How Can Digitization in the Private Sector Benefit Everyone?

Three digitization moves in the private sector that could generate public benefits.

We’ve dug into how digitization continues to spark new developments in the urban freight landscape across the private and public sectors alike — with cities lagging behind digitization veterans like Amazon.

As Urban Freight Lab members noted at the fall meeting, it’s understandable why the private sector is ahead. Digitization helps companies improve operations toward lowering costs, saving time and money, and keeping customers satisfied. In other words, digitization helps companies with their fundamental concern: The bottom line.

And yet, companies’ choices and behavior in using digital tools can have the effect of helping more than their own bottom lines. Private sector digitization can have spillover benefits, winding up helping communities and society at large, too. (To be clear, when we talk here about societal benefits, that includes mitigating and/or reducing the negative impacts of delivering goods to our homes and businesses.) But too often we treat the private and public sectors as wholly separate and siloed systems — though clearly they’re not.

Take safety, a priority area around which UFL members hope to see improvements by 2030. AI company Nauto notes that last-mile goods delivery is riskier per mile than long-haul delivery. They’re putting cameras and digital sensors on trucks to help mitigate distracted driving and boost safety. It’s a no-brainer. Accidents cost companies money. But safer fleets make for safer streets — a win for the public, too.

The efficiencies digitization supports in urban freight might well wind up contributing to quality of life in city neighborhoods and communities. Those efficiencies can impact everything from congestion and traffic flow to pollution and Co2 emissions that contribute to climate change.

Below we map three digitization moves in the private sector that could generate benefits for the public.

Move #1 - Making Delivery Routes More Efficient

A digitized, optimized route lets delivery drivers spend less time on things like sitting in traffic or getting from delivery to delivery — wasting time, fuel, and money. Public benefits? Less congestion and maybe fewer CO2 emissions.

Digital tools are fueling ample experimentation in dynamic routing for deliveries. In the past, delivery drivers learned their routes with written directions and did that same route every day. Today, say a driver is enroute to delivery A, but there’s loads of traffic. The newer tech lets drivers reroute on the fly, skipping delivery A, re-routing the truck to make delivery B, then re-injecting delivery A into the route when conditions improve.

Using software to get the maximum load possible in every truck on that optimized route saves companies money on drivers and fuel costs and may pay off for the public if a more efficiently packed truck makes it possible for one less truck to be on the road.

And instead of heading outside the city to reload packages from depots and distribution centers in the exurbs, companies are staging packages in micro-warehouses within cities. For business, the efficiency advantage is clear: reducing time reduces costs. Want your new phone delivered within an hour? It probably needs to come from a warehouse closer to your home.

Then there’s the help digital tools can offer delivery drivers looking for parking in crowded cities with heavy competition for the curb. Our work at the Urban Freight Lab has shown that, in fact, delivery drivers do the same thing passenger vehicle drivers do: cruise for parking. That cruising for parking contributes to traffic, worsening congestion, and pollution, and sets up unneeded (and potentially unsafe) interactions between delivery drivers, other vehicles, pedestrians, and the like. In a groundbreaking pilot, we tested a digital solution to the problem, digitizing the curb with sensors and giving delivery drivers real-time curb availability on a mobile app. Result? Substantially less cruising could improve traffic throughput (triggering environmental benefits); could possibly reduce the number of delivery vehicles required to meet customer demand; and maybe even enhance safety by reducing drivers’ workload and decision-making fatigue.

Move #2 - Making Delivery More Transparent for Consumers in the Last Mile

With the dynamic routing made possible by digitization, companies can get us our packages more efficiently. Digital tools also make it possible for us (and companies) to know where our package is at all times. We get push notifications on our phones so we know when something is being delivered and photos of packages once they’ve been left on the porch. All these are ways companies can reduce porch theft and failed deliveries (and their associated costs) and keep customers happy.

When it comes to societal benefits, fewer failed deliveries stemming from more consumer visibility could translate into delivery trucks driving fewer miles (vehicle miles traveled or VMT). Drivers don’t have to loop back to a house to drop a package that couldn’t be delivered the first time around or make an entirely new trip.

Companies are also tapping digital infrastructure with smart package lockers that give consumers visibility into their packages. Instead of a delivery driver making the rounds to a dozen households, customers can opt in for deliveries to a single locker. The locker then sends a delivery notification to the customer’s phone and the customer uses their phone to access the secure locker and pick up their package. This can reduce the time delivery drivers are stopped to unload (dwell time), the number of independent stops a driver would need to make, and failed deliveries — all of which impact emissions. Preventing porch theft by securing packages in a locker means those goods don’t need to be re-delivered — which saves society from those wasted miles and emissions. UFL member companies like Amazon and United Parcel Service (UPS) have their own branded lockers (respectively, for things purchased via the online giant and things delivered via UPS.) Smart delivery lockers tend to be more common outside the United States but have the potential to help reduce emissions in communities here.

Move #3 - Making More Efficient Supply of Goods to Match Customer Demands via “Personalization”

Using digital inventory management tools, big retailers are able to better match the supply of goods to customer demands. In other words, they can see what SKUs are top sellers in a given location and make sure the warehouses supplying those local stores are filled with SKUs of items that they know will sell. This way truck miles and carbon emissions aren’t wasted delivering unwanted goods to a warehouse and/or store where those goods just sit on a shelf. Bringing in the right products from the outset using digital tools that optimize forecasting minimizes costs related to wasted fuel and/or labor in the form of delivery drivers hauling goods to a place where they don’t get sold.

Our individual shopping choices and behavior impact companies’ choices and behavior in service of their economic bottom line. As we’ve seen above, digital moves in the private sector intended to help that bottom line can wind up mitigating the negative impacts of urban freight, ultimately helping society, too.