What if the number of delivery trucks could be reduced and replaced by smaller, more nimble vehicles and electric cargo bikes while still providing the same level of service to local businesses that rely on them, but without scaring away the tourists and customers that shop there? Nijmegen has done just this, but more importantly, it has also exported its success to a dozen other Dutch cities of varying sizes (including Amsterdam), thus demonstrating the scalability of its model.
The concept is relatively simple. Instead of having large, long-distance trucks coming into the center of a city, they would unload directly into freight hubs at the edge of town located next to the highway. The freight would then be redistributed into smaller delivery vehicles or cargo bikes. While freight warehouses and hubs are not a new idea, these tend to be on a much larger scale and operated at a regional level. This is because individual freight companies tend to each operate their own, which requires volume and scale that doesn’t exist for small to mid-size cities. This is where consolidated hubs make sense, by pooling the volume from several freight companies together.
But where the city of Nijmegen succeeded whilst 106 other such trials around the world failed was in the actual implementation. So, what’s the secret sauce then?
There are three key ingredients to success, according to Birgit Hendriks, Nigmegen’s inner-city manager. Firstly, it was important to make the freight consolidation company a non-governmental organization so the private freight companies wouldn’t fear it as a for-profit competitor. Secondly, business model innovation is essential. Cost for the core service of last-mile deliveries need to be kept as low as possible to keep the freight companies happy, so other fee-based services to receivers such as storage, home deliveries for bulky items, clean waste collection, and support for online retail services are essential to keep the enterprise afloat. The most important ingredient, however, is building a network of receivers (local shops and businesses) who support the idea of receiving deliveries from the freight hub, rather than directly from the freight companies. This bottom-up approach is key to getting the supply side on board.
What seems most interesting to me about the implementation of consolidated freight hubs in Nijmegen and the other dozen Dutch cities is that it was done without any kind of regulation or mandate forcing freight companies to use the hubs. Sure, Dutch cities have congestion charges and emission-free zones which probably helped, but on-the-whole the transition to this logistics model seems to have happened on a voluntary and business-minded basis. This is encouraging in terms of scalability, but bottom-up approaches can also be human resource intensive. The spread of this model sounds like it could be dependent on local ‘champions’ within a city or municipal organization to mobilize, coordinate and fight for the change. The article acknowledges that "For all their success in the Netherlands, UCCs [urban consolidation centers] still haven’t taken off elsewhere around the world."
However, congestion charges, emissions-free zones, and car-free urban streets were all once in the same position on the fringes of city planning tools, or in the “too hard to implement” basket. Perhaps greater spread of, and knowledge about, consolidated freight hubs (suggestion: call it “smart delivery zones” or something more page-turning) could make them easier to implement.
A last thought: many freight companies already seem to work together in the area of using convenience stores as local parcel pickup points (e.g. DHL, DB Schenker, and TNT use the same pickup point in my neighborhood). This poses the question about why haven’t they been able to do this for freight hubs themselves? Perhaps instead of city agencies taking on the risk and challenge of setting up their own freight hubs, another approach to solving this problem would be to work out what are the barriers preventing private companies from coordinating amongst themselves like they do at pickup points?
Written by Bobby Chen, RISE Viktoria.