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Lessons from Sweden on Urban Consolidation Centers

Monday, December 30, 2013

This is Gothenburg: A city on Sweden’s west coast, 200 miles north of Copenhagen. A clean city with a cool Nordic climate. A modern city with new construction that mingles with ancient architecture. A city with a vibrant shopping center where red-roofed stone buildings house haberdashers, tailors, wine shops, bakeries, fish mongers, and stores devoted to Gothenburg’s famous shrimp.

A city with a traffic problem.

Gothenburg’s narrow streets, established during the Age of Discovery, are clogged every day by box trucks delivering goods to retailers. The image of box trucks backed up and blocking storefronts should be familiar to those in America’s biggest and oldest cities, such as New York, Boston, and Philadelphia. Hundreds of independent retailers and restaurants vie for road space—with bicyclists, pedestrians, and drivers—to get goods into their stores and off to customers.

Narrow streets. High density. High demand. Common problems across the Atlantic.

But, if you improve how goods get to stores, then the always-moving urban ecosystem of people and vehicles becomes manageable, according to Dr. Sönke Behrends, a researcher in the Department of Technology Management and Economics at Chalmers University in Gothenburg, who spoke recently at Volpe, The National Transportation Systems Center.

The problem in Gothenburg is that retailers use many different delivery companies. Dr. Behrends studied traffic in the city center and found a per-day average of 45 medium trucks and 210 small trucks with 175 distinct operators.

“Big chains have national distribution systems and get constant deliveries. Independent retailers have a decentralized goods supply, and food stores have local suppliers,” Dr. Behrends said. “We have many more small deliveries to those stores and this is a problem. These shops generate the most traffic and we want to get rid of traffic in the city center.”

There are no easy answers. Tourism would plummet and citizens would revolt if Gothenburg’s stunning architecture were razed to expand roads. Canals that once cut through the city center were long ago replaced by boulevards and trams.

The good news? Dr. Behrends and his colleagues may have touched upon a solution. With urban consolidation centers (UCCs), Gothenburg may be able to reduce congestion, emissions, and noise, and improve safety for pedestrians and bicyclists—because what if freight trucks didn’t have to go all the way to the city center? What if electric vans and cargo bikes took goods the last mile of delivery?

UCCs are warehouses strategically located outside of cities. Trucks drop off goods at a collective receiving point and small zero-emissions vehicles transport them to the city center.

Gothenburg conducted a weeklong UCC trial with 10 retailers in fall 2012. Dr. Behrends found a 12 percent drop in the number of deliveries in the UCC area, a 13 percent drop in handling time, and shipments that were 14 percent larger. Another UCC trial phase for up to 50 retailers is planned for spring 2014.

While the initial results are promising, Dr. Behrends stressed that UCCs do not work for every situation, and that they require financing. Established chains like Ikea, for example, are in suburbs and already have efficient logistics. A UCC would actually add costs for Ikea and similar operations. UCC trials have failed elsewhere because they did not target clusters of independent stores with decentralized deliveries.

UCCs, in short, are a specific tool for a specific job. A UCC requires a critical mass of local retailers to be profitable and have positive environmental impacts, and it needs to target the correct type of retailers—small, independent stores in a dense urban area. Just the type in central Gothenburg.

A truck transports freight from a warehouse near the ocean.