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Cce Centre for Sustainable Road Freight AN ANALYSIS OF THE SAME-DAY DELIVERY MARKET AND OPERATIONS IN THE UK by Julian Allen, Maja Piecyk and Marzena Piotrowska November 2018 AN ANALYSIS OF THE SAME-DAY DELIVERY MARKET AND OPERATIONS IN THE UK Technical Report CUED/C-SRF/TR012 November 2018 Julian Allen, Maja Piecyk and Marzena Piotrowska University of Westminster Corresponding Authors: Julian Allen: [email protected]; Tel.+44(0)20 350 66627 Maja Piecyk: [email protected] Tel.+44(0)20 7911 5154 Marzena Piotrowska: [email protected] Tel.+44(0)20 350 66626 ABOUT THE FREIGHT TRAFFIC CONTROL 2050 (FTC2050) PROJECT This report has been produced as part of a research project entitled “Freight Traffic Control 2050 (FTC2050): Transforming the energy demands of last-mile urban freight through collaborative logistics”. It is an EPSRC-funded project that began in April 2016 and continues until August 2019. Freight transport currently makes up around 16% of all road vehicle activity in our cities and by 2030, the EU would like to see largely CO2-free logistics systems operating in our urban centres. With van traffic predicted to increase by 20% in London by 2030, and the uptake of alternatively fuelled and electric goods vehicles slow, more radical strategies are needed to reduce the numbers and impacts of freight vehicles in our cities. Working with parcel carriers in London, this project will examine the potential for closer operational collaboration between carriers to reduce urban traffic and energy demand whilst maintaining customer service levels, and evaluate to what extent such relationships can develop naturally within a commercial setting or whether a 3rd party ‘Freight Traffic Controller’ (FTC) would be necessary to ensure equitable distribution of demand across a city. The key research objectives are to: 1. Investigate the collective transport and energy impacts of current parcel carrier activities in urban areas; 2. Create a database to gather and interrogate collection and delivery schedules supplied by different carriers; 3. Use the data with a series of optimisation algorithms to investigate the potential transport and energy benefits if carriers were to share deliveries and collections more equitably between them and develop tools to help visualise those benefits; 4. Evaluate what business models would be needed to enable carriers to collaborate in this way; 5. Investigate the role a 3rd party 'Freight Traffic Controller' could play in stimulating collaboration between carriers to reduce energy demand and vehicle impacts across a city; 6. Identify the key legal and privacy issues associated with the receipt, processing and visualisation of such collaborative schedules; 7. Consider the wider application of this approach to other sectors of the urban freight transport market. The project is a multidisciplinary collaboration, led by the University of Southampton’s Faculty of Engineering and the Environment (CEE), and involving the Southampton Business School (SBS), Lancaster University’s School of Computing and Communications and Data Science Institute (LU), the University of Westminster’s Faculty of Architecture and the Built Environment (UoW) and University College London’s Bartlett Centre for Advanced Spatial Analysis (CASA). Two major carriers (TNT and Gnewt Cargo, (the latter operating for DX and Hermes)) have agreed to participate in the research along with Transport for London (TfL). For further information about the FTC2050 project please visit the project website at: http://www.ftc2050.com/ The Principal Investigator of the project is Professor Tom Cherrett ([email protected] Tel: + 44(0)23 80594657) ABOUT THE CENTRE FOR SUSTAINABLE ROAD FREIGHT (SRF) PROJECT This report has been produced as part of a research project entitled “Centre for Sustainable Road Freight”. The Centre is a multidisciplinary collaboration, led by the University of Cambridge with Heriot-Watt University and the University of Westminster, together with organizations in the freight and logistics sector. Its purpose is to research engineering and organizational solutions to make road freight economically, socially and environmentally sustainable. The Centre has recently been awarded a new Grant from the UK Engineering and Physical Sciences Research Council (EPSRC) that will fund the core research activities of the Centre for the next 5 years from June 2018 to May 2023. This funding will enable the Centre to embark on an exciting new programme of research, building on the work of the past 5 years and tackling a range of new challenges in vehicle engineering and logistics including this time urban freight operations, as well as policy-making. The objectives of SRF are to: 1. Develop new fundamental insights into reducing fuel usage and GHG emissions from UK road freight, by applying a full systems understanding of the ways that commercial logistics operations, vehicle technologies and government policy measures interact in practice; 2. Develop and maintain a comprehensive roadmap for decarbonising the road freight sector in the UK, accounting for research needs, implementation strategies and policy interventions; 3. Reduce barriers to implementation of the most effective strategic, deep decarbonisation measures; 4. Maximise the effectiveness of targeted near-term decarbonisation solutions and technologies; 5. Demonstrate novel decarbonisation solutions and measure their performance in practice; 6. Develop decision-support tools and promote their implementation in practice. 7. Translate research findings into recommendations for corporate strategy and government policy. A vital feature of the Centre is its close links with the freight industry. The consortium includes key freight operators such as John Lewis, Tesco, Sainsbury's, Turners and Wincanton, along with vehicle industry partners, including Volvo, Goodyear, SDC among others, and trade associations and professional bodies who help set the research agenda and spearhead the adoption of the results by the road freight industry. More details and outputs are available from the project website: http://www.csrf.ac.uk/ The Principal Investigator of the project is Professor David Cebon ([email protected] Tel: + 44(0) 1223 3 32665) CONTENTS Page no. 1. Introduction 1 PART I: SAME-DAY DELIVERY MARKET IN THE UK 2. The Same-day delivery market 3 2.1 Overview of same-day deliveries 3 2.2 Economic and technological changes that have affected demand for same- 4 day deliveries 2.3 Sectors in the same-day delivery market 6 2.4 Product categories in same-day delivery 7 3. B2B and B2C Non-Food Same-Day Delivery Sectors 9 3.1 B2B and B2C non-food same-day delivery market size 9 3.2 Major carriers in B2B and B2C non-food same-day delivery 11 3.3 B2B and B2C gig-economy start-up same-day delivery companies 14 3.4 Non-food retail customers’ use of B2C same-day delivery services 18 3.5 Retailers’ provision of non-food B2C same-day delivery services 20 3.6 Provision of same-day deliveries in the fresh-cut flowers and automotive 22 sectors 4. B2C Grocery Same-Day Delivery Sector 25 5. B2C Takeaway and Restaurant Meal Delivery Sector 30 6. Market Prospects in Same-Day Delivery Sectors 37 6.1 Current market size and future prospects for the various same-day 37 delivery sectors 6.2 Current and future same-day sector involvement by category of carrier 40 7. Rates of Courier Pay in Same-Day Delivery Sectors 44 7.1 Rates of courier pay in the parcel and document same-day delivery sector 44 7.2 Rates of courier pay in the takeaway meal same-day delivery sector 45 7.3 Rates of courier pay in the grocery same-day delivery sector 46 7.4 Changes in courier pay rates over time 46 8. Employment Status of Same-Day Couriers and Related 49 Policy Thinking 8.1 Case Study: Deliveroo’s self-employed courier arrangements 52 8.2 Case Study: Amazon Flex’s self-employed courier arrangements 53 8.3 Review of legal challenges bought by couriers against their self- 53 employed status 8.4 UK Policy thinking on self-employment 62 PART II. SAME-DAY DELIVERY OPERATIONS IN THE UK 65 9. History of Same-Day Deliveries 65 10. Operating Patterns in Same-Day Delivery Sectors 69 10.1 Non-food: parcels (B2B and B2C) and medical deliveries 71 10.1.1 Collection and delivery activities and job allocation to couriers 71 10.1.2 Logistics considerations in B2C same-day deliveries 74 10.2 Grocery deliveries 77 10.2.1 Orders fulfilled in a time-slot later in the day on the same day that the customer 77 places the order 10.2.2 Orders fulfilled immediately upon order placement (usually with 1-2 hours) 78 10.3 Takeaway meal deliveries 79 11. Vehicle Types Used in Same-Day Deliveries 88 12. Communications and Information Technology Developments 92 in Same-Day Delivery Services 12.1 Parcel carriers and fleet controllers 92 12.2 Grocery, takeaway meal and non-food retail same-day delivery 95 13. Study of Same-Day Parcel Sector Operations in German Cities 97 14. Bicycle and Cargo Cycle Same-Day Deliveries: History and 99 Findings of Studies 14.1 Same-day deliveries by bicycle – history and present day 99 14.2 Research into electrically-assisted cargo cycle operations 101 14.3 Study of freight bicycles and cargo cycles in Paris 102 14.4 Study of freight bicycles and cargo cycles in Belgium 102 14.5 Study of freight bicycles and cargo cycles in Rio de Janeiro 103 14.6 Study of cargo cycles in the USA 103 14.7 Analysis and simulation of the potential for cargo cycles 103 15. Same-Day Couriering as a Way of Life 105 16. Traffic, Social and Environmental Impacts of Same-Day 110 Deliveries 16.1 Traffic and environmental impacts of same-day operations 110 16.2 Cycling in urban areas – environmental, health and wellbeing impacts 112 16.3 Trip generation and noise and nuisance at restaurants 112 16.4 Behaviour on the road and the law concerning riding moped and 115 motorcycles 16.5 Road safety and training 117 16.6 Traffic incidents and casualties in the same-day sector 120 16.7 Vehicle provision, maintenance and use 123 16.8 Personal and accident insurance 124 16.9 Work Related Road Safety & the Management of Occupational Road Risk 125 16.10 Courier Code of Conduct/Practice 128 17.
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