interesting start into the world of distribution if vocational perspectives within the company become available following training and a period of time as a professional driver. It is certainly not the worst way to have learnt the job "from the bottom up", and to successfully benefit the company in other corporate areas based on wide-ranging operative experience within the freight forwarding business.
Conventional HRM systems in the transport sector are frequently aligned to the most efficient use of driving personnel with regard to capacity management, and this is understandable and unavoidable in view of high cost pressure existing in the business. At the same time though, the important element of personnel development is usually missing in a broader sense than the current focus on improving driving behaviour to increase efficiency and cut costs. It is indeed a part of the extensive appreciation of professional drivers in companies to make available development perspectives and offer these where development opportunities are desired.
Lastly and with a view to the above challenges, our society must also to a certain extent take a good look at itself with its ambivalent behaviour. The dilemma of negative image, high cost pressure and lack of drivers existing at the moment in the distribution sector may well have been caused by the companies as part of competition, and possible approaches for the logistics business with regard to such factors have been outlined above.
On the other hand, the situation is also the clear result of our highly price-sensitive consumer society that is prepared to pay for a product but not for its delivery costs. Apparently the assumed "free" self-collection in the retail sector is only infrequently or else never included in personal cost assessments if online orders for example are placed. Have you ever asked yourself whether the order costs for a delivery of e.g. 15 euros are really worth you investing one to two hours of leisure time needed for driving into town, purchasing and then driving back? If you then deduct the costs for parking, vehicle depreciation and petrol (or the ticket price for public transport), would you then perhaps work one or two hours for the remaining 10 euros? The answer to this question is obvious. The distinct business success of many online traders is in fact based on this irrational consumer calculation, whereby consumers reduce supply costs to zero. Who do you think bears the weight of this in the end? An answer to this question is also superfluous. The value of distribution services is clearly underestimated in a society characterised by excesses. As a consequence, professional drivers are not highly esteemed because the extensive availability of goods is seen to be a matter of course that must also be free. Furthermore, the qualification level of drivers is usually classified within the lower ranges of career opportunities.
As is often the case, there are also two sides to the coin in the transport business, whereby the quality of demand seems to massively influence the quality of the offer.
Dr. Thorsten Klaas-Wissing
Department of Logistics Management
University of St. Gallen
Bundesamt für Güterverkehr ("Federal Department for Freight Traffic") (2015): Auswertung der Arbeitsbedingungen in Güterverkehr und Logistik 2015-I – Fahrerberufe.
Breitling, T., Large, R. (2013), Mangel und Fluktuation von Berufskraftfahrern. Arbeitssituation von Berufskraftfahrern und die Bindung an Beruf und Arbeitgeber, Kurzbericht der Kooperationsstelle Arbeitswelt und Wissenschaft der Universität Stuttgart, No. 02/2013, Stuttgart 2013
Download link: https://www.bwi.uni-stuttgart.de/abt4/download/Breitling_Large_2013_Mangel_und_Fluktuation_von_Berufskraftfahrern.pdf
Peirowfeiz, R., Large, R. (2013), Mangel an Berufskraftfahrern im Güterverkehr. Ursachen, Folgen und Lösungsansätze; Kurzbericht der Kooperationsstelle Arbeitswelt und Wissenschaft der Universität Stuttgart, No. 01/2013, Stuttgart 2013
ZF future survey: http://www.zf-zukunftsstudie.de
"ECO concept" minimises CO2 emissions: the 2010 winner draws its conclusions.
Erich Löb GmbH won the Eco Performance Award in 2010 for its innovative sustainability concept in the small and medium enterprises category. The company's interconnected measures mainly in the area of greenhouse gas emissions and the expansion of these to a new business sector, solar power generation, convinced the jury.
What's become of the award-winning project/concept?
Our sustainability concept, known internally as the ECO Concept, has continued to prove itself since we won the Eco Performance Award, and we're still consistently tracking our target of achieving a neutral CO2 balance. We want to avoid even more CO2 than that emitted by our vehicles and forklift trucks with the further expansion of our solar park. At the same time we're attempting to reduce the emissions of our truck fleet to a technical minimum by using state-of-the-art vehicles.
How did you invest the prize money?
We donated the money to set up a nature trail initiated by the district council of Werneck. The trail was established in the suburb of Schleerieth and is still used regularly by groups of children and youngsters, in fact mainly by school classes. Unfortunately there's no internet presence as yet.
Which positive effects came about for your company by winning the Eco Performance Award?
The fact that our sustainability activities were distinguished with the Eco Performance Award meant that our image has benefited both internally and externally. We've been committed to sustainability for a long time now, and we can beneficially integrate the award into our marketing. The award has proven popular with our customers and has also helped us to successfully face the fight against lack of specialists. It's become apparent that young drivers and apprentices in particular consider the environment much more compared to earlier times, and our commitment towards sustainability has aroused interest in our company as an employer.
In terms of sustainability, what's new in the company?
As mentioned above, we're aiming to expand our sustainability measures and cut our greenhouse gas emissions or compensate for these. We've expanded our solar park and there are also new measures with the truck fleet – a new electric vehicle has been purchased and converting our truck fleet (35 vehicles in total) to EURO 6 vehicles has now been completed.
Any tips for future applicants?
The evaluation process is a lot of fun and the prize brings advantages with it – it's mainly a good opportunity to focus on the in-house sustainability commitment. At the same time we also contribute to making the public focus on the topic of sustainability in the transport and distribution sector. As an applicant we could also create interesting new contacts that we still have today.
Simulation-supported driver training courses significantly contribute to a reduction in fuel consumption
Cutting fuel consumption with trucks not only provides transport companies with economic benefits, but also brings with it ecological potential for improvement by reducing greenhouse gas emissions. Training and qualification for drivers is a decisive factor in reducing fuel. A forward-thinking driving style with constant speed where possible, reduced maximum speed and correct tyre pressure contain high savings potential. However, the potential of driver training is frequently underestimated although trained truck drivers are able to significantly influence levels of fuel consumption. Instead of training drivers merely in compliance with the demands of current regulations, training should be identified and supported by companies and drivers as a method of qualification that leads to cost savings, relief for the environment and increased traffic safety.
Simulation-supported driver training courses provide a new alternative to traditional driver training (driving with real trucks, supplemented with theoretical lessons). In accordance with the European 59/2003 directive, drivers must renew their qualifications every five years. This can be partly implemented with a truck simulator, enabling training for fuel saving and driving safety. When implementing fuel saving training using the simulator the driver initially drives in his usual way and then undergoes a training – in a subsequent second drive he can then apply his newly acquired knowledge. The trainer can track the drives on a screen and immediately attract attention to any weak points via the speech connection. In this way the behaviour of the driver and vehicle can be easily and precisely observed as well as the interplay of driver, vehicle and traffic. Various road and weather conditions can be simulated, and traffic situations trained without danger – these can also be varied and repeated any number of times. Simulation-supported training has no costs for fuel, tires or other wear, meaning that training activities cause no additional environmental burdens. Drives can also be recorded for later evaluation purposes and each situation can be replicated. Furthermore, a driving simulator can simultaneously train up to four drivers, thereby significantly increasing training efficiency compared to the traditional method.
Until now, no scientific verification existed concerning the effect of simulation-supported driver training on driving behaviour and its sustainable economic benefits. The University of St. Gallen Department of Logistics Management consequently analysed the effectiveness of driver training, based on primary data from pilot companies in practice. Results available until now indicate positive effects on fuel consumption – in the first months a reduction of up to 12% was measured in practical use.
Stress factors such as problems with supervisors and customers, traffic hindrances and poor weather conditions may, however, cause a return to old driving habits. Monitoring the driving behaviour and regular feedback discussions between the dispatcher or truck fleet manager and driver can however prevent the weakening of learning success. The use of telematics-supported evaluation of driving data enables driving performance to be directly referenced, and possibilities for improvement can be identified to achieve further savings potential. Regular follow-up training is also needed. Improvements in driving behaviour can also be linked with incentives for drivers which may lead to the adoption of efficiency gains.
Simulation-supported driver training is now offered as a service with mobile simulators on location. Packages individually adapted to the needs of the specific company are compiled in a flexible way from various modules. Seen generally, simulation-supported driver training courses provide an efficient alternative to traditional driver training and achieve long-term, positive effects on driving behaviour.
Chair of Logistics Management
University of St.Gallen
"Electrical mobility in city logistics" – The 2011 winner sums up.
The transport company Meyer & Meyer, a specialist for fashion logistics, won the Eco Performance Award in 2011. The company was distinguished among other reasons for its pilot project "Electrical mobility in city logistics" – the company used the very first electric truck in Germany in the class to 7.5 tons to reduce carbon dioxide, noise and pollutant emissions in central Berlin.
What's become of the award-winning project/concept?
To drive forward electrical mobility in logistics, Meyer & Meyer contributed to the "NaNu" pilot project subsidised by the German government. The project concerns multi-shift operations and night-time delivery with electric utility vehicles, and is aimed at transferring transport to peripheral times. At the moment, Meyer & Meyer is developing a schedule-controlled battery charging system together with the Fraunhofer Institute for Production Plant and Construction Technology in Berlin, intended to achieve the continuous availability of batteries and therefore electric vehicles as well. As part of this, Meyer & Meyer is working on upgrading a standard 12-ton interchangeable truck to electric drive. This provides greater flexibility and enables the use of electric vehicles for a wide range of customers and locations as well as within hybrid traffic.
How did you invest the prize money?
Half of the prize money flowed into Meyer & Meyer's company children's nursery. The other half was invested into the further development of electrical mobility.
Which positive effects came about for your company from winning the Eco Performance Award?
Wide reporting took place within the logistics sector about the award and the associated sustainable lighthouse projects of Meyer & Meyer. Seen generally, the prize has placed our sustainability activities within the public focus, and as a result our company has achieved a higher level of perception. Internally as well, the prize has definitely contributed to making our employees more aware of ecological topics. Many customers are increasingly focusing on sustainable value creation chains, and the award allowed us to emphasise our sustainable strategy with customers.
In terms of sustainability, what's new in the company?
In addition to the commitment to electrical mobility outlined above, Meyer & Meyer has recently commissioned a further photovoltaic installation at their Osnabrück site. The system generates 150,000 kWh of energy per year and saves 110 tons of climate-damaging carbon dioxide. In total, all Meyer & Meyer photovoltaic systems generate 547,000 kWh of electricity annually, enabling around 185 single-family homes to be supplied with green energy each year. The systems also save 440 tons of carbon dioxide.
Do you have any tips for future applicants?
The Eco Performance Award is a great opportunity to place social, economically and ecologically sustainable commitment more strongly in the public sphere. Because applications are evaluated by an expert technical jury, the prize can be readily used as a yardstick for the ecological commitment of a company. It’s for this reason that we heartily recommend participating.
Urban Logistics: New concepts needed for the efficient supply of urban areas
The logistics sector is facing major challenges in the supply of urban areas because increasing numbers of people live together very closely. Today more than half of the global population lives in cities, and an increase to 66% is expected to 2050. This trend will be especially strong in Europe with a predicted ratio of 80%. Because ever more people wish to be supplied in municipal districts, the quantities of goods delivered to such areas will also increase. The resultant increase in goods traffic will be critically analysed in the future especially in terms of the load on environment and infrastructure. Changes in consumer behaviour also demand new logistics concepts, and as an example, all factors are indicating that online trade will continue to boom, while the difficult-to-plan accessibility of end customers for package suppliers will need to come to terms with increasing problems. The "last mile" in urban distribution logistics is already complex due to limited stopping zones, traffic-calmed areas, tight delivery deadlines and small storage spaces. Seen in perspective, the increasing average age of the population in towns and cities will also bring logistical challenges, as in addition to goods, mobile services will need to be supplied on-call due to limitations in mobility. These driving forces with regard to complexity face rapid progress in technology, that in turn provides the logistics sector with new tools via the smart, mobile and networked use of "big data" – which will help to efficiently supply both people and companies in urban areas according to needs.
The necessity for future-fit logistics concepts in towns and cities has long been known, and was already focused on in the 1990's with the "city logistics" concept and the founding of several publicly subsidised projects. The balance between rapid, flexible and individual supply for customers and avoiding negative life quality factors due to noise, congestion and air pollution was to be achieved by concentrating goods flows and cross-company cooperations. Most of these projects were stopped at the end of their subsidy periods due to insufficient profitability and difficulties concerning teamwork between participating partners in the projects. The "city logistics" concept was deemed as having failed, and was partly lost under the radar. At the moment though, discussions about city logistics or urban logistics are increasing again, on the one hand because the pressure to act is increasing due to excessive traffic loads, and on the other because attractive markets are being created thanks to the above-specified trends that can be exploited using core logistical expertise and new technology.
Various approaches and ideas are being currently analysed with the topic of Urban Logistics. Some from the area of infrastructure adaptation for example are aimed at setting up consolidation centres, or urban hubs, near to towns and cities, micro-depots for load carriers at central locations, mixed zones in buildings and car parks and the designation of reserved parking and supply zones for logistics companies. Innovative delivery concepts are also being looked at, for example fine distribution with load carriers or E-bikes, the use of alternative means of traffic (e.g. boats in Utrecht) and increased levels of night-time delivery. In general, the use of electrical commercial vehicles in urban areas is currently being given wide potential, as these are quiet and have low emissions, thereby contributing for example to implementing the EU strategy for CO2-free logistics in towns and cities. The aim of this strategy is to completely do without vehicles using fossil fuels in urban traffic to 2050. Projects using electrical commercial vehicles are for example the "multi-shift operation and night-time supply with electrical commercial vehicles" (called ‘NaNu!’) in Berlin that was completed in December 2015 following a run time of three years, and the "Smart City Logistics" project concerned with the intelligent integration of electrical mobility in the city centre of Erfurt, Germany.
Concentrating flows of goods by using cooperative logistics systems is also important in Urban Logistics concepts, but a focus is made less on cooperation at company levels because logistics, production and trade companies have established their own, optimised logistics systems. As a result, cooperative sharing concepts for private persons are being focused on. The more simple it becomes to access third-party resources via suitable online platforms and make available own capacity, the more obvious it becomes that other things will be shared in addition to "car sharing".
It seems that the new Urban Logistics concepts are still in their initial stages in terms of development and implementation. The necessity for developing complete, future-fit concepts to supply people in towns and cities in an efficient and environmentally-friendly way, and according to their specific needs, is undisputed. Many approaches in "city logistics" discussions are currently experiencing a renaissance based on new technical possibilities both in passenger traffic and goods traffic, but the potential with these topics remains to be seen. It is however now clear that exciting possibilities for innovative logistics services are being created in this field.
Chair of Logistics Management
University of St.Gallen
- EU Whitepaper – Roadmap to a Single European Transport Area (2011)
- Model project: Nachhaltiges Lieferprojekt für die Innenstadt von Hamburg [Sustainable supply project for Hamburg’s inner city]
- Project “Mehrschichtbetrieb und Nachtbelieferung mit elektrischen Nutzfahrzeugen (NaNu!)” [Shift operation and night supply via electrical commercial vehicles]
- Project “Smart City Logistik”
"MUT" – people, environment, actions: The 2009 winner draws its conclusions.
In 2009, the transport company Kellershohn GmbH & Co. KG won the Eco Performance Award in the small and medium enterprises category with their "MUT" programme – people, environment and deeds [Mut, Umwelt, Taten]. MUT places people in the centre of activities. As a consequence, social commitment and implementing measures in the areas of training, promotion and health is focused on in addition to protecting the environment.
What's become of the award-winning project/concept?
Our MUT concept has proved its worth in practice, and investments in "green logistics" have also paid for themselves. We have developed our own fitness guide with an osteopath so that our commercial employees can keep fit on the road, and six of our workers have stopped smoking in the meantime thanks to medical support.
How did you invest the prize money?
The prize money was donated in full to environmental organisations, and the majority went to the myclimate organisation that we are working together with regarding carbon dioxide compensations.
Which positive effects came about for your company by winning the Eco Performance Award?
We got very good press reports, both regionally and trans-regionally. The scope and range of the Eco Performance Award are very wide, and it is a well-known prize that means our customers also see us in a better light. We are seen as a qualified partner in terms of the environmental actions of our customers, and we are glad to share our experiences.
In terms of sustainability, what's new in the company?
Digitalisation and Industry 4.0 are our current projects, and we are developing our own apps to simplify paper-free processes in the company. Optimisations to the vehicles never stop, and we are glad that the producers of commercial vehicles are making them ever more safe. Training for our employees is now focused on even more – we founded our own training company, BestWayConcept GmbH, to compensate for the skill shortages. BestWayConcept GmbH offers training courses aimed for example at communication, palette management and loading safety as well as specific further training for professional drivers.
Do you have any tips for future applicants?
My concluding words in my presentation for the Eco Performance Award were: "We should all think about what we can do for our environment every day." An application for the Eco Performance Award offers a great opportunity to show your commitment!
Autonomous trucks will change the business models of logistics service providers
There are currently many reports in the print and television media about autonomous trucks. This is not surprising, given that the development steps now allowing this visionary concept to take shape and move forward in reality are extremely impressive. In mid-2014, Mercedes-Benz unveiled its Future Truck in Germany with great media fanfare, and since May of this year, in a pilot test in the US state of Nevada, two autonomous Freightliner Trucks from Daimler have been allowed to travel on public roads. Other truck manufacturers, not to mention the automotive supplier industry, have realized this topic's significance as a strategic business segment and are working on relevant solutions. In Germany, there is debate in a transportation policy discussion concerning the approval of initial test routes on the Autobahn, such as the A81 in Baden-Württemberg. Experts are anticipating that the autonomous truck may be a normal phenomenon on our roads in no later than 10 years from now, at least as a semi-autonomous vehicle, i.e. accompanied by a driver, as mandated by law.
All these developments demonstrate that the autonomous truck has transcended its visionary character, and it is now high time to consider how this game-changing technical innovation in the most vital piece of work equipment in road transport will impact upon operative business. It is certain that this will be the case, especially when we consider autonomous driving as part of the digitization of our society and of the economy.
The following aspects are intended to provide initial impetus and stimulate a thought process, without already being able to provide concrete answers as to possible ramifications:
Reduction of fuel consumption: Autonomous trucks can save fuel costs through digitally networked, predictive and coordinated driving. From today's perspective, this offers an advantage over a conventional truck. That is why many service providers and their shippers will be interested in deploying the autonomous truck.
Increased capacity utilization: The integration of operative truck scheduling and autonomous truck driving opens up the option of more closely wedding the given location and load status of the truck even more closely with the current order volume, quite aside from myriad opportunities to monitor performance in handling. The requirements for IT competence will continue to increase.
Integration into the supply chain: Digitization is entering into various domains of the supply chain. In industry, there is discussion about the networking of production under Industry 4.0 (the Internet of Things). The autonomous truck is a component of corresponding logistics or Transport 4.0. This means there is even greater convergence of logistics services and industry.
Modified business concepts: Will autonomous trucks simply be adopted into today's business concepts of the "transport company" and the "freight forwarder", or will new digitally-driven business concepts, possibly with new players, establish themselves, as currently seen in "Uber" and "Notime"? The developments of the sharing economy could also emerge more and more clearly through the logistics sector driven by joint utilization of transport capacities.
Changes in job profiles: Will intelligent algorithms take over the tasks of the schedulers? Will drivers become transport managers, as Daimler describes the future? Will low-skilled jobs be replaced by highly-qualified job profiles?
This brief sample of new ideas demonstrates that autonomous trucks are expected to usher in higher efficiency in transport. In doing so, the requirements for IT competence will also rise, new job profiles are to be expected, and new business concepts will need to be formulated. These are the select topics that the logistics service providers of today ought to include in their thoughts concerning their strategies of tomorrow.
The autonomous truck is not simply an automatic transport machine that can move our goods autonomously and independently over the road. It is part of the digital revolution that has taken hold of our society and our economy. That is why this further technical revolution in truck technology is being considered in a larger context as another component of a digital supply chain, encompassing the digital integration of many players. Otherwise logistics service providers run the risk of overlooking important aspects from today's business perspective.
Dr. Thorsten Klaas-Wissing
Chair of Logistics Management
University of St. Gallen
DHL Trend Research: SELF-DRIVING VEHICLES IN LOGISTICS. A DHL perspective on implications and use cases for the logistics industry, 2014
Wirtschaftswoche: [weekly journal]
Crowd Logistics – logistics re-thought?
For a few years already, the term „Sharing Economy“ or „Shareconomy“ is making the rounds. In view of new technological developments in the areas of Internet, mobile computing, and mobile communications, well known business models - among other things - are being re-thought, such as in terms of the car pool service, or the taxi service (Uber), or in car sharing (Car2Go), or in barter centres (clothing circle) or also for the arrangement of „ride-along opportunities for goods“ (BringBee). In this, the idea of no longer owning something but only using it seems to find the approval especially of the younger gene- ration. The Internet, in particular, does play an important role since the sharing is organised via online platforms. The online channel makes these offers accessible to a broad audience, has a very wide reach, and as such has the potential to connect a large demand to a large supply. In this, the masses and/or the „crowd“ is activated explicitly in order to more effectively and more efficiently exchange and utilise goods, services, or even knowledge.
An idea also of interest for logistics that, on the one hand, opens up new business opportunities and models. Because the physical logistics and the transport costs, respectively, do still - all too often - limit the feasibility of these sharing concepts
and confine them to local areas. On the other hand, the sharing can also change the type and method of how and by whom logistics and transport services are handled and organised in the future. As such, the „Uber“ ride-along placement service is currently testing a new placement service, „UberCargo“ in Hong Kong. If this concept prevails, the entry of micro companies into the transport services business would become even simpler. What this would mean for the price competition in the trans- port industry is already foreseeable today.
But at the same time a lot of questions still remain unanswered. Who is, for example, liable when a non-professional part- time service in addition to foodstuffs is also transporting pharmaceutical articles or even furniture without adhering to professional quality or hygiene standards? The business models that result from the new opportunities of online sharing all too often act in legal grey areas since they - in part - do massively put into question the business logic and practices existing to date. Maybe logistics will have to be re-thought here. The resulting opportunities and risks for the logistics service industry are currently not comprehensively foreseeable, yet. But it surely is worthwhile already today to targetedly think about which developments from the sharing trend - in particular in connection with new technologies - may provide an opportunity or may also pose a risk for one‘s own company, in order to early on develop strategic initiatives and professional competencies.