Tackling Fragmented Last Mile Deliveries to Nanostores by Utilizing Spare Transportation Capacity-A Simulation Study

Abstract

Last mile deliveries in urban areas cause a disproportionate unsustainable impact, while it is also the most expensive part of the supply chain. This is particularly true for freight flows that are characterized by fragmentation. Logistically, this becomes apparent in vehicles that are driving around with a low vehicle fill rate, leading to the unnecessary presence of freight vehicles in our cities. This study focuses on the operational feasibility of utilizing the spare transportation capacity of a service-driven company as a potential solution to supply small independent retailers, or nanostores. The aim is to reduce inefficient vehicle movement. Based on a real-life implementation, we use SYnchronization Model for Belgian Inland Transport (SYMBIT), an agent-based model, to simulate various bundling scenarios. Results show the total vehicle kilometers and lead times to supply nanostores for the service-driven company to serve its customers. There is a potential to utilize spare capacity to supply nanostores while maintaining a decent service level. The number of vehicle kilometers driven highly depends on the location of the distribution center where the service-driven company operates. Based on these results, the conditions that have to be met to replicate this solution in other urban areas are discussed.