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TAYSIDE AND CENTRAL SCOTLAND TRANSPORT PARTNERSHIP

8 MARCH 2016

EUROPEAN PROJECTS UPDATE

REPORT BY STRATEGY MANAGER

This report updates the Partnership on progress in European projects in which the Partnership is participating.

1 RECOMMENDATION 1.1 That the Partnership notes progress in the LaMiLo and Fuel Cells and Hydrogen

Joint Undertaking projects, as outlined in the report.

2 BACKGROUND 2.1 At its meeting on 11 December 2012 the Partnership noted Tactran involvement in

the INTERREG funded LaMiLo project (Report RTP/12/28 refers). On 11 March 2014 (Report RTP/14/05 refers) the Partnership noted that planned implementation of a proposed pilot Freight Consolidation Centre (FCC) in Perth, as a demonstration element of the LaMiLo project, had not proceeded owing to difficulties in securing a commercial partner operator, but that Tactran and Perth & Kinross Council would continue as partners in the project. It was also noted that discussions were continuing with Perth & Kinross Council regarding the potential to implement the FCC pilot project outwith LaMiLo. At the Partnership meeting on 9 December 2014 (Report RTP/14/39 refers) it was noted that events had been held in Perth to present the opportunity to develop a business based on freight consolidation and other logistics services, such as warehousing, marketed as a logistics service centre.

2.2 At its meeting on 10 December 2013 the Partnership agreed to offer its support for the development of a Hydrogen Fuel Cell Bus Feasibility Study (Report RTP/13/40 refers). On 9 September 2014 the Partnership authorised the Director to sign a Memorandum of Understanding and Non-Disclosure Agreement confirming Tactran support for a Scottish bid for EU funding to develop a project Business Case (Report RTP/14/23 refers). An update on progress on this initiative was made to the Partnership on 9 December 2014 (Report RTP/14/39 refers).

3 DISCUSSION

LaMiLo

3.1 The LaMiLo (LAst MIle LOgistics) project aimed to promote new business practice for

delivering consumer goods to homes, shops and distribution centres, colloquially known as the “last mile” of deliveries. The original intention had been to implement a pilot Freight Consolidation Centre (FCC) in Perth. A logistics operator for the Centre was to be sought through an open tender procedure. After a lengthy procurement process a suitable operator was identified and progress was made towards implementing an FCC at Inveralmond in Perth. However, at a very late stage before full implementation the operator withdrew from the project. Following discussions with the European partners it was agreed that a different “bottom-up” approach to

11 RTP/16/10

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developing a Perth FCC would be pursued. The LaMiLo project concluded at the end of June 2015. A copy of the Project’s Executive Summary is attached at Appendix A.

3.2 Events were held on 9 October and 4 December 2014 in Perth which presented the

opportunity to develop a business based on freight consolidation and other logistics services, such as warehousing, marketed as a logistics service centre. This was intended to identify an entrepreneur that would be prepared to develop it as a financially viable concern. As a consequence of these events, MAJR Energy, a Dundee-based social enterprise company, expressed interest in undertaking further feasibility work and developing a detailed business plan for logistics service centres in Dundee and Perth. This work has been jointly supported by Tactran and Dundee City Council, with a contribution of £12,000 from the 2014/15 and 2015/16 RTS Revenue Programmes as reported on 10 March 2015 (Report RTP/15/10 refers) and 16 June 2015 (Report RTP/15/22 refers).

3.3 MAJR Business, another member of the MAJR Group, has developed a business plan for the Group to organically develop a consolidation centre through key strategic partnerships, seeking efficient use of resources and adoption of a sustainable growth model. It will aim to promote the circular economy and low carbon business practices through continued engagement with the local community. MAJR intends to introduce a pilot FCC in Dundee during financial year 2016/17. The business plan is based on negotiating a contract with a commercial supplier to undertake their deliveries within Dundee to guarantee a basic income for the FCC. This will then enable the generation of new business to the centre making deliveries, and the collection of recyclable waste, to other premises in Dundee. The consolidation centre will make use of electric vehicles to reduce the environmental impact of deliveries and contribute to air quality improvement in the city. As the business grows it is intended extend the consolidation service to Perth.

Fuel Cells and Hydrogen Joint Undertaking

3.4 A Scottish consortium has been formed to bid for European funding for a project seeking to commercialise the supply of hydrogen fuel cell electric buses across Europe. Tactran has joined the consortium along with the four partner Councils in the Tactran region. Hydrogen fuel cell electric buses have been identified as a viable powertrain to achieve zero emissions targets as they offer operational flexibility without the range constraints of plug-in electric buses and they are expected to be a cost competitive option in the near future. The Fuel Cells and Hydrogen Joint Undertaking is an EU instrument to support cities and bus operators preparing for the large-scale deployment of hydrogen fuel cell buses. The Undertaking will support the purchase of 300 - 600 buses which will enable manufacturers to achieve economies in supplying large batches of vehicles.

3.5 Regions across Europe will be submitting bids for EU part-funding of the purchase of hydrogen fuel cell buses and attendant hydrogen filling and storage infrastructure. The Scottish Cities Alliance (SCA) is leading the bid for the deployment of 70 - 100 buses across Great Britain. As a first stage in the bid process Aberdeen City Council, on behalf of SCA, has advertised in the Official Journal of the European Union for expressions of interest from bus manufacturers for a procurement exercise anticipated for later in 2016. The procurement exercise will enable consideration of a response to a call for bids from the Fuel Cells and Hydrogen Joint Undertaking expected in summer 2016. At this stage commitment in the project is to support exploration of a business case for potential development and application in Scotland and no financial support by Tactran is required.

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4 CONSULTATIONS 4.1 This report has been prepared in consultation with relevant officers from the

constituent Councils. 5 RESOURCE IMPLICATIONS 5.1 The Partnership’s contribution of £10,000 towards the development of freight

consolidation opportunities and proposals in Dundee and Perth is included within the approved 2015/16 Revenue Budget and Programme for the Freight Quality Partnership.

6 EQUALITIES IMPLICATIONS 6.1 This report has been screened for any policy implications in respect of Equality

Impact Assessment and no major issues have been identified. Michael Cairns Strategy Manager Report prepared by Michael Cairns. For further information e-mail michaelcairns@tactran.gov.uk or tel 01738 475774.

NOTE

The following background papers, as defined by Section 50D of the Local Government (Scotland) Act 1973 (and not containing confidential or exempt information) were relied on to a material extent in preparing the above Report: Report to Partnership RTP/12/28, European Funding Opportunities, 11 December 2012 Report to Partnership RTP/13/40, Director’s Report, 10 December 2013 Report to Partnership RTP/14/05, 2013-14 Revenue Programme and Monitoring, 11 March 2014 Report to Partnership RTP/14/23, European Projects Update, 9 September 2014 Report to Partnership RTP/14/39, European Projects Update, 9 December 2014 Report to Partnership RTP/15/10, 2015/16 Revenue Budget and Programme, 10 March 2015 Report to Partnership RTP/15/22, 2015/16 Revenue Budget and Programme, 16 June 2015

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Lead

Par

tner

Part

ners

Inst

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for S

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inab

ility

(UK)

Be

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esea

rch

Cent

re (B

E)

Brus

sels

Mob

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(BE)

Cros

s Riv

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artn

ersh

ip (U

K)

Eco2

City

(NL)

Inst

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port

Law

(FR)

Irish

Exp

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ssoc

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n (IE

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Lond

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orou

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f Cam

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(UK)

Pert

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s Cou

ncil

(UK)

)

PTV

Grou

p (D

E)

Tact

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(UK)

Tech

nisc

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t Dor

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The

Gree

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Luxe

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(LU)

www.lamiloproject.eu

Executive Summary

02 www.lamiloproject.eu

Introduction

The context The objective

Globalisation and e-commerce have changed

how we shop and how goods are delivered to the end-customer.Most logistics organisations extend their supply chains directly to the end-customer, operating increasingly across borders and with multiple organisations delivering in the same geographic area.

Due to lack of sharing capacity and increasing internet ordering, deliveries to end-customers are mostly uncoordinated, small drop-offs in separate vehicles to homes, shops and offices.

This information disconnect between suppliers, logistics providers and customers, often results in an inefficient way of delivering goods to end users, and in turn in reduced business efficiency, but most importantly, it leads to an increase in urban congestion and air and noise pollution.

The project’s objective is to embed new ways of

delivering last mile logistics by influencing the behaviour of all stakeholders involved: private companies, the public sector and consumers.By demonstrating innovative solutions that are cost effective, environmentally beneficial and transferable, the project hopes that both the private and public sectors will be encouraged to replicate the LaMiLo models across Europe in order to demonstrate more coordinated, effective and sustainable last mile logistics on a wider scale.

The project brings together public and private sector organisations, as well as researchers to collaborate on making the last

mile of freight journeys more efficient and sustainable through a number of key activities:

Engaging with private and public sector organisations, as well as customers and end users to try to influence behaviour change

Practical, real life pilots testing sustainable last mile solutions using a variety of transport modes

Understanding the barriers faced by the private sector when implementing efficient last mile solutions and influencing policy changes to bring about more sustainable urban freight deliveries.

This report sets out the main findings from these activities, and what we understand to be the conditions for success as far as sustainable last mile logistics are concerned.

By focusing on these conditions for success, the report aims to provide guidance to private and public sector organisations, inform regulatory bodies and influence them to take action to amend regulation at a national and regional level.

LaMiLo (last mile logistics) is an INTERREG IVB North West Europe (NWE) project part-funded by the European Regional Development Fund (ERDF) with 13 partners from seven countries across North West Europe.

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The conditions for success:

Achieving sustainable and efficient last mile deliveries requires the behaviour change of all the stakeholders in a supply chain.

Indeed, behaviour change of those organisations involved in the urban freight process can make the difference between the success and failure of new initiatives in the area of efficient sustainable urban logistics.

Having engaged with private and public sector organisations as well as customers and end users, partners were able to understand and influence current last mile logistics behaviour and practices.

End user assessments were carried out for all of the pilots. Retailers, consumers and council staff were interviewed to understand the challenges they face and the drivers for their current behaviour towards logistics.

Retailers, logistics providers, and a variety of consumers were also invited to participate in a series of transnational behaviour change workshops. Here, stakeholders gathered to discuss approaches to changing the conduct of the organisations and people involved and to encourage collaboration to help achieve sustainable urban deliveries.

These workshops consisted of two parts: the first part was a lecture given by a psychologist about decision making and the resulting behaviour; the second part was about working together on the LaMiLo investments, assisted by a nine-step behaviour change model.

Having liaised with private sector operators in North West Europe, the project was able to identify the key barriers to the implementation or optimisation of sustainable last mile solutions.

Similarly, by reviewing current policies and regulations and how these affect innovation in the logistics sector, the project was able to identify key changes required to achieve sustainable last mile logistics.

BarriersPrivate sector organisations involved in last mile logistics solutions face a number of barriers to the implementation or

optimisation of their operations. These include lack of suitable space for inner city consolidation centres, cost of expanding green fleets, waiting time at ramps, and regulations that do support deliveries using green vehicles.

PoliciesThe work carried out with the private sector, together with a detailed analysis of the impact of transport regulations on last mile logistics in North West Europe resulted in a thorough understanding of how policies and regulations can act as a barrier to efficient last mile logistics operations.

Policies that affect or are related to last mile logistics exist at European, national and regional/local level. These include legislation on: intelligent transport systems, road charging, clean vehicles, air quality, noise, health and safety, cargo bikes, and alternative fuels.

Eleven key policy measures used within local authorities to influence last mile logistics were identified within the project. These

include time window restrictions, sustainable procurement, and environmental zones among others, although opportunities exist to improve public sector influence on last mile logistics solutions.

Indeed, in order to support the take up of last mile solutions, more can be done by the public sector such as placing access/parking/loading-unloading restrictions on standard vehicles and safeguarding land in strategic city areas for consolidation activities.

Above all, there is the clear need for the public sector to prioritise and to understand urban logistics. The project has endeavoured to raise awareness of last mile logistics and to provide tools to assist with the development of more sustainable solutions. A web-based GIS platform has been created to help the public sector to develop more efficient and sustainable urban freight transportation plans by mapping information on transportation networks, access restrictions, traffic measures, delivery and transport facilities, administrative units, population, land use and emissions. >>

Public and private sector perspectives

Behaviour change

Partners are able to understand and influence current last mile logistics…

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The impact assessment carried out on the project’s pilot demonstrated that there is a positive environmental benefit to implementing these solutions.

However, while emissions and congestion reduction are high on governments’ agendas, the solutions also need to be financially sustainable. Indeed the two must go hand-in-hand. The LaMiLo pilots showed that this is possible and clearly demonstrated that future projects can be successful despite several factors affecting the fragile financial sustainability.

The implementation of policies and regulations that benefit last mile operators will go a long way to increase the successful implementation of existing operations and the take up of new solutions.

Public sector investments, European funding, and support to start ups all contribute to innovate and optimize last mile operations. But when it comes to financial sustainability in the long run, three things are needed.

First of all, cities need policies and regulations that benefit last mile optimisation. This will go a long way to increase the successful implementation of existing operations and the take up of new solutions. But even though it is a long way, local governments should be far more outspoken about what they want (and do not want) in their cities when it comes to freight mobility. Clear and effective Sustainable Urban Freight Plans are needed.

Secondly, the local government should give the right example when it comes to optimising their own freight flows, as discussed above in the procurement section.

Lastly, the market needs to make use of new models and concepts of urban logistics, especially when it relates to incoterms and small volume deliveries going in and out of the cities.

Incoterms rules are intended primarily to clearly communicate the tasks, costs, and risks associated with the transportation and delivery of goods. Usually, only small volumes are delivered in cities using the incoterm Delivered Duty Paid (DDP). However, the LaMiLo project advocates a new incoterm: Delivered at Citylogistic Service Center (CSC). Private companies, whether it be logistics providers or end receivers, could make use of this incoterm in order to promote the consolidation and coordination of the freight. This Incoterm decouples the financial flows between the long haul side (outside of the city) and the bundled delivery and collection inside of the city - as the market does for international trade.

The conditions for success:

Environmental and financial sustainability

Procurement The project pilots in Brussels (Belgium), London and Perth (UK) required the public sector authorities to undertake a procurement exercise to identify a suitable private sector operator to provide a consolidation function.

Each of these pilots embarked on a different procurement process, with varying degrees of success. What became clear was that urban consolidation is viewed as innovative by the logistics sector. Consequently, generating interest in public sector procurement among logistics service providers is a challenge, even in Brussels and London, both of which are at the heart of their respective national distribution systems.

Procurement can also be used as a tool for local governments to generate financial and environmental savings. Indeed, the role of transport procurers is key, as they are able to enhance efficiency and introduce

sustainability into their supply chains. This can be done by using procurement policy to enforce deliveries to consolidation centres or by enforcing cost transparency from their suppliers.

The issue of delivery cost transparency has proved to be linked to the behaviour change of end users who often lack understanding of the true cost of delivery. By enforcing cost transparency, logistics operators would find it easier to achieve the financial benefits required for their operations to become sustainable. A new way of separating and clarifying delivery costs build up is required.

CollaborationFor the status quo to change, horizontal (between retailers and suppliers) and vertical (between public and private sectors) collaboration and integration needs to take place. The public sector should collaborate with the private sector to understand the

barriers faced and to proactively deliver effective last mile solutions where relevant, in order to make our cities better places for people to work and live. A coordinated and collaborative approach between retailers and suppliers is also required to achieve sustainable logistics.

To ensure that these measures are not limited, there is the need for stakeholders to communicate, share data, overcome competition, and find common solutions.

Cities need policies and regulations that benefit last mile optimisation…

05www.lamiloproject.eu

The pilots – an overview

Brussels

Camden

Solution: logistics providers deliver their goods to a warehouse where they are consolidated for onward delivery to council building using diesel vehicles.

Solution: logistics providers deliver their goods to a warehouse where they are consolidated for onward delivery to retailers using clean vehicles, where possible.

LONDONLBCC

BRUSSELSUCC

(City Depot)

Key statistics:

Key statistics:

4 boroughs involved representing 10% of London’s geography

127 suppliers/couriers using the service

250 buildings served >100 visited each week

Over 300 orders p/week

Consolidation 30% of occasions

40% reduction in delivery days

Order values increased by >30%

Supplier discounts achieved during pilot phase: 5-7%

1 depot (1000 m2)

6 municipalities – 54 km2

Opening times 06:30 -15:00

5 days a week

4,2 roundtrips per day

1 Heavy goods vehicle (7 t)

3 Light goods vehicles (3,5 t) (1 natural gas)

Rate of failed deliveries 3,9%

Delivery reliability > 99%

Parcels 65%;

Pallets 35%

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Problem: various suppliers delivering to council buildings in Enfield, Waltham Forest and Camden contributing to congestion and emissions.

Problem: various suppliers delivering to the same addresses, more vans on the road leading to more traffic and more emissions.

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Solution: suppliers deliver goods to centrally located consolidation centres, where goods are bundled for onward delivery by bike at a time that suits the customer.

Solution: logistics providers deliver goods from their clients’ distribution centres to micro consolidation centres located in the centre of Paris, where goods are bundled for onward delivery by electric bike and vans.

Problem: the increase of e-commerce has led to a significant rise in the number of home deliveries and also an increase in failed deliveries. This in turn contributes to the increase in congestion and emissions in cities, affecting already poor air quality levels.

The pilots – an overview

Paris

Netherlands

NETHERLANDS

Arnhem,Nijmegen,Maastricht

PARISDEPOTS

x2

Key statistics:

1 depot in Maastricht (1.200 m2), 1 depot in Nijmegen (450 m2)

Opening times 07:00 – 17.00

5 days a week

1 cargocycle trip per day per city

Delivery at evening hours combined with urban mining

Delivery reliability > 99%

1 neighbourhood involved in Maastricht (approx 4700 residents)

2 neighbourhoods in Nijmegen (approximately 9.000 residents)

36 residents participating in pilot in Nijmegen

27 residents participating in pilot in Maastricht

Key statistics:

Number of recipients: 170 customers

Number of parcels: 2000 per day

Turnover: 130 € HT

Operating cost: 20% margin on salaries

Number of deliveries: 35 (no pick-up)

Cargo bike capacity: 1.5-2.1 m3, 200 kg

Travel time: 4 hours

Rate of failed deliveries: 15%

Distance: 10 km

Full consumption: 16 km for feeder

No CO2 emissions, no PM emissions, no NOx and SO2 emissions

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! Problem: suppliers deliver goods directly to their customers or they use a subcontractor for the last mile. Deliveries are carried out from depots located outside of the city, contributing to emissions and congestion during the peak traffic hours.

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Conclusion

The project has demonstrated solutions that have been proven to be environmentally, financially and socially sustainable.

These solutions are transferable and transnational: they can be implemented in large and medium-sized cities, with little or no adaptation. The lessons learnt from the pilots, and the knowledge shared by the project will hopefully encourage others to replicate these models.

Organisations need to create networks of contacts so they can identify themselves as wanting to participate in this new way of working and demonstrating the advantages of operating at scale and replicability. There is a need to agree on common goals and objectives and more importantly to produce a set of core evaluation criteria – but with flexibility to suit respective organisations. This would ensure organisations can supplement this core evaluation with more specific local influencers.

Behaviour change is time consuming but ultimately achievable. Raising awareness of logistics and the environmental and social impact of freight should be a priority as it contributes greatly to changes in the behaviour of stakeholders.

The public sector must not only create policies to support sustainable initiatives but also lead on these solutions. The Camden and Brussels pilots have shown that where local government leads, others will follow.

Finally, the positive impact of last mile logistics on the environment and the economy could be much greater if the private and public sectors collaborate on implementing sustainable solutions. Collaboration must also take place between stakeholders in a supply chain who should share data and fleets to achieve truly sustainable logistics.

Raising awareness of logistics and the environmental and social impact of freight should be a priority…

where local governments lead, others will follow…

For further information visit www.lamiloproject.eu or contact the lead partner

Institute for SustainabilityCAN Mezzanine49-51 East RoadLondonN1 6AH

T: +44 (0) 207 517 1832

Lead

Par

tner

Part

ners

Inst

itute

for S

usta

inab

ility

(UK)

Be

lgia

n Ro

ad R

esea

rch

Cent

re (B

E)

Brus

sels

Mob

ility

(BE)

Cros

s Riv

er P

artn

ersh

ip (U

K)

Eco2

City

(NL)

Inst

itute

for I

nter

natio

nal T

rans

port

Law

(FR)

Irish

Exp

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rs A

ssoc

iatio

n (IE

)

Lond

on B

orou

gh o

f Cam

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(UK)

Pert

h an

d Ki

nros

s Cou

ncil

(UK)

)

PTV

Grou

p (D

E)

Tact

ran

(UK)

Tech

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he U

nive

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t Dor

tmun

d (D

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The

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Luxe

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logy

(LU)