Logistics Are Conquering the City

City logistics is becoming increasingly important. On one hand, more and more people live in cities and their agglomerations. On the other, they increasingly order items on the internet. To efficiently manage logistics in the city, innovative solutions are required.

The urban exodus of the 80s and 90s is history. People are once again being drawn to cities. Today, around 3.6 million – and therefore 43 percent – of the total 8.4 million inhabitants of Switzerland live in one of the five major agglomerations of the country – and counting.

In particular, agglomeration municipalities around the major urban centers are expected to see above-average expansion by 2030. This is revealed in the study on the Swiss real estate market in 2018 by Credit Suisse.

Online Retail and the Number of Packages Are Increasing

This trend is a challenge for the logistics industry. Even more so, now that online retail is becoming more and more important. In 2017, already 8.3 percent of the domestic retail volume was processed online. The growth potential in this context remains significant. Since 2013, the total number of packages transported in the Swiss market has increased by around 20 million to the record level of 165 million.

In this context, online retailers try to distinguish themselves from their competitors not only through their offerings and pricing, but also through additional services and delivery conditions, such as shorter delivery times, for example. Accordingly, more and more packages are sent via Swiss Post priority mail. Their share increased from 27 percent in 2005 to 53 percent in 2017.


Packages Transported in Switzerland

Change in number of packages in millions compared with the previous year (estimate)
Source: Swiss Post, Credit Suisse

Alternatives to City Logistics Sought

Concepts to improve economic efficiency in urban goods transportation and to manage the local loop have been actively discussed for a few years now in specialist circles and grouped under the term city logistics (or urban logistics). Essentially, these concepts focus on four points:

First, alternatives to classic delivery by truck/van are being suggested (e-vehicles, autonomous vehicles, drones, etc.). Second, new delivery models are being introduced or tested (e.g. pickup points and package boxes at central locations). A third approach for more efficient city logistics relies on cooperation: logistics providers, package service providers, and retailers should share their transportation and storage capacities, as well as their data, to increase resource efficiency.

Exciting Urban Logistics Project in Geneva

A fourth concept thread starts with real estate. In this context, a system with a warehouse in the agglomeration and a network of smaller distribution centers or microstorage in the city is considered ideal. Such a concept is intended to enable same-day or same-hour delivery on a broader basis. For inner-city logistics, for instance, office space or retail space can be converted.

A current project, which follows an interesting approach, is the Espace Tourbillon in Geneva – a large development in which mainly flexibly usable commercial and industrial space is being created. An underground logistics terminal, connected to all buildings and also accessible to heavy trucks, is planned.

Logistics Focal Points Remain in the Agglomeration

Despite innovations, however, in Switzerland the classic locations at highway junctions outside the agglomeration remain the geographical focal points of logistics. This is especially true in the Zurich area. In the city itself, postal and courier services are particularly represented.

In contrast, the larger warehousing and logistics areas are concentrated in a few locations ideal for transportation in the agglomeration, such as the airport area and the Limmattal. With regard to planned logistics areas as well, the focal points are outside the centers.


Logistics Location Zurich: Density of Employment / Construction Projects in the Logistics Area

Density of employment in logistics-related sectors (2015), planning application by sector of builder-owner (as of a construction cost volume of CHF 1 mn; circle size = construction costs)
Source: Swiss Federal Statistical Office, Baublatt, Credit Suisse, Geostat