Cargo Bikes As a Potential Solution for Sustainable Urban Logistics: a Case Study in Tirana

Cargo Bikes as a potential solution for sustainable urban logistics: a case study in Tirana

Faculty of Civil and Industrial Engineering Department of Civil, Constructional and Environmental Engineering Master Degree in Transport Systems Engineering

Candidate Gleardo Terziu - 1777838

Supervisor Prof. Andrea Campagna

A.A. 2018-2019

Contents Page

CONTENTS ...... I FIGURE CONTENTS ...... III TABLE CONTENTS ...... IV

1 INTRODUCTION ...... 1 1.1 Problem description ...... 1 1.2 Research question ...... 3 1.3 Statements and hypothesis ...... 3 1.4 Purpose of the thesis ...... 4 1.5 Methodology ...... 4

2 LITERATURE REVIEW ...... 6 2.1 Last Mile Logistics ...... 6 2.2 Importance of delivery ...... 7 2.3 Usage of cargo bikes ...... 9

3 METHODOLOGY ...... 13 3.1 Survey methodology ...... 13 3.1.1 Investigation of distribution flow ...... 13 3.1.2 Survey technique ...... 14 3.1.3 Methodology of data analysis and elaboration ...... 17 3.1.4 Survey methodology and software implementation ...... 18 3.2 Ex-ante evaluation of the scenarios ...... 21 3.2.1 Overview ...... 21 3.2.2 Logistics Sustainability Index calculation ...... 22 3.2.3 Phase 1: Selection of the impact area ...... 23 3.2.4 Phase 2: Selection of criteria ...... 23 3.2.5 Phase 3: Selection and computation of indicators...... 24 3.2.6 Phase 4: Weighting process ...... 25 3.2.7 Phase 5: Values normalization ...... 28

3.2.8 Phase 6: Logistics Sustainable Index ...... 29

4 IMPLEMENTATION TO THE CASE STUDY ...... 30 4.1 Study area “Blloku” district of Tirana ...... 30 4.2 Independent retail sector ...... 38 4.2.1 Establishments area ...... 40 4.2.2 Employees and vehicles ...... 41 4.2.3 Supply chains and deliveries ...... 42 4.2.4 Transport & delivery operations ...... 44 4.3 Brand retail sector ...... 45 4.4 Freight Deliveries & Quantity ...... 46 4.5 Supply chains selected for the project implementation ...... 47

5 New supply chain design ...... 49 5.1 Supply chain characteristics ...... 49 5.1.1 Depot layout ...... 49 5.1.2 Vehicle selection ...... 54 5.2 Route generations ...... 56 5.3 Cost-Benefit Analysis ...... 61 5.3.1 Project financial costs ...... 62 5.3.2 Project financial benefits ...... 68 5.3.3 Break Even Point analysis ...... 69

6 BEFORE’ AND ‘AFTER’ SCENARIOS COMPARISON ...... 70 6.1 ‘Before’ and ‘After’ scenarios assessment ...... 70 6.2 Logistic Sustainable Index calculation ...... 71 6.3 LSI Results ...... 81

7 FINAL CONCLUSIONS ...... 84 7.1 Conclusions ...... 84 7.2 Further researches...... 87

8 REFERENCES ...... 88

Figure contents Page

1 Methodology division ...... 5 2 Copenhagen Illum Department Store ...... 9 3 A typical carrier of 1910 (Bergrijer Brother, Amsterdam) ...... 10 4 Long-John, Denmark 1920 ...... 10 5 Usage of cargo bikes in Europe (Lenz & Riehle, 2013) ...... 12 6 Logical process of the questionnaire ...... 18 7 Detail of the “Supplies” process of the questionnaire ...... 20 8 LSI evaluation process ...... 22 9 Tirana Road Map (Urban planning project JCIA Studio Team) ...... 31 10 Cargo-Bikes used for city cleaning service in Tirana (EcoVolis) ...... 32 11 New dedicated lane for bikes in Tirana (Tirana Municipality) ...... 33 12 New urban buses 100% electrical (Tirana Municipality) ...... 33 13 Depot location ...... 50 14 Depot layout ...... 51 15 VELOVE, electric cargo bike (case used by DHL) ...... 55 16 Example of electric Cargo Bike operations ...... 58 17 Example of courier walking operations...... 59 18 Example of electric Cargo Bike route per tour ...... 59 19 Example of courier walking route per tour ...... 60 20 Cost benefit analysis ...... 61 21 Linear depreciation of e-Cargo Bikes ...... 64 22 Break Even Point graph ...... 69 22 ‘Before’ Scenario representation ...... 70 23 ‘After’ Scenario representation ...... 71 24 Impact areas performance ...... 81

III

Table contents Page

1 Number of criteria and indicators per impact area ...... 24 2 LSI Indicators categories ...... 25 3 Random Consistency Index (RI) ...... 28 4 Traffic counts in the study area (Tirana Open Data) ...... 34 5 Traffic flow during last three years ...... 35 6 Time-Window Traffic Limited Zone (Municipality of Tirana) ...... 36 7 Population of Retail chains and brand sector ...... 37 8 Population of Independent Retail Sector ...... 37 9 Establishment characteristics of the study case ...... 39 10 Average size of the Establishments & Depo in ‘Blloku’ district ...... 40 11 Employee number per category ...... 41 12 Supply chains identified in the study area ...... 44 13 Number of deliveries per year for brand retail sector ...... 46 14 Summary of actual scenario ...... 47 15 Urban supply chains suitable for the UCC ...... 48 16 Freight volume demand ...... 50 17 Handler working time-table ...... 53 18 Cost indicators of the proposed project ...... 62 19 Depot installation costs ...... 65 20 Re-charging costs ...... 67 21 Aggregated annual cost of the project ...... 67 22 Project financial benefits ...... 68 23 Before and After scenarios summary ...... 71 24 Logistics sustainability index indicators ...... 72 25 Values of the LSI indicators in ‘Before’ scenario ...... 75 26 Values of the LSI indicators in ‘After’ scenario...... 76 27 Air emission indicators ...... 78 28 Annoyed level of the population for noise pollution ...... 79 29 Performance of the impact areas in the ‘Before’ scenario ...... 80 30 Performance of the impact areas in the ‘After’ scenario ...... 81

1. INTRODUCTION

Urban freight distribution is considered the least efficient and the most difficult, expensive and polluting part of the supply chain. The urban freight distribution is often hampered due to limited traffic zones, narrow streets and lack of parking slots. Among the economic costs the externalities caused by commercial vehicle are very dangerous. Tirana is one of the most polluted cities in Europe and the main cause is the road traffic externalities.

New sustainable solutions must be developed to reduce the negative effects of this activities to the environment, life quality and economy. A successful new mode that is tested lastly in Europe, is the urban freight distribution using electric cargo bikes. Based on the pilot projects conducted in different cities in Europe an estimation of 51% of all goods, delivered in the cities can be switched from traditional fueled vehicles to e-cargo bikes.

1.1 Problem description

The increase of the urbanization and the technological evolution (e-commerce) is increasing the challenges of urban freight distribution. People want every day more goods to be delivered and picked up in their places. The open market competition makes clients raise their requests to speed and time windowed. On the other hand, the logistical companies aren’t updating as fast as the increase demand and its new requests. Traditional ‘fueled track’ remain the dominant transport mode.

The actual demand with its updated requests and the lack of real updates on the urban distribution by the logistic companies is leading to a ‘Lose – Lose’ scenario for both the companies and the population.

Usage of the traditional supply chain has negative effects on urban-life quality ⋅ noise pollution

⋅ air pollution (CO2, NOX) ⋅ traffic congestion ⋅ illegal and dangerous parking

In the other hand we have the effects urbanization and the urban policies that the municipalities are developing to improve the life quality such as: ⋅ narrow urban streets ⋅ traffic congestion ⋅ lack of parking ⋅ limited/restricted traffic zones

These effects are making last mile logistics the most expensive and fatigues part of all supply chain. Logistic companies are trying to take measures in their supply chain in order to: ⋅ adapt new urban policies ⋅ reduce cost ⋅ fulfill the demand

Mostly the way out is founded in the renewal of the fleet with electrical tracks but again their size is a lack that doesn’t: ⋅ enter limited/restricted traffic zones

⋅ find parking ⋅ adapt with narrow streets

In some avantgarde cities, we have some examples of the usage of ‘Cargo-Bikes’ for last mile logistics. The lack of studies is an important reason that prevents the wider usage of these vehicles.

1.2 Research question

To investigate and structure the studied situation a research question followed by a set of hypotheses has been developed. The focus of the thesis is: ⋅ Productivity ⋅ Level of service ⋅ Environmental impact

The research question is formulated as follows:

Is Cargo-Bike a potential solution to make urban freight more sustainable?

1.3 Statements and hypothesis

Statement 1: Cargo bikes can take shorter routes and avoid traffic congestion and have the potential to increase the LOS in terms of on-time deliveries.

Hypothesis 1: Cargo bikes increase productivity and LOS

Statement 2: Cargo bikes do not emit CO2 and they reduce traffic congestion so decrease the CO2 emission of other vehicles

Hypothesis 2: Cargo bikes reduce CO2 emission

Statement 3: Cargo bikes are cheaper to be purchased and to be maintained. Their charging costs are much lower than vans fuel and they perform shorter routes.

Hypothesis 3: Cargo bikes reduce delivery costs

1.4 Purpose of the thesis

The goal of this thesis is to analyze whether a new model of urban distribution that includes Electrical Cargo Bikes is efficient in freight urban distribution. This research will be based on similar experiences and projects in different European cities. The study will be focused on freight distribution in one of the densest populated zones of the Tirana, Blloku district. The efficiency is evaluated in terms of productivity, LOS, environmental impact and economical costs. In additional, this research will highlight the factors that influence in the understanding the challenges and benefits related to the implementation of this new distribution model in the urban areas. The results of this thesis will determine whether proposing this new model is efficient or not.

1.5 Methodology

The methodology of this work is divided in three main parts. The first step of was the reveal of the current situation in the study area. The data collection is based on a deep

4 investigation of the study area, by developing a survey tool for understanding freight behaviors and impacts in Functional Urban Areas. The methodology of this survey is based on similar methodologies used for sustainable urban logistics planning and freight transport project but is adapted to cover exactly the needs of this thesis.

The second part is the formulation of the new supply chain that will be served with electrical cargo bikes. This part will include the selection of the depot location, vehicle selection, logistic operations, simulation of the network and the calculation of the number of vehicles needed. Also, in this part a business model analysis is included to evaluate whether the project implementation is worthy or not. The last part of the thesis includes an ex-ante evaluation. ‘Before’ and ‘After’ scenarios will be compared based on Logistics Sustainable Index.

Figure 1. Methodology division

2. LITERATURE REVIEW

In this chapter is aimed to identify the key literature on this field. There are many similar cases over the world that concern in the implementation of e-cargo bike in urban freight deliveries. The experience on the priviest cases states the importance of the implementation of these vehicles in urban logistics. There are no studies that has evaluate this mode in the Albanian market.

2.1 Last Mile Logistics

Last mile logistic distribution system is the final step of the supply chain which needs carefully investigation in order to efficiently and economically deliver goods to customers. The Last Mile in the supply chain is considered as the last part of the supply chain for the direct-to-consumer market. In supply chain logistic operations. Last Mile refers to the last part of physical goods delivery process which involves a set of activities that are necessary for the delivery process from the last transit point to the final drop point of the delivery chain. The Last Mile is critical because it is responsible for the final delivery of products to customers and is typically a source of high amount of costs of delivery chains. (Aized & Srai, 2014)

City logistics is the term used to denote the specific logistic concepts and practices involved in deliveries in congested urban areas, the ‘‘last mile’’ transport, with specific problems such as delays caused by congestion, lack of parking spaces, close interaction with other road users, etc. (Munuzuri, Larraneta, Onieva, & Cortés, 2005)

The process for totally optimizing the logistics and transport activities by private companies in areas while considering the traffic environment, the traffic congestion and energy consumption within the framework of a market economy. Moreover, city logistics is based on general knowledge about issues including distribution costs, and social and environmental costs. The goal of city logistics is to reduce both and make the whole system more effective. (Taniguchi, Thomson, Yamadi & Van Duin 2001)

The last mile is considered the more expensive, least efficient and most polluting part of the entire supply chain (Gevaers, 2011) Factors that affect these high proportions are due to inefficiencies, such as traffic (e.g. traffic jams, heavy congestion), and time spent on handling of goods at multiple locations. The last mile often hinders city logistics and supply chains in high-populated areas. For example, due to regulated traffic speed and intensity (e.g. rush hour, low emission zones, etc.), limited parking and unloading space (Aized & Srai, 2014).

The actual supply chain has negative effects on urban-life quality as noise pollution, air pollution (CO2, NOX), traffic congestion and illegal and dangerous parking in the other hand we have the effects urbanization and the urban policies that the municipalities are developing to improve the life quality such as narrow urban streets, traffic congestion, lack of parking and limited or restricted traffic zones. These effects are making last mile logistics the most expensive and fatigues part of all supply chain.

2.2 Importance of delivery

Delivery can be considered the most delicate phase of the supply chain. The client’s evaluation is highly based on the delivery service. During time a lot of measures to improve this phase are been taken but the clients has become more and more difficult to

be satisfied and the companies are obligated to satisfy them as service is the key competitor for the companies trading the same product. Varying delivery options and its perceived quality are highly sensitive criteria for the clients. Based on their request we can identify four types of clients:

⋅ Clients who seek for the cheapest delivery method ⋅ Clients who seek for Same-Day-Delivery ⋅ Clients who seek for Time-Window-Delivery ⋅ Clients who seek for Instant-Delivery

Even if the increasement on Same-Day-Delivery, Time-Window-Delivery or Instant- Delivery studies has notice the client’s choice based on cheapest delivery keeps the majority with 50%.

Delivery success is based in three main factors: cost, efficiency and transparency.

⋅ Cost: Last mile logistics cost are considered to be up to 30% of the total delivery cost and some time they may be exceeded. ⋅ Efficiency: To be efficient is important to satisfy the clients need for fast and economic delivery. The increase the efficiency a good management of the supply chain is needed and the key phase in las mile logistics. ⋅ Transparency: The clients wants to track their product so for this reason the companies generate tracking code in order to check delivery status.

Nowadays the tracking code is not enough, and the clients want to follow their order in real-time. The clients want information for the driver’s location and time window with at least four hours in order to wait in their zone.

2.3 Usage of cargo bikes

The first usage of cargo bikes is known as 1877 in England. James Starely was the first that build a three-carrier design for transportation of people or goods. The first documented usage was for the purpose of urban postal delivery. In 1920 in Denmark cargo bikes were the main transport mode used for Copenhagen Post and Telegraph Service messengers, with two wheeled bicycles and three wheeled tricycles (Klepfer, 2012). This mode was also used by several companies in the country, such as the Illum Department Store and the Byposten messenger company, to manage business logistics (Colville-Andersen, 2012).

Figure 2: Copenhagen Illum Department Store

Cargo bikes were comprised of both commercially manufactured models and self- adapted vehicles (Decker, 2012). The most popular model in Holland and Scandinavia was the “Bakfeitsen” (box bike) which was a modified design of a cargo trike (Klepfer, 2012).

Figure 3: A typical carrier of 1910 (Bergrijer Brother, Amsterdam)

The Long-John which first appeared in Denmark in the late 1920s was considered the most practical cargo bike for speedy deliveries with heavy/bulky goods. It is equipped with a steering mechanism comprised of a tie-rod passing under the platform (Decker, 2012).

Figure 4: Long-John, Denmark 1920

The “bakery bikes” or “butcher bikes”, famous in the UK in the 1930s, were another form of cargo bike with front-fixed boxes or baskets used for the delivery of goods

10 such as bread, meat, vegetables, fruit, and dairy products. In the United States the first cargo cycles were manufactured in 1898 by a company called “Workman Cycles” and were used by the post office for warehouse work as well as by the Good Humor Ice Cream Company for vending purposes. From 1939 to 1967, “Cycle Trucks” became the most popular in the U.S. whereby 10,000 units were sold during World War II (Klepfer, 2012).

Starting from the mid-twentieth century there was a market decline in the use of bicycles for urban deliveries of goods, due to factors as: greater availability of cars and vans, comparatively lower operating costs per unit carried of cars and vans, and the growing suburbanization of urban areas (Leonardi, Browne, & Allen, 2012). Different with the present, the focus was on speed, environmental issues were less of a problem at that time (Maes & Vanelslander, 2012).

Cargo Bike, as known today, can be a two or three or four-wheeled vehicle that is operated entirely by human power or with an electric assist (e-Cargo Bike) (Kamga & Conway, 2013). It is a zero-emission alternative to light freight vehicles, which are commonly powered by diesel engines (Saenz, Figliozzi, & Faulin, 2016). E-cargo bikes can carry loads of varying weight and volume. In additional cargo bikes with electrical motor increase load capacity, speed and range. Electric cargo bikes can carry loads up to 250 kg, which increase their potential to manage a list of tasks. The load and volume characteristics depend on the type of cargo bike and distribution area characteristics. These characteristics of e-cargo bikes show that they can afford the increasing demand for point-to-point express deliveries in the urban areas (Lenz & Riehle, 2013).

The results of previous studies were found that the implementation of cargo bikes as a new freight transportation mode is a viable option for urban freight transport (Schliwa, 2015). However, we are facing with a lack of researches for the usage of cargo bikes in

11 the city freight distribution (Decker, 2012; Gruber, Kihm, & Lenz, 2014; Lenz & Riehle, 2013). The study Lenz & Riehle on 2013 analyzed the experiences of 38 service providers in Europe that had implemented bikes for urban freight deliveries. Their research identified Western and Central Europe as the core areas of cycle freight. Most studies are limited to the European context as cargo bikes are more convenient to the narrow streets of old towns than to boulevards (Saenz et, 2016).

Figure 5: Usage of cargo bikes in Europe (Lenz & Riehle, 2013)

3. METHODOLOGY

3.1 Survey methodology

The data collection of this thesis is based on a deep investigation of the study area, by developing a survey tool for understanding freight behaviors and impacts in Functional Urban Areas. The survey is made with the implementation of a complex questionnaire with the help of technological software. The methodology of this survey is based on similar methodologies used for sustainable urban logistics planning and freight transport project but is adapted to cover exactly the needs of this thesis.

3.1.1 Investigation of distribution flow

The investigation of the distribution flow starts with the understanding the supply chain approach. SCs are defined depending on the ‘Operating formal procedure for the service and management of goods. the procedure changes not only on the basis of the type of the freight but also on the structure of their distribution method. It is different for retail chain and brands sector and independent retail sector.

A deep survey is needed to reveal the distribution flow. This survey includes several steps. The first steps start with a census of the activities on the study area that represent the sources of demand for urban freight in that specific area of the city. Based on the complexity of the retail sector a special and different treatment is needed to understand better. Two different survey methods are needed for retail chain and brands sector and independent retail sector.

The method consists on the following steps: ⋅ Sampling ⋅ Web-based establishment and commodity flow survey ⋅ Database collection ⋅ Analysis and statistical inference process.

Since the retail chain and brands sector control their distribution, the methodology needs to define a list of firms that own their outlets in the study area and to record data about their supply chain structure.

The first step to reveal the supply chain in a specific urban area consist in a census of the ‘Freight Demand Generators’ that are located on the study area. This survey can be limited to retail activities or can be extended to every activity on the area that order, receive or ship freights. The big retail groups have own control on the distribution of the goods on their establishments on the other hand the small independent retailers often don’t control deliveries, they let every responsibility on the hand of the wholesalers or suppliers that are using their own account or third-party carriers. Often, they even do not pay for the transport directly and the only contact that they have with the carrier is the sign of the freight documents. The supplying process and the ‘operating formal procedure for the service and management of goods’ used by retail groups are different from those used in the independent retail sector.

3.1.2 Survey technique

Survey of independent Retail Sector

The method to identify and characterize the supply chains of the independent retail sector involves an establishment and commodity flow survey conducted on a

14 statistically significant sample size of shopkeepers located the assigned urban area. The survey includes different questions about the supplying process of each type of good traded by them.

Based on this methodology, every supplying process represents an ‘observation unit’ and every participant represents a ‘reporting unit’.

For each type of good supplied, the following topics have to be collected:

1. type of suppliers (manufacturers, wholesalers, etc.)

2. type of agreement for delivery/collection from supplier

3. who organizes delivery/collection of goods

4. who resolves delivery/collection problems

5. type of delivery/collection operator (own account, logistics company, carrier, express courier, etc.) 6. vehicle types/sizes

7. no. of deliveries/collections

8. size/type of delivery/collection

9. type of delivery packaging used

10. quantity of goods delivered/collected

11. frequency of delivery/collection of goods

12. time of day

13. variation by day of week

14. variation during year

15. who sets delivery/collection time

16. time taken to carry out deliveries

17. whether staff from establishment need to be present

18. whether signature is required

19. whether goods have to be checked by receiver

In addition, participants have to be asked also to provide a series of information about their establishments located in the specific urban area. Specifically:

20. type of establishment

21. size of establishment

22. employees at establishment

23. size of warehousing space at establishment

24. other warehousing space out of establishment

25. no. of deliveries/collections (considering all types of goods as a whole)

26. delivery/collection frequency (considering all types of goods as a whole)

27. size/type of delivery/collection (considering all types of goods as a whole)

28. time of day

29. variation by day of week

30. variation during year

31. whether vehicles based at establishment

32. vehicle types/sizes

33. deliveries/home deliveries made by vehicles at the establishment

Data collected on topics from 20 to 33 improve the knowledge of the urban economic composition. In this additional survey, observation units and reporting units coincide. The survey does not address the activities performed on the retailer side during the delivery of goods.

Survey of retail chains and brand sector

Taking into consideration that chains and brand sector control their own distribution channel and processes the methodology of the survey is involving directly their head offices. They are asked to provide data related to the deliveries to their establishments located in the study area.

It consists of a survey used to gather data about:

1. Distribution organizational structure 2. Type of delivery operator (own account, logistics company, carrier, express courier, etc.) 3. Goods flows to establishments in the urban area 4. Trip details and patterns of goods vehicles in the urban area 5. Loading/unloading activities of goods vehicles in the urban area 6. Movement of goods between vehicles and establishments in the urban area.

3.1.3 Methodology of data analysis and elaboration

The data collected allow to have conclusions about the population in terms of statistical inference process. The main scope of the survey for the independent retail sector is to reveal the characteristics of the supply chain of each type of goods delivered in the

17 assigned urban area. In this survey shopkeepers are ‘reporting units’ and the data to be collected (deliveries, type of suppliers, etc.) are “observation units”. This is set by taking into consideration that a significant sample of shopkeeper can be determined given the number of the shops on the area. On the other hand, the universe of the suppling channels for each type of freight is unknown. As a result, this method can’t provide a statistically significant quantitative result for the supply chains, only a qualitative characterization is possible to be provided.

3.1.4 Survey methodology and software implementation

The methodology of this survey is based on a similar methodology used for sustainable urban logistics planning and freight transport project but is adapted to cover exactly the needs of this thesis. The first step of this survey starts with a census of the retail activities located in a specific urban area. The second step is consisting with a questionnaire for the characteristics of the establishment type of goods traded by them and the supply chain of each type of good. The questionnaire is divided into four main categories:

ESTABLISHMENT DATA (warehousing, employees, vehicles)

SUPPLIES

HOME DELIVERY TO FINAL CUSTOMERS

PROBLEMS & SUGGESTIONS

Figure 6. Logical process of the questionnaire 18

• ‘ESTABLISHMENT DATA’ includes all the characteristics of the local establishment and of the other establishments the shop-owners may have in the surroundings on in other area, number of employees and of the vehicles used for deliveries.

• ‘SUPPLIES’ concern the most complex section of the questionnaire, since goods can be supplied in different modalities to the same shop, and the same supplying process may happen in different phases.

• ‘HOME DELIVERY TO FINAL CUSTOMERS’ regards deliveries to final customers (at home) from the shops in the area.

• ‘PROBLEMS & SUGGESTIONS’ includes open questions and is oriented to acquire free answers.

The most important part of the survey is the part of Supplies since it collects data for different supply chains and allows to understand the difference between supply chains of different goods. In the table below is illustrated in details the structure of the questionnaire (see Figure 7)

Figure 7. Detail of the “Supplies” process of the questionnaire

The first step of the survey, the identifications of the establishments on the study area was conducted with the usage of Google Map software and Street View option. On the parts of the zone that street views are not available a site inspection was conducted.

The complexity of the data that this survey cover needs the implementation of the software-s to collect and elaborate data. Google Forms software that is part of Google's online apps suite of tools, was used to conduct the survey. This software has the ability to save data directly to a spreadsheet and later on to analyze them. The questionnaire was created on the online format in Albanian language.

The questionnaires were delivered in two way: • by email to the establishments that are adapted with the usage of the technology • by face-to-face interviews with the help of IPAD-s Tablets to record obtained data in real-time.

In the face-to-face interviews the questionnaire was made with the help of two site assistants, civil engineer students from Polytechnic University of Tirana, that were trained to conduct this survey.

3.2 Ex-ante evaluation of the scenarios

3.2.1 Overview

This section explains the Logistics Sustainability Index (LSI), a Multi Criteria Decision Analysis that is used to combine normalized values of indicators into a unique index. This index can assess the city logistics measures impacts over an impact area and combine different indexes to assess the overall convenience of a measure. Multi-Criteria Decision Analysis (MCDA) tool provide directions considering all relative aspects and areas being affected by the implemented measure in city logistics. The evaluations that follow the concept of multi-stakeholder multi-criteria

21 assessment methodologies bring to the estimation of the Logistics Sustainability Index, that is the values from the respective basic indicators will be combined into composite indicators and will make possible to calculate LSI.

Logistics Sustainability Index is very useful to compare the current scenario with a potential after scenario. In the following paragraphs the method to calculate the LSI is explained in detail.

3.2.2 Logistics Sustainability Index calculation

Logistics Sustainability Index has set of parameters, available for selection by each stakeholder category, including impact areas, criteria and indicators. According to the selected parameters, the evaluation process can produce multi-criteria results, also separately processed results. The evaluation process is composed of six steps reported in the figure 8.

Step 1: Selection of the impact area

Step 2: Selection of criteria

Step 3: Selection and computation of indicators

Step 4: Weighting process

Step 5: Values normalization

Step 6: Logistics Sustainability Index

Figure 8. LSI evaluation process

3.2.3 Phase 1: Selection of the impact area

Over the seven impact areas at least one of them based on primary and secondary objectives and perform the assessment of the measures. Impact areas are:

⋅ Economy and energy ⋅ Environment ⋅ Transport and mobility ⋅ Society ⋅ Policy and measure maturity ⋅ Social acceptance

⋅ User uptake

3.2.4 Phase 2: Selection of criteria

For every impact area, there are several criteria. The criteria for the different impact area are the following:

⋅ Economy and energy: energy, development, benefits, costs, economic and financial risk

⋅ Environment: air quality, GHG emissions, noise pollution

⋅ Transport and mobility: level of service, safety and security, transport system, UFT vehicles, IT infrastructure and technology

⋅ Society: greening, convenience, living standards, socio-political dimensions, natural disaster and civil disturbances

⋅ Policy and measure maturity: awareness, managerial, background

⋅ Social acceptance: social approval, regulations acceptance

⋅ User uptake: flexibility, knowledge and experience transfer, consensus, success

Impact areas Criteria Indicators Economy and energy 5 36 Environment 3 10 Transport and mobility 5 29 Society 3 20 Policy and measure 3 24 maturity Social acceptance 2 9 User uptake 5 9 Total 26 137

Table 1. Number of criteria and indicators per impact area

3.2.5 Phase 3: Selection and computation of indicators

In order to evaluate the performance of a measure, a series of indicators that are relevant with the lifecycle stages of the measure can be selected. The indicators can be divided in three main categories:

Indicator Impact areas Criteria

Air quality Greenhouse Gas Environment Emission Noise Impact Assessment Indicators (IAM) Level of Service Safety & Security Transport &Mobility Transport System UFT Vehicles Energy Development Social Cost Benefit Indicators (SCBI) Economy and Energy Benefits Costs Policy & Measure Background maturity Social approval Flexibility Transferability and Adaptability Social acceptance Adaptability Indicators (TAM) Consensus Transferability User uptake Success

Table 2. LSI Indicators categories

3.2.6 Phase 4: Weighting process

Weighting process is the step where two or more elements are compared. The main standard principle of weighting is: Higher the weight, higher the importance of the element is. According to the literature five methods are mostly used based on simplicity and effectiveness:

⋅ Analytical Hierarchy Process (AHP) method

⋅ Pairwise Comparison method

⋅ Delphi method

⋅ Ratio method

⋅ Rank Order Centroid method

In this project Analytical Hierarchy Process (AHP) method is used as it is considered the most-widely used method for multi-criteria analysis in the transportation and urban logistics field. The main strengths of this method are:

⋅ usable in a very wide spectrum of fields

⋅ easy to be understood

⋅ flexibility and easiness of use

⋅ interdependence of the different criteria

⋅ usable for both monetary and non-monetary scales

The user is called to state the importance (or preference) of element 1 compared to element 2 by rating it according to a scale from 1 to 9, where:

⋅ 1 = same

⋅ 3 = moderately

⋅ 5 = very

⋅ 7 = much more

⋅ 9 = exceptionally more

All the intermediate integer ratings are possible. When element 1 is less important than 2, then the respective reciprocal value is attributed (e.g. 1/5). The A matrix (n x n), called “comparison” or “reciprocal matrix”, is filled in by the user, where n is the number of the compared elements. The cells under the unitary diagonal cells are filled in with the user’s rating input values, while the others below are equal to the reciprocal value of the input value. An example is the following matrix A (3x3)

1 a12 a13

A = a21 1 a23

a31 a32 1 Where for instance :

The required weight Wi of the element in row i, is calculated using the following equation 1.

Equation 1.

The consistency of the weight is estimated through the consistency index (CI) using equation 2. and the consistency ratio (CR) using equation 3.

Equation 2. Equation 3.

The Random Consistency Index (RI) depends on the number of elements n to be compared, as reported in the Table 3, below.

n 1 2 3 4 5 6 7 8 9 10 RI 0 0 0.58 0.9 1.12 1.24 1.32 1.41 1.45 1.49

Table 3. Random Consistency Index (RI)

Normally, a CR of up to 10% is considered a good consistency. But also, higher values (e.g. up to 30%) may be acceptable. The first step is to weight impact areas with each other and then the criteria are weighted within the respective impact area. All the weights of the elements belonging to the same component (Impact Area or Criterion), after the aggregation should sum up to one.

3.2.7 Phase 5: Values normalization

The use of indicators of different nature, context and value in a common assessment methodology, requires the establishment of a commensurate scale, that can make indicator values dimensionless. This can be achieved by means of the normalization of values of each criteria and indicator into the set of dimensionless real numbers. Data normalization consists of the rescaling of the values of the data into a single specified range, such as from 0 to 1 or from 0 to 100. There are several normalization methods available in literature:

⋅ normalization by comparison with the best alternative

⋅ classic normalization

⋅ max and min normalization

⋅ vector normalization

⋅ statistical z score

In this project, the normalization by comparison with the best alternative is used. This method consists in: all the indicators values are divided (inside the same criterion) by the maximum value.

3.2.8 Phase 6: Logistics Sustainable Index

The last step of the LSI procedure consists in data interpretation and calculation. In this step the complexity of e decision making process is in the difficulty of considering all the areas and the aspects that are affected by the measure (i.e. economy and energy, transport and mobility, social acceptance) and the multiple stakeholders that participate in the process.

When there is a problem with multiple alternatives and only one choice criterion, the decision maker is required to determine the best alternative by comparing every alternative based on the value of the criterion. There are many techniques able to solve this kind of problems, as: ⋅ Bayesian decision making ⋅ Entropy technique ⋅ Expected value method ⋅ Goals achievement method ⋅ Utility function-based methods ⋅ Multi attribute utility theory (MAUT) ⋅ Simple Multi Attribute Rated Technique (SMART) ⋅ Analytical hierarchy process (AHP) ⋅ Weighted Sum model (WSM) ⋅ Weighted Product model (WPM) ⋅ Outranking methods (ELECTRE, PROMETHEE I and II, REGIME analysis)

Weighted Sum Model (WSM) is the method used in this project. WSM is the earliest and most common used method. The main characteristic of this model is the additive utility assumption. This method can be used in problems with different alternatives and one indicator, with the condition that the units of each indicator are same for all alternatives.

The utility Vi for every alternative is calculate by the equation 4.

Vi = Rj rij 𝑛𝑛 Equation∑𝑗𝑗=1 𝑊𝑊 4. rij is the normalized value of indicator j for alternative i.

Weighted Sum Model is used to aggregate normalized values of indicators into a unique index that is able to assess the city logistics measures impacts over a given impact area and eventually to combine all these indexes into a unique LSI. This procedure is done by assessing the overall convenience of measure implementation.

4. IMPLEMENTATION TO THE CASE STUDY

4.1 Study area “Blloku” district of Tirana

The method is applied in a central zone of the city center of Tirana, Blloku (see Figure 9). Ish-Blloku (the former Block) known as Blloku is the most famous and attractive area in Tirana. It became very attractive after the fall of communism in Albania

30 because during communism it used to be the area where only the communist elites lived. This zone is very famous and attractive for tourists and local mostly for two purposes shopping and clubs. Also, it is the most important business zone of Tirana.

Figure 9. Tirana Road Map (Project for Tirana urban planning JCIA Studio Team)

Air pollution is one of the biggest problems of Tirana municipality. According to the data monitored and recorded by Mobile Air Quality Monitoring Station of Tirana Municipality, the main problem is with PM10 and NO2 indicators that are caused mainly by road traffic and vehicle emission. These two indicators are over the annual rate standards of the European Union. The PM10 indicator the average measured annual rate is 59.38 µg/m³ from 40 µg/m³ that is the annual rate of the European

Union which means an overpass of the European standards with 48.45%. The highest monitored value during the day is 125.59 µg/m³. (measures of 2018, Tirana.opendata)

According the monitoring center the values of the pollution are higher during the week-day while in the week-end these values are significantly lower, having a lower number of vehicles traveling. Having this high air pollution, the municipality tend to the reduction of the traffic flows and stimulates the use of alternative transport modes. The municipality has started to build 10 km of dedicated lanes for bicycles furthermore is promoting and financing every eco-friendly project as Bike-Sharing, Electrical Vehicles or Cargo Bikes.

Figure 10. Cargo-Bikes used for Urban cleaning service in Tirana (EcoVolis Project)

Figure 11. New dedicated lane for bikes in Tirana (Tirana Municipality)

Figure 12. New urban buses 100% electrical (Tirana Municipality)

According to the traffic counts of Tirana municipality published on opendata.tirana.al, our study area has a high traffic flow which in 2018 was 18,700 vehicles per year. The traffic flow is increased with 6% from 2016 to 2017 and with 3% from 2017 to 2018. Based on this increasing ratio during last three years we can assume that the traffic flow of 2019 will increase again with 3% and will be 19200 vehicles/day.

Since we don’t have an exact number of commercial vehicles serving the zone is assumed to be 10% of total traffic flow, based on literature who quotes the number of commercial vehicles between 4% – 10%. The reason that the maximum 10% was assumed is because the urban policy of the municipality that don’t allow the commercial vehicles with payload capacity over 3.5 tons to enter in the study area from 06:00 until 20:00 which cause the supply chain to be served only with van up to 3.5 tons payload capacity.

Period Vehicles/Day Commercial Vehicles/Day

Trimestral traffic counts I. Trimester 2018 18250 1825 II. Trimester 2018 18850 1885 III. Trimester 2018 18500 1850 IV. Trimester 2018 19100 1910

Period Vehicles/Day Commercial Vehicles/Day

Annual traffic counts 2016 17100 1710 2017 18150 1815 2018 18700 1870 2019 19200 1920

Table 4. Traffic counts in the study area (Tirana Open Data)

TRAFFIC FLOW 20000 19000 18700 19200 18000 18150 17000 17100 16000 2016 2017 2018 2019

Figure 5. Traffic flow during last three years

The zone characteristics as a central and attractive zone of Tirana with a high demand generation of people and goods, with air pollution and with a big number of residents it is exposed to the urban policies of the municipality. Different development plans propose to have a limited traffic zone even fully pedestrian zone in this district. According a study conducted by the Ministry of Education, Sports and Youth of Albania every student in Tirana loses 5 minutes of the first lesson hour because of the traffic. Having a number of almost 100,000 students they lose 8,333 hours of lesson per week and almost 300,000 lesson hours per year.

The municipality has approved a Time-Window Limited Traffic Zone for commercial vehicles. This urban policy is affecting also our study area, as it is located inside the median ring of the city. In the district no commercial vehicle can enter from 06:00 to 09:00 and from 16:00 to 20:00. Moreover, commercial vehicles having over 18 tons payload capacity con not enter this zone starting from 06:00 until 20:00.

Time Window Restricted vehicles Restricted zone

06:00 - 09:00 All commercial vehicles Grand ring of the city 16:00 - 20:00

Median ring of the city, in its interior All commercial vehicles network, including streets Sulejman 06:00 - 20:00 having over 3.5 tons payload Delvina, Abdyl Frashëri, Ismail Qemali, capacity Elbasanit and Blvd. Bajram Curri

All commercial vehicles Inside grand ring of the city including the 06:00 - 20:00 having over 18 tons payload main entry links of the city capacity

Table 6. Time-Window Traffic Limited Zone (Municipality of Tirana)

The purpose of this that introduce the potential of the usage of e-Cargo Bikes is to find a solution in case that the municipality will approve the proposed plans and introduce a fully Pedestrian Zone or Commercial Vehicle Traffic Limited Zone.

The first step of the introduced method starts with a census of the retail activities located in this area of the city. As a part of the work for this thesis a census was made on February and March of 2019. In this zone a total of 842 of establishment were identified, 88 (10.1 %) establishments of which were the Population of Retail chains and brand sector (see Table 7) and 754 (89.9%) were Population of Independent Retail Sector (see Table 8).

ID Categories Elements 1 Ho.Re.Ca Hotel, Restaurant & Café 10 2 Textile & Leather 15 3 Jewelry & Watches 3 4 Home Furnishing & Décor 18 5 Cosmetic & Personal care 18 6 Accessories & Gadgets 2 7 Groceries 7 8 Other 25

Population of retail chains outlets 88

Table 7. Population of Retail chains and brand sector

During the survey 8 different categories and 26 sub-categories were used to identify the retail establishments.

ID Categories Elements Sub-Categories Elements

Fast-Food 28 Ho.Re.Ca Hotel, Restaurant & Restaurant 42 1 347 Café Café 208 Hotel 69 Textile clothing 121 2 Textile & Leather 212 Footwear 85 Leather products 6 Gold & Diamond 4 Jewelry & Accessories 13 3 Jewelry & Watches 43 Watches 13 Optica 13 Home furniture’s 13 4 Home Furnishing & Décor 25 Tiles & Sanitation 6

Color shop 1 Natural Flower 8 Barber Shop 13 Farmacy 9 5 Cosmetic & Personal care 43 Cosmetics 10 Herbalist 11 Phone shop 13 6 Accessories & Gadgets 36 Gift shop 5 Tobacco shop 18 Mini Market 14 7 Groceries 18 Market 4 Offices 16 8 Other 29 Bank & Monetary 13

Population of Independent stores 754

Table 8. Population of Independent Retail Sector

4.2 Independent retail sector

The survey was made in the study area with the help of two assistant that helped with the site survey. A total of 44 surveys were made in different establishment types which helped to understand the retail population, establishment characteristics, supply chains for different type of goods and the problems and suggestions of shop owners in the study area.

Table 9 reported below include the general characteristics of the establishments located in the study area (establishment area, number of employees, warehousing).

Employees Area Warehousing

Categories Samples Id Sub-Categories Samples average average % of average (m2) (m2) establishment

Ho.Re.Ca Hotel, 347 1 Fast-Food 28 6.0 34.9 3.5 0.11 Restaurant & Café 2 Restaurant 42 15.3 90.8 6 0.09

3 Café 208 11.0 185.1 4 0.06

4 Hotel 69 4.9 273.9 40 0.08 Textile & Leather 212 5 Textile clothing 121 4.8 39.6 4.5 0.15 6 Footwear 85 2.9 31.5 2.5 0.10

7 Leather products 6 4.0 40.0 8 0.20 jewelry & 43 8 Gold & Diamond 4 6.0 35.0 4 0.11 Watches 9 jewelry & 13 8.0 25.0 2 0.08 Accessories 10 Watches 13 3.0 25.0 2 0.08

11 Optica 13 3.0 20.0 2 0.10 Home Furnishing 25 12 Home furniture’s 13 4.0 150.0 15 0.10 & Décor 13 Tiles & Sanitation 6 4.0 150.0 15 0.10

14 Color shop 1 2.0 35.0 16 0.46

15 Natural Flower 8 3.0 16.0 1 0.06 Cosmetic 43 16 Barber Shop 13 2.0 20.0 2 0.10 & Personal care 17 Farmacy 9 4.0 25.0 10 0.40

18 Cosmetics 10 4.0 25.0 10 0.40

19 Herbalist 11 4.0 25.0 10 0.40 Accessories 36 20 Phone shop 13 2.0 20.0 2 0.10 & Gadgets 21 Gift shop 5 2.0 20.0 5 0.25

22 Tobacco shop 18 2.0 16.0 5 0.31 Groceries 18 23 Mini Market 14 3.5 27.5 5.5 0.20 24 Market 4 13.0 140.0 10.5 0.08 Other 28 25 Offices 26 Bank

Table 9. Establishment characteristics of the study case

4.2.1 Establishments area

In the study area a total of 726 independent stores were evaluated based on their dimensions. The average size of an establishment in Blloku area is 103.8 sqm. It is estimated that the total area of establishments in the study area is more than 78,000 sqm. In the table 6 reported below are reported the average area of the identified categories of the establishments.

Categories Establishment Depo avg. Depo avg. size (sqm) size (sqm) % avg. Ho.Re.Ca Hotel, Restaurant & Café 179.2 9.4 0.08 Textile & Leather 36.3 4.5 0.15 Jewelry & Watches 24.4 2.2 0.09 Home Furnishing & Décor 120.5 12.4 0.18 Cosmetic & Personal care 23.5 7.6 0.33 Accessories & Gadgets 18.0 3.9 0.22 Groceries 52.5 6.6 0.14

Table 10. Average size of the Establishments & Depo in ‘Blloku’ district

Ho.Re.Ca is the category with the biggest average size of establishments with 179 sqm average size. The nature of the service offered by these businesses is that to have a bigger size comparing with the other establishments. The second biggest average size of establishments is in Home Furnishing & Décor category as it needs more place to expose their products. While the smallest average size of establishment is shown by Accessories & Gadgets category as the goods traded by them are smaller in size and need less place to be exposed.

Home Furnishing & Décor is the category with the biggest average size of the depo with 12.4 sqm as the goods traded by them have bigger size comparing with the others. However, they don’t have the biggest depo/establishment ratio with 18%. The biggest depo/establishment ratio is at the Cosmetic & Personal care with 33%.

The small average space of depo in the establishments of the zone can be noted as a big problem, highlighted also by the shop owners. The expensive renting/purchasing prices of the properties in the zone and the need to maximize the area usage are the main reason of the low depositing space. The fact that the establishments don’t have extra depo bring in a higher number of deliveries per property.

4.2.2 Employees and vehicles

The estimated number of employees in the study area was 4920, with an average of 4.8 employees per establishment. In the table 11, reported below are the average number of employees for each category.

Categories Employee number Avg. number

Ho.Re.Ca Hotel, Restaurant & Café 3448 9.9 Textile & Leather 848 4.0 Jewelry & Watches 214 5.0 Home Furnishing & Décor 90 3.6 Cosmetic & Personal care 146 3.4 Accessories & Gadgets 72 2.0 Groceries 101 5.6

Table 11. Employee number per category

Ho.Re.Ca is the category with the biggest number of employees with more than 3400 employees with an average number of 9.9 employees for establishment. The second category with the biggest average number of employees is Jewelry & Watches with 5.0 employees per establishment, as in their structures the value of the goods is greater they have big number of staffs.

Most of the establishments in the zone own vehicles used for both personal and commercial purposes by the shop owner or the manager of the structure. But due to time restriction they park them outside study area. The main type of the vehicles is mini-van, used by the establishments to collect goods or in some cases even to deliver orders. Almost 55% of the establishments included in Ho.Re.Ca category own vehicles. The category that owns also vans is Home Furnishing & Décor and Groceries as the goods traded by them are greater in size and weight.

4.2.3 Supply chains and deliveries

In the study area over 40 different supply chains were identified. The number of deliveries was estimated for all of them. In some cases, the number was estimated because of small number of observations. The total number deliveries on the study area is estimated to be almost 218,000 deliveries per year. Considering that there are only 283 working days per year we can assume that we have more than 800 deliveries per day that are made in a time-window from 09:00 to 16:00, by taking out the time to reach/leave the zone from/to the New-Ring of Tirana (assumed 15 minutes/direction) and the lunch time (assumed 60 minutes) the effective working time of the commercial vehicles in the zone 5 hours and 30 minutes.

Id Urban supply chain Stratum Deliveries /Year

1 Soft beverage Ho.Re.Ca 16068 2 Fresh beverage Ho.Re.Ca 8983 3 Coffee Ho.Re.Ca 6266 4 Finished bakery products Ho.Re.Ca 43498 5 Fresh food Ho.Re.Ca 8762 6 General food products Ho.Re.Ca 10712 7 Non-Food Products Ho.Re.Ca 8869 8 Frozen Products Ho.Re.Ca 5850 9 Beer Ho.Re.Ca 19952 10 Alcohols Ho.Re.Ca 9048 11 Laundry Ho.Re.Ca 14716 12 Fish Ho.Re.Ca 9620 13 Meat Ho.Re.Ca 6123 14 Dried products Ho.Re.Ca 7826 15 Textile clothes Textile & Leather 6722 16 Foot wear Textile & Leather 6756 17 Leather clothes Textile & Leather 120 18 Accessories Textile & Leather 3120 19 Gold product Jewelry & Watches 136 20 Precious stones Jewelry & Watches 16 21 Watches Jewelry & Watches 120 22 jewelry Accessories Jewelry & Watches 104 23 Glasses & Sun glasses Jewelry & Watches 676 24 Furnitures Home Furnishing & Décor 78 25 Home accessories Home Furnishing & Décor 78 26 Kitchen accessories Home Furnishing & Décor 78 27 Lighting accessories Home Furnishing & Décor 78 28 Home textile Home Furnishing & Décor 78 29 pigments & color Home Furnishing & Décor 24

30 Tiles & Sanitation Home Furnishing & Décor 24 31 Natural flowers Home Furnishing & Décor 1440 32 Semi-finished products Home Furnishing & Décor 156 33 Cosmetics and personal care products Cosmetic & Personal care 1400 34 Hair and beauty salon equipment Cosmetic & Personal care 133 35 Medicines, drugs, pharmaceutical and health Cosmetic & Personal care 592 products 36 Herbal products Cosmetic & Personal care 832 37 Cell phone & Accessories Accessories & Gadgets 35 38 Gift Accessories & Gadgets 60 39 Tabaco products & accessories Accessories & Gadgets 936 40 Food products Groceries 11752 41 Fresh food Groceries 5096 42 Meat products Groceries 1820 43 Other Other

Table 12. Supply chains identified in the study area

Considering that some goods as fresh food for Ho.Re.Ca, being a delicate product is collected daily by the shopkeepers and as in most cases is not counted as a collection/delivery due to its daily volume. We have also other cases that the number of collection/deliveries is not counted due to daily collection by the shopkeepers, as in the case of phone shops the accessories and the phones can be collected directly by the shopkeeper. Based on this it can be said that we have an underestimation of the deliveries on the zone.

4.2.4 Transport & delivery operations

Mainly the establishments located in the study area don’t receive goods before normal activity time. Only 7% of the supply chain that concern to finished-bakery products,

44 fresh food and natural flowers are served before 06:00 in the morning. The distributing time are windowed by the rules of the municipality.

The goods transportation to the study area is carried out by vans and mini-vans with payload capacity up to 3.5 tons, as specified in the traffic restriction rules by the municipality. Mostly the vehicles that perform the distributions are owned by the manufacture/wholesalers that trade the goods. The results were insufficient to obtain statistically significant results for the number of deliveries operated by third parties. Mostly, a receiving document sign is required, and the goods must be always checked by the receiver.

The goods delivery operations in 75% of the cases takes up to 10 minutes, not including parking time and loading/unloading good and time to reach the shop from parking place. In other cases, this operation time ca reaches up to 20 minutes and there are very rarely cases that this time is more than 20 minutes.

4.3 Brand retail sector

There were identified 88 brand establishments inside the study area (see table 3). The distribution process of this establishments is controlled by their main offices. Usually this establishments are trading high quality and luxury products. The establishments that trade leather, textile or high-quality jewelry usually are doing the transportation of their goods by third parties. Due to low number of observations on this sector no statically significant results were obtained for their number of delivery and quantities. The demand produced by them was assumed based on the demand of the independent retail sector, based on their %. The total assumed number is over 16,000 deliveries per year.

Id Categories Deliveries /Year 1 Ho.Re.Ca Hotel, Restaurant & Café 5080 2 Textile & Leather 962 3 Jewelry & Watches 244 4 Home Furnishing & Décor 1839 5 Cosmetic & Personal care 657 6 Accessories & Gadgets 104 7 Groceries 7260

Table 13. Number of deliveries per year for brand retail sector

4.4 Freight Deliveries & Quantity

The restrictions of the payload capacity per vehicle (<3,5 tons) and the fact that the establishments in the study area have significantly small warehousing space increase the number of the number of vehicles needed to satisfy the demand and the number of deliveries. The total number of deliveries for both independent and brand sectors was estimated to be 234,000 deliveries per year.

The total quantity of goods transported in the identified supply chains is assumed to be over 30,000 tons per year. This demand maybe underestimated compared with the real one due to absences of establishments that are not counted by our survey, having the establishments that are not visible from the main streets, or are located on the upper floors of the existing buildings in the zone.

In table 14 are reported the summary of the current situation in “Blloku” district in Tirana. Features All the supply chains

Annual deliveries 234,000 Annual quantities 30,000 (tons) Daily deliveries 827 Daily quantities (ton) 106 Number of vehicles 1,920

Table 14. Summary of actual scenario

4.5 Supply chains selected for the project implementation

The survey reported above as also previously indicated, was conducted with the aim to evaluate the potential of e-Cargo Bikes for last mile delivery in Blloku district in Tirana. This thesis also analyzes the business model of this for this proposal. The first step of this starts with a ‘market segmentation’ that includes a light analysis of the supply chains that can be suitable for the implementation of e-Cargo Bikes.

The data of the supply chains in the study area are obtained by the survey and by analyzing them we are able to define the segment of the market for an Urban Consolidation Center using electric cargo bikes for last mile deliveries, in the assumption that traditional diesel vans are not allowed to access the study area. The supply chains that can have a benefit have been selected using the following empirical approach: ⋅ Exclude the urban supply chains of products that needs special treatments (e.g. fresh products, frozen products, valuable products)

⋅ Exclude the urban supply chains of products that have big item sizes (e.g. home furniture’s) ⋅ Exclude the urban supply chains of products that have great weight quantity and low delivery number. ⋅ Include the urban supply chains of products that have high number of deliveries and low weight

As a result, eleven urban supply chains have been selected among forty-three urban supply chains, as the most suitable urban supply chains for the implementation of the e-Cargo Bikes.

Id Urban supply chain Stratum Deliveries/Year

1 Coffee Ho.Re.Ca 6266 2 Non-Food Products Ho.Re.Ca 8869 3 Alcohol Ho.Re.Ca 9048 4 Dried products Ho.Re.Ca 7826 5 Accessories Textile & Leather 3120 6 Watches Jewelry & Watches 120 7 Jewelry Accessories Jewelry & Watches 104 8 Glasses & Sun glasses Jewelry & Watches 676 9 Cell phone & Accessories Accessories & Gadgets 35 10 Gift Accessories & Gadgets 60 11 Tabaco products & accessories Accessories & Gadgets 936

Table 15. Urban supply chains suitable for the UCC

The supply chains selected for the project implementation have a total of 37,000 deliveries/year corresponding with 16% of the total deliveries of the zone. In the survey was estimated that the selected supply chains have an annual freight quantity of 1,575 tons/year.

5. NEW SUPPLY CHAIN DESIGN

This part presents the assumptions and inputs for the formulation of the simulation model in the proposed project. Principally, the e-cargo bike will be replacing the vans and will have the same functions as them. The e-cargo bikes will be distributing the goods of the selected supply chains, while the remaining part will be distributed as normal by the diesel vans. The weight of the goods has an impact on the utilization and capacity of the vehicles, which affect the number of the delivery tours covered per day. When the bike will fulfill all the deliveries of the tour, the bike courier will return to the depot, unload the empty container and load a filled to start a new delivery tour.

5.1 Supply chain characteristics

This part includes the inputs and the characteristics of the prosed model of the new supply chain. Majority of the data of this part are taken from the survey of the current situation in the study area.

5.1.1 Depot layout

Given that the commercial vehicles (>3.5 tons) cannot enter the Grand Ring of Tirana (06:00 – 09:00 and 16:00 – 20:00), the depot of this project should be located as near as possible to the study area and should be accessible by commercial vehicles during the time window restriction. The best option is ‘Tregu Industrial’ (industrial market), located in Kavaja street, accessible by the interchange of the Grand Ring. This zone has available warehousing areas and it is managed by the municipality. The depot is in distance 1,47 km from distribution area and we can take advantages from the new ‘reserved lanes for bikes’ constructed recently by the municipality.

Figure 13: Depot location

Based on the volume of the goods and warehouse operations, a warehouse layout was designed keeping on mind three main principles of an efficient warehouse: flow, accessibility and space. The average daily volume of the goods distributed by cargo bikes is assumed to be 18.5 m3 (based on the survey data)

Id Urban supply chain Stratum Daily Daily Quantity (kg) Volume (m3) 1 Coffee Ho.Re.Ca 745.6 1.1 2 Non-Food Products Ho.Re.Ca 51.9 1.2 3 Alcohol Ho.Re.Ca 4176.7 3.1 4 Dried products Ho.Re.Ca 349.8 0.5 5 Accessories Textile & Leather 144.9 3.9 6 Watches Jewelry & Watches 25.8 3.2 7 Jewelry Accessories Jewelry & Watches 12.7 1.6 8 Glasses & Sun glasses Jewelry & Watches 4.9 0.6 9 Cell phone & Accessories Accessories & Gadgets 6.4 0.8

10 Gift Accessories & Gadgets 12.4 1.5 11 Tabaco products & accessories Accessories & Gadgets 33.6 0.9

TOTAL 5565 kg 18.5 m3

Table 16: Freight volume demand

The depot will have a total area of 180 sqm (12m x 15m). Warehouse racking system has a total of 42 linear meters of three shelf levels with dimensions 80 x 100 (W x H), with a racking storage capacity of 100 m3.

Figure 14: Depot layout

In the depot there are two unloading slots for the vehicles that supply the goods. The area of the unloading slots will be used also as a parking area for the vehicles during the night. A module to unload and load the containers with 10 available slots. In this module the couriers will unload the empty containers and load the re-loaded ones to start the new tour without losing time. To inform the courier for the slot number of his container, an electronic info board is installed next to the container slots. For the warehouse operation, the following equipment’s are available:

⋅ Ladders ⋅ Mobile ladders ⋅ Utility truck ⋅ Hand truck ⋅ Hydraulic truck

In the depot there are located divided areas for office and a resting lounge. The office is equipped with the necessary equipment to manage and organize the work. The lounge area is equipped with the necessary equipment’s for the break time. In the depot a security system and anti-fire system are installed and monitored by a private company with a periodic payment.

The depot is managed and controlled by a warehouse manager who is responsible for:

• Control receiving, replacing and distributing operations by coordinating operational, and personnel policies and procedures.

• Complies with warehousing, material handling, and shipping requirements by studying existing and new legislation.

• Safeguards depot operations by establishing and monitoring security procedures and.protocols.

• Controls inventory levels by conducting physical counts and compare them with the data stored in the system.

• Maintains physical condition of depot by inspecting equipment and order the repair or new purchase.

• Prepare an annual budget, schedule expenditures, analyze variances to archive financial objectives.

• Recruit, select, and training employees.

Freight loading/unloading process is operated by two handlers that are responsible for:

• Loading and unloading inventory from delivery vehicles and storage areas.

• Control and check all incoming goods.

• Store goods in assigned locations.

• Manage inventory by identifying, cataloging, and recording the location of inventory in the depot.

• Record the number of units handled and moved every day.

• Analyze order sheets of each container and pull the appropriate products.

It is assumed that the goods are established on the warehouse early in the morning and the first containers should be loaded and ready to go before 08:00. During the time that the bikes starts the distributing tours the handlers should load the other container within the time the carrier return to reload.

Time Time to operate Operation 6:30 Start 9:00 2:30 Loading/Unloading 9:30 0:30 Inventory control 12:00 2:30 Loading/Unloading

13:00 1:00 Lunch time 15:00 2:00 Loading/Unloading 15:30 0:30 Inventory control 15:30 0:00 Finish

Table 17: Handler working time-table

5.1.2 Vehicle selection

The cargo bikes available on market have different technical characteristics, on their size, payload capacity, volume capacity. Considering that the main disadvantage of implementation of cargo bikes for urban freight distribution are the payload capacity and the riding power. Capacity is important when assigning customers to routes and when calculating how many delivery tours are necessary. Evidently, the capacity of the e-cargo bikes cannot be exceeded during the route. For this project was chosen to use electric assisted vehicles with the maximum payload capacity. As a result of a deep research the e-Cargo Bike with the most suitable e-Cargo Bikes for this project were the electrical cargo bikes produced by VELOVE, in Sweden. To get more detailed information about the technical data of the, a communication with Mr. Johan Erlandsson the CEO & Co-founder of VELOVE was established. Mr. Erlandsson is an expert in the field of sustainability, he is a Lecturer & Sustainability Researcher at Chalmers University of Technology and the founder of Eco Profile Sustainability Consultancy & Forum. He holds a M.Sc. in Industrial Engineering and Management from Linköping University, Sweden, and a Lic.Eng. in Energy & Environment from Chalmers University of Technology, Sweden.

Figure 15: VELOVE, electric cargo bike (case used by DHL)

The VELOVE cargo bikes can carry up to 300 kg payload, without having performance problems. In the back side of the bikes is incorporated a module that allows to remove and change the container. The max loading area is 200*86 cm (L x W) and doesn’t have any height restriction by the bikes body. The battery of the bike is 1,2 kWh, which gives 50 km of range and takes 6h to recharge. The batteries can do 800 charge cycles until they are at 80 % capacity. Up to request, in the front part of the vehicle it can be installed a plastic cover, to protect the driver from the rain. The bikes are very easy to ride, and the drivers don’t need a driving license to use these vehicles. It fits in between posts while the large loading space is comparable to that of a small delivery van.

The price of one Cargo Bike including electric assist and one 0.6 kWh battery is 8,190 euro. An extra 0.6 kWh battery costs 550 euro. A spare wheel costs 175 euro. The module to carry the city container costs 300 euro. The prices of one city containers is 2,200 euro and the price of the shelf system is 300 euro. Considering that the containers prices are expensive, and we need 2 containers for one bike the option of purchasing them in another place was evaluated.

After a research, the best option to purchase container was evaluated to be a company ‘X’ that produce containers of different sizes, located in Istanbul, Turkey. Based on the communication with them, their price was much lower. The price of one city container with the dimensions 170 * 86 * 120 cm ((L * W * H) having a volume capacity of 1.5 m3, suitable for the bike modules and with the shelf included costs 1500 Turkish Lira, that correspond to 242 euro. In each cargo bikes a hand truck will be attached for the walking delivery tours of the courier.

5.2 Route generations

This part of the thesis represent a description of the model built for the proposed scenario. The objective of this model is to minimize total driving distance, maximize vehicle utilization and satisfy the demand of the supply chain. To present a reliable study the distances used in the simulation are very close to the real-life driving distances. The real distances of the streets were found and calculated using Google Map.

Assumptions are set to develop the routes for cargo bikes:

⋅ Traffic congestion does not affect travel time ⋅ Homogeneous cargo bikes are used (equal capacity and technical characteristics) ⋅ Volume and weight are limited ⋅ E-Cargo bikes are operating all times during working hours (no maintenance & breakdowns) ⋅ E-Cargo bikes are always available at the depot when needed ⋅ The distribution of goods starts from 08:00 ⋅ Daily working hours of the couriers is 8 hours

⋅ Lunch time is 1 hour (12:30 – 13:30)

Technical data: ⋅ The average speed for cargo bikes is considered to be 15 kmph (based on previous studies in other countries such as London and Paris, and a report by TØI (Browne, Allen, & Leonardi, 2011; Dablanc, 2011; Midttun, Ødegaard, Flatheim, & Stridh, 2012). ⋅ The average walking speed for couriers is considered to be 7 mps (half of the normal walking speed 1.4 mps, as they carry hand trucks) ⋅ The average time to perform a delivery operation is considered to be 7.5 min (based on the data obtained by the survey) ⋅ Time to load/unload the containers to the bike’s module is considered to be 5 min per operation. ⋅ Time to unload the orders from the bike to the hand truck is considered 2 min per order ⋅ Lost time to park and start up is considered 2.5 min per operation ⋅ Annual working days are considered 283 day

Reserved parking slots: In the zone there are going to be 27 reserved parking slots for unloading operations and parking the bike. The parking slots are equally distributed in the zone 350 m from each other. The dimensions of the bike doesn’t prevent the other vehicles to use the unloading parking slot. The bike can be parked and locked in a safe way in the parking slot. And the courier can deliver the goods using a hand truck that is available at the e- Cargo Bike. The average distance of the parking slots with the depot is calculated to be 2.5 km.

Delivery points and orders: There are 131 delivery points per day in the study area, to simplify the simulations it is assumed that all the delivery points are equally distributed in the zone. The average distance between retailers is calculated to be 75 m. From each parking area can be reached in walking distance 5 delivery points, with a total of 600 m walking distance. The total weight of the orders is 5565 kg and the average weight per order is 42.5 kg. It is assumed that all the orders have the same weight and as the e-Cargo Bikes has a payload capacity of 300 kg they can carry 7 orders per route.

Delivery operations: The courier after loading the container in the bike’s module, will move to the first parking area and distribute the orders to the delivery points with the help of the hand truck. After serving the delivery points that are reachable from the first park, he will move to the second parking area and deliver the remaining orders. After he deliver all the orders available on the bikes he will return to switch the empty container in the depot.

Figure 16: Example of electric Cargo Bike operations

Figure 17: Example of courier walking operations

The route simulation was performed. One delivery tour take 135 minutes to be fulfilled with an average driving distance of 5.35 km and 0.9 km walking distance.

Figure 18: Example of electric Cargo Bike route per tour

Figure 19: Example of courier walking route per tour

A bike can deliver up to 23 orders per day, having 3 full tours with 7 delivery points per tour and a tour with 2 delivery points.

There are needed 6 cargo bikes to fulfill this supply chain. Each day three of the bikes will perform 4 tours and the other bikes will perform only 3 tours. The total traveled distance by all the e-Cargo Bikes is 106.3 km per day and 30,083 km per year.

5.3 Cost-Benefit Analysis

The cost-benefit analysis is business process to analyze the decisions. The benefits produced by the action are summed and then the cost associated with the project are subtracted. The first step is to compile a comprehensive list of all the costs and benefits associated with the project

Costs includes direct and indirect costs.

• Fix costs: these costs are related to structural costs as warehouse rent, vehicles, headquarter bills. They are independent from the produced service. • Variable costs: they are related to the volume of the goods handling as transportation and logistics costs. They increase proportionally with the volume of the goods.

Benefits includes all direct and indirect revenues and intangible benefits, such as increased production from improved employee safety and morale. It must be applied a common unit of monetary measurement to all items on the list, taking care not to underestimate costs or overestimate benefits.

Figure 20: Cost benefit analysis

The final step of this analysis is to compare the total aggregate costs and benefits quantitatively to determine if the project is suitable to be implemented. If the benefits are greater than the costs, it means that the project can be implemented, if not the project should be reviewed and make the adjustments to reduce the costs and increase the benefits.

5.3.1 Project financial costs

The project costs analysis include all the cumulative costs to set and operate the proposed project. The cost-benefit model is developed for a period of 10 years (equal to the assumed effective lifetime of the e-Cargo Bikes), for the equipment’s that has a smaller lifetime their cost is calculated based on their real lifetime. Interest rate is calculated 6 %. The model is developed using the monetary values of each of the following costs:

Id Indicators Explanation 1 Installation & fixed taxes Cumulative amount of money to register a new company and business operation fixed taxes 2 Rental cost Depot rental cost 3 Vehicles cost Vehicle purchasing costs 4 Container Cost Container purchasing costs 5 Wages Cumulative amount of money for the wages 6 Depot installation costs Cumulative amount of money for the purchase and installation of the depot equipment’s 7 Communication units Amount of money to purchase the communication units 8 Re-Charging cost The energy used to recharge the vehicles 9 Utility costs Cumulative amount of money to pay the utility bills, insurance, security and anti-fire system for the depot

Table 18: Cost indicators of the proposed project

Installation & fixes taxes

The installation cost of a business includes the cost to register at national register center and in the municipality and the fixed taxes to the municipality are calculated to be 1000 euro/year.

Rental cost

⋅ Depot size: 180 m2 ⋅ Price/m2: 5.2 euro/m2/month ⋅ Depot cost is: 11232 euro/year

Vehicles cost

⋅ VELOVE Cargo Bike (electric assisted): 8190 euro ⋅ Extra battery: 550 euro ⋅ Spare wheel 175 euro ⋅ Module platform for city container: 300 euro

Total: 9215 euro

Purchasing cost for 6 e-Cargo Bike: 55290 Euro Calculated based on interest rate of 6% for 10 years the total cost: 64134 Euro Salvage value (re-selling) after 10 years: 6000 euro

Amount of depreciation per year = 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃ℎ𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 −𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣 𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿

Amount of depreciation per year is 5813 euro/year

Figure 21: Linear depreciation of e-Cargo Bikes

Container purchasing cost

⋅ 2 m3 city container: 242 euro

12 city container costs: 2904 euro Calculated based on interest rate of 6% for 10 years the total cost: 3368 euro Salvage value (re-selling) after 10 years: 0 euro Amount of depreciation per year is 337 euro/year

Wages

Warehouse manager

Net salary : 520 euro (65,000 ALL) Gross salary: 646 euro (80,742 ALL) Gross salary = Net salary + Social insurance contributions + Health insurance contributions + Income tax

Gross salary = 65 000+ 10.7% * 26 640 + 12.53% * (65 000 – 26 640) + 1.91% * 26 640 + 2.24% * (65 000 – 26 640) + 17.15% * (65 000 – 26 640) = 80 742 ALL (646 EURO) Handler & Couriers

Net salary : 400 euro (50,000 ALL) Gross salary: 486,5 euro (60,816 ALL) Gross salary = Net salary + Social insurance contributions + Health insurance contributions + Income tax Gross salary = 50 000+ 10.7% * 26 640 + 12.53% * (50 000 – 26 640) + 1.91% * 26 640 + 2.24% * (50 000 – 26 640) + 17.15% * (50 000 – 26 640) = 60 816 ALL (486,5 EURO)

TOTAL 1 x warehouse manager: 7,751.2 euro/year 2 x handler: 11,676.0 euro/year 6 x couriers 35,028.0 euro/year TOTAL 54,455,2 euro/year

Depot installation costs

Element pcs price/pcs (€) Total (€)

Ladders 2 70 140 Mobile ladders 4 150 600 Utility truck 4 110 440 Hand truck 10 80 800 Hydraulic truck 2 300 600 Pallet racking (2x3x0,8) 21 400 8400 Container slots 10 400 4000

Monitors 2 350 700 Office equipment’s 1 1050 1050 Lounge equipment’s 1 1130 1130 Technics installation 1 1000 1000 Total 18860 €

Table 19: Depot installation costs

It is assumed that all the equipment’s salvage value after 10 year is 30 % of the purchased value. Calculated based on interest rate of 6% for 10 years the total cost: 21877 Euro Salvage value (re-selling) after 10 years: 5210 euro Amount per year is 1667 euro/year

Communication units

For the communication between the employees and the vehicle positions smartphone with GPS service are used. Price per device: 200 euro 9 x smartphone = 1800 euro

Calculated based on interest rate of 6% for 5 years the total cost: 2090 Euro Salvage value (re-selling) after 5 years: 0 euro Amount per year is 420 euro/year

Re-charging Cost

Electrical energy per vehicle recharging Kw/km/Vehicle: 0.020 kwh/km Price/Kw: 12 cents Average tour length: 5.35 km Total traveled km by all vehicles/year: 30,083 km Total annual energy consumed: 601.66 kW

Total charging cost: 72.2 euro/year

Table 20: Re-charging costs

Vehicle maintenance Costs

Battery change 2 x 550 euro (after 40,000 km)/bike = 990 euro/year Spare wheel change 175 euro (after 4,000 km) /bike = 1575 euro/year Normal maintenance 400 euro (after 6,000 km) /bike = 2400 euro/year TOTAL = 4965 euro/year

Utility Costs

Security system 110 euro/month Fire system 40 euro/month Internet 20 euro/month Sim cards (9 pcs x 12 euro) 108 euro/month Water bills 30 euro/month Energy 70 euro/month

Total utility cost is 4536 euro/year

Aggregated annual cost of the project

Id Indicators Annual costs (€) 1 Installation & fixed taxes 1000 2 Rental cost 11232 3 Vehicles cost 5813 4 Container Cost 337 5 Wages 54455 6 Depot installation costs 1667 7 Communication units 420 8 Re-Charging cost 73 9 Maintenance cost 4965 10 Utility costs 4536 TOTAL 84,497

Table 21: Aggregated annual cost of the project

The total cost of the new supply chain is calculated to be 84,497 euro/year. This cost model is formulated assuming that there will be taken a business loan with interest of 6% and is going to be paid in ten years.

5.3.2 Project financial benefits

In this part are calculated the financial benefits of the project. The benefits are calculated based on the price of the service and the quantity that this supply chain is going to serve. The price of the service is assumed to be same with the other express courier services that are operating in Tirana. The price including the 20% VAT (TVSH) is going to be 9 cent/kg. The tax on profit according to the Albania law is 15%.

Indicator Value Unit

Price /Kg 9 Cent

68 Price (ex. VAT)/Kg 7.5 Cent Quantity/Year 1,575 Tons Income +118,110 Euro Costs -84,497 Euro

Profit 33,613 Euro Tax on profit -5041.9 Euro

Benefit/Year +28,571 Euro

Table 22: Project financial benefits

The total annual benefit is calculated to be 28,571 Euro. As the benefits are greater than costs the project is suitable to be implemented.

5.3.3 Break Even Point analysis

The break-even point analysis was done for this business model. The analysis was conducted in annual terms. To calculate the breakeven point, the fixed and variable costs were divided. Considering the type of vehicles used in this project the variable costs are very low. The break-even point was calculated with the following formula:

BEP = FC / (p-vc) Where: Fixed Cost 79459 € BEP – Break-even point Variable Cost/Unit 3.2 €/Ton FC – Fixed costs Price/Unit 75 €/Ton p – Price/Unit BEP 1106 Ton (70%) vc – Variable costs/Unit

The annual break-even point is reached after 70% of the demand, in other terms is 1106 tons over 1575 tons of goods. Following is reported the break-even point graph:

Break Even Point 120000

100000

80000

60000

40000

20000

0 0 200 400 600 800 1000 1200 1400 1575

Total Cost (€) Sales (€)

Figure 22: Break Even Point graph

6. BEFORE’ AND ‘AFTER’ SCENARIOS COMPARISON

6.1 ‘Before’ and ‘After’ scenarios assessment

The first step of this chapter is to show the current situation (Before) and the expected situation (After) after the project implementation. In the current situation, is assumed that all the supply chains are served by diesel vans with maximum payload capacity >3.5 tons. There are 1920 diesel commercial vehicles. There are identified 43 supply chains that serve the zone.

Figure 22. ‘Before’ Scenario representation

There were selected eleven supply chains that are suitable to implement this project. The selected supply chains have a total of 37,000 deliveries/year corresponding with 16% of the total deliveries of the zone. In the survey was estimated that the selected supply chains have an annual freight quantity of 1,575 tons/year.

Figure 23. ‘After’ Scenario representation

In the table 23. reported below a summary of two scenarios is given

Scenario Before Scenario After Features All the supply Supply chains Remaining supply chains served by e-CB chains Annual deliveries 234,000 37,000 197,000 Annual quantities (ton) 30,000 1,575 8,386 Daily deliveries 827 131 696 Daily quantities (ton) 106 5.6 29.6 Number of vehicles 1,920 diesel 6 e-Cargo 1,616 diesel vehicles Bikes vehicles

Table 23: Before and After scenarios summary

6.2 Logistic Sustainable Index calculation

To evaluate the impact of the project a set of indicators are selected from the Annex A of LSI to compare the ‘Before’ and ‘After’ scenarios. The selected indicators are reported in table 24.

Impact Criterion Indicator Unit Area Development Local/regional development Likert scale Income generated Euro Benefits Strength and diversification of Likert scale diversification of local economy Installation & fixed taxes Euro Rental cost Euro Economy Vehicles cost Euro and Energy Container Cost Euro Costs Wages Euro Depot installation costs Euro Communication units Euro Re-Charging cost Euro Utility costs Euro CO emission gr/year Environment Air quality NOX emission gr/year

NMVOC emission gr/year

NH3 emission gr/year PM emission gr/year

N2O gr/year

GHG emission CO2 emission gr/year Noise Noise level dB (A) Customer satisfaction Likert scale Level of service Supply chain visibility Likert scale Transport Percentage Transport system and Mobility Violations (%) IT, infrastructure and Network barriers Likert scale technology Infrastructure usage Likert scale Green reputation Likert scale Greening Green concern Likert scale Perceived visual and audio nuisance Likert scale Convenience Diffusion of information Likert scale Society Perceived alternative mobility Likert scale Quality of life Likert scale Living standards Changes in consumer behavior society Likert scale Lack of awareness of UFT impacts Likert scale Bad habits of UFT users Likert scale Awareness Awareness level Likert scale Information flow problems Likert scale Time planning misjudgment Likert scale Policy and Poor or lack of know-how Likert scale measure Managerial risks maturity Lack of cooperation Likert scale Lack of knowledge about stakeholders' Likert scale requirements Background Replication Likert scale Public acceptance Likert scale Social consciousness Likert scale Social approval Final user awareness Likert scale Final user acceptance Likert scale Decision making acceptance Likert scale Social acceptance Compliance with regulations Likert scale Enforcement Likert scale Eco-driving practice before the journey Likert scale Regulations’ acceptance Eco-driving practice during the Likert scale journey Motivation for eco-driving practice Likert scale Flexibility Penetration Likert scale User uptake Stakeholder approval Stakeholder acceptance Likert scale Transferability Replication Likert scale

Table 24: Logistics sustainability index indicators

The values for the cost and the benefits are taken from the Cost/Benefit analysis reported in the previews chapter.

The air emissions indicators: ⋅ CO emission

⋅ NOX emission ⋅ NMVOC emission

⋅ NH3 emission ⋅ PM emission

⋅ N2O emission

Are calculated by using the COPERT Methodology ‘EMEP/EEA air pollutant emission inventory guidebook 2013’, using the algorithm of the first method (Tier 1)

Ei = ∑j ( ∑m (FCj,m x EFi,j,m ))

Ei = emission of pollutant i [g],

FCj,m = fuel consumption of vehicle category j using fuel m [kg],

EFi,j,m = fuel consumption-specific emission factor of pollutant i for vehicle category j and fuel m [g/kg].

In this project the mean value of the emission factors is used. The maximum and minimum values correspond to : ⋅ the maximum values correspond to uncontrolled vehicle technology ⋅ the minimum values correspond to a European average in 2005 (before the introduction of Euro 4).

The greenhouse gas (GHG) emission is calculated based on the formula: 74

CO2 emission g/MJ of fuel = 3,67 x cC / Ha Where: cC = fuel carbon content (mass basis) Ha = lower heating value of the fuel

The noise level is calculated using a model formulated by the French ‘Centre.Scientifique.et.Technique.du.Batiment’ with a predictive formula of equivalent

emission level based on the average acoustic level (L50):

Leq = 0.65 L50 + 28.8 [dB(A)]

L50 is calculated considering only the equivalent vehicular flows (Qeq) and is given by:

L50 = 11.9 Log Q + 31.4 [dB(A)]

The other indicators are evaluated using the ‘Likert Scale’ based in a reasonable analysis using the stakeholder feedback through questionnaire survey was done. For each of the selected indicators was given a value thinking of what their impact could have been in before and after scenarios. The indicators are computed for ‘Before’ and ‘After’ scenarios, in the tables 27 and 28 reported below are given the values for both scenarios:

Criterion Indicator Value Unit

Development Local/regional development 2 Likert scale Income generated 0.00 Euro Benefits Strength and diversification of 1 Likert scale diversification of local economy Installation & fixed taxes 0.00 Euro Rental cost 0.00 Euro Vehicles cost 0.00 Euro Container Cost 0.00 Euro Costs Wages 0.00 Euro Depot installation costs 0.00 Euro Communication units 0.00 Euro Re-Charging cost 0.00 Euro

Maintenance costs 0.00 Euro Utility costs 0.00 Euro CO emission 402,086.40 gr/year Nox emission 810,149.76 gr/year NMVOC emission 83,677.44 gr/year Air quality NH3 emission 2,064.77 gr/year PM emission 82,590.72 gr/year N2O 3,042.82 gr/year GHG emission CO2 emission 143,447,040.00 gr/year Noise Noise level 67.62093 dB (A) Customer satisfaction 2 Likert scale Level of service Supply chain visibility 3 Likert scale Percentage Transport system 80 Violations (%) IT, infrastructure and Network barriers 1 Likert scale technology Infrastructure usage 1 Likert scale Green reputation 1 Likert scale Greening Green concern 1 Likert scale Perceived visual and audio 4 Likert scale Convenience nuisance Diffusion of information 2 Likert scale Perceived alternative mobility 1 Likert scale Quality of life 1 Likert scale Changes in consumer behavior 2 Likert scale Living standards society Lack of awareness of UFT 1 Likert scale impacts Bad habits of UFT users 1 Likert scale Awareness Awareness level 2 Likert scale Information flow problems 1 Likert scale Time planning misjudgment 1 Likert scale Poor or lack of know-how 5 Likert scale Managerial risks Lack of cooperation 3 Likert scale Lack of knowledge about 3 Likert scale stakeholders' requirements Background Replication 1 Likert scale Public acceptance 2 Likert scale Social consciousness 2 Likert scale Social approval Final user awareness 1 Likert scale Final user acceptance 2 Likert scale Decision making acceptance 2 Likert scale Regulations’ Compliance with regulations 2 Likert scale acceptance Enforcement 2 Likert scale

Eco-driving practice before the 1 Likert scale journey Eco-driving practice during the 1 Likert scale journey Motivation for eco-driving 1 Likert scale practice Flexibility Penetration 2 Likert scale Stakeholder approval Stakeholder acceptance 2 Likert scale Transferability Replication 1 Likert scale

Table 25: Values of the LSI indicators in ‘Before’ scenario

Criterion Indicator Value Unit

Development Local/regional development 4 Likert scale Income generated 28,571.00 Euro Benefits Strength and diversification of 3 Likert scale diversification of local economy Installation & fixed taxes 1,000.00 Euro Rental cost 11,232.00 Euro Vehicles cost 5,813.00 Euro Container Cost 337.00 Euro Wages 54,455.00 Euro Costs Depot installation costs 1,667.00 Euro Communication units 420.00 Euro Re-Charging cost 73.00 Euro Maintenance cost 4965.00 Euro Utility costs 4,536.00 Euro CO emission 338,422.72 gr/year Nox emission 681,876.05 gr/year NMVOC emission 70,428.51 gr/year Air quality NH3 emission 1,737.85 gr/year PM emission 69,513.86 gr/year N2O 2,561.04 gr/year GHG emission CO2 emission 120,734,592.00 gr/year Noise Noise level 67.04189 dB (A) Customer satisfaction 4 Likert scale Level of service Supply chain visibility 4 Likert scale Percentage Transport system 10 Violations (%) Network barriers 4 Likert scale

IT, infrastructure and Infrastructure usage 4 Likert scale technology Green reputation 5 Likert scale Greening Green concern 5 Likert scale Perceived visual and audio 1 Likert scale Convenience nuisance Diffusion of information 4 Likert scale Perceived alternative mobility 5 Likert scale Quality of life 5 Likert scale Changes in consumer behavior 5 Likert scale Living standards society Lack of awareness of UFT 5 Likert scale impacts Bad habits of UFT users 5 Likert scale Awareness Awareness level 5 Likert scale Information flow problems 1 Likert scale Time planning misjudgment 1 Likert scale Poor or lack of know-how 1 Likert scale Managerial risks Lack of cooperation 1 Likert scale Lack of knowledge about 1 Likert scale stakeholders' requirements Background Replication 5 Likert scale Public acceptance 5 Likert scale Social consciousness 5 Likert scale Social approval Final user awareness 5 Likert scale Final user acceptance 5 Likert scale Decision making acceptance 5 Likert scale Compliance with regulations 5 Likert scale Enforcement 5 Likert scale Eco-driving practice before the 5 Likert scale Regulations’ journey acceptance Eco-driving practice during the 5 Likert scale journey Motivation for eco-driving 5 Likert scale practice Flexibility Penetration 4 Likert scale Stakeholder approval Stakeholder acceptance 4 Likert scale Transferability Replication 3 Likert scale

Table 26: Values of the LSI indicators in ‘After’ scenario

Considering that the values of the indicators are expressed in different units: (Euro, g/year, dB(A) ), all of them must be monetized in Euro. This step was done by using

78 the ‘Harmonized European Approaches for Transport Costing and Project Assessment’ guideline. The external costs of the pollution are calculated by the annual production of the pollutant agent (ton/year) and the external cost of that agent (euro/ton). Considering that the external cost for Albania, aren’t available, for this actual study case the Italian standards are used.

Emission Cost Unit CO 0.004 Euro/g NMVOC 0.0016 Euro/g NOx 0.0032 Euro/g PM 0.39 Euro/g N2O 0.003 Euro/g NH3 0.0221 Euro/g CO2 0.0001 Euro/g

Table 27: Air emission indicators

The same guideline determines, also the methodology to calculate the monetary cost for the noise pollution. The population is divided in: highly annoyed people annoyed people a few/not annoyed people Using the following equations:

Where: ⋅ (%HA) - % of highly annoyed people

⋅ (%A) - % of annoyed people ⋅ (%LA) - % of a few/not annoyed people

Group % Cost Highly annoyed people 20.3 85 Euro/person Annoyed people 41.3 85 Euro/person Few/not annoyed people 38.4 37 Euro/person

Table 28: Annoyed level of the population for noise pollution

The next step is the value normalization. The values of the negative indicators is signed with a negative sign (minus) and the values of the positive indicators are signed with a positive sign (plus).

The final step of this ex-ante evaluation is the performance calculation of each impact area using the following formula:

LSIi = Rm * Wm 𝑀𝑀 Where: ∑𝑚𝑚=1 𝐼𝐼

LSIi = Logistic Sustainability Index assessing the performance of impact area i

Im = Normalized value of indicator m with minus or plus sign

Wm = weight of indicator m

The total Logistics Sustainable Index is calculated as the weighted sum of the LSIi with the following formula:

LSI = Ri LSIi * wi

Where: ∑ wi = are the weights of the impact areas.

6.3 LSI Results

The performance for each impact area is calculated for both ‘Before’ and ‘After’ scenarios. The results are given in tables 29 and 30 reported below:

Impact area Impact area performance

Economy and Energy 0.056 Environment -0.327 Transport and Mobility 0.095 Society 0.089 Policy and Measure maturity -0.085 Social acceptance 0.134 User uptake 0.029 LSI -0.009

Table 29: Performance of the impact areas in the ‘Before’ scenario

Impact area Impact area performance

Economy and Energy 0.20 Environment -0.28 Transport and Mobility 0.25 Society 0.30 Policy and Measure maturity 0.05 Social acceptance 0.39 User uptake 0.06 LSI 0.97

Table 30: Performance of the impact areas in the ‘After’ scenario

The following radar graph represent the comparison of the performance of each indicator between both scenarios.

Economy and Energy 0.40 0.30 0.20 User uptake 0.10 0.20 Environment

0.00 0.052 0.06 -0.10 0.029 -0.20

-0.30 -0.28 -0.40 -0.327 0.134 0.095 Transport and Social acceptance 0.25 0.39 -0.085 mobillity 0.089 0.05

0.30 Policy and measure Society maturity

Figure 24: Impact areas performance Considering that the costs are signed as negative values and the benefits as positive values, we have that by the increase of the Logistic Sustainability Index the overall performance of the selected measure improves.

Economy and Energy: The performance of this impact area is improved as the implementation of the selected measure bring operating financial benefits. This type of sustainable and eco-friendly measures has a good effect on the local economy and development.

Environment: We can see a light improvement on the environment impact area as the implementation of this measure is decreasing significantly the number of fueled commercial vehicles. The air, GHG, and noise pollutions are lightly reduced and, in both scenarios,, they are in negative values.

Transport and Mobility: In this impact area we have a significant improvement. The new served supply chain will have a greater transparency with the clients. The new used vehicles are going to reduce significantly the violations, the infrastructure usage is greater, and they don’t have network barriers due to their dimensions and characteristics.

Society: The performance is significantly improved as the evaluation is based mainly in life quality, this type of eco-friendly projects have a positive impact to the environment and they have greater values in the ‘after’ scenario evaluation.

Policy and measure maturity: This impact area consider the level of the stakeholder involvement and level of implementations of standards or procedures on information flow between stakeholders affect by the measure implementation.

Social acceptance: This impact area have similar considerations with the society impact are, they consider the life quality and as the implemented measure has an eco- friendly approach the evaluation of after scenario is greater.

User uptake: In this impact area is considered the stakeholder acceptance of the implemented measure and the possibility of re-use or replicate this measure in other contexts.

7. FINAL CONLUSION

In this chapter are reported the final conclusions of the master thesis and the suggestions for further researches are proposed. The survey, analysis, findings and simulations has revealed that the implementation of e-cargo bikes, is a potential solution for a sustainable urban freight distribution.

7.1 Conclusion

The demand for goods is daily increased and brings with it a daily increase of the externalities. The urban freight distribution is not a problem only for Tirana or certain cities, but a world widely challenge. The urban context itself with the narrow streets, lack of parking and traffic jams, limit the urban freight distribution. In the other hand the externalities of the road traffic to the life-quality and environment force the local and central governments to implement policies that limits the operators to distribute urban freight within the city. Having an increase of the demand and a decrease of the ability to perform the operation for the demand fulfillment, we can say that the scenario of urban freight distribution is going forward a collapse.

Tirana is one of most polluted cities in western Balkan. The air pollution, noise and traffic jams are great negative factors that affect the life-quality and the environment. A big influence in the road traffic externalities is due to the commercial vehicles that are supplying the city necessities for goods. The municipality of Tirana is doing many investments and policies to reduce the pollution. The main focus is in the investments for new bus lines and lanes, bike promotion and bike reserved lanes and public

84 parking. In the field of urban freight distribution there is not a proper policy to evaluate and solve the problem. The only action of the municipality is the time- windowed traffic limitation for commercial vehicles. A sustainable solution is needed. The main purpose of the thesis was to evaluate if the implementation of a new supply chain served with alternative vehicles, is suitable and effective in Tirana. The objective was to create a supply chain that reduce the costs, the traffic externalities and satisfy the demand. Considering this problem and lack in Tirana, a research was made to find a sustainable solution that is feasible and suitable based on the city characteristics. Among different alternatives, the usage of electric Cargo Bikes was chosen as an avantgarde and eco- friendly solution. Based on market researches and knowledges the zone to conduct the study case was selected to be on the busiest districts of Tirana, Blloku district.

The lack of studies, data and information brought the need of the survey to reveal the current situation of urban freight delivery in the study area. The data that were aimed to obtain form the survey were: the freight demand in terms of yearly quantity and volume, the actual supply chain characteristics, establishment characteristics and the problems that the stakeholders are facing.

The field survey was conducted in Blloku district, with the assistance of two colleagues and the necessary data to simulate the new supply chain were gained. There were identified a total population of 842 establishments. Their characteristics as area, warehousing capacity, number of employments and number of vehicles were obtained. The current supply chains their characteristics as vehicle type, parking availability and delivery operating time were identified. Another important goal of the field survey was the identification of the freight demand in terms of yearly quantity and volume. Based on the data gained by the survey the demand quantity of each type of good was estimated.

In the survey there was an open question for the shopkeepers to express their problems and expectations. The main problems that the stakeholders in the study area are the lack of reserved parking for loading/unloading operations, traffic congestion, illegal parking, audio and visual pollution, lack of available warehouses. The also express the need and the importance to take some sustainable solution to eco-friendly alternatives.

After the reveal of all the supply chains that were operating in the zone, there were selected the ones that could be suitable for the new project. The selection was done in an empirical approach that exclude the ones that have limitations to be applied in the proposed project.

In order to simulate the new proposed supply chain and to check if it was a realistic and efficient solution all the characteristics of the supply chain were designed according to the real-world parameters. The depot location and characteristics, vehicles selection, logistic operations including staff duties were designed and simulated. To check if the new proposed model was economically efficient and suitable a Cost/Benefit analysis and a Break Even Point analysis were conducted.

In the proposed supply chain there is projected to have 27 new reserved parking slots for the loading/unloading operations. These new reserved parking lanes will be used also by the other supply chains that are served with fueled commercial vehicles. This will reduce many externalities that are caused by traffic congestion and illegal parking.

The thesis consisted in comparing the current situation with proposed project. To evaluate the impact of the project an ex-ante evaluation of the scenarios was conducted. The impact in different impact areas and with different indicators was evaluated and compared, to see the results of the proposed project. The analysis of the results revealed that the proposed supply chain is feasible, efficient and will reduce the traffic congestion, illegal parking, air pollution, GHG emission and noise pollution.

As conclusion ,this study has revealed that the implementation of electric cargo bikes for urban freight distribution is an efficient a sustainable solution. Based on analysis and the simulations conducted in the thesis it can be said that the proposed solution confirm the hypothesis that cargo bikes reduce road traffic externalities, reduce costs and has a sufficiently good level of service.

Finally, to answer the research question, we can say that the implementation of a supply chain served by electric cargo bikes in Tirana, has the potential to be a sustainable urban freight distribution model. This model is able to provide economic, environmental and social benefits.

7.2 Further researches

The results of this thesis has provided interesting results for the performance of electric cargo bikes in urban freight distribution in Tirana. However, considering that in some cases the data and information taken from the survey and other sources can deviate from reality is important to have further researches to evaluate the effects in different city context. Another aspect can be the researches to see the effects, that different policies or measures alters the potential modal change from fueled commercial vehicles toward electric cargo bikes or other eco-friendly vehicles. It would be very interesting if the proposed project is implemented as a pilot project in Tirana and to obtain real performance data. The encounter of the proposed project with the real-events as traffic congestion, weather conditions, routes and human limitations can lead to more realistic conclusions.

BIBLIOGRAPHY

Handbook for users, 2017. D.T.1.2.1 SULPITER software tool development for understanding freight behaviors and impact in FUAS. Vienna: Interreg CENTRAL EUROPE Program.

Campagna, A., Persia, L., Mezzavilla, L., 2018. A method to reveal supply chains in order to set up effective and sustainable city logistics solutions. Rome: Scienze Regionali.

Aized, T. & Srai, J. S. , 2015. Hierarchical modelling of Last Mile logistic distribution system. Cambridge: International journal of advanced manufacturing technology.

Munuzuri, J., Larraneta, J., Onieva, L., & Cortés, P. , 2005. Solutions applicable by local administrations for urban logistics improvement. Cities.

Taniguchi, E., Thomson, R. G., Yamadi, T., & Van Duin, R. , 2001. City Logistics: Network Modelling and Intelligent Transport Systems. Journal of Transport Geography.

Quartieri, J., Mastorakis, N. E. , Iannone, G. , Guarnaccia, C. , D’Ambrosio, S. , Troisi, A. , Lenza, T. A Review of Traffic Noise Predictive Models. Salerno.

Decker, K. D. , 2012. Cargo cyclists replace truck drivers on European city streets. Retrieved from http://www.lowtechmagazine.com/2012/09/jobsof-the-future-cargo-cyclist.html

European Environment Agency, 2013. EMEP/EEA air pollutant emission inventory guidebook. Luxembourg: Publications Office of the European Union.

Jokiniemi, T. , 2010. Greenhouse gas emissions from direct combustion of various fuels. Helsinki: Faculty of agriculture and forestry.

Guidelines, 2004. Developing Harmonized European Approaches for Transport Costing and Project Assessment. Ier: Heatco project.