Shared Mobility for Last-Mile Delivery: Design, Operational Prescriptions, and Environmental Impact

Two socioeconomic transformations, namely, the booms in the sharing economy and retail e-commerce, lead to the prospect where shared mobility of passenger cars prevails throughout urban areas for home delivery services. Logistics service providers as well as local governments are in need of evaluating the potentially substantial impacts of this mode shift, given their economic objectives and environmental concerns. This paper addresses this need by providing new logistics planning models and managerial insights. These models characterize open-loop car routes, car drivers’ wage-response behavior, interplay with the ride-share market, and optimal sizes of service zones within which passenger vehicles pick up goods and fulfill the last-mile delivery. Based on theoretical analysis and empirical estimates in a realistic setting, the findings suggest that crowdsourcing shared mobility is not as scalable as the conventional truck-only system in terms of the operating cost. However, a transition to this paradigm has the potential for creating economic benefits by reducing the truck fleet size and exploiting additional operational flexibilities (e.g., avoiding high-demand areas and peak hours, adjusting vehicle loading capacities, etc.). These insights are insignificantly affected by the dynamic adjustment of wages and prices of the ride-share market. If entering into this paradigm, greenhouse gas emissions may increase because of prolonged car trip distance; on the other hand, even exclusively minimizing operating costs incurs only slightly more emissions than exclusively minimizing emissions. The online appendix is available at https://doi.org/10.1287/msom.2017.0683 .