Designing integrated urban delivery systems using public transport

The growth of online retail leads to increasing last-mile delivery operations that contribute to various negative externalities, such as traffic congestion and air pollution, especially in urban areas. One way to improve urban delivery operations is to use public transport capacity to move goods to intermediate transfer locations from which they can be delivered by (small) vehicles to the final customers. We study the distance savings that can be achieved by such a two-tier urban delivery system. In particular, we focus on determining which transit stop is best located to be used as a transfer location. We present several special cases to get insights into the transfer location decisions. Moreover, we present a mixed-integer linear programming formulation and a heuristic to solve it. To evaluate the different approaches, we run several computational studies. We also perform a sensitivity analysis to assess the impact of different system parameters on the location decisions and system performance. For very conservative benchmarks, the results show that savings up to 7.1 percent are possible from using public transport capacity to support urban delivery. The savings increase with the distance to the depot, tighter deadlines and customers that are clustered around the transit line.