Analysing the Determinants of Logistics Service Provider Efficiency in Urban Distribution

Traffic congestion, lack of parking spaces, and high levels of pollution in urban areas, together with an increased awareness of freight transportation impacts, stress the importance of City Logistics (CL) as a comprehensive approach aimed at mitigating the negative effects of distribution activities without penalizing social, cultural, and economic development. CL faces a relevant degree of complexity, which causes uncertainty about planning and managing urban logistics activities. Several models have been developed to optimize CL focusing on distribution warehouses, freight flows, the routing task, vehicle loading, the size and type of vehicles that can enter urban areas, and possible congestion charges. However, a successful implementation of such models requires a proper level of internal efficiency of the stakeholders involved. Among them, logistics service providers (LSPs) play a crucial role because they are expected to offer high quality services in urban areas. The paper proposes an empirical analysis on the operational factors determining the level of efficiency of a LSP, which is here assessed through productivity. Data about an Italian LSP involved in urban freight distribution are analyzed and a regression analysis is completed. Two managerial levers are found to affect the level of productivity: the organization of the distribution network, and the vehicle loading strategy. The first lever implies a more efficient location of warehouses, an extension of the area covered by each driver and a more effective routing structure. Furthermore, vehicles should not be excessively loaded, especially with big parcels, in order to ensure flexibility. This study represents an attempt to develop a comprehensive panel of operational variables affecting the efficiency of the urban distribution system of LSPs. The enhancement of LSP efficiency contributes to achieve a better quality of life in urban areas as well as the associated economic and environmental benefits.