Green Urban Transformation

As urbanization brings more people to cities, transportation activity on urban roads around the world is projected to more than double by 2050. Freight trucks taking goods in and out of cities will contribute to this and impact the environment, and logistics organizations will feel the consequences – longer and less reliable delivery times for customers.

Foreseeing this issue, the Swiss government in 2022 gave the go-ahead to Cargo Sous Terrain to begin constructing its privately financed underground system with phase 1 operations starting in 2031. In this first phase, specially designed cargo pods, including refrigerated units, each loaded at a surface facility with up to two pallets of freight will be lowered to an underground freight-only highway that connects 10 destinations along 70 km (43 miles) between Zurich and a regional logistics center. Using electric motors, the pods will travel to the required destination, where they will be lifted to the surface and unloaded. In this way, freight can be delivered directly into urban centers without adding to or being affected by road congestion. If successful, by 2045, phase 2 will expand the system to include other major Swiss cities like Geneva, Bern, and Basel. However, concerns are being raised about this project by municipalities and citizens affected.

In March 2024, the European Hyperloop Test Center opened in the Netherlands, a significant step forward for this futuristic transport technology. The newly launched 420-meter (quarter-mile) white steel tube will be a proving ground for capsules floating on magnetic fields, with the potential to achieve speeds of around 700 kph (435 mph). This evolving technology could usher in a new era of passenger and freight transportation.

With urban roads around the world projected to suffer large increases in congestion in the coming decades, logistics organizations should monitor these and other underground system developments. In time, they may provide a valuable way to protect urban delivery times despite traffic delays.

Many governments have made progress with their digital agendas, achieving widespread adoption of digital technology. Municipalities are promoting eco-friendly mobility, energy, heat, water, sewage, and waste concepts. And, to fully achieve a smart city, it is essential to integrate infrastructure and processes in energy, information, communication technologies, and transportation.

With smart city concepts for transportation, municipalities can provide real-time public transit information and road navigation data. They can also integrate multimodal information, deliver intelligent traffic control and smart parking management, introduce congestion pricing, and offer on-demand micro-transit services.

There are several benefits for logistics. For example, logistics providers can digitally interact with the infrastructure to plan logistics activities and adjust delivery windows according to real-time events. This is already possible for Helsinki, using its virtual rendering (digital twin) of the city’s environment, operations, and changing circumstances.

In the transformed urban environment, municipalities act as regulators of major logistics flows, with authorities typically taking over control tower functionality.

In addition, authorities may seek to reduce inner-city vehicle numbers by creating white-label hubs – consolidation points managed by a third party. Here, multiple logistics players arrange last-mile delivery (the most expensive segment of the fulfillment supply chain), effectively achieving parcel-load pooling. This represents a significant shift away from hubs traditionally located on the edges of a city, far from the primary customer base.

Reacting to these changes, many quick commerce providers are opening and operating so-called dark stores (micro-fulfillment centers housed in what used to be retail space) in central neighborhoods or at the back of large suburban retail stores. These allow quick commerce providers to get closer to customers and ensure promised delivery times. As the dark store ecosystem grows, specialized services are appearing. For example, the American software company Mapbox offers mapping technology to help retailers pinpoint the perfect location for their next dark store.

Dark stores provide several benefits. They allow for faster picking and delivery. They can also achieve a lower cost per pick and delivery due to their more specialized product assortment and the fact they are closer to city consumers than traditional warehouses. While there may be higher fixed costs when renting these centrally located properties, dark stores offer savings that can make all the difference in last-mile delivery. At the same time, complaints are being raised about the presence of dark stores as critics claim they are a hazard to the public and too noisy.