City Logistics Research: A Transatlantic Perspective (2013)

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34 Terminals and Hubs Impacts and Strategies Lanfranco Senn, Bocconi University, Milan, Italy Jean-Paul Rodrigue, Hofstra University, Hempstead, New York, USA Thierry Vanelslander, University of Antwerp, Belgium Clarence Woudsma, University of Waterloo, Ontario, Canada Thomas O’Brien, California State University, Long Beach, California, USA Genevieve Giuliano, University of Southern California, Los Angeles, California, USA IntroductIon Lanfranco Senn Lanfranco Senn opened this session by saying that hubs have both a positive and a negative effect. Given global supply chains, freight has no well-defined borders, which results in “glocalism” (the practice of conducting busi- ness according to both local and global considerations). Global supply chains create local impacts. This session will focus on terminals and hubs that have arisen around nodes, particularly ports and airports, he said. These hubs create more concentrated environmental impacts around their immediate area, even though the freight they transport may go to locations worldwide. The pur- pose of the session, Senn said, was to discuss the impact of hubs and how to mitigate their negative impacts. pArt 1: IMpActs oF terMInAls And hubs on MetropolItAn AreAs Intermodalism and Urban Logistics: Impacts of Terminals on Metropolitan Areas Jean-Paul Rodrigue Jean-Paul Rodrigue spoke about intermodalism and urban logistics, focusing on the impacts of terminals on metropolitan areas. Across the board, he said, material intensiveness has increased. This term refers to the fact that the number of containers moving across the world has increased by a factor much higher than the levels of export value, economic activity, or population. One interesting change that has taken place is the disloca- tion of manufacturing, while its operations have become highly integrated. That is, there is a higher level of func- tional integration even though operations are spatially dislocated. The outsourcing and offshoring of manufac- turing has had a large impact on global supply chains (see Figure 1, page 35). Rodrigue attempted to cross-reference United Nations data on cities with the logistics performance index (LPI), an indicator published by the World Bank. The scale mismatch (city versus country) does not allow a strong association, so the concordance between urban areas and the national LPI is tenuous at best. He noted that 75% of cities are located in areas considered to be logis- tically deficient. Using Ports for City Logistics Next, Rodrigue moved to the topic of ports as an ele- ment of city logistics. When the performance of a port or terminal is evaluated, city logistics is not part of the evaluation. Ports and terminals only report on metrics inside the port. The fact that drivers may occasionally wait for hours on urban roads before they can access a terminal is not part of the performance evaluation of the terminal. This creates a conflict in which the city has to bear the externalities of port operations. Instead,

35TERMINALS AND HUBS: IMPACTS AND STRATEGIES Rodrigue proposed the idea of using ports for city logis- tics. Port-centric logistics zones would offer advantages such as the availability of land and labor. Containers could be transloaded within the port and empties could be quickly repositioned, which would decrease supply chain lead times. Rodrigue cited the Savannah Logistics Cluster as an example of such a port-centric cluster. This cluster, based around the seaport in Savannah, Georgia, has numerous industrial parks and is home to the distribution centers of large firms such as Ikea, Target, and Home Depot. The Savannah Logistics Cluster is a new gateway and is the outcome of private firms’ decisions to use a new port of entry to the East Coast. One factor for planning such port-centric clusters, however, is that many ports experi- ence a yearly cycle in which monthly container traffic builds for the holiday season and then drops dramatically in January before slowly picking up again. A question for urban planners is whether to build for the peak opera- tions or for the less-intense daily operations. Locating a logistics center in an area that has both a seaport and an airport, or that has a seaport and rail connections, makes it easier to shift between modes, Rodrigue said. Companies build and choose to locate in large ter- minals or freight handling facilities due to economies of scale that make these facilities efficient. However, a problem occurs because this concentration of flows trig- gers major conflicts concerning functional, spatial, and environmental goals. City Logistics Performance Index Rodrigue suggested research was needed to develop a global city logistics performance index and to understand the interaction between city logistics and ports’ commer- cial cycle impact. Rodrigue was immediately asked what kinds of performance measures would go into this index. He answered that there would be different metrics, but the analysis would begin with perception: How do you perceive parking or opening hours in terms of ranking the city? In the short discussion that followed, Heike Fläemig pointed out that it was important to distinguish between logistics and freight. The city of Hamburg is located near a port, but very few of the goods coming into the port actually go to the city of Hamburg itself. Some ports are gateways to a whole region. Another example is that a city may look high performing in terms of hav- ing large fleets of commercial trucks, but those trucks may be running half empty, which is not good for the environment. FIGURE 1 Outsourcing and offshoring of manufacturing has significantly affected global supply chain.

36 city logistics research: a transatlantic perspective pArt 2: strAtegIes For MItIgAtIng IMpActs oF terMInAls And hubs Consolidation Hubs and Freight Villages Thierry Vanelslander Thierry Vanelslander presented two strategies for miti- gating the impact of consolidation hubs or freight vil- lages: making a time shift and making a mode shift. Specifically, the first strategy for mitigating the impact of consolidation hubs or freight villages is to make better use of the existing network, which can be accomplished by shifting operations in time. That is, opening hours in seaports or in the hinterland, or both, could be extended in order to spread operations over more hours during the day and night. Alternatively, within the existing open hours, traffic could be shifted to less-congested periods during those hours. Making a Time Shift Vanelslander researched these two strategies to identify bottlenecks and assess the impact of making such shifts. He found that shifting within existing terminal opening hours is more efficient than extending terminal opening hours. The method he used to arrive at this conclusion included creating a hinterland flow typology, using port flow statistics, opening hours, and capacity use data. He also used real-life cases and found that in current practice, most deliveries and pickups take place at 8:00 a.m. This timing is the result of habit more than any- thing else, he said, and it occurs because 8:00 a.m. is typically the start of the day. Furthermore, just-in-time strategies dictate frequent deliveries of small batches of freight. Finally, the opening hours of Customs facilities constrain when the movement of freight can take place. Vanelslander measured the cost of making time-shift changes, considering three alternative scenarios: a 3:00 a.m. start, a 10:00 a.m. start, and a 7:00 p.m. start. His assumptions included peak hours being 7:00 to 9:00 a.m. and 4:00 to 7:00 p.m., and he assumed average travel and waiting times and time and distance costs. He did not take external effects into account, or the cost of extra trips. His first case was the export of containers by a medium-sized shipper via the Port of Antwerp. The two systems involved were container lift and chassis (or skeletal trailer), and the timing of these was 7:00 a.m. to 5:00 p.m. for the container lift and 24-hour per day operations for the chassis. Vanelslander’s analysis showed that the cost impacts were highest for operating during the off-peak hours of 8:00 p.m. to 5:00 a.m. Moving to off-peak hours would require finding ways to compensate receivers for off- hours delivery. Similarly, adding extra labor for the Cus- toms office to operate outside of the hours of 8:00 a.m. to 5:00 p.m. would be an added cost that would need to be borne by the public. On the basis of this analysis, he concluded that shifting within existing terminal opening hours is more efficient than extending terminal opening hours. Making a Mode Shift Next, Vanelslander considered a shift in mode, namely using rail rather than truck to reach a city center. He analyzed the case of French retailer Monoprix, which uses rail to deliver goods into Paris. The freight begins at a large production facility and is then moved by rail (using existing rail lines) to the city center. The transfer point in Paris is an old railway station that Monoprix transformed into a hub. The results, after 1 year of using rail rather than truck, include a savings of 70,000 liters of fuel and a reduction in vehicle kilometers. In partic- ular, 12,000 trucks do not have to enter the center of Paris, which reduces traffic congestion. In addition, the mode shift significantly lowered greenhouse gas (GHG) emissions (a decline of 340,000 tons of CO2 and 25 tons of nitrogen oxides [NOx]). Using rail in Europe is more expensive than using trucks, so that shift was more expensive for Monoprix. Vanelslander also discussed another case of mode shift: urban distribution using barges. He examined the case of the Utrecht beer boat, in which the barge delivers to the city center, and bikes deliver the last mile. Using the barge rather than vans results in significant environ- mental benefits, namely reductions of 74% of particulate matter with a diameter ≤10 micrometers (PM10), 27% of CO2, and 85% of NOx (all percentage reductions are kilograms per year). Another example of a shift to barge is the DHL Floating Center Concept. The advantages of the shift to barge are that it is a sustainable alternative that lowers external costs, reduces congestion, avoids road transport limitations, decreases traffic fines, and offers a reliable service. The disadvantages include adapt- ing logistics habits to the change and extra transfer cost. If there is a large last mile, then there are higher costs of using cycling messengers. However, delivering by bike is not always more expensive; if enough volume is gener- ated, the cost per stop is comparable with van transport cost. In addition, if road congestion increases, bikes are less susceptible to the resulting traffic congestion delays. In contrast, under increasingly congested conditions, fuel consumption increases and more vans and drivers may be needed to make on-time deliveries, which fur- ther increases costs of that mode. Finally, Vanelslander observed, less equipment cost is more important than extra needed bike drivers for the same volumes.

37terminals and hubs: impacts and strategies Recommendations for Research Vanelslander concluded by offering some recommenda- tions for collaborative research. First, he suggested that much more urban logistics research is needed into the areas of urbanization, congestion concentration, and pollution concentration. Second, supply chain thinking and analysis are needed, because to date urban logis- tics research has considered these topics separately. Collaboration and chain thinking are needed because chain actors will need to work together and, in terms of financing, the public and private sectors will need to work together. Environmental Regulation Clarence Woudsma Clarence Woudsma briefly defined environmental reg- ulation and offered some examples of regulation that affect the freight system. Environmental regulations are explicit requirements aimed at reducing noise lev- els, improving air quality, reducing GHG emissions, and so forth, he said. They are sustainability driven and are focused more on mitigating negative effects on the environment rather than on productivity or economic concerns. Regulations in North America are set at the federal, state, and regional or local lev- els. At the federal level, examples of environmental policies that may affect the freight system include pol- icies that set emissions or fuel standards, air quality standards, water pollutant discharge rules for vessels, and oil spill prevention rules, such as requiring double hulls. At the state level, policies affecting the freight system include drayage truck rules at ports and rules on locomotive idling. At the regional or local level, environmental policies such as airport noise restric- tions, restrictions on visual impacts (e.g., lighting), and vessel shore power requirements affect the freight system. Similarly, regulations regarding energy and climate change issues are set at all three governmental levels. Examples that affect the freight system include require- ments or subsidies for renewable fuels, GHG cap and trade, and programs or incentives to improve fuel effi- ciency, such as the SmartWay program. The key consideration with all of these policies is that there is an interplay among policies and regu- lations and the local terminal or hub. Woudsma focused his presentation on the city level and impacts of terminals on cities. At this level, the question arises of what to regulate (air quality? noise?) and how to regulate (and subsequently mitigate), such as via land use measures. U.S.-EU Examples of City-Level Environmental Regulation Woudsma next presented examples of regulations cur- rently in effect at the city level in the United States as well as in Europe. He explained the regulation and listed the location where that regulation is currently enacted. He listed regulations that penalize poor performers (such as restricted access or fees), as well as promote good perfor- mance (such as exemptions from charges). Woudsma’s examples included truck fleet emission standards that specify diesel particulate filter standards (California); low-emission zones (LEZs) that restrict access by older and more polluting trucks (London); alternative fuels and electric delivery vehicles exempted from paying a congestion charge (Milan, London); promotion of alter- native modes or cargo diversion, such as CargoTram (Paris, Dresden); restrictions on truck idling, such as a 5-minute limit on diesel truck idling (California); deliv- ery noise reduction (such as the Netherlands’ PIEK pro- gram to research noise reduction equipment for vehicles, and Atlanta’s ASTROMAP); and environmental justice or community mitigation measures, such as Baltimore’s Maritime Industrial Zone Overlay District. In the area of environmental justice, public health concerns may push the agenda more than anything else. London’s LEZ and Los Angeles’s Clean Truck Program Woudsma then examined the results of London’s LEZ 5 years after of its implementation. The LEZ covers the greater London area, not just its core. The larger area extends the environmental benefits. The LEZ set minimum emissions standards for heavy goods vehicles of Euro III class, using a phased approach that began in 2008. This measure led to a higher rate of vehicle replacement, decreasing the proportion of pre-Euro III class vehicles. After 5 years, air quality measurements in the LEZ show that PM10 has dropped by 2.46% to 3.07%, com- pared with an increase of 1% just outside the LEZ. No differences were found for NOx. National Cooperative Freight Research Program Report 23 (2013) rated LEZs high for effectiveness but low for applicability in the United States due to local jurisdictional complexity. In the United States, results of mandatory clean truck programs (in the Los Angeles–Long Beach ports) have been dramatically more effective than voluntary pro- grams, such as those at the ports of Houston or Charles- ton. Results include an 80% reduction in PM10 and NOx from the baseline for the mandatory programs, compared with a 1% to 4% reduction in the areas cov- ered by voluntary programs.

38 city logistics research: a transatlantic perspective Canadian Examples Woudsma next offered some examples from Canada, particularly the greater Toronto area, which is subject to federal emissions standards, trade corridors, and the SmartWay program, as well as provincial regulations that limit trucks to speeds of 105 kilometers per hour. Regu- lations do permit one tractor pulling two 53-foot trail- ers, which improves fuel efficiency, although motorists are not happy with these long vehicles on the highway. Locally, Toronto has issued anti-idling regulations that limit idling to 1 minute in the city of Toronto. Toronto often looks to London as an example for environmental regulations and policies. At the provincial level, Ontario has developed Freight-Supportive Land Use Guidelines to provide con- sistent direction for local land use planning, site design practices, and operational procedures to facilitate goods movement in diverse communities. There is legislated protection of economic highway corridor lands and con- sideration of truck-specific usage of highway capacity to enhance system performance. Unfortunately, Woudsma said, the planning community knows little about urban freight. A business-led initiative that includes major logistics firms seeks to create a recognized “eco-business zone” around Toronto’s Pearson International Airport. In addition, Metrolinx, a provincial agency, was cre- ated to integrate transit systems across jurisdictions in the greater Toronto area. Metrolinx initiated an urban freight study in which freight is the focus of the study, doing so in conjunction with their major emphasis, which is passenger transit. Innovative ideas are welcomed in Canada, but there is lack of pressure for action, Woudsma said, because Canada does not have the core congestion and land development challenges that, for example, Paris has. In Canada, there is still room to build 1,000,000-square- foot facilities on the periphery of major cities, and the pressures in the urban core—air quality, congestion, or noise pollution—are not as acute. Challenges of Environmental Regulations Woudsma next discussed the challenges of environmen- tal regulations. First, there are interdependencies, such as air quality and noise being linked to public health outcomes. Second are unanticipated consequences and multijurisdictional influences. Another challenge is that of enforcement and compliance. Often, large firms com- ply but small firms are less compliant, yet the combined actions of many small firms can have a disproportion- ately high impact. Finally, it would be good to internalize the externalities, Woudsma suggested, such as utilizing user-pay or polluter-pay schemes. Such pay schemes are often difficult to implement during an economic down- turn, however, when there is less appetite for more strin- gent measures. One way to motivate change or political pressure could be to visually show externalities that may otherwise be hidden. Woudsma showed an example of fine-grain emissions data graphed by the Hestia Project. The graph displayed on-site fuel CO2 emissions across the city of Indianapolis, Indiana, showing not just green and red zones but also the three-dimensional height of the red zones, which highlighted the worst areas and pre- sented a more effective communication of the issue (see Figure 2, page 39). Recommendations for Research Woudsma concluded his session with suggestions for research. One research area is how to move on the spec- trum of “command and control” regulation to “nego- tiated” policy (regulation) through partnerships. Here, policy makers could act as “deal brokers” rather than rule makers, taking into account the competing interests of multiple actors. A second research thrust could look at the most effective types and combinations of policies to achieve environmental objectives, examining how they interact with other policies. A third possible research area is that of public health and equity implications of environmental regulations. Overall, there is a need for both qualitative research (to better understand the moti- vations, response, and process of the policy lifecycle) as well as quantitative research (i.e., data on activity and outcomes) to better understand the impacts, interactions, and trade-offs among regulations. Finally, Woudsma mentioned the need for a databank with information about approaches, implementation, and impacts. Operational Strategies Thomas O’Brien Thomas O’Brien began by explaining the context of the hub and terminal problem. Growth in merchandise trade and services has brought an increasing need for scale economies on the part of ocean shipping, and that scale has impacts on cities and regions. Decentralization has resulted in the development of distribution centers on the urban periphery from which goods must be moved into the urban core. Urban freight comprises not just goods for consumption in the city, but also the export activity within the city. This activity can have a large impact, such as in Los Angeles County, which is the largest man- ufacturing county in the United States. The increasing size and capacity of container ships lets them move a large amount of goods, but the ves-

39terminals and hubs: impacts and strategies sels’ size limits the number of ports they can enter. The largest container ships, as of 2013, have a capacity of 18,270 20-foot equivalent units (TEUs), compared with 4,538 TEUs of the largest ships in 1988. These “triple E” (economy of scale, energy efficient, environmentally improved) ships of 2013 are 400 meters (1,312 feet) long by 59 meters (194 feet) wide with a draft of 16 meters (52.5 feet). Because not all ports can accommodate these huge vessels, a smaller number of ports must handle a larger amount of cargo. O’Brien next discussed some of the solutions to address the problem of freight at trade hubs and gate- ways, focusing first on the issues of bottlenecks at these hubs. Specifically, these solutions encompass gate pric- ing at the port and the use of an appointment system for truckers to pick up cargo. The goals of these solutions are to spread out the flow of truck traffic and to reduce noise, air pollution, and engine idling. Congestion Pricing at Ports One such program, the PierPASS program instituted at the Los Angeles–Long Beach ports, was a program to encourage off-peak traffic. PierPASS charged a sur- charge to companies who moved goods during the peak 8 a.m. to 5 p.m. hours. The program had a dramatic impact immediately from its inception in 2004: it rap- idly shifted 40% of eligible cargo to evening and week- end hours. The PierPASS program was managed cooperatively by the terminal operators themselves, who created a third- party company to collect the fee. The fees were used to pay for off-peak labor. The PierPASS program worked because it was terminal focused, O’Brien said. An ear- lier appointment scheme at the Los Angeles–Long Beach ports failed. Appointment schemes often fail because they focus on just one actor, ignoring the effects on the rest of the supply chain. The Port of Busan in South Korea implemented con- gestion pricing, but in reverse of southern California’s scheme. In Busan, the greater demand was for off-peak operations because of the desire to pick up shipments in the evening in order to make early-morning delivery in Seoul. Thus, Busan assessed a surcharge on off-peak operations to encourage a spread of operations to day- time hours. Clean Truck Program Next, O’Brien described the Los Angeles–Long Beach Clean Truck Program, which is an example of gate pricing. The Clean Truck Program was a mandatory program whose aim was to transition the truck fleet to cleaner vehicle standards. The program was the center- FIGURE 2 Three-dimensional graphs effectively communicate high levels of urban CO2 emissions. (Example of fine-grain emissions data, from the Hestia Project, Arizona State University: on-site fossil fuel CO2 emis- sions across the city of Indianapolis, Indiana, for the year 2002; from Gurney, K. R., I. Razlivanov, Y. Song, Y. Zhou, B. Benes, and M. Abdul-Massih, Quantification of Fossil Fuel CO2 Emissions at the Building/Street Scale for a Large U.S. City, Figure 5, 2012. www.epa.gov/ttnchie1/conference/ei20/session3/hestia_gurney.pdf.)

40 city logistics research: a transatlantic perspective piece of a voluntary agreement to develop an environ- mental program that would encourage cleaner vehicles by offering subsidies and grants to truckers to retrofit or replace vehicles to accelerate truck replacement. A fee was attached to using older, dirtier trucks. There was a progressive ban of trucks in the port: a ban on pre-1989 trucks by October 1, 2008; a ban on 1989 to 1993 trucks by January 1, 2010; a ban on unretrofitted 1994 to 2003 trucks by January 1, 2011; and a ban on pre-2007 trucks by January 1, 2012. No fees were needed as of 2012, because the entire fleet was now operating with newer or retrofitted trucks. This sunset clause was added to appeal to industry. Results of the Clean Truck Program included a 90% reduction of air pollution from harbor trucks in 3 years. O’Brien offered the Clean Truck Program as an example of an industry-driven approach that bought aggressive implementation. It established a fee structure to pay for environmental mitigation efforts. Getting ahead of envi- ronmental mandates was good for regional competitive- ness, O’Brien said. In the realm of environmental policy and processes, the Clean Truck Program set a precedent for extraregu- latory pricing. The risk of such programs, however, is that they might create multiple, competing standards. Some regions may also be hesitant to implement such programs for fear that the uncertainty might be bad for regional competitiveness. Nonetheless, O’Brien said, the Clean Truck Program serves as a model for adoption and adaptation. Road Pricing and Separate Truck Lanes O’Brien next moved to the topic of road pricing and separated truck lanes, whose aim is to reschedule truck traffic to off-peak hours or to separate truck traffic from automobile traffic. He mentioned that weight distance fees are being used in Switzerland, Austria, and Ger- many, and noted that economic conditions and bud- get limitations affect the scale and feasibility of pricing schemes and separated lanes. For example, there may be a scarcity of land to create truck-only lanes, as in the Netherlands, or a lack of political will. Dedicated truck lanes were proposed in Atlanta, Georgia, and Los Angeles, California, but were never implemented. Truck bypass lanes or auto-only inner roads separated from general-purpose outer roads may be more feasible to implement. In London, it took 2 years for stakeholders to agree on a congestion-pricing fee for commercial vehicles. A proposed New York bridge toll plan assumed a $21 daily fee for trucks and may require a subsidy to receiv- ers. A key question arises from such pricing schemes: Do they divert discretionary cargo? Rail Strategies for Hub Regions Next, O’Brien turned his attention to rail strategies for hub regions. Examples of strategies are the elimination of bottlenecks through double tracking, double stacking, integration of legacy rail systems, and better switching technology. The problem with double tracking is that it is capital intensive. O’Brien cited the Chicago Region Environmental and Transportation Efficiency Program (CREATE). The program is a first-of-its-kind partner- ship between the U.S. Department of Transportation, the State of Illinois, the City of Chicago, Metra, Amtrak, and Chicago area freight railroads. One of the ways the project aims to improve efficiency is by building flyovers to separate rail freight traffic from passenger traffic on congested rail lines. Freight rail traffic becomes an issue in cities when it interferes with passenger traffic, particularly at rail– highway grade crossings. Attempts to minimize such freight impacts include eliminating grade crossings, shifting truck and rail traffic to barge (marine high- ways), optimizing rail schedules, and using commuter rail for local freight, as in the Monoprix example in Paris cited earlier. San Francisco attempted this type of solution as well by using the BART passenger rail system to move packages for UPS, DHL, and FedEx, but it proved too difficult to integrate those operations. One of the main challenges of rail strategies, such as removing grade crossings, is the high cost of the projects and the question of funding. U.S. infrastructure projects are often a combination of public- and private-sector funding, with contributions from the federal government, states, and private companies who stand to benefit. For example, the $300 million Heartland Corridor Project funding is approximately 46% federal, 20% state (Ohio and Virginia), and 33% Norfolk Southern. The corridor is designed to help the East Coast rail networks handle more traffic from the expanded Panama Canal, which will be completed in 2015. The corridor improves direct transit time to Chicago by providing a high-speed, double- stack corridor and helps East Coast ports compete with those on the West Coast by allowing them to serve Chi- cago faster. The corridor will shave 225 route miles off each container moved to Chicago and will reduce transit time between East Coast ports and Chicago by 1 day. The Alameda Corridor Project stands as an example of innovative financing, with 48% of the $2.43 billion project funding coming from revenue bonds, 17% from a federal loan (repaid in 2004), 16% of funding coming from ports, and 14% coming from local transportation agency grants. The 20-mile corridor replaced four rail branch lines and built 40 grade crossing separations and a 10-mile dedicated trench that improves the connections and speeds up traffic to make the region more competi- tive. This showcase project has not, unfortunately, been

41terminals and hubs: impacts and strategies replicated elsewhere due to the high costs and protracted negotiations involved. Recommendations for Research O’Brien concluded his presentation with an identifica- tion of research needs in three areas. First, in intramet- ropolitan freight moves in hub regions, researchers need to define what “local freight” means. Shippers may not even know, so researchers need to spend time defining the concept. Second, a better exploration of case stud- ies of existing policies and experiences is needed, in particular an examination of pricing strategies. The Pier- PASS program has been evaluated, but looking at other pricing programs would be beneficial. Finally, O’Brien suggested conducting an inventory of municipal-level regulations that affect freight flows in trade hubs and gateway regions. sessIon suMMAry Genevieve Giuliano Genevieve Giuliano identified three themes in Rodrigue’s presentation. The dominant theme was that of the importance of taking a comprehensive approach to city logistics and the broader context in which it takes place. All the types of flows, the modes on which they move, and all the metro locations in which those activities take place come under this purview. Rodrigue provided the audience with many examples, she said. The second theme was that of the concept of city logistics terminals and the important function they play. Terminals affect the larger network and the whole sup- ply chain. Third, Giuliano pointed out, Rodrigue men- tioned creating a global city logistics performance index, which instantly initiated questions on what types of met- rics would be used. Finally, Giuliano said, Rodrigue made a point about the importance of decision makers who are typically supply chain managers. Giuliano described these decision makers as key global players. For example, Wal-Mart managers and Target managers are key global players who have tre- mendous impacts all around the world and significantly affect cities through their supply chain designs. Vanelslander, Giuliano said, walked the audience through the types of strategies that could improve effi- ciency in freight hubs, namely time shifts and modal shifts. The weakest link limited what could be done. In Vanelslander’s example, the opening hours of Customs facilities was a limiting factor that raised costs for com- panies who tried to operate outside of opening hours. Another point that was clear throughout Vanelslander’s presentation, Giuliano said, was the conflict between technical ability to generate efficiencies (e.g., by using appointment systems or pricing strategies) and institu- tional habits that may block these strategies. Research- ers have the technical knowledge and can simulate the benefits of strategies, Giuliano said, but they cannot change the opening hours of Customs facilities. She rec- ommended identifying which conditions were binding and which were not. Woudsma’s presentation illustrated the often-conflict- ing objectives of environmental regulation and economic efficiency. In Canada, the government aims to get more of the trade market in North America; thus, it allows the use of higher-capacity equipment, such as double and triple trailers, which increase efficiency and therefore support an economic development strategy. Giuliano also mentioned the value of careful empiri- cal studies, such as the one done by London Transport, to show exactly what happens when a policy like an LEZ is implemented. London has documented the environ- mental benefits of the LEZ, and such documentation is rare. Giuliano said it was important to have such mea- sures—in this case, to know if air quality improved—so that policy makers and decision makers can see if the social benefits outweigh the costs. O’Brien’s presentation detailed the implementations undertaken by Southern California ports and how to make changes in a complex world of trade-offs. In the Southern California case, the ports took a risk that they could impose these costs given the uncertainty and yet still maintain market share, Giuliano said. sessIon QuestIons And AnsWers Barbara Lenz commented that with supply chain nodes and various functions, we have to ensure that we have the right function in the right location. Edoardo Marcucci questioned the value of a city logis- tics performance index, because 39 gateway regions have 90% of the worldwide concentration of freight. He praised Vanelslander’s point that cooperation is needed along the whole supply chain, especially given that not all agents in the supply chain have equal power. From a methodological perspective, analytical tools are needed to estimate the interaction among agents, he said. Within supply chains, there is not just one reaction but many. Marcucci also praised Woudsma’s presentation for its clear conception of how environmental regula- tions influence the flow of goods. Multilevel governance is at play, from cities where flows are local on up to regional, national, and international: different regula- tory policies have different impacts. It would be nice to see if regulations could be coordinated, Marcucci said.

42 city logistics research: a transatlantic perspective Finally, from O’Brien’s presentation, Marcucci appreci- ated seeing the effects of pricing policies and what could be done. He suggested that, methodologically, research- ers could develop instruments to test the effects of policy interventions. Vanelslander agreed with Marcucci about the need for tools to look at cooperation among supply chain actors. Woudsma added to Marcucci’s point that not only are multilevel jurisdictions a challenge, but sometimes even within a given jurisdiction, multiple players have competing models and may be unaware of others’ mod- els. This was the case when Woudsma worked with the Federal Ministry of Canada and saw that the Environ- mental Ministry and Natural Resources Canada each had their own models but did not talk with one another. Therefore, even within a jurisdiction there may be lack of communication or interplay. O’Brien agreed with Marcucci’s call for case stud- ies and evaluating the effects of strategies implemented. He urged that not only success stories but also failures be included in order to understand why some strategies failed to be implemented. René de Koster asked about the impact of warehouses that are located at the edge of cities. He said such ware- houses generate problems that must be mitigated, but no one had yet spoken about that topic. Goods flow from these warehouses, but labor also must get to them. Often, warehouses are located where people do not want to work. Warehouses often get automated when people do not want to work there. Vanelslander replied to de Koster, saying that these warehouse issues are similar to the issues that seaports have, namely the problem of getting people there and the cost of land. He agreed that such centers could be important centers of jobs and value added, and thus merit research. Rodrigue added that, over time, terminals and ware- houses could create neighboring services and activities, generating a critical mass of people to bring in service industries like restaurants and shops. Carlo Vaghi asked Vanelslander whether, in his survey of hubs, he took into account the neutrality of the loca- tion (i.e., a hub that does not favor any particular car- rier) as a success factor. Vanelslander answered that yes, neutrality and con- fidentiality are important success factors, which is why collaboration is important between operators who spe- cialize in providing special types of contracts that guar- antee neutrality. Vaghi asked Woudsma about the congestion charge, which has had successful results in reducing traffic by 23% and accidents by 22% and improving environmen- tal standards in the Milan city center through bundling freight and better truck utilization. Woudsma responded to Vaghi’s point about reducing the number of accidents, saying that in many countries road space is shared by vehicles and bicycles, increasing bicyclists’ exposure to potential crashes. In some cities, environmental considerations may be less of a motivator for regulations than public health and reducing accidents. Anne V. Goodchild asked a question of O’Brien, saying he seemed to imply that PierPASS was industry driven, but she thought it was driven by air quality regulation. O’Brien answered that Goodchild’s was a fair point, but PierPASS happened because of significant buy-in from the terminal operators because it was in their best interests. It is true that state-level legislation was in the works to mandate something similar to PierPASS, but with that legislation, proceeds of the fee charged would have gone back to the state, not the terminal operators. With PierPASS, the proceeds of the fee go back to the ter- minal operators. Thus, PierPASS was terminal-operator driven, and that was a key reason for its success. O’Brien added that it has not been possible to audit the program, but it was not losing money. A combination of heavy trade volumes and political pressure drove the terminal operators to act. Rosário Macário commented that researchers needed to think clearly to distinguish between what is “urban” and what is not. She posed several questions: Where are the locations of hubs? Are they in metro areas, and how is it reflected in the supply chain? Where are the elements of value added of urban logistics, and what elements of the supply chain can provide value? Vanelslander replied that different kinds of cities play different roles in the supply chain and have differ- ent needs. He noted that there has been an evolution in thinking about “urban”: an area like the region of Flanders is considered a metro area because of its dense population. But although Flanders is considered to be a metropolitan area, it is not a classic city and has very different needs. Woudsma turned the question back on Macário, asking her what she meant by “urban.” To planners, “urban” means a dense built-up core area with a dense population. To them, the core is urban and the rest is suburb. Macário replied that she considered a location “urban” if it was administratively defined as such. Woudsma added that downtown Chicago is different from the suburbs of Chicago. Some see urban areas as parcels of land, he said, while others see them as markets. Rodrigue added that other typologies of cities that can be looked at are as a jurisdiction, as a commuting range, as a market, or as a government region; there is variation

43terminals and hubs: impacts and strategies in levels of density. He suggested research be done in the area of added value and value chain to find which cities are adding value. Globalization has decreased the costs of manufacturing. For example, Apple captures 50% added value. There are logistics inequalities in terms of where value gets captured. Kazuya Kawamura commented that more research was needed about rail terminals. In France, an older terminal was converted for Monoprix’s use to haul freight into the Paris city center by rail. Having logistics centers at the outskirts of a city means that goods have to be deliv- ered into the city, but they also offer an opportunity for rail freight to bypass the city, as happened in Chicago. Building outside the city can provide benefits, as well. Edgar Blanco commented that the Port of Los Angeles in 1988 was taken to court, lost the lawsuit, and was forced to improve air quality, which led to initiatives like Pier- PASS. He asked whether O’Brien saw nongovernmental organization pressure as a factor that motivates mitiga- tion measures. Entities are committed, even if their com- mitment is not quite market driven. O’Brien answered that the court case was against a China shipping terminal, which did result in specific environmental measures, but PierPASS was based on rising trade volumes and involved all the terminals, not just one terminal, which made it work. He noted that many others have looked to Southern California as a leader and have emulated measures such as the Clean Truck Program by calling theirs a “Clean Truck” pro- gram, but they do not have the pressures of compli- ance. Participation is voluntary, and other ports like to advertise that they are “congestion-fee free” in contrast to Los Angeles, using this as a marketing tool to attract vessels to their ports.