Writer: Jennifer Eveland | Photographer: Chee Boon Pin
In the future, as more people move into the world’s cities, an increasing number of goods will end up in cities as well, and with game-changing revolutions in online shopping and globalisation, the number of deliveries only stands to grow. Amid these trends, cities are tasked with finding solutions to ease traffic congestion and reduce pollution and other unwanted externalities while promoting economic growth, competitiveness, quality of life and sustainability.
In 2016, the Logistics Industry Transformation Map was launched to strengthen Singapore’s position as a leading logistics hub and the logistics industry digital plan was released in 2018 to guide local small and medium enterprises to capitalise on digital technologies to enhance logistics solutions. While a lot of attention has been given to technological solutions such as drone deliveries and driverless vehicles, innovations in business models and urban infrastructure are set to usher in a new mindset around how we as consumers, urban residents and policymakers will see goods moved from factories into our businesses and homes.
Urban logistics faces a more daunting set of challenges than global logistics, according to Vincent Phang, chief executive officer at ST Logistics and executive vice-president for Global Logistics in Singapore at Toll Group, part of Japan Post Holdings, a global transportation and logistics company. “Distance can mask some of the inefficiencies in logistics,” he says, “In large countries with large distances, some of the details around utilisation and productivity may not stand out as starkly as it does in an urban setting. For cities, it’s amplified.”
Few scenarios underscore the importance of urban logistics quite like the medical supply chain, according to Vincent, when not a moment can be spared in delivering life-saving supplies at a precise level of quality. When time is of the essence, the complexity of urban logistics systems and the problems involved in getting goods from point A to point B are intensified. For medical deliveries, Vincent adds it’s easy for his company to provide a dedicated fleet on constant standby with personnel working around the clock. The challenge is in sustaining that level of operations across the board.
“These days, consumers expect instant gratification. When we buy something, not only do we expect it to be delivered as soon as possible, we also expect to be able to track where that delivery is any time through its supply chain,” he says.
There’s no shortage of companies willing to take up the gauntlet. With a low barrier to entry, Vincent estimates approximately five thousand logistics firms in Singapore - smaller players running fleets, warehouses and local small-and medium-sized enterprises – but he sees that number consolidating, with more players thinking about future directions in direct-to-consumer, last-mile-type of deliveries. For these companies, Vincent believes their focus is likely to be on last mile logistics as it accounts for about two-fifths of the overall delivery costs.
Likewise, for cities, freight vehicles contribute to urban traffic emissions and can hog up the road capacity. Innovations in last mile logistics can have a tremendous improvement on both industry and government.
In 2017, Singapore imported S$452 billion worth of goods. These goods make their way to consumers and businesses. (Source: Singapore Department of Statistics)
There are over 142,800 vehicles in Singapore, making up 15 per cent of the total vehicle population. (Source: Land Transport Authority)
On average, a goods vehicle travels 2 times the distance of a private car. (Source: Calculated based on Land Transport Authority, Statistics in Brief and annual vehicle statistics)
In Singapore, Vincent sees latent capacity and resources that are not immediately obvious.
“We could start by looking at innovation in a different way,” he says. “It's not always about implementing technology to optimise things in the current construct. Perhaps we should invest in innovation that helps us change the construct itself.”
One such construct is time. The entire country, he says, revolves around the idea of peak hours created by the beginning and end of work shifts, school days and business operations.
“We have data around how our fleets and warehouses are working,” says Vincent. “We can plot it to see how the spikes correlate, but I wonder could there be a better way to stagger things, especially given our constraints in resources like land and assets?” He believes that perhaps government and industry can work in tandem to redefine work shifts and schedule deliveries to hospitals and business during the wee hours of the morning.
This would also require a mindset shift in customers with regards to how they receive deliveries.
“Can consumers receive goods round-the-clock at home?” he asks. If there was a way to change or incentivise certain behaviours, Vincent believes we will start to see the implementation of productivity improvements that are more industry-wide as opposed to piecemeal.
Improving productivity is an area that Singapore is constantly grappling with, says Vincent.
“My take is we have to strive toward a mechanised future to intensify every productive hour that we have,” he suggests. “For example, in our warehouse, if we automate, which is where I think that government would like us to invest, we would have to run the machines around the clock so that there are no surges, no shifts. That would also have to be matched by a distribution system that is also operating around the clock.”
Vincent views assets in a different way. “In a truly efficient logistics system, supply chains would be optimised to the level that warehouses could potentially be very much reduced. The footprint for storage would be very much lesser if we have a smooth ability to plan supply chains from point to point, then truly there’s no need for an intermediate storage like a warehouse.” He believes that in an urban setting, it is worth considering whether or not we should invest in real estate at this level. “Maybe operating in a more consolidated and synergistic manner without warehouses and fleets would drive the next level of innovative development.”
Perhaps things could change, he adds. Vincent believes there is far more capacity in Singapore especially being a city that never sleeps. For example, there is low capacity at 2 o’clock in the morning where consumers are not demanding solutions and businesses are not structured to utilise that low capacity. There are opportunities around this. To make better use of underutilised resources, night deliveries could be planned with lesser parties competing for the use of the same infrastructure such as roads and loading bays.
In addition, Vincent also suggests a co-sharing business model could be explored where supply (vehicles) and demand (goods delivery) are made available. “Other than being proprietary to certain companies if there could be some kind of crowd sourced capacity…and how could we actually fire up that capacity to ensure that the solutions for the future aren't just locked to any specific user or any specific company, but rather be inter-operable and be transparent in a way that an entire industry can access relevant information.”
“Access to data is certainly pervasive and levels the playing field, however translating that data into an actual efficient delivery system, that’s still being worked on, with the goal to make deliveries within a few hours,” says Vincent, adding, “I think we’re not quite there yet.”
“Just looking in the crystal ball, Singapore is probably the most digitally connected nation in the world. If we can get around the sensitivities of some of those digital connections and start to look at the entire nation, knowing where everyone is because of our mobile devices, then we can make deliveries in the most efficient manner,” says Vincent.
“If there is an industry solution that connects people at any point throughout the day, that would truly change the game for a small country like ours.”
While Vincent believes reaching a true urban logistics nirvana is all down to innovation, he is careful to distinguish that innovation is not always about technology. “I think innovation in the true sense of the word,” he says, “is to change people’s behaviour and what we have right now.”
Instead of having many individual trucks drop off small items each time at shopping centres and food outlets, how about channeling deliveries to an off-site consolidation centre and ensuring trucks are at full loads or well utilised when they reach malls or food outlets? Such off-site consolidation centres are piloted by Enterprise Singapore with several delivery companies for the retail and food services. One of these companies, AAK Logistics, has helped their customers save 15 to 20 per cent of their logistics costs through such consolidation.
Another way to enhance delivery efficiencies is to create a common district dispersion point (DDP) for buildings within an area to receive deliveries at a shared dock where goods are then redistributed to each building. DDP has been successfully implemented in countries such as Japan and Australia. In Singapore, this idea is being explored for the Punggol Digital District and other areas.
Technology can be tapped on to better manage deliveries. Global company Gurusoft’s Dock Scheduling & Queue Management (DSQ) system provides real-time visibility of loading bay availability and facilitates timeslot bookings. A pilot of DSQ at Tampines Mall showed a significant reduction in queuing time. It is also being implemented in Fusionopolis One @ one-north and Changi Airport Terminal 4.
Even residents can play a part. Local start-up Park N Parcel uses residential homes as collection points. Residents, referred to as ‘parkers’, earn a small fee to collect and hold the parcels until their neighbours are free to pick them up. Park N Parcel currently has more than 1,600 parkers island-wide, comprising homes and shops, processing more than 1,000 parcels daily.
100 unique tasks. Limited store operating hours. Varying drivers’ working shifts. How can operators plan deliveries in the most efficient way? Transport management softwares can potentially help to better manage deliveries and support other innovations such as dock scheduling. Local start-up VersaFleet put seasoned logistics personnel to the test in 2017. While the best team completed the exercise manually in 1.5 hours, VersaFleet’s optimisation algorithm took less than one minute.
The night is young, and the roads are empty. Night deliveries can offer quicker, smoother deliveries. AAK Logistics collaborates with various retailers to deliver goods after operating hours. As there are no staff to receive the goods, the delivery personnel are given the keys to enter the premises and place the goods in a dedicated space in the shop.
Autonomous Mobile Robots (AMRs) such as TUG by Aethon, an ST Engineering subsidiary, can take night deliveries to the next level. It is able to navigate autonomously through the building to bring deliveries from the loading bay to the shop, and communicate with smart locks to ensure security. They can also carry heavy loads and are already being used in healthcare, manufacturing and hospitality sectors.