HomePublicationsInsightsURBAN DISTRIBUTION AND THE EFFECTS OF MOVEMENT RESTRICTIONS IN LARGE CITIES

URBAN DISTRIBUTION AND THE EFFECTS OF MOVEMENT RESTRICTIONS IN LARGE CITIES

INTRODUCTION

Even in the shadows of a world economic crisis driven by a Europe in political collapse and an American market below its usual consumption standards, the Brazilian economy continues to show signs of resistance. It behaves above the market average and shows good signs of resilience, especially based on the consumption power of its domestic market. This scenario means that logistics and the challenges of product distribution are increasingly highlighted on the agenda of top executives. There is no company that intends to be competitive today that is not attentive and developing logistics and service plans for its markets.

In addition to the business environment, the public power also sees itself with the agenda taken by challenges of circulation of goods and provision of services that allow meeting this growing demand of ascending social classes without this putting pressure on the systems or reflecting in a shortage of supply. and price increases.

In this scenario, one of the great challenges currently facing concerns the activity of urban cargo distribution. Large Brazilian cities have, for the most part, disorderly growth, lack of planning, little investment in urban equipment, lack of infrastructure and increasing population density. As a result, new rules and restrictions on the movement of freight vehicles are increasingly emerging, especially in large urban centers. This stimulated a new survey, carried out in 2011 by the Market Intelligence area of ​​ILOS – Instituto de Logística e Supply Chain, which was exclusively presented at the XVII International Logistics Forum and which motivates this article.

 

INTERNATIONAL SCENE

Before getting into the ILOS study itself, we looked for secondary data from studies with similar motives that would allow us to draw a comparative picture and seek an understanding of trends or known stories around the world. We found that, in fact, circulation restrictions are a reality and are here to stay. This type of norm or regulation exists in cities all over the world, such as: Vancouver, New York, London, Paris, Prague, Tokyo, Montevideo, Rio de Janeiro and São Paulo. To have a clearer idea of ​​this dimension, a study carried out in 417 different cities in Europe by PwC (PricewaterhouseCoopers) in 2010 pointed to the existence of some type of regulation or circulation restriction in no less than 84% of the cities surveyed, as shown in Figure 1. :

2012_02_image_01Figure 1 – Percentage of European cities with restriction
Source: Study on Urban Access Restrictions 2010, PwC

 

Although they occur in a very widespread way, the restrictions have a similar origin and cover both cargo vehicles and passenger cars. The main reason for restrictions is environmental concerns, as seen in Figure 2, with congestion problems second. Of course, these factors end up mixing and, over time, users lose track of their origin and true impacts of the result of the restriction. It is also important to note that, although they impact both cargo and passenger vehicles, the cargo transport sector is notably the most affected by circulation restrictions, as we can see from the same study, as shown in Figure 3.

2012_02_image_02Figure 2 - Main purpose of the restriction
Source: Study on Urban Access Restrictions 2010, PwC

 

2012_02_image_03Figure 3 – Vehicles most affected by restrictions
Source: Study on Urban Access Restrictions 2010, PwC

 

In summary, traffic restrictions are a reality in a large number of cities. They have different generating factors, notably environmental and circulation factors, are applied in a diverse way and, unfortunately, without major studies or follow-up and monitoring of result indicators that allow monitoring the degree of evolution of what was intended to combat when the restriction was created. This lack of standardization also generates difficulties in measuring and comparing best practices, thus making the effect more diverse and difficult to measure and regulate the effectiveness.

 

THE ILOS STUDY: SECTOR CHARACTERISTICS AND RESEARCH SAMPLE

When we decided to study the subject, a first question soon arose: should we seek information from shipping companies or logistics service providers? In order to have the most effective and pragmatic study possible, we decided to seek data, information and opinions from urban distribution operators, since they represent the link that directly deals with urban restrictions and their management in day-to-day business. To this end, ILOS carried out an unprecedented survey with 60 large urban distribution operators present throughout the national territory.

Before going into the research data and its main conclusions, we would like to present an overview of the general situation of circulation restrictions in the Brazilian market. In Brazil, there are already several cities with some kind of circulation restriction, which is a phenomenon in the main capitals, but which is also beginning to spread to large cities in the interior of the country. See Figure 4.

2012_02_image_04Figure 4 – Brazilian capitals with vehicle circulation restrictions
Source: City Hall websites, G1

 

Also in the case of Brazil, the main circulation restriction measures are applied to cargo transport vehicles. There are three main types of measures adopted: circulation restriction areas, circulation restriction times and license plate rotation. The main restrictions concern loading and unloading hours and the size and weight of vehicles.

With regard to the companies surveyed, we tried to talk to the largest urban distribution operators in the country and also ensure a geographic coverage that represented our vast territory. The average total fleet of these companies was 800 vehicles, which is divided into: own vehicles, fixed aggregates and temporary aggregates. Within this average fleet profile, 40% of the total was dedicated to distribution activity, with this percentage being higher in the own fleet and much lower in the fleet of aggregates.

Other relevant information that helped us to better understand this segment in the study was the operating profile that characterizes urban distribution in Brazil. As shown in Figure 4, the characteristic profile of this type of operation is that of a non-dangerous, fractional delivery load, mostly for points of sale. Since express orders participate with something like 30% of the total volumes involved.

2012_02_image_05Figure 5 - Profile of loads and urban distribution in Brazil
Source: ILOS Survey 2011

 

As additional information, the sectors most served by this type of delivery are: food and beverages, chemicals and petrochemicals, steel and metallurgy, automotive, building material, electronics, computing and retail.

 

MAIN CHALLENGES AND PERCEPTIONS

In order to better understand the obstacles of urban distribution, we created questionnaires and conducted direct interviews with the executives of these companies, which allowed us to construct a map with the ranking of the main current challenges of this type of operation and also with what, in the opinion of these service providers , will be the main problems in the future.

In this sense, it was quite interesting to identify that the main difficulty item present and also projected for the future is traffic. Interesting due to the phenomenon of cause and effect, since this is what motivates most of the circulation restrictions that we see in application in Brazilian cities, at the same time that it is these restrictions that service providers accuse of making circulation difficult and unfeasible the good provision of distribution services.

2012_02_image_06
Figure 6 – Main challenges of urban distribution in the opinion of service providers today and in the future
Source: ILOS Survey 2011

Another important data from the study was to identify that the second biggest current problem of urban distribution operators is the difficulty in hiring drivers. This is a situation that exists throughout the road freight transport sector and, it seems, has been getting worse lately. We have news of large companies that have a renewed and modern fleet, but that are stopped or underutilized due to a lack of sufficient and/or minimally qualified drivers for the operation. This is even stronger in the case of urban distribution, as it is a slightly more sophisticated transport operation, which involves assets with greater technological content on board and which often require greater qualification from drivers and operators.

In third place is an item – circulation restrictions – which should be a solution to traffic problems, but which appears to be a major obstacle to urban deliveries. This can be understood because, although many of the restrictions are created to help with the flow of traffic, the lack of standardization and diversity of their applications ends up making an adequate operational and business investment planning unfeasible. Currently, companies are uncertain about how and when to make new fleet investments, as you never know where a new restriction may arise and for what type of vehicle and schedules it will be applied.

It is also noted that environmental restrictions already appear in fifth place in the minds of operators and that their participation tends to grow in the future. Even with that, in the opinion of the executives, this is an even less relevant factor than the difficulty of parking. This is interesting to note, as the biggest factor generating new circulation restrictions is exactly environmental concern and care.

Finally, items with characteristics of managerial opportunities appear, such as the time to receive customers, routing, load formation and delivery windows.

2012_02_image_07

Figure 7 – Opportunities for government actions, according to distribution service providers
Source: ILOS Survey 2011

 

On the other hand, when we look at the main measures adopted by operators to face the challenges of urban distribution, companies listed, in decreasing order of importance, the following actions: investment in information technology and assets, use of smaller vehicles, use of loading and unloading platforms in vehicles and greater use of drivers on routes.

Finally, companies see the government as distant from the problem or, often, as the responsible and main generator of the sector's service difficulties. In Figure 6, we list where this group of companies sees an opportunity for government action.

 

MAIN CONCLUSIONS

By crossing some of the information made available in this article with a series of others from our complete research, we can draw some important conclusions for the urban cargo distribution sector.

In summary, this is a sector that today presents serious challenges related to traffic, the difficulty of hiring qualified labor and the growing level of restrictions on the circulation of vehicles. The continuous environmental demands and the increasing density of urban centers only predict that the situation will become even more difficult in the future.

In the governmental sphere, there is a great difficulty in planning, given the variety of rules, diversity of application and lack of standardization and measurement of benefits. In the opinion of those surveyed, the government has not been doing its part in infrastructure investments that could facilitate the challenge for companies in the sector. In addition to not investing enough either in the cargo sector or in mass public transport (which would help by reducing competition between passenger vehicles and freight vehicles), it also does not create a way to standardize and allow better planning on the part of private investments to accommodate the challenges of this distribution.

In turn, the investments made by operators to improve this situation are still timid and are limited to specific initiatives in information technology and asset optimization, the search for collaborative circuits and transport, the creation of alternative re-dispatch networks and points of remote transfers and the focus on operational and daily management so that not a single minute is wasted with a stationary or empty truck.

Finally, and as an objective result of the study, we found that, on average among the companies interviewed, 57% of them had to pass on a price increase to their shipping customers and that this average increase was around 19,6% in the last year.

 

BIBLIOGRAPHIC REFERENCES
Study on Urban Access Restrictions 2010, PwC
Urban distribution survey and traffic circulation restrictions 2011, ILOS

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