USP Mega-city Logistics public - MIT...

10/25/11

1

Megacity Logis2cs in Emerging Markets

USP, October 25, 2011 São Paulo, Brasil

Edgar E Blanco [email protected] Research Director Executive Director MIT SCALE Latin America

E. Blanco © 2011 MIT CTL . Do not quote without author authoriza2on 1

2

Why are Emerging Markets important?

Source: Wikipedia, World Bank 2006 Database

China 1,314M - $2k

India 1,113M - $0.8k

USA 300M - $45k

Mexico 104M - $8k

Brazil 187M - $4.7k

Nigeria 149M - $0.6k

Egypt 75M - $1.3k

Germany 82M - $36k

Russia 142M - $5.8k

Vietnam 84M - $0.6k

Japan 128M – $38k

Philippines 87M – $1.4k

Indonesia 222M - $1.4k

Pakistan 155M - $0.7k

Bangladesh 144M - $0.4k

Country Population – GNI per Capita

EU 459M - $34k

World 6,440M - $7.5k

E. Blanco © 2011 MIT CTL . Do not quote without author authoriza2on

10/25/11

2

… why is megacity logis-cs strategic today?


Urbaniza2on today


10/25/11

3


Urbaniza2on tomorrow


10/25/11

4

Megaci2es with popula2on > 5M

1950s 2000s 1900s (5)

Tokyo ~ 13M New York ~ 12M Osaka ~ 9M London ~ 8M

Paris, Shanghai ~ 5M


(1) London ~ 6.5M

Osaka(?), New York ~ 4M Paris, Berlin ~ 3M

Tokyo ~ 1.5

(78) Tokyo ~ 35M

Mumbai, Mexico City ~ 20M São Paulo, New York ~ 19M

Shanghai ~ 17M Kolkata, Delhi ~ 16M Beijing, London ~ 15M LA, Buenos Aires ~ 12M Rio, Paris, Manila~ 11M Moscow, Istanbul ~ 10M

.... 45 more Source MGI, Forbes, University of Cologne


Megaci2es with popula2on > 5M

Source: University of Cologne

10/25/11

5

Megacity Dynamic 1: Accelera2ng growth


Megaci2es keep growing

•  100 mega-‐ci2es represent 38% of global GDP •  Projected to double by 2025 •  Complex environment …


Source: MGI (2011)

10/25/11

6

Megacity Dynamic 2: Urban density to “new” levels


Pu[ng density in Perspec-ve

12 E. Blanco © 2011 MIT CTL . Do not quote without author authoriza2on

10/25/11

7

Megacity Dynamic 3: Drama2c socio-‐economic contrasts


Diverse city profiles

14

Fuente: MEIKO 2009+ DANE 2009

121 hhabs per store Per capita COL$469K

151 habs per store Per capita COL$237K



242 habs per store Per capita COL$2.185K 279 habs per store

Per capita COL$2.0195K


10/25/11

8

Megacity Dynamic 4: People mobility is the priority

… and boxes do not vote


Grinding halt…


4 – 5 Km/h

10 – 15 Km/h

Source: BRT Across LaItudes; Gakenheimer & Zegras (MIT)

10/25/11

9

Shrinking freight-‐friendly infrastructure


Source: BRT Across LaItudes


Source: Espiritoutdoor.com

10/25/11

10


Source: TURBLOG

Megacity Dynamic 5: Small stores mager

(and they only take cash)


10/25/11

11


Source Nielsen

Channel Complexity

22

MOM & POP STORE • 200 – 1500 sq.l. • Owner opera2on & individual decision-‐making • Counter • Knowledge & proximity to community •  Informality (p.e. taxes, invoicing, financing) • Smaller size products • Slow volume, high frequency, few items (500 – 5,000 SKUs) • Examples: Tiendas de barrio, ferreterías, panaderías, kioskos, mayoristas, droguerías, autoservicio independiente, etc.

MODERN RETAIL • 5000 sq.l or more • “Corporate” decision-‐making process • Self-‐service • Mul2ple outlets, shared brand • Organiza2onal structure, physical infrastructure, IT technology • Regular size products • High volume, high frequency, many items(30,000 – 150,000 SKUs) • Examples: Supermercados, hipermercados, 2endas de conveniencia, cadenas de autoservicios etc.


10/25/11

12



10/25/11

13



10/25/11

14

Megacity Dynamic 6: More fragmented logis-cs opera2ons

More store loca2ons Smaller shipment sizes More empty miles More conges2on


Megacity logis2cs dynamics

1.  Accelera2ng growth 2.  Urban density to “new” levels 3.  Drama2c socio-‐economic contrasts 4.  People mobility is the priority 5.  Small stores mager 6.  More fragmented logis-cs opera2ons

E. Blanco © 2011 MIT CTL . Do not quote

without author authoriza2on 28

10/25/11

15

The megacity dilemma…


•  Increasing wealth, eroding accessibility •  Disconnected actors

– Regional urban planning – Land use – Passenger transport planning – Companies

•  Not a good understanding of the logis2c system and its dynamics – Physical, informa2on, monetary flows

Tradi2onal city logis2cs policy focus on the symptoms…

•  Truck routes •  Urban freight informa2on and maps •  Vehicle weight and size regula2ons •  Truck lanes & loading zones •  Road charging systems •  Urban consolida2on centers •  Megacity freight movements grow faster than policies …

E. Blanco © 2011 MIT CTL . Do not quote


10/25/11

16

Proac2ve & innova-ve megacity logis2cs strategies

needed… Beyond compliance Scalability & speed


Ex: City of New York Night Deliveries Pilot (Holguin-‐Veras, 2010)


Source: Holguin-‐Veras (RPI)

•  Is made jointly between receivers and carriers –  40% receivers, 38% receivers+carriers, 22% carriers

•  Let’s take a look at the payoff matrix –  The first sign represents the impact on carrier and the second the

impact on receiver

Strategy Regular hours Off-hoursRegular hours (-,+) (I) (-,-) (II)

Off-hours (-,-) (III) (+,-) (IV)

Receiver

Carrier

(These are non-feasible solutions)

(This is the solution preferred by most carriers)

(This is the solution preferred by most receivers)

The fact that more than 90% of deliveries are made in the day hours clearly show who has the power…

10/25/11

17

Average space mean speeds

33 More than twice as fast E. Blanco © 2011 MIT CTL . Do not quote

without author authoriza2on

Average service times

34 More than three times as fast E. Blanco © 2011 MIT CTL . Do not quote

without author authoriza2on

10/25/11

18

Ex: France Urban Freight Ini2a2ves


Average distance of terminals to center of gravity increased from 6 to 16 km

Average distance of jobs to center of gravity has increased by 2 km

Source: LaeIIa Dablanc TURBLOG, 2010)

Porsolio of ini2a2ves…

•  Chronopost – small electric vehicles, network re-‐design aligned with urban topology

•  La pe2te Reine cargocycles – elelectric assisted vehicles for small parcel deliveiries

•  Monoprix experiment – Urban consolida2on intermodal center

•  Consolidated freight land-‐use plan

E. Blanco © 2011 MIT CTL . Do not quote without author authoriza2on 36 Source: LaeIIa Dablanc TURBLOG, 2010)

10/25/11

19

Ex: Tailored OR for megaci2es

•  No megaci2es when logis2cs op2miza2on field was created – Facility loca2on problem (Weber, 1909) – Vehicle rou2ng problem (Dantzig and Ramser, 1960)

•  Implicit assump2ons of homogeneous urban density and transporta2on environments


Subject to

Fixed cost per truck type

Variable cost per truck type

-‐ 150 -‐ 100 -‐ 50

-‐ 100

-‐ 50

50

100

150

200

Simple problem structures, very different solu2ons


Source: Velazquez, Blanco, Fransoo (2011)

10/25/11

20

Ex: Tokyo high-‐rise 3PL

•  Inefficient distribu2on to high-‐rise buildings in Tokyo Shinjuku area – 130,000 workers in 20 high-‐rise buildings –  Individual deliveries to office areas

•  Crea2on of Shinjuku Matenro Staff 3PL to deliver goods – Collabora2on of carriers – Micro-‐urban distribu2on center

•  For-‐profit venture E. Blanco © 2011 MIT CTL . Do not quote


Source, Junichi Yashiro (TURBLOG, 2011)

Shinjuku, Tokyo


10/25/11

21

Shinjuku X-‐Docking Process


The Wonder Of Dabbawallas Unfolded NUTAN MUMBAI TIFFIN BOX SUPPLIERS ASSOCIATION

Web Site : mumbaidabbawala.org

Sant Dnyaneshwar Lord Ganesha

Late Shri Mahadu H. Bachhe Founder Late Shri Dhondiba Medge

Sr. Member


10/25/11

22

ABOUT NMTBSA History : Started in 1890 Charitable trust : Registered in 1956 Employee Strength : 5000 Avg. Literacy Rate : 8th Grade Schooling Total area coverage : 60 Kms to 70 Kms Number of Tiffins : 2,00,000 Tiffin Boxes 400,000 transac2ons every day (including return) i.e. 400,000*25 days*12 months= 120,000,000 (120 million or 12 crore transac2ons per year) Time taken : 8 to 9 Hours Morning 3 Hours War2me

(9 A.M. to 12 P.M. for the Collec-on and Delivery)



10/25/11

23

II. City Profile – Mumbai, INDIA

Shared transport/freight Infrastructure

Suburban Rail Network •  2 Zones – Western (80 km) &

Central (120 km, Harbor-‐100 km) •  Extensive reach: 300 km / 95

stns. transpor2ng 6.9 Mill. Daily •  Avg. 4,500 pass. packed in 9 car

rakes (Cap: 1,700) •  3 rakes in each train dedicated to

freight

Source, Deepak Baindur (TURBLOG, 2011)


Ex: Virtual Retailing in San2ago


10/25/11

24

Final thoughts…

•  Recognize uniqueness of megacity dynamics and their impact in logis2cs – Dynamics + Topology

•  Collabora2on between government & industry sorely needed in freight planning –  Beyond “constrained-‐based” policy

•  Aim for innova-on, not reac-on –  Localized research & collabora2on needed –  Embrace complexity – Opportuni2es for disrup2ve technology investments


Thanks!

Q&A

Edgar E Blanco [email protected]


USP Mega-city Logistics public - MIT...

Documents

Transcript of USP Mega-city Logistics public - MIT...