Search
Close this search box.

NEWS & ARTICLES

New era of urban freight in China: Workshop with 22 pilot cities on green urban delivery in Chengdu

China has been struggling to meet the growing demands of urban delivery. With urban population continuously growing at about 15 million people per year, 58.52% of Chinese citizens now live in cities (up from 36.22% in 2000). At the same time, consumption spending per capita in China has grown by 25% in just 3 years from RMB 18,487 (about EUR 2,370) in 2013 to 23,079RMB (about EUR 2,960) in 2016. A lot of this increased consumption spending has been driving the fast growth of e-commerce, which saw a 60% annual growth (CAGR) for the past 7 years. These developments have provided a boom for logistics companies in China, which saw their express deliveries rise from 9 billion shipments in 2013 to an estimated 40 billion in 2018.

Figure 1: Shipments in Billion in China

However, this development also provides many challenges to both the traffic in the cities as well as the environment. With numbers of both delivery and private vehicles soaring by 20 million from 2016 to 2017, the Chinese Ministry of Transport (MOT) started a green urban delivery program in 22 pilot cities to explore and implement low-carbon measures to improve urban delivery.

On 27 and 28 September 2018, MOT with support from GIZ in China organized a workshop to discuss current developments, best practices and challenges. Participants of this conference included representatives from local governments (Departments of Transport, Economy, Public Security), from think tanks (e.g. Shenzhen Electric Vehicle Application and Promotion Center), from industry (e.g. JD.com) and start-ups (e.g. Juma Logistics). GIZ had invited experts from the UK and Japan to introduce their experience in developing innovative modes towards sustainable urban delivery.

In the discussions and presentations, particularly three main pathways to better manage the urban deliveries emerged: electrification of the fleet, shared delivery and connectivity.

Electrification: developing New Energy Vehicles (NEVs)

Diesel delivery vehicles are a major source of pollution in cities. With further increases in urban transport to be expected, one important pathway to lower emissions is the introduction of new energy delivery vehicles. During the workshop, Xie Haiming from the Shenzhen Electric Vehicle Application and Promotion Center explained the status of this transition.

One particular success factor, as explained, was the provision of subsidies by the city of Shenzhen for the purchasing and operation of NEVs, which give NEVs a comparative advantage over traditional vehicles. The subsidies depend on the battery sizes: operators receive subsidies ranging from 700RMB/kWh for batteries lower than 30kWh (about 90 EUR/kWh), to 600 RMB/kwH for batteries between 30kWh and 50kwH (about 77 EUR/kwH), and to 500RMB/kWh for batteries over 50 kWh (about 64 EUR/kWh). In order to avoid an abuse of the subsidies, the government introduced the requirement that the vehicles have to operate over 30,000 km per year.

To further incentivize logistic companies to purchase and operate NEVs, Shenzhen gives favorable access permits to NEVs. This provides a comparative advantage. Moreover, since 1 May 2018, when procuring new light duty trucks, logistics companies are only allowed to procure NEVs .

Another factor to accelerate the introduction of NEVs in urban logistics is the availability of charging facilities. Shenzhen has used big data analysis to better understand the amount of charging stations needed as well as the location of charging poles. With about 9,000 charging poles for non-bus NEVs in Shenzhen, Mr. Xie explained that Shenzhen has an urgent need for more charging facilities. For this, policy makers need to ensure that challenges such as finding space, ensuring quality standards, and navigating the unwillingness of gas stations to install charging stations (as charging an NEV delivery vehicle takes longer than filling the gas tank) are circumvented.

So far, a total of 40,363 light duty NEVs were sold July 2018 in Shenzhen. Shenzhen aims to have a total share of 30% NEV in light trucks by the end of 2020.

Figure 2: Sales of NEVs and NEV logistics vehicles in Shenzhen, 2015-2018

However, further challenges for NEVs remain. One challenge mentioned was the lack of second-hand markets and prices for NEVs in logistics: whereas ordinary delivery vehicles can be easily re-sold and re-sale prices can be factored into the original purchasing decision, this mechanism is thus far absent for NEVs.

Our take-away: The path to NEVs in logistics seems achievable, yet many hurdles still need to be taken. Among them are charging infrastructure, quality issues, and proper life-cycle analyses to better understand the environmental impact of the different modes of technology for urban delivery. The city of Shenzhen continues to be a leading city in China for the introduction of NEVs and relevant NEV policies.

Shared delivery: policy and practice

Shared delivery has been a topic for discussion in Japan, Germany, the UK and China for many years, as was presented by the different experts. The idea is that logistics companies share resources to bundle deliveries to increase efficiency (e.g. by pooling delivery runs), reduce the use of resources (e.g. by cutting idle times and empty runs) and thus reduce cost and externalities (e.g. pollution, space use).

Local Chinese governments have set up a series of policies to promote shared delivery. For instance, the city of Chengdu set up access control policies to allow only a specific number of vehicles to enter the city area. It decided to stop issuing access permits in 3 years. The city government aims to effectively control the types of delivery vehicles entering specific parts of the city, with preferential access for shared delivery vehicles. To provide logistics services in the affected areas, logistic providers thus have to operate in a shared delivery mode.

To further strengthen shared delivery, the city of Chengdu has built three centralized distribution centers with 1.5 million square meters of standardized storage facilities. During the workshop, participants had the chance to visit a local shared delivery warehouse for fast-moving consumer goods, including cold-chain freight.

One example from Chengdu was particularly highlighted: Renrenle Supermarket. By increasing its proportion of shared delivery from 30% to 70%, they increased the average working time for a vehicle from 6.1 h/d to 7.5 h/d, the load factor from 74% to 86%, and decreased the number for vehicle trips from 100 to 25.

During the workshop presentation, participants also discussed the challenges of shared delivery. They include:

  • If shared delivery is applied on the last mile, the question for logistics companies could be how to differentiate themselves from their competitors or brand themselves
  • As shared delivery requires sharing information, companies may wonder how to keep a competitive advantage that comes through ownership of data.
  • As shared delivery requires a high degree of standardization (e.g. vehicles, containers, information systems), it is unclear how much investment is necessary.

Our take-away: Addressing these challenges in shared delivery will require either more government action through incentives/disincentives or regulation. While the advantages for the environment of shared delivery are mostly evident, successful implementation examples of large-scale shared delivery are still lacking.

Connectivity: information platforms for monitoring

The application of information technology, digitalization and big data in urban delivery can help not only operators to increase efficiency, but also cities to promote green urban delivery, as was introduced by representatives from the cities of Chengdu, Shenzhen and Suzhou. One particular goal is to better manage traffic flow to reduce congestion. With 9 out of the 30 most jammed cities in the world being in China, Chinese city governments are hard pressed to use every tool available to improve traffic efficiency. For urban delivery it is particularly illegal parking that exacerbates the problem, according to MOT. Although parking regulations are often in place, effective enforcement of regulations would require more timely and precise monitoring. Therefore, Chinese cities explore the idea of an information platform for urban delivery monitoring.

Chengdu, for example, set up an urban delivery information system that monitors the speed, location, stop-times, and temperature of the freight compartment (particularly relevant for cold-chain delivery vehicles) of every delivery vehicle. Employees of the city administration can then analyze traffic efficiency and lawful behavior of drivers on the central information platform. This helps to monitor when a vehicle violates, for example, the access control policy, or whether a cold delivery vehicle has maintained the temperature of goods.

Figure 3: Joint Distribution Monitoring Center in Chengdu

Our take-away: This information platform is currently used predominantly for the enforcement of laws and regulations. Other use cases seem also possible, e.g. to integrate these data into the shared-delivery planning.

International experiences and lessons

Recognizing the uniqueness of Chinese rapid development and the scale of the challenge in urban delivery, Dr. Jaques Leonardi from University of Westminster, Dr. Ueta Minoru from Nittsu Research Institute and Consulting in Japan, and Dr. Christoph Nedopil, project director of the Sino-German Cooperation on Low-Carbon Transport at GIZ in China, shared international experiences and best practices in planning, managing, regulating, and innovating green urban freight delivery.

Environmental zone in London

Dr. Leonardi focused his presentation on the holistic approach of logistics planning necessary to overcome sustainability challenges in urban delivery. He highlighted the necessary mix of technology, infrastructure, markets, behavior (e.g. drivers), energy composition and generation as well as regulation. He  raised many examples to highlight the possibilities of increased efficiency in urban delivery, e.g. San Sebastian in Spain which introduced urban consolidation centers with cargo bikes. He showed pathways for cities to better manage local emissions, e.g. by introducing environmental zones and access limits for vehicles, e.g. in Paris or London. A particular highlight was his emphasis on using waterways for inner-city freight, e.g. for construction material.

Using waterways for urban freight

Dr. Ueta explained the trends and solutions of urban deliveries in Japan. While economic growth, and with it the growth of urban delivery, in Japan seems much slower than in China, the freight structure in China and Japan are comparable. For instance, most trucks in China and Japan are private trucks, while commercial trucks have a much higher efficiency (in tons transported per day). To increase efficiency, also Japan introduced shared delivery principles, for example by building four public truck hubs around Tokyo. Apart from this, Tokyo also encourages the set-up of shared delivery zones for many shops. In regards to fighting pollution in cities, Tokyo has introduced environmental zones that prohibit heavy-duty trucks from entering the city. Similarly to China, Japan faces an on-street parking problem. To overcome the problem, the Tokyo government introduced fines for both owners and drivers of vehicles with the option to withdraw operating licenses for repeat violators.

Example for Parking and Loading Zones in “Smooth Tokyo” Yasukuni Street

At the same time, Tokyo introduced better parking space management by better making use of empty spaces in cities. Another policy to reduce parking time is the necessity to have two operators in a delivery truck: one driver, one loader.

Dr. Nedopil introduced the concept of intermodal urban deliveries. Intermodal urban delivery is employing, for example, rail-based trams to deliver goods to a micro-hub, from where the goods are then delivered by a low-carbon vehicle (e.g. cargo-bike) to the recipient. The German city of Frankfurt just announced a pilot to employ a shared passenger-cargo-tram to deliver goods. Other examples of such intermodal transport using trams are or were found in Switzerland to transport garbage, in France to transport goods to supermarkets, and in the German city of Dresden to supply materials to the Volkswagen car factory. While this form of intermodal urban delivery requires a high level of coordination among many stakeholders (e.g. logistics providers, public transport operators, legislators), it can be seen as one pathway to contribute to reducing emissions in urban deliveries. This form of delivery is particularly successful if external circumstances (e.g. entry limitations for trucks, weather-induced difficulties for road deliveries, space limitations) and regulations make this form of delivery more attractive than conventional delivery.

Using a tram for to supply small shops in Amsterdam, Netherlands

Outlook for green urban delivery

China will continue to face an uphill battle to limit the externalities, such as emissions, from urban deliveries. Many solutions present themselves and combining the relevant solutions that are applicable for the specific urban circumstances requires more analysis and design than simply copying the solutions from one city to another.

This workshop allowed cities to present and exchange ideas amongst each other and with international experts. It has allowed for critical thinking, but it has also shown that a mix of more innovations, enforcements of laws as well as the introduction of more market mechanisms – and thus a close cooperation and coordination among private and public stakeholders – are necessary to manage the challenges in urban delivery to make urban delivery green in result and not in name only.