Mobility • Safety • Economy • Environment The Implications of Internet Shopping Growth on the Van Fleet and Traffic Activity Professor Alan Braithwaite LCP Consulting May 2017 The Royal Automobile Club Foundation for Motoring Ltd is a transport policy and research organisation which explores the economic, mobility, safety and environmental issues relating to roads and their users. The Foundation publishes independent and authoritative research with which it promotes informed debate and advocates policy in the interest of the responsible motorist. RAC Foundation 89–91 Pall Mall London SW1Y 5HS Tel no: 020 7747 3445 www.racfoundation.org Registered Charity No. 1002705 May 2017 © Copyright Royal Automobile Club Foundation for Motoring Ltd Mobility • Safety • Economy • Environment The Implications of Internet Shopping Growth on the Van Fleet and Traffic Activity Professor Alan Braithwaite LCP Consulting May 2017 About the Author Professor Alan Braithwaite Alan is the Founder of LCP Consulting and has spent his career working with more than 400 companies on their operations, supply chains and logistics. In 2015 he published a book with Professor Martin Christopher under the title ‘Business Operations Models – becoming a disruptive competitor’. In 2016 he was awarded the Sir Robert Lawrence Award by the Chartered Institute of Logistics and Transport for his lifetime contribution to the profession. He is also a Visiting Professor in Supply Chain Management at Cranfield University, School of Management, where he contributes to research and teaching. In this role, he is a thought leader and educator, a regular speaker at conferences, and the author of many papers and articles. In recent years he has taken an academic and consulting interest in freight transport policy. In the course of this work he has published widely, including being the lead author of the Chartered Institute of Logistics and Transport – Freight Vision 2035. He is a recognised thinker on the future of urban logistics in the face of the challenges of congestion and pollution. LCP Consulting LCP is a specialist operations and supply chain consultancy, which is now part of BearingPoint – a leading global business consulting firm with broad management and technology capabilities. LCP’s focus is on advising companies how to simultaneously improve customer experience and enhance their bottom lines through their operations. The firm has a strong retail practice where it has become a leader in retail e-commerce and advised many high street names on their operational development. This deep experience has helped to inform this analysis and report. i The Implications of Internet Shopping Growth on the Van Fleet and Traffic Activity www.racfoundation.org ii Acknowledgements My thanks are due to the RAC Foundation for asking me to prepare this analysis and report. Also I must recognise their support and challenge during the course of the work; it is the better for it. The team at LCP have provided industry experience and detailed background analysis. Many connections, including with the CILT, MDS Transmodal, The Transport Systems Catapult, Transport for London and UK Warehousing Association have also helped with sources and validation. The opinions and conclusions are mine and should not be taken to represent those of any other organisation. Disclaimer This report has been prepared for the RAC Foundation by Professor Alan Braithwaite (LCP Consulting). Any errors or omissions are the author’s sole responsibility. The report content reflects the views of the author and not necessarily those of the RAC Foundation. i The Implications of Internet Shopping Growth on the Van Fleet and Traffic Activity www.racfoundation.org ii Contents List of Abbreviations ............................................................................................................vi Executive Summary ............................................................................................................ vii 1 The Rise and Rise of Internet Retailing ................................................................................. 1 1.1 The growth in e-commerce and its importance in the UK ............................................... 1 1.2 Changing patterns of e-commerce access – the growth of mobile ................................. 2 1.3 Retailers’ responses to e-commerce growth and customer preferences ������������������������ 4 1.4 The customer delivery event: critical to retention and profit ............................................ 5 1.5 Fast-track service based on vans: a core competitive lever ............................................ 6 2 The Parcel Market Serving e-Commerce ............................................................................. 8 2.1 Estimating the scale of the parcel market ....................................................................... 8 2.2 The van resources that service the parcel delivery market ............................................ 11 2.3 The impact of the growth in click-and-collect on delivery volumes ............................... 14 2.4 Developing a forecast of parcel volumes for 2020 ........................................................ 17 3 Vans and Traffic Generation ............................................................................................... 18 3.1 Van traffic growth in the total traffic mix ........................................................................ 18 3.2 The composition of the van parc .................................................................................. 20 3.3 How the van parc is growing ....................................................................................... 21 3.4 The place of vans and e-commerce in traffic growth .................................................... 24 4 Traffic Congestion, Air Quality and e-Commerce ................................................................ 25 4.1 e-Commerce impacts on personal travel ..................................................................... 25 4.2 Travel for shopping and journey substitution ................................................................ 27 4.3 Travel timing and its impact on congestion................................................................... 28 4.4 Implications of commercial vehicles (vans and lorries) on congestion and air quality ..... 31 4.5 Strategies for mitigating the environmental and congestion impacts of freight .............. 33 4.6 Vans and freight: as much a victim of congestion as a contributor ............................... 34 5 Emerging City Logistics Models – Examples and Case Studies .......................................... 35 5.1 London case study – avoid the journey ........................................................................ 36 5.2 London case study – retime the journey ...................................................................... 37 5.3 Mitigate the emissions and pollution impacts ............................................................... 40 6 The Need for Further Research .......................................................................................... 42 7 Conclusions and Recommendations ................................................................................. 46 References ........................................................................................................................ 49 iii The Implications of Internet Shopping Growth on the Van Fleet and Traffic Activity www.racfoundation.org iv Figures list Figure 1.1: The relative scale and recent growth of online retail revenues, within the EU and worldwide .............................................................................. 2 Figure 1.2: The three main factors underlying customer purchase decisions ........................ 5 Figure 1.3: Does a good delivery experience influence repeat purchase? ............................. 6 Figure 2.1: UK e-commerce market: levels of ordering and delivery activity .......................... 9 Figure 2.2: Click-and-collect sales as a percentage of sales completed online ................... 15 Figure 2.3: Customer preferences for fulfilment methods ................................................... 15 Figure 2.4: Motivations to use click-and-collect ................................................................. 16 Figure 3.1: Illustration of the type of van by size ................................................................. 20 Figure 3.2: The distribution of the van parc by vehicle type, 2015 ...................................... 21 Figure 3.3: Trend in van parc growth by segment, 2003–15 ............................................... 22 Figure 3.4: Trend in new van registrations by segment, 2003–15 ....................................... 23 Figure 4.1: Trends in travel distance by mode, England, 2002–15 ...................................... 27 Figure 4.2: Frequency of household delivery of goods, England, 2002–4 and 2008–15 ..... 28 Figure 4.3: Personal trips by start time and purpose, weekdays, England, 2011/15 ........... 29 Figure 4.4: Air quality map of Greater London .................................................................... 32 Figure 4.5: Profile of freight vehicle movements in London’s Congestion charging zone by time of day .......................................................................................... 33 Figure 5.1: Van utilisation in London ................................................................................... 36 Figure 5.2: A ground drone delivering