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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 Do not quote without author authoriza2on 1
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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 Do not quote without author authoriza2on
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… why is megacity logis-cs strategic today?
E. Blanco © 2011 MIT CTL . Do not quote without author authoriza2on 3
Urbaniza2on today
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E. Blanco © 2011 MIT CTL . Do not quote without author authoriza2on 5
Urbaniza2on tomorrow
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Megaci2es with popula2on > 5M
1950s 2000s 1900s (5)
Tokyo ~ 13M New York ~ 12M Osaka ~ 9M London ~ 8M
Paris, Shanghai ~ 5M
E. Blanco © 2011 MIT CTL . Do not quote without author authoriza2on 7
(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
E. Blanco © 2011 MIT CTL . Do not quote without author authoriza2on 8
Megaci2es with popula2on > 5M
Source: University of Cologne
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Megacity Dynamic 1: Accelera2ng growth
E. Blanco © 2011 MIT CTL . Do not quote without author authoriza2on 9
Megaci2es keep growing
• 100 mega-‐ci2es represent 38% of global GDP • Projected to double by 2025 • Complex environment …
E. Blanco © 2011 MIT CTL . Do not quote without author authoriza2on 10
Source: MGI (2011)
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Megacity Dynamic 2: Urban density to “new” levels
E. Blanco © 2011 MIT CTL . Do not quote without author authoriza2on 11
Pu[ng density in Perspec-ve
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Megacity Dynamic 3: Drama2c socio-‐economic contrasts
E. Blanco © 2011 MIT CTL . Do not quote without author authoriza2on 13
Diverse city profiles
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Fuente: MEIKO 2009+ DANE 2009
121 hhabs per store Per capita COL$469K
151 habs per store Per capita COL$237K
155 habs per store Per capita COL$186K
148 habs per store Per capita COL$267K
242 habs per store Per capita COL$2.185K 279 habs per store
Per capita COL$2.0195K
E. Blanco © 2011 MIT CTL . Do not quote without author authoriza2on
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Megacity Dynamic 4: People mobility is the priority
… and boxes do not vote
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Grinding halt…
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4 – 5 Km/h
10 – 15 Km/h
Source: BRT Across LaItudes; Gakenheimer & Zegras (MIT)
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Shrinking freight-‐friendly infrastructure
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Source: BRT Across LaItudes
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Source: Espiritoutdoor.com
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Source: TURBLOG
Megacity Dynamic 5: Small stores mager
(and they only take cash)
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Source Nielsen
Channel Complexity
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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.
E. Blanco © 2011 MIT CTL . Do not quote without author authoriza2on
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Megacity Dynamic 6: More fragmented logis-cs opera2ons
More store loca2ons Smaller shipment sizes More empty miles More conges2on
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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
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The megacity dilemma…
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• 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
without author authoriza2on 30
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Proac2ve & innova-ve megacity logis2cs strategies
needed… Beyond compliance Scalability & speed
E. Blanco © 2011 MIT CTL . Do not quote without author authoriza2on 31
Ex: City of New York Night Deliveries Pilot (Holguin-‐Veras, 2010)
E. Blanco © 2011 MIT CTL . Do not quote without author authoriza2on 32
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…
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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
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Ex: France Urban Freight Ini2a2ves
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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)
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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
E. Blanco © 2011 MIT CTL . Do not quote without author authoriza2on 37
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
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Source: Velazquez, Blanco, Fransoo (2011)
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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
without author authoriza2on 39
Source, Junichi Yashiro (TURBLOG, 2011)
Shinjuku, Tokyo
E. Blanco © 2011 MIT CTL . Do not quote without author authoriza2on 40
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Shinjuku X-‐Docking Process
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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
42 E. Blanco © 2011 MIT CTL . Do not quote without author authoriza2on
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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)
43 E. Blanco © 2011 MIT CTL . Do not quote without author authoriza2on
44 E. Blanco © 2011 MIT CTL . Do not quote without author authoriza2on
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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)
E. Blanco © 2011 MIT CTL . Do not quote without author authoriza2on 45
Ex: Virtual Retailing in San2ago
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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
E. Blanco © 2011 MIT CTL . Do not quote without author authoriza2on 47
Thanks!
Q&A
Edgar E Blanco [email protected]
E. Blanco © 2011 MIT CTL . Do not quote without author authoriza2on 48