PROJECT

ECO-EFFICIENT AND SUSTAINABLE

URBAN INFRASTRUCTURE DEVELOPMENT
IN ASIA AND LATIN AMERICA

CASE STUDY
Review of good practices in urban freight
transportation

Prepared by Dr. Wisinee Wisetjindawat, Department of Civil

Engineering, Nagoya Institute of Technology

The designations employed and the presentation of the material in this

publication do not imply the expression of any opinion whatsoever on the part of
the Secretariat of the United Nations concerning the legal status of any country,
territory, city or area, or its authorities, or concerning the delimitation of its
frontiers or boundaries. The content and views expressed in this publication are
those of the authors and not necessarily reflect the views or policies, or carry the
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The co-publishing organizations do not guarantee the accuracy of the data
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their use. This publication has been issued without formal editing.
Executive Summary

This report provides information on freight transport policies implemented in several

regions including Asia, Europe, and United States. Identifying clearly the objectives
that lead to sustainable development in the field of freight transport is a necessary first
step to guide public policies on freight operations. This report defines the objectives as
follows: 1) Reducing energy consumption per ton-kilometer, 2) Decreasing
ton-kilometers of less sustainable transportation modes such as road transport, and 3)
Increasing usage of more environmental friendly transport modes such as rail, water,
and inland water transports.

The policies and measures that can lead to these outcomes are classified into 5 groups.
They are:
Licensing and regulations,
Freight centers and consolidated deliveries,
Low-emission vehicles, environmentally friendly modes, and alternative fuels,
Technology-based service improvement and driver training, and
New freight transport systems.

The policies and measures in each of the categories are discussed based on their
contribution to achieving the stated objectives, and their practicality is analyzed.
Particular points of concern with each policy are presented. Among the promising
measures, some case studies are selected for an in depth discussion including:
Multimodal freight centers,
Urban freight centers, and
Incentives for increasing use of more environmentally friendly modes.

Freight centers and consolidated deliveries provide the most promising way to achieve
sustainable development, as they can reduce the use of road transport, which generates
the most negative environmental impact. Multi-modal facilities of freight centers
together with the development of rail and water transport networks are highly
recommended since they respond to the third objective, that of increasing the share of
more environmentally friendly modes, as well as increasing the opportunities for
consolidated delivery. Coordination among the measures is also recommended in order

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to improve the chances of successful implementation and to increase cooperation from
private sector operators.
CONTENTS

Executive summary 1
1 Introduction 3
1.1 Introduction 3
1.2 Objectives toward Sustainable Freight Transportation 5
2 Policies on freight transportation 7
2.1 Reviews of policies related to freight transportation 7
2.1.1 Licensing and regulations 7
2.1.2 Freight centers and consolidated delivery 9
2.1.3 Low-emission vehicles, alternative fuels, and
the use of environmental friendly modes 13
2.1.4 Technologies for service improvement and driver training 15
2.1.5 Freight transportation system for the new century 17
2.2 Comparisons among the freight practices and recommendations 17
2.3 Conclusion 23
3 Selected case studies: 25
3.1 Overview 25
3.2 Projects to increase the use of low-emission modes 26
3.3 Multimodal freight centers 30
3.3.1 GVZ, Bremen 30
3.3.2 Interporto, Bologna 35
3.4 Urban freight centers 41
3.4.1 City Logistik, Kassel 41
3.4.2 Public Wholesale Markets in Japan 43
3.5 Discussion 49
3.6 Conclusion 52
4 Conclusion and Recommendation 54

References 57

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 1. Introduction

Introduction

Freight transportation is certainly one of the most important elements for economic
growth in any country. Efficient freight transport and logistics systems can strengthen
the economic structure of a country. The cost of logistics is generally computed as a
percentage of gross domestic product (GDP) of a country. Referring to a logistics report
from Bangkok Bank (2007), in developed countries such as the United Kingdom or
Japan, the logistics cost is around 10 percent of GDP, while for countries in Asia and
Pacific region, the proportion is higher at about 11.6 percent of the GDP. Thailand
especially has a considerably higher estimated logistics cost of 19 percent of GDP or a
total of 1.5 trillion Baht. This means that Thailand is spending a greater proportion of its
wealth on logistics activities in comparison to developed countries, and therefore is
suffering from its inefficient freight and logistics system resulting in an uncompetitive
position in both global and domestic markets.

Not only the economic perspective but also environmental concerns should be analyzed
as well. During last ten years, environmental questions have become more pressing
around the world. Climate change is currently a subject of global debate. Since 1987 in
the United Nations Brundtland commission, sustainable development is declared to be
the key for future development. The word sustainable and its implications in terms of
recycling, for example, have become part of our lifestyle since then, and clean energy
dominates discussions of future development. As well as passenger transportation and
other non-transport questions, sustainable freight transportation is an unavoidable issue.
Sustainable freight transport is critical both economically and environmentally. Both the
economic and environmental perspectives have to be coordinated to ensure that
environmentally friendly measures do not unduly perturb the economic system. A list of
objectives for more sustainable freight transport is 1) reducing energy consumption per
ton-kilometer, 2) decreasing the ton-kilometer of less sustainable transportation modes
(such as road transport), and 3) increasing the use of environmental friendly transport
modes (such as rail and water transports). The question is how these objectives and
hence a more sustainable freight system can be achieved in practice.

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To move towards a sustainable freight system, one needs to understand the whole
logistics system. Each purchase by an end customer launches several activities. Before
becoming the completed products ready for purchase by their end consumers, raw
materials are typically transformed in to several intermediate forms, transferred to
several places, and through several sectors. For a simple example, raw materials are
moved to manufactures where they are changed into packaged products before being
transferred to warehouses, and then moved again to wholesalers or retail shops waiting
for customers to purchase the finished product. In reality, the system is usually even
more complicated with a greater number of people and facilities involved.

Understanding the concerned people, their roles, and the scope of their activities will be
important when deciding the suitable freight action. Taniguchi et al (1999) classifies the
actors in city logistics, which are referred to as freight actors, roughly into 4 groups:
shippers, receivers, carriers, and administrators at the city level. Shippers and receivers
are the supply and demand for products. Carriers have a big role in todays market
system. They respond to the demand for transportation of the products between shippers
and receivers. Lastly, administrators play a role in controlling the functioning of the
whole system through encouragement or enforcement of measures related to freight
transport. Following regulation and other interventions from the government sector, the
remaining freight actors react in response to the government measures.

Transportation has inevitably a big role in freight movement costs. Transportation costs
are estimated to occupy as much as 40 percent of the total logistic costs. Private sector
actors, of course, try to reduce costs as much as possible in order to maximize their
profits and may be less directly concerned with environmental or safety issues. The city
planner, on the other hand, can be expected to be more directly concerned with safety
and environmental questions, as well as economic growth which usually leads to a
higher quality of life for the inhabitants of the city. In fact, it is not straightforward for
the city administrator to enforce strong measures to control the activities of the private
sector. Mis-guided policies could damage the wider economic system. It is the most
difficult part for a city planner to decide how to deal with diverse actors with different
perspectives and how to find an appropriate compromise of their various interests with
those of the wider population. Can a win-win situation possibly be achieved? It is
necessary to promote an understanding in the private sector, trough effective
communication, how much they can save in costs (and particularly long-term costs) if
they adopt practices that are sustainable.

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In developed countries, for example Japan, France, Germany, the United Kingdom, and
the Netherlands, several policies related to the environmental impact of freight
transportation have been attempted since the 1990s. Among the implemented measures,
several policies have succeeded and many have failed. The objectives for this report are,
therefore, to find what the key determinants of success or failure are. In this report,
policies implemented in several countries are summarized with their advantages and
disadvantages. In addition, since the project ECO-EFFICIENT AND SUSTAINABLE
URBAN INFRASTRUCTURE DEVELOPMENT IN ASIA AND LATIN AMERICA
is intended for application in developing countries; the potential for the implementation
of each measure in developing countries shall be discussed as well. A summary and
recommendations can be found at the end of this report.

Objectives toward Sustainable Freight Transportation

The European Federation for Transport and Environment (2000) sets objectives for
sustainable freight transportation including:
1) Reducing energy consumption per ton-kilometer,
2) Decreasing total ton-kilometers of less sustainable transportation modes such as
road transport, and
3) Increasing use of environmental friendly transport modes such as rail, water, and
inland water transports.

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 Figure 1.1 Policy objectives for urban goods transport (adapted from Visser, 2006)
Visser (2006) explains the policy objectives for urban goods transport as shown in
Figure 1.1. Sustainable development, precisely sustainable urban goods transport,
requires that economic development is compatible with the future needs of society, the
economy, and the environment. Focusing solely on a single objective could compromise
the other objectives. Infrastructure developments should serve all three aspects by
facilitating accessibility in order to increase economic growth. Likewise, infrastructure
should encourage competitiveness and be fairly priced. In the meantime, environmental
(such as air quality, noise, and wastes) and social concerns (such as safety, health, and
efficient services) should be guaranteed as well.

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 2. Policies related to freight transportation

Reviews of policies related to freight transportation

Based on Vissers categorization of the necessary freight measures (2006), the report on
European freight policy by the EXTR@Web (Exploitation of Transport Research via
the Web, 2006), and a source book of good practice in freight transport by the European
commission (2000), the policies on freight transportation can be categorized into 5
groups:
a) Licensing and regulations,
b) Freight centers and consolidated delivery,
c) Low-emission vehicles, environmental friendly modes, and alternative fuels,
d) Technologies for service improvement and driver training, and
e) Freight transportation systems for the new century.
The first two categories, including licensing and regulations and freight centers and
consolidated delivery can be led by the government sector; whereas, Categories 3 and 4
(low-emission vehicles, environmental friendly modes, alternative fuels and
technology-based for service improvement) usually require considerable input from the
private sector. Among the five groups, the fourth category can most easily be performed
by the private sector since they could undoubtedly gain direct benefits from improving
their human and technological resources.

Licensing and regulations

This approach is the most popular implementation method in several countries, for
example, weight restriction, eco-zoning, and truck bans during certain periods of time.
Regulation seems to be the easiest way for the government sector to control the whole
system by, for example, introducing weight restriction systems to prevent large vehicles
from entering restricted zones, which are normally residential areas and city centers.
Eco-zoning systems are a new trend to allow only low emissions vehicles to enter the
restricted zone. The restrictions can be flexible by time period, level of emissions,
weight limit, and size of vehicle.

Measures classified into the licensing and regulation category are:

Low emission zones,

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 Combined use lanes,
Freight-exclusive lanes,
Incentives for off-peak delivery,
Restricted delivery hours, and
Truck bans during a certain period of time.

Low emission zones are implemented in Sweden, Amsterdam, and London. Emission
criteria are set by the local government to allow only vehicles that meet the desired
emission level to enter to the restricted zones (Seattle Urban Mobility Plan, 2008).

Combined use lanes, for example Variable Message Signs (VMS) in Barcelona, are
used to alter the usage of lanes at different times of the day, such as through-traffic only
during peak period, temporary truck loading stops during mid-day, and on-street
parking during the weekend (Seattle Urban Mobility Plan, 2008).

Freight-exclusive lanes measures are carried out in the United States but are limited to
truck traffic to/from port facilities or at international border crossings. For example, at
the Port of New Orleans, the roadway connected to the Port is split half for general
traffic and the other half for commercial vehicles (2 lanes each). In Laredo, Texas, the
8-lane commercial traffic only highway was built to serve the increasing trade at the
border between Mexico and Texas (Seattle Urban Mobility Plan, 2008).

Incentives for off-peak delivery are, as the name implies, measures intending to shift
deliveries to the off-peak period. An example of such actions is the introduction of a fee
for commercial vehicles entering a restricted zone during the peak period. This was
implemented through fees on truck traffic at the Ports of Los Angles and Long Beach in
2005. A Traffic Mitigation Fee is required for truck movements during peak hours in
order to shift truck traffic to night-time and weekends instead. Seattle Urban Mobility
Plan (2008) reports that 30-35 percent of typical day containers have changed to
off-peak hours since the implementation.

Restricted delivery hours is one of the most popular policies, being implemented in
several cities. For example, in Boston, the vehicles with commercial license plates are
prohibited from using certain streets in downtown except during a certain time period.
Only certain companies such as U.S. Postal Service and newspapers are allowed to enter

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after 2:00pm, while other companies who want to enter the restricted zone have to apply
for a one day special permission (Seattle Urban Mobility Plan, 2008).
Truck ban policies, are similar to the restricted delivery hours. The difference is the
focus of truck bans is generally on larger commercial vehicles. Here, truck ban refers to
restrictions for a specific kind of truck, prohibited from the downtown during a certain
period of time. A truck ban policy has been implemented in Manila. Punzalan (2000)
investigates the socio-economic impacts on truck operators, drivers, and truck operation
from the truck ban policy in Metropolitan Manila. The study reveals that truck operators
prefer using their usual routes, and rather than using alternative routes shift the driving
time to night-time or in-between the truck ban times instead. Night-time driving
evidently results in undesirable impacts on truck operators and drivers as it disrupts
drivers sleeping patterns and hence may increase the risk of accidents. This measures
social impact may be deleterious as freight coordinators and drivers spend less time on
family activities.

Results from the implementation of licensing and regulations can be expected during a
short-time period. However, in the long-term, implementing only the restrictions
without considering their impact on the economic and social situation of the private
sector may cause other problems. For example, Wisetjindawat (2006) reports a
simulation result, where the implementation of a truck ban prohibiting trucks larger than
5 tons from entering downtown Tokyo during peak hours, leads in the long run to an
increased number of small trucks. Finally there is little difference in terms of
environmental improvements in both the restricted and outer zones since the demand for
goods does not reduce and often increases year-on-year. However, there are some
positive points from the large truck ban policy, namely that one can expect an
improvement of environmental conditions in the restricted zone in the short-term. In
addition, from a safety perspective, a large truck ban policy could work well since large
trucks maneuvering in dense city centers cause numerous safety problems.

Freight centers and consolidated delivery

Theoretically, freight centers and consolidated delivery systems generally seem to be

the best way to achieve sustainable freight development. The concept of consolidation is
just the same as that of public transport for passenger transportation (such as buses,
trains etc.) where shipments sharing the same origin and destination are consolidated
into a singe vehicle in order to reduce the number of vehicles used. Consolidated

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delivery is generally performed for the delivery of shipments of a single company.
However, as a city planner, one prefers consolidated deliveries regardless of the number
of participants. However, in practice this is not easy to achieve when dealing with
multiple companies since it impacts on competition amongst them, and they are
generally reluctant to share their delivery technology.

Freight centers are one of the urban freight infrastructures designed to promote
consolidated delivery, in harmony with the facilitation of logistic activities. Large
long-haul trucks stop at the freight center and transfer their shipments to smaller trucks,
a process known as transshipment, before these smaller trucks enter the city center. In
addition, with freight centers, a city planner can expect the shipments from different
companies to be consolidated before deliveries are sent downtown. One can obviously
expect a reduction in the number of trucks operating in dense city centers, hence less
congestion, and also safer cities. Browne et al (2005) gives the meaning of freight center,
or the European expression Urban Freight Consolidation Centre (UCC), as
principally a logistics facility located in close proximity to a geographic area to serve
consolidated deliveries within that area. The UCC has several names; they are, for
example,
Urban transshipment center,
Consolidation center,
Urban distribution center, and
City logistics (or City logistik).

Several advantages can be expected from the UCC schemes. Based on the objectives
that define sustainable urban freight transport discussed in Section 2, the advantages can
be listed as follows:
Environmental aspect:
o Less emissions and noise because of a smaller number of trucks
operating in the city center.
Social aspect:
o Better in terms of health and safety due to less number of trucks
(especially, large trucks) maneuvered in the city center.
o Less congestion in the city center due to fewer trucks.
o More efficient services to customers due to faster deliveries.
Economic aspect:

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 o Participating companies gain benefits from a reduced number of vehicle
trips and vehicle kilometers.
o Improvement of load factor that reduces the unit cost of transportation of
goods.
o Opportunities to gain revenue from the return trip by carrying some
products back instead of running an empty truck.
o Improves opportunities for usage of other non-road modes that are better
from environmental perspective such as rail and inland water transport.

Despite the attractiveness of these advantages, among the many UCC that have been
piloted in several countries, a few of them have succeeded but a large number of freight
center projects have failed. City logistics (or City logistik) is the German terminology
for one kind of UCC. In 1999, Germany launched City Logistik schemes in about 80
German cities for the consolidation of shipments outside the city center (Seattle Urban
Mobility Plan, 2008) and for joint deliveries of goods from different companies to urban
areas (Visser et al, 1999). However, the majority of these projects were suspended.
Nobel (2005, in Browne et al, 2005) reported that among these pilot projects,
consolidation centers are still operating in only 5 cities: Aachen, Bremen, Essen,
Frankfurt, and Regensburg.

The freight centers can be classified based on their orientation as follows (Visser et al,
1999):
Freight village,
Industrial and logistics park,
Business grouping development, and
Special logistics area.

A Freight village is a kind of transport oriented freight center in the form of

transshipment terminals grouped in a specific area with designated transport services
provided. The examples are Guterverkehrszentren (GVZ) in Germany and Interporti in
Italy. GVZ and City Logistik in Germany differ with respect to their targeted
geographic zones. GVZ is designed to serve inter-regional freight movement between
conurbations, whilst City Logistik is for the joint deliveries of goods within urban areas.
GVZ are often a form of Multi-Modal Freight Center in which road, rail, and/or water
transports can be connected. Multi-modal freight centers are one of the most interesting
approaches in which the objective of sustainable freight systems through increased

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usage of environmental friendly modes can be achieved. With multi-modal facilities,
transportation choices become wider and it increases the chance of operators choosing
rail and water transport that can be more economical when transporting over long
distances and produce less negative impacts on the environment.

In Japan, there are developments to gather small and medium size wholesalers (SMEs)
of food products to a selected area, which is known as a Wholesale Market, and
provide them with dedicated logistics facilities in coordination with local transport
operators. The wholesale market is classified as a Business grouping development
category. The operation of the wholesale market has success in increasing
competitiveness among the companies. Nowadays, there are numerous wholesale
markets of this kind operating in most cities in Japan. Nagoya central wholesale market
for fresh food (such as fresh meat, fish, vegetables, and fruits) is an example of this kind
of wholesale market in Japan. In the market, there are 2-3 large wholesalers acquiring
fresh products from the local area, the rest of Japan, and overseas. The products are
transferred to the market early every morning and these large wholesalers start bidding
to sell their products to the smaller wholesalers, whom we call the second level
wholesalers, also located in the same market. The products are then transferred to the
second level wholesalers who delivery the products to their next customers (who can be
other fresh food markets, supermarkets, or shops). In fact, there is a possibility for
consolidated deliveries among the second level wholesalers in the market, since the
facility itself provides a transport operator which is run by the local government.
However, if there is only a single transport operator for everyone in the market, it
clearly reduces the competitiveness of the transportation offer, and finally leads to a
situation in which the companies prefer to run their own trucks rather than to use the
provided transport operator. However, the implementation of the wholesale market has
success in reducing the number of truck trips and operating vehicles as the transport
links between suppliers (whether they are from the local area, national operators or
overseas) and the large wholesalers situated in the market, since these large companies
are all gathered in the same place. In addition, there is no need at all for transport
vehicles between the large wholesalers and the second level wholesalers located within
the same wholesale market. In spite of the weak points mentioned above, this kind of
freight center is very promising if the public sector focuses sufficiently on the
competitiveness of the transport operators to be provided in the market. For the same
type of market in Sendai, Japan, there has been a research to overcome this weak point
by introducing a system with database technology to consolidate shipments by the

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second level wholesalers and final deliveries to their end-customers by the same
transport operator. The study claims that with this system energy consumption can be
reduced by up to 47 percent (Sendai City Central Wholesale Market Group, 1999).

Best Urban Freight Solution (BESTUF) Project under the European Commission, which
aims to identify problems and to provide the solutions related to city logistics in
European cities, states that the key to successful UCC projects is that publicly organized
UCCs should be led and operated by one or several key commercial players. In addition,
there should be sustained support from the public sector for research work and studies
related to the UCCs otherwise such operations are unlikely to proceed (Huschebeck and
Allen, 2005 in Urban Freight Transport and Logistics, 2006).

Points of concern when adopting UCC schemes are:

High set up costs.
Need several UCCs in a large urban since a single UCC cannot handle the wide
variety of goods moving in and out of the city and a single UCC center for an
urban area is likely to be less attractive for freight operators.
Need to be careful when selecting the participants since there is a risk of creating
monopolistic situations, which eliminate competition.
Possibly disadvantages to the suppliers in competitive terms, since consolidated
delivery lessens the direct interactions between the suppliers and their
customers.
Difficulties in attracting large companies because they generally already have a
similar system to consolidate their own shipments within their company.

Low-emission vehicles, alternative fuels, and encouraging the use of

environmental friendly modes

The shift to the usage of environmental friendly modes is a key step in creating
sustainable transportation systems. Road transport is the most popular delivery mode
because of its flexibility, punctuality, security, and competitive cost; however,
traditional freight vehicles worsen air quality and cause several/numerous other
environmental and social problems. A source book for good practices in freight
transport by European Commission (2000) points out that a switch from road
transport to other environmental friendly modes will deliver immediate
improvements. The more environmental friendly modes are rail, inland waterways, and

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coastal shipping which are evidently preferred given the lower levels of noise and
emissions. Many studies reveal that large amounts of energy can be saved when goods
are transported by train or waterways. For example, a German food company has saved
as much as 40 percent in energy consumption by switching to rail for long distance
transportation (European Commission, 2000). Generally, rail is a very competitive
option on price and delivery time for long distance deliveries. The source book also
suggests that combined transport, such as between road and rail, provides very
cost-effective and reliable alternatives to the road only option and can avoid congestion.
Multi-modal facilities are, therefore, necessary to promote the combined transport
option. In addition, multi-modal facilities could operate as freight centers creating
opportunities for consolidated deliveries among firms.

Another example of modal shifts for deliveries in cities is the CITY FREIGHT project
adopted in Europe. The project recommends a strategy of combining freight traffic with
passenger traffic within cities. The actions can be the usage of Cargo Trams, electric
and hybrid vehicles, bicycle couriers, and distribution by walking.

Since road transport is unavoidable for deliveries in urban areas, much research has
been devoted to the improvement of vehicle engines to lower emission rates and to the
development of alternative fuels, such as Compressed Natural Gas (CNG) or low
sulfur diesel. The idea of using these more environmentally friendly engines itself is
excellent; however, there is a need for the public sector to ensure sufficient
infrastructure for the supply of alternative fuels. An inadequate supply infrastructure is a
great obstacle to the widespread adoption of these alternative vehicles.

A case study of a company in Denbighshire, the United Kingdom (Freight Best Practice,
2008), which aims to improve freight efficiency and reduce the emissions from freight
vehicles, proposes the utilization of Dual-purpose vehicles. Each vehicle is equipped to
be able to operate for both highway and maintenance operations instead of using a
vehicle solely for each purpose. The multiple-usage of vehicles can save the total
numbers of vehicles required for both operations and, at the same time, it can prevent
the problem that several vehicles are unused for long periods of time.

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 Technologies for service improvement and driver training

The development of technologies for service improvement and driver training tends to
be the most attractive option from the perspective of the private sector. Encouragement
to use these technologies is apparently the easiest way to achieve win-win solutions for
both the public and private sectors. The companies benefit from their improved service,
such as reduced energy wastage when efficient delivery routes are used. At the same
time, city planners can expect a better quality of life shall result from the environmental
and social benefits of the service improvement.

Several projects related to this technology have been launched in Europe. The
EXTR@Web consortium (2006) recommends supporting the development of
web-based technology with low costs and to standardize the traffic information data in
order that the technology becomes more easily available for private sectors operators.
Web-based technologies are, for example, services for shortest path finding, on-line
vehicle routing, tracking- tracing systems, and fleet management.

Another technology that can be shared with passenger transports is Intelligent

Transportation Systems such as Electronic Toll Collection (ETC) and the Global
Positioning System (GPS). ETC systems automatically debit the toll fee from
expressway users and does not require them to stop and wait to pay the charge at toll
gates. At present, ETC systems have already been implemented in many countries, such
as Japan, Europe, and United States. The system can significantly reduce the congestion
that normally occurs at the toll gates and allows for variable charges depending on the
time of day and type of vehicle. ETC systems benefit freight movement as well.
Commercial vehicles, operating within an ETC set up, can profit from reductions in
travel time delays when using the expressway networks. Travel time information
systems on highways are also very useful for users to receive timely information on
congestion and traffic incidents, so that users can avoid delays. In Japan, the system
called VICS provides such traffic information through electronic boards set up along the
highways and expressways throughout the country. Global Positioning Systems (GPS)
have become commonly in vehicles in Japan. Vehicles equipped with GPS systems are,
positioned real-time on the network map showing on their screens, and are easily guided
to the most efficient routes. Information on the travel times on links is automatically
updated from the traffic information center, so that users can avoid congestion.

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One of the most interesting innovation-based freight systems for urban areas is that of
the eDRUL project which is implemented in Siena and Lisbon (EXTR@Web
consortium, 2006). The Park & Buy service adopted in Siena was very successful.
There are about 20 shops enthusiastically participating in the project. The system
facilitates customers who previously had to walk into the pedestrian city center to buy
heavy items, by offering a booking and delivery service that allows consumers to
purchase items and have them delivered to a collection point in a car park. The system
resolves the customers parking problems and increases the sales of the participating
shops.

Unattended delivery systems are also one of the potential services to resolve delivery
problems when recipients of the goods are not at home or their office. Considerable
amount of energy is lost when a truck attempts to deliver goods and finds that the
recipient is not waiting to receive the goods. The truck then has to return to the depot
and must re-delivery the goods later. This situation doubles the amount of energy used.
A solution adopted in Japan, for example by Yahoo.co.jp, the online book store is the
following. The system allows the customers to choose to get the books delivered at
home or to pick up the books themselves at the convenience store of their choice.
Another method implemented by some online businesses in Japan is that the customer is
allowed to choose his/her location to have the products dropped there when he/she is
absent. From the authors point of view, there is still a room to improve this method.

The gains from the adoption of more ecological ways of driving are not negligible. Via
a Driver Training scheme, one can expect significant amount of energy to be saved as
well as improving the safety of people living in cities. A report on eco-driving
schemes in Japan reveals that 12 percent of fuel consumption can be saved after a
company has the program implemented (Japanese Institute of Logistics System, 2008).
Similar findings are reported from several countries (European Commission, 2000); for
example lorry manufacturer, Mercedes-Benz, points out that 5-10 percent of the
previous fuel consumption has been reduced after the company organized courses and
training programs for a companys drivers. In addition, up to 18 percent fuel
consumption reductions are reported to be reached by the driver training schemes of a
British company. The measures can be a reward for the most fuel-efficient drivers,
encouraging drivers to use gears properly, to switch off the engine when the vehicle is
stationary, and to avoid heavy acceleration.

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 Freight transportation systems for the new century

In the Netherlands, there is a new development for urban freight systems, which is
called the Underground Freight Transportation (UTF) (Pielage, 2001). Planning
began on the project in 1995 and the project is still in the development stage. The
concept is to move freight vehicles underground in order to reduce the negative impacts
caused by freight movement, especially, in the city center. The implementation of this
system is not too difficult with todays technology. Underground transport systems can
be found in daily life including subways. In addition, the Mail Rail system in London,
which began in 1927, was an automated underground transport system that operated for
over 75 years. The UTF system is designed, in the same way, to transport goods using
underground pipelines. The transport system through the pipelines is planned to be full
automated.

As a result of this huge investment, the Dutch government expects enormous benefits
from improvements to the environment and peoples quality of life as well as an
improved urban organization when the UTF is implemented. In Japan, there is a similar
study on the feasibility of an underground freight system for Tokyo. The study (Koshi et
al., 1992 in Taniguchi et al, 2001) estimates NOx and CO2 would be reduced by 10
percent and 18 percent respectively, and a reduction of 18 percent of energy
consumption and an increase of 24 percent in average travel speed are predicted.

Comparisons among the freight practices and recommendations

Comparisons of the advantages and points to note, when implementing each of the
freight practices, are summarized in Tables 2.1, 2.2, and 2.3.

17
 Table 2.1. Comparisons among freight policies
Category Policies & Measures Regions/Cities Some points to concern Advantages Remarks

Licensing & Regulations

Low emission zones Sweden, Many good examples on * Immediate results can be expected from *Social side-effects from changing delivery time in
Amsterdam, licensing & regulation the improvements in safety and to the response to the policies, such as increases of accident
and London environment. rates due to lack of sleep of drivers and truck
Combined use lanes Barcelona overloading.
Freight exclusive lanes New Orleans *Negative feedback from the private sector due to, for
1 Laredo, Texas example, increasing costs for new vehicles.
Off-peak delivery Los Angles and *Advised to be adopted together with other schemes for
Long Beach better results, such as the provision of freight centers, so

Restricted delivery zones Boston that the private sector has more choice and hence a less

Truck ban. Manila Result of the negative reaction.

implementation in a
developing country.
Freight centers & Consolidated delivery
Multi-modal freight Germany Many numbers of projects *Increased likelihood of using other more *The best way to sustainable development but difficult
centers have been tested and we environmental friendly modes: rail and in practice.
2 can learn from their water transports. *High investment costs.
failures and successes *Increased opportunities for consolidated *Large area Required.
delivery that will reduce commercial *Strong cooperation from private sector required for
vehicle trips entering the city center. success.

18

Category Policies & Measures
Urban freight centers
Business group development
such as wholesale markets in
2 (cont.) Japan.
Low emission vehicles, environmental friendly modes, and alternative fuels
Increasing use of low emission
modes such as rail and water
transports.
3
Encouraging the development of
low emission vehicles,
multi-purpose vehicles, and
alternative fuels.
Table 2.2. Comparisons among freight policies (Continue)
Regions/Cities Some points to concern Advantages
Germany * Increased opportunities
consolidated delivery.
Japan Adopting in most cities and *Economic growth from firms
Japan improved competitiveness.
*Increased opportunities for
consolidated delivery.
*Successfully adopted in most
cities in Japan.
Europe One of the best examples * Large environmental and safety
for sustainable improvements can be expected if
development the share of road transport is
reduced.
Europe, Japan Several innovations have * Technology ready: important
been developed in these developments on low emission
regions vehicles (eg. Hybrid vehicles)
have already been achieved.
Remarks
for * Education on the advantages of consolidated delivery is
necessary.
*High investment costs.
*Large area Required.
*Need to provide competitive transportation services to
prevent companies preferring their own vehicles.
* To increase the usage of other modes, the public sector
has to provide sufficient facilities to support flexible
multi-modal transport
* Suggesting implementation together with Licensing&
Regulation scheme.
* For alternative fuels, need to provide enough supply
facilities to ensure widespread adoption.
19

Category Policies & Measures
Technologies for service improvement & Driver training
Intelligent transportation
system (ITS) such as ETC,
GPS, and Traffic information
system.
Service improvement trough
technologies such as
4 web-based delivery routing
system, park & buy, and
unattended delivery systems.
Driver training
New freight transport system
Underground freight transport
5 Netherlands,
Table 2.3. Comparisons among freight policies (Continue)
Regions/Cities Some points to concern Advantages Remarks
Europe, Japan, Implemented throughout *The system can be shared with passenger *High set up costs.
United States the countries transport operators. * This does not increase the use of other more
*The technology has been already matured and environmental friendly transport modes.
is adopted widely in developed countries.
Europe, Japan Several technologies * Inexpensive cost for implementation. * Encouragement from public sectors is
have been developed in * Likely to be well-received from private required; Eg. Providing low cost technologies
both regions. sectors. that are affordable for most private sectors.
Europe, Japan Implemented and many *Cheap to implement. *Encouragement from public sectors is required;
projects report successful *Positive private sector response. e.g. Organizing training courses for the private
results *Environmental and social benefits from sector.
reducing energy usage and decreasing the
accident rate through better driving.
The During developing status *Alters the urban structure. Freight vehicles * Enormous investment costs.
in the Netherlands and are separated from other traffic, resulting in * Still in development stage in developed
Japan under feasibility study in reduced negative impacts from freight countries.
Japan vehicles.
20
The policies discussed above are not to be recommended to be implemented alone since
they are naturally supportive of each other, and policy coordination greatly strengthens
the chance for successful implementation, notably through reduced negative reactions
from the private sector. From the viewpoint of the public sector, Category 1 (Licensing
& Regulation) seems to be the most attractive and immediate results can be expected.
However, careless regulation will elicit negative responses from the private sector
because of, for example, increasing costs for purchasing new vehicles. In addition, some
policies, like the truck ban implemented in Manila, evidently cause negative impacts to
society because transport operators shift deliveries to night-time in response to the
regulation. Accident rates may increases due to drivers disrupted sleep patterns and
truck overloading when truck operators try to maximize operational efficiency during
restricted periods (Catro and Kuse, 2005).

In principle, consolidated delivery is the best way to achieve sustainable freight

development by reducing freight trips and energy consumed for deliveries; however, it
is not easily implemented in practice. In addition to relatively high set up costs for
freight centers, understanding and cooperation from the private sector are necessary.
Multi-modal freight facilities are also recommended to increase the use of other more
environmentally friendly modes. A problem for most developing countries (for example
Thailand) is that infrastructure is insufficiently developed for transport modes other than
roads and hence transport operators have no other option than to use trucks. Developing
railways, inland waterways, and coastal transport systems concurrently with providing
enough facilities to support flexible multi-modal systems is the most promising option.
Transportation costs also can be reduced for long-distance deliveries since rail and
water transports are often cheaper. If governments focus also on economic growth, the
option of business group development, such as wholesale markets in Japan, is very
interesting. Gathering wholesalers together in an area provided with facilities
strengthens the competitiveness of businesses. At the same time, shipments to be
transferred to several places are grouped together, resulting in reducing energy and
transport costs for the companies as well as reducing emissions. If the facility is well
planned and provides high quality transport services, the probability that goods from
different companies will be consolidated for further transport is increased.

Category 3 includes measures to support the current trend towards the adoption of low
emission vehicles and alternative fuels. Several technologies have been developed so far
for both passenger and commercial purposes: low emission vehicles (such as hybrid

21
vehicles and electric vehicles), alternative fuels (such as CNG and low sulfur diesel).
However, the main problem is that there are insufficient supply facilities for these
special vehicles. Hybrid vehicles have no problem because they consume gasoline, but,
for electric or gas vehicles, there are very few supply facilities. This situation has caused
many to drop the idea of using these new vehicles. In case that the government plans to
adopt low emission and alternative fuels, investment should be assigned to the building
of supply facilities together with to support to research on the new technologies.

Among the categories presented above, Category 4 (Technologies for service

improvement & Driver training) seems to be the approach most likely to achieve a
positive response from the private sector. Especially, affordable technologies and driver
training courses provided by the government would be very attractive for them.
Companies gain benefits from using these technologies through improvements in their
efficiency and reductions in costs resulting in increased competitiveness. Citizens also
gain benefits from those improvements as well as from driver training schemes, which
make city traffic safer. Unlike the high set up costs for intelligent transportation systems
(ITS), investment costs for online-technologies and training courses are low.
Investments on ITS systems not only profit passenger transports but also freight
vehicles. Commercial vehicles enjoy benefits from reducing travel delays and from
easier delivery scheduling. However, ITS systems are, clearly, not the way to reduce the
share of road transport, which is an important sustainable development.

The new freight system (that is, an underground freight transportation system) opens
the door to a whole new approach for the next century. The system itself is an excellent
innovation as it completely separates freight transport away from passenger traffic.
Negative impacts from freight vehicles (such as exhaust gas and accidents) can be
enormously reduced as well as the improvement of the delivery lead time and reliability
that are important for goods movement. However, this choice seems to be available only
for developed countries that have large budgets for the construction of the new system.

The implementation of a combination of the policies is highly recommended. For

example, regulation (such as low emission zone) concurrent with the provision of
freight transshipment facilities is a good option. This combination provides choices for
freight operators and opportunities for consolidated delivery since the companies might
find it easier to transport their goods using freight forwarder services than to purchase
new trucks. In addition to licensing and regulation, support from the government to

22
provide new technologies (both for new engines/fuels and service improvements such as
web-based technology and GPS navigation systems) at affordable prices, is critical to
their successful operation, since most companies would prefer to use these new
technologies but they are usually expensive. Finally, the most important thing is to
develop understanding from private sectors and to identify benefits from sustainable
development direction.

Conclusion

Policies discussed previously have different impacts on freight operators, the wider
economy, and the environment. Governments must choose where their priorities lie. In
any case, coordinated implementation of the practices that are categorized into groups in
this report is recommended, in order to achieve the best results. Many of the measures
are mutually reinforcing and a balanced overall package of measures can increase
cooperation from the private sector.

Among the most promising solutions is the promotion of multi-modal facilities while
developing rail, inland waterway, and coastal networks. Although it requires substantial
investment, it strengthens the economic structure, by providing flexible transportation
options to reduce transport operation costs and lessens the overall environmental impact
from transport. Encouraging cooperation among private sector actors themselves is
suggested as well. The success of many European businesses comes from their
cooperation; consolidated delivery and sharing technologies can reduce operation costs
and at the same time decrease the environmental impact. In developing countries,
similar cooperation should be encouraged in order to improve not only the quality of
life of citizens, but also to improve the position of these countries businesses in the
global market. Incentives for shifting deliveries from shippers own trucks to using
services provided by freight forwarders are also recommended in order to increase the
chance of consolidated deliveries. The public sector should also be ready to intervene to
support the business of professional carriers in order to increase competitiveness in this
field. Encouragement of the use of low-emission vehicles, service improvements, and
organizing driver training appear to be the easiest measures to implement and are likely
to be very well received by private sector operators. In addition, particular attention
should also be given to aiding small and medium enterprises (SMEs) to acquire cutting
edge technology, as their operations are often less efficient due to lower economies of
scale. Considering the large number of SMEs operating in the transport sector in

23
developing countries, significant improvements can be expected if sufficient attention is
paid to their particular needs.

The most important thing when dealing with freight movements is to find the best
compromise among the varied interests of the different actors. Most freight experts
emphasize the importance of creating win-win solutions when deciding freight policy.
The success of the freight transport policies are very dependant on cooperation from the
private sector. Once again, the author emphasizes the necessity of effective
communication with actors in the private sector to transmit an understanding of the
significant gains that can accrue from sustainable freight development.

24
 3. Selected Case Studies

3.1 Overview

Based on the decision of the committee of the project ECO-EFFICIENT AND

SUSTAINABLE URBAN INFRASTRUCTURE DEVELOPMENT IN ASIA AND
LATIN AMERICA by UNESCAP, Bangkok, the case studies presented here include:
Projects to increase the use of low-emission modes,
Multimodal freight centers in Germany and Italy,
Urban freight centers in Germany , and
Wholesale markets in Japan.

Most of the selected case studies presented in this section belong to the policy category
of freight centers and consolidated delivery discussed in the previous section. The
policy of Increasing use of low-mission modes requires the implementation of
multimodal transshipment facilities or freight centers.

There are several forms of freight center with varying functionalities. The concept of a
freight center is a place providing facilities for logistics activities, such as transshipment
equipment, warehouses, and other logistics services for trucks before entering into the
urban area. The freight centers can be classified based on their orientation as follows
(Visser et al, 1999):
Freight village,
Industrial and logistics park,
Business grouping development, and
Special logistics area.

A Freight village is a specific kind of freight center in the form of transshipment

terminals grouped in a designated area. Freight villages are, for example,
Guterverkehrszentren (GVZ) in Germany and Interporto in Italy. The definition of
freight village defined by a working group of the Transport Departments Conference of
the Federation and the Lands (Bonn, 1991 in Kondratowicz, 2003) is:
A freight village (GVZ) is a transport business area where transport
enterprises of different orientation (transport, forwarding, warehousing, services,
logistic services) settle as independent enterprises, connected with several, at least two
transport modes. GVZ should facilitate the change of transport modes in the transport

25
chain and thus contribute to relieve the roads from long distance, regional and short
distance traffic. Also postal freight centres may be integrated. GVZ comprise a terminal
for intermodal transport rail/road or inland waterway shipping/rail/road, in doing so it
is sufficient, that this terminal is situated in close vicinity to the transport businesses
area and organizationally connected to it.

Multimodal freight centers (GVZ in Germany and Interporto in Italy) are freight
villages. A similar system, known as City Logistik in the German terminology, involves
joint distribution among different companies in which the companies share their depot
and vehicle capacity (Koehler, 2001 in Browne et al., 2005). City logistic is also
categorized as a freight village.

3.2 Projects to increase the use of low-emission modes, Europe

One way to increase the utilization of low-emission modes (including rail and waterway
transports) is clearly to promote the development of multimodal freight facilities.
Multimodal freight facilities help to facilitate transshipments between transport modes.
At the same time, attention needs to be paid to the quality of the rail network, the inland
waterway network, so that the private sectors can efficiently utilize the networks. The
problem of most countries in Asia (including even Japan), is that the rail system has not
been developed for the purpose of transporting cargo. Most of domestic freight transport
in Japan is done by road transport; surprisingly, less than five percent of freight by
ton-km is transported by railway networks (Japan Statistics Bureau, 2009).

Based on research by Takahashi (2003), the comparison of the share by transport mode
between Japan and other countries is as shown in Figure 3.1. Transport modes for
freight include road, rail, waterway, and pipeline. Pipeline is for transportation of goods
in liquid form such as oil and gas. United State has the lowest share of freight transport
done by road. Japan is the next where more than 40 percent of cargo is transported by
coastal transport in response to efficiently utilizing the country's island geography. The
European countries on the continent such as Germany and France have rather large
shares for rail transport of more than 15 percent; whilst the shares for the developing
countries in Indochina such as Vietnam and Cambodia range between 4 and 5 percent
(Goh and Ang, 2000)

26
 UK (1998) 65.0 7.1 23.3 4.6 Car
1.9 1.5 Rail
France (1998) 74.1 15.9 6.5 Ship
0.1 Pipe
Germany (1997) 67.3 15.7 13.7 3.2 Air
0.4

US (1997) 28.1 36.1 18.9 16.5

0.2
ton- km
J apan (1997) 53.8 4.3 41.7

0% 20% 40% 60% 80% 100%

Figure 3.1. Modal share for domestic freight transports in many countries
(Source: Takahashi, 2003)
In Europe, there has been a strong focus on promoting rail networks for many years.
The freight networks in Europe, Germany is the best example, are developed
multimodally. Figure 3.2 shows all the freight networks in Germany. The transport
system utilizes efficiently the networks of many transport modes. Germany has 33
freight villages; these multimodal facilities (GVZ) are located at the main cities.
Especially at the hub cities likes Bremen, Berlin, and Nurnberg, the GVZs are designed
to be able to handle freight from more than two modes on each site including roads,
rails, and inland waterways. In addition, Germany has the largest networks of railways
and waterways in Europe. The total length of railway tracks is 40,327 km and that of the
navigable inland waterways is 7,450 km (Invest in Germany, 2005).

27
 Figure 3.2. Germany freight networks (Source: Germany Trade and Invest, 2009)
Policies to increase the utilization of environmental friendly modes by European
countries are summarized as follows:

Germany
Since the 1980s, Germany has focused especially on the development of
multimodal freight centers; more than 30 freight villages have been
established across many cities.
At present, Germany aims at increasing the share of rail transport to 25
percent by ton-km by 2015 (German Federal Environment Agency Fact
sheet, 2009).

28
 Increasing the capacity of rail infrastructure through renovation,
modernization, and extension of rail lines. Increasing track capacity
through operational optimization.
Stronger promotion of intermodal transport and rail connections.
Implementing toll schemes for heavy goods vehicle (HGVs) in which the
toll rate varies between higher and lower emission vehicles (UNECE,
2009).
Increasing the country's investment on transport infrastructures.

Italy (source: OECD, 2001)

Italy implemented the laws 240/90 and 385/90 for a specific plan to
promote intermodal transport and the country has signed the United Nation
International Agreement on Intermodal Transport.
With cooperation between local governments and the national government,
several plans to promote intermodality of freight transport have been
pushed such as freight terminals.
Implementations of large vehicles bans from city centers; with intermodal
transport being exempted from the weekend ban. ?

Austria (source: OECD, 2001)

Austrian government provided financial support for investments to
promote intermodal transports using combinations of road, rail, and
waterways since 1992.
The investments were used for the development of intermodal freight
terminals and innovations to handle multimodal cargos.
Regulations such as driving ban for freight vehicles during weekend and
driving ban for noisy truck at night; but exemption from the weekend ban
for intermodal freight vehicles.

The Netherlands
The Dutch government states that modal shift is difficult to promote at
present in the national context; the reasons are (RAND, 1996):
o The average distance traveled by national freight is less than 50
kilometers,
o Rail and waterway transports usually require trucks in connection
with the intermodal centers.

29
 o Businesses prefer the utilization of trucks to other modes.
o Rail and waterway transports are more suitable for international
shipments.
Due to the above reasons, the Dutch government has paid more attention to
the development of Underground freight systems together with the
development of multimodal facilities to support all transport modes:
railway, waterway, short sea, and an automated underground freight system
planned for the future.

3.3 Multimodal freight centers

Several projects related to the freight centers have been developed in Europe since
1990s. The first freight center in Europe was established in Paris during the mid 1960s
(BESTUF handbook, 2002) in response to urban congestion. Next, Interporto in Italy
was the second major development beginning in the mid 1970s (Boile et al, 2009).
Since the 1990s, several countries in Europe include the development of freight centers
in their national policies (BESTUF handbook, 2002).

3.3.1 Guterverkehrszentrum (GVZ), Bremen

In Germany, many Guterverkehrszentren (GVZ) projects have been launched since

1992 (BESTUF handbook, 2002). However, only a few schemes have succeeded while
many have failed and ceased operations. The very first project was the GVZ in Bremen
which is still operating and serving as an example of the GVZ for the rest of the country.
In Germany, which ranks third in the world for the amount of goods and services
generated, the largest freight village is GVZ-Bremen. This facility is the most highly
rated in terms of performance when compared to other similar logistic facilities. Whilst,
the second and the third ranked facilities are the GVZ-Nurnberg and the GVZ-South
Berlin, respectively (Deutsche Bank Research, 2008).

Overview

The primary motivation for the development of multi-modal centers comes from the
desire to increase the utilization of transport modes other than trucks. The establishment
of a freight village is important as it provides a place to flexibly shift commodities
between transport modes. In supporting intermodal facilities, the uses of rail and water

30
transports can be increased and road congestion can be reduced. Bremen is a major
hub of northern Germany connected to three important sea ports on the North Sea,
Hamburg port, Bremer port, and Willhelms port as shown in Figure 3.3. The
GVZ-Bremen was the first such development and was established in 1985.

Figure 3.3. Location of GVZ, Bremen

(Source: the brochure of GVZ, Bremen)

Facilities

The Bremen freight village is a tri-modal facility dealing with road, rail, and inland
waterways. In addition, air transport is accessible since an international airport is
located close to the GVZ facility (approximately 7 km.). As shown below in Figure 3.4,
the facility is accessible through major railway, highways, and inland waterways across
the region. The layout of the GVZ in 2007 is shown in Figure 3.5. The facility is
connected to highway along its south edge (orange line in the figure), it is connected the
inland port on the northern side (blue area in the figure), and the rail tracks are centrally
located (dark grey area connected to the port in the figure). There are 135 competitive
companies operating in the 1.0 million sqm. of the facility (from website
gvz-bremen.de). The companies are transport operators, industries, and wholesalers.

31
 Figure 3.4. GVZ Bremen with the network connections
(Source: Germany Trade and Invest, 2009)

Some figures about the facility:

Total area of approx. 496 ha, where approx. 200 ha is currently occupied.
Largest high bay warehouse in Europe.
135 companies operating with 5,500 employees.
Container terminal (KLV).
Truck terminal.

32
 Other services than logistic activities including gasoline stations, truck services,
customs, and restaurants.
It focuses on logistics-intensive wholesale and production in the food industry.

Figure 3.5. Layout of the GVZ, Bremen (Source: the brochure of GVZ, Bremen)

Type of goods

The Bremen freight village deals with several kinds of commodities including
automotive industry, trade and commerce, aerospace industry, food and beverage
industry, energy and chemical industry, and break bulk logistics (website:

33
gvz-bremen.de). Special attention is paid to logistics-intensive production and
wholesale companies in the food and beverage industries (Boile et al, 2009).

Financial and organization (Source: Nobel, 2007)

Freight villages (FV) in Germany are directly supported by the national transportation
ministry. In general, the FV companies are separately established in most of the Freight
Village locations for provision of the FVs; for example, GVZE is an FV development
company of the Bremen freight village. The legal construction is the limited company
which offers advantages in terms of limited liability and flexibility of membership and
administration. If there is no FV company established, the management is taken over
either by a subsidiary company or a department of a municipality.

The public sector is commonly involved in the freight villages as a shareholder and/or
through board member. The organizational structure is a public private partnership in
which the city of Bremen holds a share of at least 25 percent and appoints board
members of the organization as shown in Figure 3.6. The remaining shareholders are
many private companies.

Figure 3.6. Organization structure of the Freight Village development company,

Bremen (Source: modified from Nobel, 2007)

The outcomes from the FV development company are, for example, the general tasks
for administration, development tasks, and presentation of the freight village. The
development tasks are:

34
 The FV implementation: moderation between interests and objectives of the
public and private sectors.
The FV settlement structure: size of enterprises (focus on strengthen
competitiveness of the SMEs) and industries (industrial mix of transport,
warehousing, contract logistics, production, and wholesale).
Organization and cooperative activities: synergy between tenants, pooling
resources (eg. cooperative purchase), and freight traffic reduction (eg. city
logistik scheme).
The FV supplement service: settlement of external service providers or
internal cooperative investment and operation.
Public relations and marketing: non-commercial promotion of the FV concept
in sense of sustainability and commercial marketing.
Network with external partners: permanent connection with the national
freight village association (DGG) and occasionally with temporary alliances for
individual logistics projects.

3.3.2 Interporto, Bologna

At present, there are 22 freight villages in Italy due in large part to the national subsidies
for this kind of facility. Their purpose is to remove heavy truck traffic from cities by
encouraging the utilization of rail transport, and environmentally sustainable economic
development. These freight facilities currently handle as much as 60 percent of the
nations intermodal traffic (Boile et al, 2009).

Overview

Interporto, Bologna was the second development of a freight village in Europe in 1971,
and presently is one of the best examples of this type of development in Europe for
several reasons (Boile et al, 2009); including:
A strong local partnership initiated the project.
A strong Public Private Partnership.
It includes all the typical functions and services for a European freight village.
Wide variety of tenants from small local parcel companies to large companies
such as DHL.
It is very successful and is claimed to be one of the most important freight
villages in Europe and is expanding every year.

35
 It has developed a very successful relationship with the neighboring
communities.

Bologna freight village (or Interporto Bologna) is located 12 kilometers from the city
center along the main highway and rail routes that connect the northern and the southern
parts of the country which carry 75 percent of all goods exchanged in the country
(website of the Interporto, Bologna in Boile et al, 2009). As shown in Figure 3.7, the
facility can be accessed by five major railway lines and four highways.

Figure 3.7. Map of location of Interporto Bologna

(Source: Interport Bologna website in Boile et al, 2009)

The project was initiated by cooperation between public and private sectors including
the municipality, the province, the chamber of commerce, and road haulage associations.
The objectives of the project are (BESTUFS, 2007):
To reduce congestion by banning heavy goods vehicle traffic in the urban area,

36
 Strategic construction of logistic infrastructure,
To increase the competitiveness of the transport and logistics companies by
increasing productivity through efficient transshipment? facilities?, and
To promote rail transport by increasing intermodality.

The following impacts were expected from the implementation of the freight village;
they are (BESTUFS, 2007):
Reduced pollution levels,
Increased use of other transport modes and alternative fuel vehicles,
Reduced delivery times, and
Reduced urban congestion.

One of the keys for the success of this freight center scheme is obviously its location.
The location was selected based on three main reasons (Interporto Bologna Social
Report, 2005 in Boile et al, 2009); they are:
The possibility to dispose of a large area situated next to a railway line, the
Bologna-Padua axis, and the capacity to absorb the additional traffic.
The possibility to establish a link with the highway network.
It was located in proximity to the area that the wholesalers of Bologna elected to
be a commercial district (Presently this area has become a very large commercial
space hosting more than 600 firms).

The second key issue is the organization of the freight center. The BESTUF project
recommends Public Private Partnerships (PPPs) to be the organizational structure for
this kind of project. Based on the report by Boile et al (2009), the shareholders of this
project are the municipality, the province, and the chamber of commerce and several
regional and national companies.

Facilities

The Bologna freight village covers an area of 2.0 million sqm. plus a plan to expand
by about 2.3 million sqm., which is currently at the development stage (Boile et al,
2009). There are 81 national and international transport companies operating in the
freight village.

Some figures about the facility:

37
 2.0 million sqm. for the entire area.
650,000 sqm. for rail transport.
57,000 sqm. for customs district.
350,000 sqm. of covered warehouses with fiber-optic connections.
Not only logistics related facilities, but also services such as car & lorry cleaning
facilities, banks, post offices, bars, and restaurants.
1/3 of the area of the covered warehouses allows the company to make
investments, rent or sell.
42,000 sqm. of the area of the covered warehouses has a direct link to the
railway line.
The railway facilities include both a Container terminal (147,000 sq. m.) and an
intermodal terminal (130.000 sq. m.) with 15 tracks. Approximately 15 trains
per day link the freight village to the main European freight hubs.

Figure 3.8. The current layout of the Bologna freight village (Source: the Bologna
freight village brochure)

38
 Figure 3.9. Layout of the Bologna freight village including the expansion areas
(Source: the Bologna freight village brochure)

Type of goods

The Bologna freight village handles many kinds of goods though no perishable goods.
The reason is simply that there is no facility for storing refrigerated products. The goods
handled in the freight villages are divided in to two groups based on the facility types;
they are:
Logistics warehouses which serve for consignee retailers: packaged food,
beverages, spirits and vinegar, tobacco and tobacco substitutes, textiles, articles
of wood, paper, paperboard, and other miscellaneous manufactured products.
Intermodal terminals which serve for freight forwarders and intermodal
operators: metal, mineral products, plaster, clay minerals, cement, mica, ceramic
products, machinery and mechanical appliances, polypropylene, and
miscellaneous manufactured products.

Finance and organization

The Bologna freight village is a Public Private Partnership (PPP) organization operated
by the municipality, the province, the chamber of commerce, and private companies.
The public sector actors, namely the municipality, the province, the chamber of
commerce hold shares of approximately 35 percent, 18 percent, and 6 percent

39
respectively. The remaining shares are held by regional and national companies (Boile
et al, 2009).

Other aspects

The Bologna freight village has a good reputation with respect to the environment. With
contributions from the Ministry of the Environment, they invested more than 1.3 million
Euros for the installation of over 1,000 photovoltaic solar panels. The plant produces
about 236 MWh a year resulting in a total saving of 50 tons of petroleum. To help
integrate the facility with its surroundings, more than 30% of the total area is green
space, which contains works of arts (and sculptures). In addition, new road networks
were constructed in order to avoid disturbing regular traffic on the existing road
networks.

Experiences from the Bologna freight village

BESTUF-II project (2007) identifies the following findings from the Bologna freight
village.
The integrated concept of freight village is preferable to the non-integrated one,
The integration of transport and logistic activities in a single facility is more
economic and efficient than several smaller intermodal terminals, and
Coordination between public and private sectors in planning and funding is
necessary to successfully develop a freight village.

Projects in the Bologna freight village

Many projects have been implemented in the Bologna freight village in order to
increase efficiency and to reduce pollution. An example is the VAN-SHARING project
that has the following measures (BESTUFS, 2007):
Increase the cooperation among operators involved in the facility,
Provide approximately 15 low emission vehicles, and
Create an IT system for Route planning, Loading optimization, and a Parking
booking system at the designated delivery locations.

40
3.4 Urban freight center

Urban freight center is a type of freight village on a smaller scale that provides facilities
for a single of transport mode only (typically road transport).

3.4.1 City Logistik, Kassel

Overview

The project started in 1994 through cooperation among 7 forwarding companies in

order to deliver their commodities to the inner city of Kassel. The project was supported
by the forwarding association and the chamber for industry and commerce of Kassel.
The city of Kassel is located in central Germany and has the potential to be a logistics
hub for the country. The main industries of this region are the automotive and transport
industries, telematics and software development, environmental and energy
technologies, as well as culture and tourism.

Approach

The basic approach is that there is a neutral transport operator employed by the group of
forwarding agents to pickup and delivery their goods to the recipients in the inner city.
The concept is demonstrated in Figure 3.10 by Koehler (2003). In the early morning, the
neutral carrier pickups the consignments at each forwarders depot and bundles the
consignment at the distribution center before starting delivery tours to the recipients
(Huschebeck, 2002 in BESTUFS, 2002).

Figure 3.10. Kassel model (Source: Koehler, 2003)

41
Some figures
10 freight forwarding companies are participating.
Electronic communication between the city logistics operator and the
participating freight forwarders.
No extra charge for deliveries when using the program.

Finance and organization

This freight facility is also classified as a Public Private Partnership (PPP) since it was
supported by the local government and operated by the private companies.

Experiences from the Kassel City Logistik scheme

Based on a study by Koehler (2003), goods vehicle mileage towards the inner city and
within the inner city reduced by 40 percent and 60 percent respectively, upon the
implementation of the city logistik scheme. Load factors of trucks doubled and the
delivery weight per stop increased by 15 percent.

The implementation of the Kassel freight village proves to be profitable measure for the
city due to the reduced number of commercial vehicles in the city and lower emissions.
There is little difference in terms of service quality to the recipients of the goods. There
is no extra cost or inconvenience for the freight operators involved. The participating
transport operators benefit from an improved image as innovative companies that act
positively for the environment. Finally, this project emphasizes that the most important
factor for the success of the project is the motivation of the participating partners
(Huschebeck, 2002 in BESTUFS, 2002).

Despite all the above advantages, the project still has some problems. Koehler (200x)
stated that some forwarding agents have left the cooperation. The reason could be that
there is not enough interaction (eg. through regular meetings, exchanges of information,
or suitable organizational structures) between the participating companies. It is
important to note that the benefit to the companies is intangible; there are no direct costs
saved through utilization of the scheme.

42
3.4.2 Public Wholesale Markets, Japan

The Japanese government has established various types of freight centers in large cities
in Japan. The freight centers include truck terminals and business districts. One type of
freight center developed were wholesale markets, whose purpose was to group small
and medium wholesalers in the same place, with sufficient facilities provided in order to
make them competitive. At present, there are wholesale markets in most cities in Japan.
The wholesale markets can be categorized to the group of Business Grouping
Developments in the freight center categorization of Visser et al. (1999).

Public Wholesale Markets, Nagoya

Overview

In Nagoya, there are three wholesale markets for the food industry. One is located in
central Nagoya and is the oldest facility established, it began as a wholesale market for
fresh foods in 1949. Another one situated in the northern part of the city, was previously
a market and, and due to increased demand, the market was moved to its current
location and has served as a wholesale market for fresh food since 1985. The last one is
located in the southern part of Nagoya. Similarly, it was previously a market and moved
to the current location in 2007 in response to an increased demand for meat products.

History and development of the Nagoya central wholesale markets

The central wholesale market law was established in March, 1923 and the city of
Nagoya was selected for an establishment together with other main cities in the country.
The history timeline is presented in Table 3.1. The master plan for the market was
decided in the next year and it took around 20 years for feasibility assessment and
discussion in several topics including its necessity and construction budget; until 1943,
the budget was approved by the local government committee. The construction was
started on the consecutive year concurrently with the formal establishment of the market
based on the food market law of Aichi prefecture (Nagoya is a city in Aichi prefecture)
and the completion was in the next 4 years. In 1949, after receiving of the permission
based on the central wholesale market law, the central wholesale market was formally
opened. During its operation, many buildings and facilities were sequentially

43
established as well as the revision of the law and regulations to ensure proper operations
of the markets.

Table 3.1. History and development of the Nagoya central wholesale markets.
(Source: Website of Nagoya central wholesale market)

Facilities

44
Nagoya central wholesale market:
Area: approx. 170,000 sqm.
Location: located at the city center and accessible by car (15 minutes from the
central train station), by rail (15 mins walk from the rail station closest to the
facility) and subway (5 mins walk from the subway station next to the
facility).
Facilities: warehouses, refrigerated rooms, parking.
Goods: fresh food including fish, fruits, vegetables, processed foods, and
meats.
Two types of wholesalers: 6 companies are first-level wholesalers and 134
companies are second-level wholesalers.
Services: transport operator, restaurants, and convenience stores.
Nagoya north wholesale market:
Area: approx. 130,000 sqm.
Location: located approx. 6 km. from the city center, in proximity to the
Nagoya domestic airport. It is accessible by main roads.
Facilities: warehouses, refrigerated rooms, parking.
Goods: fresh foods including fish, vegetables, and fruits.
Two types of wholesalers: 3 companies are first-level wholesalers and 96
companies are second-level wholesalers.
Services: transport operator, restaurants, and convenient stores.

Nagoya south wholesale market:

Area: approx. 61,000 sqm.
Location: located approx. 4 km. from the city center, accessible by main
roads.
Facilities: warehouses, refrigerated rooms, parking.
Goods: meat products only.
Operated by only one wholesaler of meat products.

Approach

In the wholesale market, 2-3 large wholesalers acquire fresh products from the local
area, the rest of Japan, and overseas. The products are transferred to the market early
every morning and these large wholesalers start bidding to sell their products to the
smaller wholesalers, whom we call the second level wholesalers, also located in the

45
same market. The products are then transferred to the second level wholesalers who
deliver the products to their customers (who can be other fresh food markets,
supermarkets, or local shops). The deliveries are done by the wholesalers themselves or
by a transport operator provided in the facility which is run by the local government.
The structure of goods flow is as shown in Figure 3.11.

Figure 3.11. Structure of the goods flows by implementing of the facility

(Source: Website of Nagoya central wholesale market)

46
Finance and organization

These facilities are classified to be Public Private Partnerships (PPP) due to

subsidization and organization by the local government. The organization structure is as
demonstrated in Figure 3.12. The wholesale markets are directly organized by the local
government through the management and business management sections at each
location. These sections guide the everyday activities including transactions and price
setting in the markets as well as carry out the cleanliness inspection of the goods,
statistics, and official announcement of the market prices.

Figure 3.12. Organization structure of the wholesale markets.

(Source: Website of Nagoya central wholesale market)

The operations of the markets (as stated above) are advised by the organizations (see
Figure 3.13), including Nagoya central wholesale market operation council and Nagoya
central wholesale market trade committee. The operation council members comprise of
the city government, university experts, consumer association, and the wholesale market
associations of the three markets (including the central, north, and south wholesale
markets). This council accounts for an investigation related to the market operations and

47
construct a report to the city mayor. Second, the trade committee members include the
local government, university experts, SMEs experts, consumer association, and several
enterprise associations related to the markets (eg. the Nagoya association of wholesalers
of fruits and vegetables). Similarly, this committee provides a guideline for trade and
exchanges, and writes an advice report to the city mayor.

Figure 3.13. Relationships between organizations of the wholesale markets.

Experiences

Based on the survey on the delivery situation in the Nagoya central wholesale market
(Kobayashi et al, 2009), about 40 percent of companies still use their own trucks for
delivery. The companies prefer having their own trucks, and use the transport service
when they have a shortage of workers or trucks. Expensive fees for delivery services are
one of the main reasons why companies prefer to have their own trucks.

The competitiveness of transport operators should also be analyzed. When there is only
a single transport operator for everyone in the market, this clearly reduces the
competitiveness of the transportation offer, and finally leads to a situation in which the
companies prefer to run their own trucks rather than to use the provided transport
operator. However, the implementation of the wholesale market has success in reducing
the number of truck trips and operating vehicles as the transport links between suppliers
(whether they are from the local area, national or overseas operators) and the large
wholesalers situated in the market, since these large companies are all gathered in the
same place. In addition, there is no need for transport vehicles between the large
wholesalers and the second level wholesalers located within the same wholesale market.
In spite of the weak points discussed previously, this kind of freight center is very

48
promising if the public sector focuses sufficiently on the competitiveness of the
transport operators active in the market.

For the same type of market in Sendai, Japan, research has been conducted to examine
the potential role of a system using database technology, to consolidate shipments by
the second level wholesalers and final deliveries to their end-customers, by the same
transport operator to overcome this weak point. The study claims that with this system
energy consumption can be reduced by up to 47 percent (Sendai City Central Wholesale
Market Group, 1999).

3.5 Discussion

Tables 3.2 and 3.3 summarize the main characteristics of the freight villages in the case
studies. The GVZ-Bremen and Interporto-Bologna, both are multimodal freight centers
focusing on international and domestic (regional and urban area) freight flows.
Germany having the best network of inland waterways so that the GVZs in hub cities
support tri-modal transports: road, rail, and waterway; whilst, the facility in Italy deals
with road and rail transports. The GVZ-Bremen is more oriented to logistics-intensive
industries and wholesalers; thus, the facility provides warehouses and working spaces
for those companies in addition to the container terminal and transshipment facilities.
The Interporto-Bologna provides both warehouses for consignee wholesalers and
retailers and intermodal facilities for freight forwarders.

49
 Table 3.2. Summary of the characteristics among the case studies
Group Multimodal freight centers Urban freight centers Business Group
Development
Project GVZ-Bremen Interporto-Bologna City Logistik-Kassel Central Wholesale
since 1984 since 1971 since 1994 Market-Nagoya

Orientation International, Regional and Urban International, Regional and Urban area Urban area
area Urban area
Operators Transport operators, productions, Transport operators and Freight forwarders Wholesalers and freight
and wholesalers warehousing and logistics forwarder
operators
Facilities Container terminal, truck terminal, Warehouses, intermodal N/A Warehouses, freight
and other car maintenance and terminal, and other car forwarder service, and other
services maintenance and services services
Commodities Automotive, trade and commerce, Warehouses: packaged Parcels Fresh foods
aerospace, food & beverage, energy, food and beverages
and break bulk logistics. Intermodal terminal: metal,
Main focus is on logistics-intensive mineral, ceramic, machinery,
(production/industries?) and and other heavy products.
wholesale companies.

50
 Table 3.3. Summary of the characteristics among the case studies (Continued)
Group Multimodal freight centers Urban freight centers Business Group
Development
Project GVZ-Bremen Interporto-Bologna City Logistik-Kassel Central Wholesale
since 1984 since 1971 since 1994 Market-Nagoya
since 1949
Transport Modes Tri-modal facility for road, Intermodal facility for road Road Road
rail, and waterway and rail
Function Transshipment location and Transshipment location Consolidated goods Gathering wholesalers into
industries. and warehouses for from the involved a space and provided facility
City Logistik scheme for wholesalers and retailers in companies to be delivered in order to increase the
Urban area of Bremen is also the region. by a neutral freight competitiveness among the
implemented at the site since Intermodal terminal serves forwarder to the inner city. companies.
1994 for freight forwarders
Funding and PPP PPP PPP PPP
Organization

51
The City logistik scheme in Kassel combines goods from the freight forwarders
participating in the program, to a neutral carrier, before the consolidated deliveries made
to the inner city. Similar programs are implemented in other cities including Ulm,
Cologne, and Stuttgart (Browe et al, 2005). In addition, the program is applicable for
consolidated delivery among the freight forwarders operating at the GVZs; thus the City
Logistik scheme is also carried out at GVZ-Bremen. The concept is similar to the
program in Kassel, it focuses on consolidating commodities of the GVZ-based shipping
companies to serve a variety of shops in the city center. However, the City Logistik
schemes in many cities in Germany are facing some problems; the participation has
reduced since the benefit from participating in the project is intangible. Occasionally
organizing a round table discussion among the participants and the public sector might
improve the situation (Koehler, 2003).

In Japan, the focus is more on strengthening the countrys economy by increasing the
competitiveness among businesses in the same industry. There is no national policy on
urban freight transport (Visser et al, 1999). The wholesale markets in Japan are oriented
to the strengthening of SMEs in the food industry. However, the facilities are potentially
a way to more sustainable transport if it can successfully implement cooperation on the
consolidated deliveries.

3.5 Conclusion

Increasing the usage of more environmental friendly modes has been found to be the
best way to develop sustainable transport. To achieve this goal, a city planner should
remember that determinants such as cost, flexibility, and reliability are keys for freight
operators when choosing a transport mode. In addition, road transport can achieve these
goals as it provides greater flexibility than other transport modes, and this usually at a
reasonable price. However, rail and waterways can win in term of cost for long distance
deliveries. Combinations among the modes are therefore recommended in certain cases.
In cities, where it is difficult to use modes other than road, it is recommended to
implement schemes such as increased consolidation among different freight operators
via urban freight center schemes (such as City Logistik in Germany), and/or to provide
vehicles with new technology or alternative fuels that produce less pollution.

Regarding long distance freight flows, the utilization of rail and waterways should be
increased. The development of multimodal freight facilities (such as GVZ in Germany

52
and Interporto in Italy) is necessary to support transshipment between transport modes
and so increase the ability to connect between these modes and road transport for urban
deliveries. At the same time, the capacity of railway, waterway, and coastal facilities
should be increased by extending rail networks and through new technologies such as
operational optimization for railways, ports and cargos handling systems.

Public Private Partnership (PPP) is the most recommended organizational structure for
freight facilities. The Public sector should subsidize and/or organize the facilities
together with private sector entities. Initial funding for research work and pilot studies
should be provided by the government sector. It important to note that the key to
success for most schemes is the enthusiasm of the private sector operators participating
in the project. The development of an understanding of the benefits of sustainable
transport among private sector operators is very important since the benefits in reduced
cost are not always obvious, and can cause the private sector to lose interest in the long
run.

53
 4. Conclusion and Recommendation

For developing countries it is reasonable to assume that economic development shall

lead to more ton-kms of freight transport. However, policies that reduce this total
demand should be nevertheless being encouraged. These may include buying locally
produced goods and carbon taxes. It is important to note that: more efficient transport
systems will reduce pollution for a given quantity of ton-kms transported, but efficient
transport systems also encourage a larger quantity of ton-kms to be transported. Hence,
policies that lead to more efficient transport systems and policies that reduce demand
for transport should be implemented in unison.

Based on experiences of various policies implemented in several countries, the policies

and measures that can lead to more sustainable freight transport are classified into 5
groups. They are:
Licensing and regulations,
Freight centers and consolidated delivery,
Low-emission vehicles, environmental friendly modes, and alternative fuels,
Technology-based service improvement and driver training, and
New freight transport systems.

The key idea for sustainable freight transport is to use road transport only when it is
necessary (if it is unavoidable, try to reduce it as much as possible and so restrict
pollution). Immediate changes can be expected through the development of freight
centers concurrently with increasing the use of the more environmental friendly modes
(including rail, waterway, and coastal transport). For the long distance deliveries, it is
strongly recommended using these less polluting modes. However, the infrastructure
necessary to support flexible intermodal delivery systems cannot be neglected. The
development of multimodal freight facilities (such as GVZ in Germany and Interporto
in Italy) is necessary to connect between rail and/or waterway to road transport to enter
the urban areas where road transport is generally the only option. It is also important to
increase the capacity of railways, waterways, and coastal facilities.

In urban areas, road transport seems to be the only delivery method attractive to
transport operators due to its flexibility. The policies of urban freight centers and
consolidated deliveries provide a way to reduce the number of truck trips entering cities.
However, it is not an easy task. Several urban freight centers and consolidation schemes

54
have failed due to the absence of the required strong cooperation among participating
freight operators. In many cases, the implementation of urban freight centers leads to
increasing costs to the freight operators. Even for the City Logistik scheme in Kassel,
which claims not to generate any extra costs to the participants, it has been reported that
some companies have already left the cooperation. This experience demonstrates the
need to give adequate attention to cost efficiency for operators in the implementation of
consolidation schemes.

Licensing and regulation should be carried out concurrently with the implementation of
urban freight centers and consolidation schemes. Implementing pricing and regulation
schemes with the introduction of freight centers and consolidation programs can
increase the opportunities for cooperation among freight operators. However, it does not
always guarantee the best result. Strong implementation of regulation while the freight
centers are not well planned (for example, poorly located) might lead to undesirable
effects.

Technology based service improvement, as well as consolidation schemes, can lead to a

reduced number of freight vehicle trips in cities. Proper route planning and fleet
management help to reduce unnecessary delivery trips. In addition, this approach is
easier to promote among freight operators since the benefits of reduced costs can clearly
being seen.

Supporting the development of low-emission vehicles and alternative fuels for freight
vehicles obviously reduces the pollution in cities. Although the scheme itself can not
reduce the number of truck trips entering into the city, implementation of such measures
together with pricing and regulation can achieve significant improvements in air quality.

The new freight transport system (such as the Underground freight system proposed by
the Dutch government) is very promising despite the huge investment required. In some
cases, modal shift techniques (to increase the usage of rail and waterway) may not work
for several reasons, for example, most trips are short distance deliveries and other
modes are not attractive for freight operators.

Finally, as most policies have different impacts on freight operators, the wider economy,
and the environment, governments must choose where their priorities lie. It should be
emphasized that there is considerable scope for win-win policies, both from the

55
different perspectives of the public and private sectors, and across social, environmental
and economic goals. Combined schemes (such as the examples discussed above) are
highly recommended in order to achieve the best results. Many of the measures are
mutually reinforcing and a balanced overall package of measures will lead to higher
levels of cooperation from the private sector.

56
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