Pick-up and drop-off (PUDO) Networks PUDO networks, including parcel lockers and shops, are increasingly seen as an alternative to home deliveries. This strategy boosts first- time delivery success, with consignments often redirected to PUDO points, allowing for local pick- up. This approach minimizes travel distances and decouples courier and customer schedules. PUDO networks consolidate drop-offs and reduce the amount of time delivery vehicles spend on the road, enhancing efficiency. Major companies such as DHL, DPD, FedEx and Amazon have established proprietary parcel lockers. However, open parcel locker networks, such as those by InPost and Posten, are also gaining traction, especially in Europe. These carrier-agnostic (or white-label) lockers support delivery businesses without their own networks. DHL’s OneStopBox in Germany is an example of this trend.32 Despite high capital costs and logistical challenges – including access to real estate, permits, maintenance and optimal operational usage – parcel lockers are popular with both companies and customers.33 Urban microhubs Microhubs are compact warehouse spaces situated in urban areas, including inner-city locations. These are increasingly deployed to support alternative operating and business models. Consolidation and cross-docking Many CEP operators are adopting microhubs to support last-mile operations, including for the transfer of consignments (known also as cross- docking) to micromobility alternatives and walking for the last part of the journey. Walking and cycling are among the most efficient delivery modes in congested urban areas, assuming the appropriate cycling/pedestrian infrastructure is in place. For example, DPD is investing in a London network, including a £40 million eco-regional sorting centre and smaller depots, using electric vans and micro-vehicles.34 The KoMoDo project in Berlin, a collaborative urban logistics hub shared by five operators, saved more than 11 tons of CO2 in one year by delivering 160,000 parcels via e-cargo bikes.35 Similar pilots are ongoing worldwide, from Yokohama to Montreal to Paris.36 Consolidation centres, which combine deliveries from multiple operators into a single trip, are less common. Although they reduce trip numbers, participation is low, as established operators prefer control over end-to-end delivery for efficiency and customer experience. These centres often rely on subsidies due to challenging unit economics. However, rising operational costs from road-use charges, low-emission zones and non-compliance penalties may improve their commercial viability in the future. In the Regent Street area of London, located in a low-emission zone, a single operator runs a delivery consolidation service to major retailers. This initiative has cut congestion in the area by 92% since 2008.37 Where real estate is unavailable, trucks can serve as alternative microhubs. In New York, UPS uses trucks parked in designated kerbside areas to offload packages to cargo bikes for the final stretch, reducing large vehicle movements and improving efficiency. Amazon also partnered with the RATP public transport network in Paris to use bus depots during the day as microhubs for cargo-bike deliveries.38 Dark stores Microhubs, in the form of dark stores, are also used for warehousing, order fulfilment and dispatching of some e-commerce orders, especially for quick- commerce models and groceries. These dark stores allow for near-instant delivery, operated by companies such as Gopuff.39 However, this operating model has faced a backlash in some cities due to noise and disruption in residential areas, leading to closures and bans in some European countries.40 Difficult unit economics are also contributing to the ongoing restructuring of this industry segment. PUDO networks consolidate drop- offs and reduce the amount of time delivery vehicles spend on the road, enhancing efficiency. Transforming Urban Logistics: Sustainable and Efficient Last-Mile Delivery in Cities 14

Transforming Urban Logistics 2024