Planning Freight-Efficient Land Uses: Methodology, Strategies, and Tools (2022)

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A-1   Emerging trends and technologies have transformed economies, redefined business opera- tions, and re-interpreted the value of goods and services. As such, the relationship between business partners, supply chain networks, and the demand for freight activities are also evolving with the introduction of trends and technologies exerting profound impacts on supply chains, freight transportation, and the spatial distribution of economic activities. Globalization has lifted millions of people in developing countries out of poverty, while large portions of tradi- tional manufacturing activities in developed countries have been wiped out, leading to dramatic changes in land-use patterns, and rising concerns about the environmental effects of the resulting freight transportation activity. A chief impact of globalization is the tightening of the links between the various layers of supply chains. In contrast to years ago—when local supply chains handled mostly local products with minimal interactions with global supply chains—all levels of supply chains are now tightly interconnected. A store in the Midwest may sell T-shirts made in Bangladesh; a diner at a Seattle restaurant may enjoy Kobe beef or Chilean grapes; a shopper in Memphis may be pondering whether to buy high-end leather boots from Finland or a pair made in Australia. Market forces such as globalization are not the only ones transforming economies and supply chains. Emergent technologies are producing, and will continue to produce, major changes in the economy, supply chains, and land-use patterns. Smart City technologies, truck platooning, Google trucks, Uber trucks, drones, 3D printing, delivery crowdsourcing, and others are already making their mark. Truck platooning—where a single driver “drives” a platoon of connected trucks—will provide a modal alternative between trucking and rail freight. This could lead to the use of platoons of 10 or more trucks to transport containers from marine ports to distribution centers, inducing changes in the location of these facilities and freeing up land for other uses. 3D printing may lead to decentralization of manufacturing, and to the development of on-demand manufacturing; the space occupied by former manufacturing sites may be freed up for other uses, while there would be an increase in demand for space for small-scale manufacturing throughout metropolitan areas. Drones could play a role in transporting high-priority small shipments, though in so doing, drones would require the provision of suitable land and airspace. Smart City technologies offer a framework to integrate these technologies, providing a measure of public policy on what otherwise could be a process driven primarily by private-sector forces. However, this brings to the fore challenging questions about the proper balance between the private-sector interests of technology developers, and societal interests in achieving sustainable and livable cities. These scenarios exemplify what practitioners may have to contend with in the near future. The disruptions brought about by the emerging trends and technologies cannot be avoided. To stay ahead or not be left behind by competitors, businesses have no choice but to embrace change. The impacts on business operations, supply chains, and transportation systems have varying mag- nitudes for different trends at different locations and times; it is difficult to have one-size-fits-all A P P E N D I X A Emerging Market and Technological Trends

A-2 Planning Freight-Efcient Land Uses: Methodology, Strategies, and Tools Figure A-1. Economic system and emergent trends. predictions on the outcomes of trends. Although the extent and direction of these impacts may be highly volatile, gaining insights into potential impacts will enable practitioners to take preparatory steps and corrective actions to minimize negative impacts. e ultimate goal of this chapter is to help practitioners understand the inuence of trends and technologies on economic activities and supply chains within the urban freight system. e rst section identi- es key trends that aect freight systems and land use. e section that follows describes an approach that was developed to analyze the impact of these trends and other possible trends on freight and land use. A.1 Key Trends and Technologies Trends are forces that continuously transform economies, business practices, and supply chains, and evolve the economic system. Market trends are the physical manifestations of the economy, and internal forces in the economic system. However, there are also external forces that can change the economic system. ese trends or external forces can be classied into four distinct categories: economic, technological, societal, and environmental (see Figure A-1). Economic trends are those that dene the overall direction in which the economy is moving. Techno- logical trends account for developments in soware and hardware that result in or inuence economic trends. Societal trends are changes in the ways in which people live, or the characteristics of the population itself, such as the aging population and the increase of urbanization. Environ- mental trends are related to impacts on living conditions in the planet biomass, the atmosphere, and any component that aects living things. Trends within these categories can be market trends within the economic system or external forces that interact with the economic system. Essentially, all trends exist in the same realm. ey can indirectly inuence other trends through interaction with the economic system. At the same time, one trend can directly exert external forces on another trend and change the trajectory of its development. Forces exerted by trends can propel, stie, or change the direction of development of other trends. Rising environmental awareness can encourage the acceptance of electrication, or discourage the acceptance of expe- dited B2C deliveries if the community is aware of their environmental impacts. However, con- sumers’ desire to receive parcels faster and low transportation costs have fueled the demand for expedited B2C deliveries, causing signicant impacts due to the prevalence of the trend. At this

Emerging Market and Technological Trends A-3   moment in time, it is unlikely for rising environmental awareness to change the trajectory of expedited B2C deliveries, due to the lack of awareness of their environmental impacts. These trends continuously influence each other, transforming business operations, supply chains, and freight transportation systems to varying degrees. Each trend under these categories has the ability to transform supply chain operations, but the relevant ones are those with the most significant impact on land use, supply chains, and freight transportation systems. The key trends are listed in Table A-1. The selected trends were classified into those that have a direct and indirect effect on freight activities and land-use decisions. A.2 Approach for Assessing Impact Emerging trends and technologies have the power to alter economic activities and supply chain operations, including changes in the amount of freight produced or consumed, the loca- tions where activities take place, the distances traveled to perform deliveries, and the types of vehicles used as well as their characteristics. To understand the drivers of change in freight activ- ities and land uses, it is important to understand how trends impact the decisions of the agents involved in the supply chain. Changes in decisions ultimately result in changes in land-use patterns, freight traffic patterns, and externalities. Therefore, the impacts of trends are considered at two levels: (1) how the trends impact individual decisions, and (2) how the individual deci- sions impact transportation and land-use systems. Figure A-2 illustrates these dynamics and inter connections between the levels of impacts of the trends. This chart provides a guideline to analyze the potential impacts that emerging trends can have on freight activities and land uses, from the supply chain perspective. Prior to performing any analysis, it is important to define its scope. The scope includes the trend or technology of interest, which must be a single trend to simplify the analysis and avoid compound effects. The scope also takes into consideration the geographical area of analysis, such as local/urban, regional/metropolitan, and national/global level. The process of analysis must also consider the stakeholders that relate to the trend, since they are the ones making the decisions. The agents that participate directly in the supply chain are some of those stakeholders that can be impacted by trends. However, the urban freight system—where the supply chains operate— is not an isolated system; it uses transportation systems and networks, which are shared with the general public. The general public uses the transportation system for their daily travel needs, and they also become the receivers of the supply chain when they order goods online and have the goods delivered to their homes. In this way, the individual member of the general public is Impact Trend Direct Globalization Anti-globalization Expedited B2C deliveries Regular B2C deliveries Sharing economy Unmanned autonomous delivery vehicles Connected and autonomous trucks Urbanization Electrification Advanced manufacturing Indirect Artificial intelligence and big data analytics Internet of Things (IoT) Rising environmental awareness Table A-1. Selected emerging trends.

A-4 Planning Freight-Efficient Land Uses: Methodology, Strategies, and Tools also a decision-maker in the urban freight system and economic system. Thus, individuals are stakeholders to take into account for this analysis. Different trends may impact each stakeholder on a different level, but each stakeholder type is assumed to have a similar response to the trend. However, it is also possible that similar types of agents, belonging to different geographic areas of analysis, will have different responses to a trend. For instance, truck platooning is likely to have a larger impact for long-haul freight carriers, who typically locate outside of the urban core, because they will save on fuel consumption with the reduction of drag force due to trucks traveling in a convoy. Shippers or carriers located within the urban core will not be able to accumulate the benefits of truck platooning, as they typically perform short-haul deliveries with numerous starts-stops in the city. Hence, the shippers or carriers within the urban core are unlikely to change their behavior, or to adopt truck platooning. Stakeholders, or agents in the supply chain, making individual decisions in response to emerging trends and technologies may be affected by the location of their operation. Hence, the best approach is to perform the analysis by using a single trend, and a single agent of a single geo- graphical area. Understanding the effects of trends can become a complex task due to the multiple types of stakeholders that can be involved, the many possible decisions they can make, and the further consequences that can transpire. All of these put together leads to a rapid rise in the number of potential outcomes and scenarios. Thus, it is essential to develop a systematic process to sim- plify the analysis, and to obtain the most prominent effects of trends on the system, in this case, the system of freight activities and land uses. The process includes a breakdown into stages, as shown in Figure A-2: (1) the general impacts of the trend on the key stakeholders, and how this modifies their critical decisions, and (2) the relationship between critical decisions and impacts on the system, resulting in changes of performance indicators. In the end, the guideline allows us to identify the extent and direction of the impacts of a single trend on the system. A.2.1 Impact of Trends on Individual Decisions Trends can impact multiple actors in the society. Although there are many stakeholders within supply chains, the key agents that drive the decisions are the suppliers (producers), distributors, and receivers. These stakeholders typically play more than one agent role in the supply chain; they receive goods from their upstream agents and send goods to their downstream agents. Every link Land-use choices - Distance to suppliers or customers - Establishment size - Number of establishments Logistical choices - Total demand - Shipment frequency - Shipment size Individual Decisions System-Level Impacts Geographical area - Local/Urban - Regional/Metropolitan - National/Global Direct land-use impact - Density - Land value - Land-use diversity Direct transportation impact - Travel time - Truck VMTs - Truck trips Externalities - Congestion - Pollution (noise, air) - Pavement damage Figure A-2. Interconnections between levels of impacts.

Emerging Market and Technological Trends A-5   within the supply chain is a production-consumption link. Hence, despite the role of the stake- holder within the supply chain, all of them face the same conditions regarding the reception and shipping of goods. Consequently, agents from all echelons of the supply chain will face the same decisions regarding their goods movement operations. Facility-related decisions include the size of the facility and its location, measured in terms of the distance to agents upstream and downstream of the supply chain. Logistics-related decisions include the quantity transported, frequency, and size of shipment. Agents corresponding to the general public tend to make the following series of decisions: (1) land-use-related, such as housing location; and (2) logistics- related, including the amount of goods ordered online. Thus, all decisions can be grouped as shown in Figure A-2. Each of these decisions is explained in detail, including examples of the expected impact of trends on each decision, according to some stakeholders. The instances men- tioned aim to provide an example of how to perform the analysis, but these are not exhaustive. Distance to Customers, Establishment Size, and Number of Establishments Location choice is a long-term decision that constitutes numerous operational and logistics decisions (Owen and Daskin 1998). As indicated by Perl and Daskin (1985), the cost and quality of service in the distribution system is a result of location choices regarding the number, size, and location of establishments as well as the decision of which customers to serve from each location. To decide the location of an establishment, the organization may want to maximize the market share captured by the facility, or minimize the logistics costs of serving a spatially dis- tributed set of customers (Drezner 1995). When considering logistics costs, the decision-maker faces a tradeoff between the fixed costs of building a new facility and the transportation costs involved in serving their customers from a facility farther away. Moving closer to customers may result in lower transportation costs but in higher costs of building the new facility (e.g., higher land values). Moving farther away will increase their transportation costs but will lower the building costs of the new facility, as land value prices may be lower at these locations. Related to location decisions, businesses also have to determine the size and number of their facilities. As considered by Shu et al. (2005) and Daskin et al. (2002), when managing inventory, the organization faces two crucial tasks: to determine the number of stocking points (number of establishments) and to define the level of inventory at each site (establishment size). The former decision is a result of the costs involved in setting up these facilities and the geographical dispersion of the customers. The latter results from the demanded quantity and shipment frequency. There is a joint decision between location choice and number of facilities that is determined by the tradeoff between transportation costs and value of land. This decision further determines the size of the establishment, as it will increase or decrease depending on whether there are more or fewer establishments serving the same set of customers. Distance to Customers. Because of increased communication and higher technological advancements, trends such as globalization as well as connected and autonomous vehicles allow establishments to move farther away from suppliers and customers. Regular B2C is in line with these trends at a more localized scale. High land costs in city centers and possible regulatory issues impede businesses from operating large distribution centers in these urban centers. None- theless, newer alternative pickup locations may allow the businesses to get closer to their customers, which is the case of expedited B2C deliveries. In the case of expedited B2C, other trends such as anti-globalization, the sharing economy, urbanization, electrification, and rising environmental awareness—may encourage establish- ments to move closer to suppliers and customers. Anti-globalization fosters the growth of local markets, which makes distances between suppliers and customers much shorter. The sharing

A-6 Planning Freight-Efficient Land Uses: Methodology, Strategies, and Tools economy allows for cost savings in fixed costs of warehouses, as suppliers and carriers share available space, thus enabling them to move closer to their customers. Yet the trends that enable a greater reduction in the distances between agents are urbanization and electrification. Urbanization requires facilities to move closer to where the bulk of the market is located. Electrification also encourages establishments to move closer, due to the higher cost of trans- portation and the technical issues of electrical vehicles traveling longer distances. Trends, such as unmanned autonomous delivery vehicles as well as advanced manufacturing, may induce establishments to move either closer or further from their suppliers and customers. On one hand, machinery and equipment related to advanced manufacturing occupy higher physical space than traditional standard equipment, which induces facilities to relocate to lower cost lands that tend to be farther from the urban area. On the other hand, advanced manu- facturing (e.g., 3D printing) and unmanned autonomous delivery vehicles foster on-demand operations, and together with a limited range of operation, induce the relocation of facilities to be close to one another. Establishment Size. Establishment size could increase with globalization, because of scale economies. At a smaller impact, an increase in establishment size is also expected for the elec- trification trend, as additional space to house recharging vehicles and equipment will be needed. Establishments tend to grow smaller in accordance with the trends of anti-globalization, regular B2C deliveries, the sharing economy, and urbanization; in general, these trends encourage more on-demand services and smaller inventories, and thus may require smaller physical spaces. There is a mixed effect with respect to establishment size in the cases of expedited B2C deliveries and unmanned autonomous delivery vehicles. In the former case, larger establish- ments may result from the larger e-commerce businesses, but a contrasting effect for smaller establishments is the need to keep stock close to their customers while not being able to afford the larger space. In the case of unmanned autonomous delivery vehicles, warehouses that have to test the technologies must be large, yet the point of distribution from where these vehicles would depart to make a delivery is expected to be much smaller. Number of Establishments. Having a higher establishment size reduces the overall number of establishments. This is true for most of the trends analyzed (i.e., globalization, anti-globalization, regular B2C deliveries, the sharing economy, and urbanization). A few exceptions should be discussed. Expedited B2C deliveries rely on on-demand service, requiring an increasing number of establishments for pickup and delivery points, regardless of establishment size. Unmanned autonomous delivery vehicles and electrification (i.e., electric vehicles used in the last-mile delivery) also rely on an increasing number of intermediary facilities to make the delivery as short as possible, since longer distances may not be feasible for most of these technologies. Total Demand, Shipment Frequency, and Shipment Size One of the main components of an integrated logistics system is transportation. Agents within the supply chain not only make decisions about their facilities and ways to process goods or provide services, but they also play a role in moving those goods along the supply chain. These transportation-related simultaneous decisions can be characterized by the amount of cargo that is transported, and how often it is shipped (Abate and de Jong 2014). On one hand, variations in the amount of cargo—volume transported—can be analyzed by observing changes in the patterns for total demand of such commodity. On the other hand, variations in the periodicity of the transportation can be studied by looking at both the ship- ment frequency and shipment size. Overall, these correspond to attributes of the flow. External factors may influence decisions regarding both the quantity of demand and the frequency of demand for any commodity. However, these decisions would be based on their

Emerging Market and Technological Trends A-7   economic impact over the cost function of the decision-maker. Based on the inventory manage- ment theory—mainly the economic order-quantity model (EOQ), first proposed in 1913—optimal size is that which minimizes the total costs of both holding inventory and placing new orders (Harris 1913). Thus, when a decision is made on the size and frequency of a shipment, there is a tradeoff between two options: (1) transporting a large size shipment with a low frequency, or (2) transporting a small shipment size but with a higher frequency. The first option takes advantage of economies of distance and scale, which reduces the cost of placing the order and transportation of such shipment, although it increases the inventory cost, since a large inventory must be stored (Abate and de Jong 2014). While the second option has the converse effect, and it corresponds to a more flexible environment (Schwarz 2008). Moreover, when considering the relationship between the decisions of total demand, and shipment frequency and size, the EOQ model can be considered as follows. When the demand for a good remains constant, but it is required more often than usual, the firm would place more frequent orders of a smaller shipment size—to keep the total product received a constant. Conversely, if an external factor requires the firm to have larger shipment sizes while the total demand remains constant, then less frequent orders will have to be placed. This would reflect the tradeoff between shipment size and shipment frequency described by the EOQ model. However, if the total demand for the good increases, increasing only the frequency of shipments or the shipment size might not be enough to compensate for the increase of demand, so the other corresponding variable would have to increase as well. The opposite direction, when the vari- ables decrease, is equally valid. Thus, if demand varies, at least one of those variables should vary in the same direction as the demand, so that the net offset between shipment frequency and size adjusts to the change in demand. This interdependence between such variables implies that when an external force acts on one variable, it will impact the other variables as well. Total Demand. Variations in the total amount of goods and services consumed by society corresponds to changes in demand. Within the supply chain, the driving force affecting the demand for raw materials is the sales of its final products, which is seen through the change in demand from local stores. In this way, variations in demand can be appointed to variations in consumption levels. Overall, globalization has been driving society toward a higher amount of goods consumed, together with the implementation of advanced manufacturing, as well as regular and expedited B2C deliveries, which allow for more flexible supply chains that can induce people toward buying more goods and services. On a lesser scale, trends such as the sharing economy facilitate platforms for movement along the supply chain, which ends up impacting the demand as well. Nonetheless, there are initiatives that seek to work against consumer behaviors by reducing the amount of goods that are consumed. From a broad perspective, the rising of environmental awareness is pointing toward reducing the amount of resources used, thus reducing consump- tion. From a nationwide perspective, anti-globalization initiatives might reduce overall con- sumption by fostering consumption from local companies instead of international ones. The analysis of variations in total demand can be viewed from the perspective of overall consumption, particularly for certain commodity types, even though this analysis refers to the aggregate demand level. For instance, a trend such as urbanization impacts total demand for goods and services as follows: as city centers become more populated, from the perspective of the city center, the consumption will increase; however, from the perspective of rural areas, there is a decrease in total demand. In this way, urbanization might not increase the total demand of a country, but it would lead to higher total demand in the cities. Similarly, each person will not necessarily be increasing their personal level of consumption, since reallocation is what fosters the increase in the total demand within cities.

A-8 Planning Freight-Efficient Land Uses: Methodology, Strategies, and Tools Shipment Frequency. The rise of on-demand services and flexible supply chains, fostered by trends such as expedited B2C deliveries and the sharing economy, are requiring decision- makers to account for a higher frequency of shipments. Technology developments such as robotics and drones allow such flexibility by providing means of transport that are smaller and can move faster, while platforms such as Internet of Things (IoT) provide the physical and computational structure to provide and perform these activities. From a global perspective and on a lesser scale, globalization and advanced manufacturing put pressure on societies by fomenting consumption and flexibility practices, so that needs can be satisfied in the quickest way. Conversely, practices oriented toward reduction of consumption such as rising environmental awareness and anti-globalization lead decision-makers to prefer less frequent shipments, either to reduce the externalities of transportation, or to compensate for reduced consumption, respec- tively. In long-haul transportation, such as regional or national, certain technologies such as connected and autonomous trucks can increase the efficiency of the operations and allow for less frequent shipments. This can be observed in the case of autonomous truck platooning, where a fleet of driverless trucks moves together following the path of the lead truck. The main benefit of this scenario is increased shipping capacity, which would reduce shipment frequency; other benefits are decreased shipment costs and decreased fuel consumption. In addition, certain technological trends, such as artificial intelligence and big data analytics, provide operational tools that help decision-makers choose the optimal shipment frequency, according to the specific factors relevant to the decision-maker. Thus, for certain agents of the supply chain, it might be better to increase their shipment frequency, while for others, decreasing shipment frequency will be optimal. Shipment Size. On-demand practices tend to reduce shipment sizes since the behavior necessitates more frequent shipments of goods and services. Thus, expedited and regular B2C deliveries, the sharing economy, unmanned autonomous delivery vehicles, advanced manufac- turing and IoT, foster higher frequency yet smaller shipment sized operations to satisfy demand faster and provide a more flexible supply chain. Nonetheless, the increase in demand fostered by certain trends like globalization requires an increase in shipment size as well as in frequency, to keep up with the faster pace of consump- tion. Conversely, the decrease in total demand influenced by anti-globalization practices and the rising of environmental awareness implies both less frequent and smaller shipment sizes. Artificial intelligence and big data analytics have an uncertain effect; the role of these tech- nologies is to help a decision-maker determine optimal shipping practices, which, depending on the individual, could lead to increased or decreased shipment sizes. Relationship between Trends and Individual Decisions Table A-2 displays the results of the qualitative analysis that links the trends—listed on the rows—with individual decisions—listed in the columns. Each trend can increase (“+”), decrease (“-”), or have no effect on the metric of the decision (e.g., it is expected for globalization to increase the distance to costumers or suppliers, but to decrease the number of establishments). The degree to which the trend may impact the decisions is represented by the number of symbols: the more symbols, the stronger the impact (e.g., expedited B2C deliveries tend to have a large impact on increasing total demand, while a small impact on decreasing the distance to costumers or suppliers). In cases where the effects could be estimated as either increasing or decreasing, a slash symbol (/) was used to show that there could be two different outcomes. For example, advanced manufacturing could lead some agents to locate farther from customers or suppliers (increase distance, “+”) due to the need for larger facilities, while other agents might locate closer (decrease distance, “−”) due to ease of manufacturing processes.

Emerging Market and Technological Trends A-9   A.2.2 Impact of Individual Decisions on the Transportation System Considering the impact of all of the individual stakeholders’ decisions within the supply chain provides an understanding of the effect on a systemwide level. For instance, a rise in land costs in the city center would lead a distributor toward locating its warehouse farther from the city center, where the land costs would be more reasonable. From an individual perspective, the tendency is to move out. If other individuals act similarly, there would be a rise in warehouses located in the periphery of the city, hence the systemwide effect would be an increased disper- sion of activities. In this way, the resultant aggregated behavior and its effects can be measured using metrics directly related to land use and transportation. On one hand, individual decisions regarding the location of establishments and households yield different aggregated patterns of centrality and dispersion. Centrality is the degree of centralization of activities; they can be concentrated at a main economic center or they could be clustered at multiple centers or subcenters. Dispersion is the measure of activities spread from the city center without considering either clustering around a specific location, or concentrating in certain areas. On the other hand, different combinations of logistics decisions—the amount of cargo transported, frequency or shipment size—yield a variety of patterns of network and vehicle usage. The systemwide effects materialize, directly impacting land-use patterns and transportation systems, and indirectly producing externalities onto the community. The land-use impacts produced by changes in land-use decisions, are measured as changes in population density, in land value, and land-use diversity; while the transportation impacts produced by network and vehicle usage are measured as changes in travel time, VMT, and truck trips. Similarly, the indi- rect impacts consist of the externalities produced by the operations of the urban freight system, accounting for traffic congestion, pollution, and pavement damage. By following the proposed guidelines from Table A-2, the trends would alter the decisions of the individual businesses in the following ways: by moving their establishment closer or farther Im pa ct Trend D ist an ce to C us to m er s o r Su pp lie rs Es ta bl ish m en t Si ze N um be r of Es ta bl ish m en ts To ta l D em an d Sh ip m en t Fr eq ue nc y Sh ip m en t S iz e D ire ct Globalization +++ +++ -- +++ ++ ++ Anti-globalization - - + -- - - Expedited B2C deliveries - +/- +++ +++ -- Regular B2C deliveries + + - ++ + - Sharing economy - - ++ ++ -- Unmanned autonomous delivery vehicles + - Connected and autonomous trucks ++ ++ --- +++ Urbanization -- - + ++ ++ Electrification -- + ++ Advanced manufacturing +/-- ++ ++ - In di re ct Artificial intelligence and big data +/- +/- Internet of Things (IoT) + - Rising environmental awareness - - - - Note: blank spaces designate insignificant or neutral effects. + Increases. - Decreases. Table A-2. Relationship matrix between trends and impacts on individual decisions.

A-10 Planning Freight-Efficient Land Uses: Methodology, Strategies, and Tools away from customers or suppliers, and by increasing or decreasing the size of their establish- ment, number of establishments, the overall demand of the goods, shipment frequency, and size of the shipment. Table A-3 summarizes the effects of those individual decisions on the system-level impacts by using positive signs (+) and negative signs (-). The positive sign implies that the individual decision—listed on the rows—yields an increase of the system-level metric—listed in the columns (e.g., the decision of a larger establishment size increases density). The negative sign implies a decrease. The impacts of decisions on land-use and freight activities on a system- level are as follows. Increase in Distance to Customers or Suppliers. When the business decides to move away from their customers or suppliers, the establishments become located farther away from each other. Hence, the increasing spread of establishments reduces density, land value, and land-use diversity. At the same time, the vehicles have to travel longer distances, hence increases in truck VMTs, travel times, congestion, pollution, and pavement damage. Larger Establishment Size. When the business expands or decides that a larger establish- ment size is needed, it is assumed that the productivity of the business has increased, resulting in a higher employment density. However, a larger establishment size implies more homog- enous land-use, hence the land-use diversity decreases. In terms of land value, the larger estab- lishment size has a different effect depending on the location. For example, if the expansion takes place in a dense urban area, the land value increases due to increased competition. However, if the business is unable to expand locally due to the high land cost, it may move to some location where the land cost is lower and where there is more available space. Hence, the land cost may decrease. Increase in Number of Establishments. When the business decides to open additional establishment locations, they are likely to search for locations similar to their existing location, so that they could serve their customers better. Hence, there will be a competition for space for new establishments. If there is a lack of supply for space to build the new establishments, the number of levels for the buildings tend to increase to meet the demand for space. Hence, the increase in the number of establishments generally increases density. With competition for space, the land value and land-use diversity are likely to increase. Increase in Demand. This implies that the overall demand for freight increases, hence there is a general increase in shipment size and shipment frequency. It is likely that there will be an System-Level Impact D en sit y La nd V al ue La nd -U se D iv er sit y Tr av el T im es Tr uc k V M Ts Tr uc k Tr ip s C on ge st io n Po llu tio n (n oi se , ai r) Pa ve m en t D am ag e Increase in Distance to Customers or Suppliers - - - + + + + + Larger Establishment Size + +/- - Increase in Number of Establishments + + + Increase in Demand + + + + + + Increase in Shipment Frequency + + + + + + Larger Shipment Size - - - - - + Note: blank spaces designate insignificant or neutral effects. + Increases. - Decreases. Table A-3. Relationship matrix between individual decisions and system-level impacts.

Emerging Market and Technological Trends A-11   increase in truck trips and truck VMTs, which results in a greater degree of congestion, longer travel times, more pollution, and more pavement damage. Increase in Shipment Frequency. is implies that the trucks have to make more trips, which would result in an increase in truck VMT, a higher degree of congestion, longer travel times, more pollution, and more pavement damage. Hence, there are positive signs for travel times, truck VMTs, truck trip, congestion, and pollution. Larger Shipment Size. Larger shipment sizes imply that freight is consolidated to a larger vehicle, which reduces freight vehicles on the road, assuming total demand for freight remains unchanged. Hence, there is a reduction in truck trips and VMTs, resulting in a reduction of travel times, congestion, and pollution. However, since a larger vehicle is used, the amount of pavement damage increases. A.3 Net Effects e previous approach can be used to gain insight on the impacts of a single trend at a single geographic area. e summary of the impact of individual trends and technologies can be found in Section A-5. However, the economy in general, urban patterns, and freight activities are shaped by many trends simultaneously. Depending on the extent or direction of these trends, the eects of some may be amplied, while the eects of other trends may diminish on a system level. Figure A-3 illustrates an example of such interaction considering the eect of indi- vidual decisions on both expedited B2C deliveries, and the use of connected and autonomous vehicles. ese two trends exert competing forces on the demand for land and space, evolving the urban pattern in dierent directions. Expedited B2C deliveries increase the establishment sizes but decrease the distance to customers or suppliers, and the number of establishments. On the other hand, the connected and autonomous vehicles trend has the opposite eects on individual decisions. When both trends have a similar magnitude of impact, it may not be possible to see a distinct trend in terms of the change in urban pattern. In freight activities, both trends are likely to increase demand and shipment frequency, and decrease shipment size. Hence, there will be a distinct growth in freight demand and freight trips. Increase Expedited B2C Deliveries Connected and Autonomous Vehicles Distance to Customers or Suppliers Establishment Size Number of Establishments Demand Shipment Frequency Shipment Size DC-Customers Decrease Figure A-3. Effects of expedited B2C deliveries, and connected and autonomous vehicles.

A-12 Planning Freight-Efcient Land Uses: Methodology, Strategies, and Tools A.4 Remarks is is an era dened by social, economic, and technological transformation. e various trends are currently producing and will continue to produce counterbalancing eects. e net eects will be determined by the net result of these sometimes countervailing forces. More than ever, transportation and land-use decision-makers must frequently update policy procedures to keep up with the changing pace of these dynamics. A.5 Summary of Impacts of Trends of Technologies Direct Impact: Globalization Causes: • Reduction of international shipping costs • Improvement of communication and information technologies Eects: • Surge of global supply chains and increased interdependence of the eco- nomies of dierent countries • Reduced costs through relocation of establishments to places with cheaper labor markets or materials • Increase in social inequality and poverty in places with cheaper labor market Eects on Freight and Land Use: • Increase in import/export quantity due to reduction in international shipping cost • Increase in establishment size of suppliers and facilities (e.g., warehouses and ports) involved in imports/export business • Increased distance of stakeholders from each other due to goods manufacturing outside of the consumer’s country • Increase in demand quantity due to a larger global market • Increase in delivery frequency as a result of higher competitiveness among stakeholders • Decrease in shipment sizes due to higher frequency of deliveries • Decrease in establishment size of receivers as a result of more frequent deliveries Examples: • Loss of production activities in developed countries, and manufacturing of products where production is cheaper (e.g., clothing brands in United States are produced in Central and South America) • Car parts manufactured in certain countries and assembled in assembly plants in another country (e.g., car manufacturing plants located in United States, Germany, and Japan) • Latest technology available internationally (e.g., smart phones) • Fresh products from overseas easily accessible and available in other countries (e.g., kiwi fruit from New Zealand is available in U.S. shops) Key References: World Economic Forum (2017); Shangquan (2000); Dobbs et al. (2011); Global Policy Forum (2018) Source: (McKinsey Global Institute Cityscope 1.0)

Emerging Market and Technological Trends A-13   Direct Impact: Anti-globalization Causes: • Protectionism of local markets • Increase in costs due to restrictions and regulations between countries (e.g., tari) for international shipping Eects: • Rise and expansion of local markets • Decrease in exports/imports • Increase in the speed of fulllment of goods to customers • Increase in cost of production (e.g., labor costs of factory workers in the United States are much higher than comparable costs in developing countries) • Rise of international trade taris, increasing the cost of goods manufactured outside the United States and imported to the United States. Eects on Freight and Land Use: • Decrease in exports/imports quantity, which enables less distance among stakeholders • Decrease in establishment size as closer locations enable more frequent deliveries • Increase in demand for local goods from the rise and expansion of local markets • Increase in delivery frequency as transportation costs reduce between facilities • Decrease in shipment size due to higher frequency of shipments • Reduction of truck share as a result of rise in fuel prices Examples Related to Freight and Land Use: • Reshoring: Many of the U.S.-based manufacturers have relocated their production back to the United States, resulting in growth in employment and expansion of local markets in the United States. • Swedish furniture manufacturer, Ikea, opened its rst factory in Danville, Virginia, in May 2008 to reduce importing all of its products (e New York Times 2008). Key References: Hungton Post (2017); USA Today (2018); e New York Times (2008) Source: (Grasshopper 2019)

A-14 Planning Freight-Efcient Land Uses: Methodology, Strategies, and Tools Direct Impact: Expedited B2C Deliveries Causes: • Advancement in technology in e-com- merce transactions • Market leaders’ strategies (e.g., Amazon and Walmart) regarding faster delivery options at low costs are challenging other retailers to do the same Eects: • Changes in consumer expectations [fast deliveries (e.g., same-day shipping)] • Increase in inventory of products due to online and in-store shopping • Lack of shipment consolidation, and increased preference for smaller modes of transport • Multiple options for order fulllment • Flexible trucking operations • Increase in the importance of delivery reliability Eects on Freight and Land Use: • Distribution centers closer to customer • Increase in delivery frequency due to increasing internet household deliveries and shorter delivery windows • Decrease in shipment size due to higher frequency of shipments and low delivery costs borne by the consumer • Increase in number of distribution centers closer to urban areas to enable quick deliveries • Decrease in establishment sizes as less distance from urban areas enables more frequent deliveries • Increase in establishment size of warehouses due to increasing demand for goods online Examples Related to Freight and Land Use: • Marketplaces (e.g., Amazon) oer exible delivery opportunities. e cost of fast delivery options (e.g., same-day and next-day delivery) are now available for lower fees. • Programs such as Amazon Prime oer free two-day shipping on many of their products. • New start-up businesses oer fast delivery services working in partnership with retailers. Key References: American Transportation Research Institute (2019); PFS (2014); Supply Chain Dive (2017); TechCrunch (2017); e Wall Street Journal (2016) Source: (PFS 2014)

Emerging Market and Technological Trends A-15   Direct Impact: Regular B2C Deliveries Causes: • Advancement of communication and information technology in e-commerce transactions • Security in payment methods • Pro-consumer return policy • Low shipping costs provided by the seller Eects: • Suppliers selling directly to consumer • Increase in number of small businesses, as e-commerce has low barrier to entry • Decrease in shipment size due to small order size by consumer • Increase in delivery frequency for many consumers due to small shipment size • Increase in business’ geographical coverage due to cost reductions compared with oine stores • Increased convenience for consumer (e.g., ability to shop anytime, save time) • Provides consumer with a variety of goods and suppliers Eects on Freight and Land Use: • Increased distance between customers and suppliers, since e-commerce allows customers to buy products from anywhere • Decrease in number of retail establishments, since e-commerce increases the exibility and ease of shopping • Increase in warehousing establishment size to cater to the rising volume of goods ordered online and delivered from warehouses • Increase in total demand for goods due to the variety of products available to customers • Increase in shipment frequency due to increasing internet household deliveries • Increase in shipment frequency due to rise in product returns and low return delivery costs borne by the consumer • Decrease in shipment size due to higher frequency of shipments Examples Related to Freight and Land Use: • People order the majority of their goods online. According to the U.S. Census Bureau, the percentage of e-commerce sales in total retail sales shows increasing trend since 2009. • Large retailers (e.g., Walmart) provide multi- and omni-channel services, both traditional oine and online services. • Large online retailers, such as Amazon.com, previously focused on big warehouses are now building a network of small urban facilities to enable last-mile deliveries. Key References: U.S. Census Bureau (2018b); e Wall Street Journal (2015) Source: (JOC 2018)

A-16 Planning Freight-Efcient Land Uses: Methodology, Strategies, and Tools Direct Impact: Sharing Economy Causes: • Development of the internet • Advancement of information technology • Rise in environmental awareness (less owning and more sharing) Eects: • Changes in connections between man- ufacturers and customers • Increase in efficiency of last-mile deliveries • Increased utilization of existing infra- structure and assets • Reduced barriers to entry for small- and medium-sized businesses Eects on Freight and Land Use: • Closer locations to oer exible points of pickup and distribution • Decrease in establishment size due to the proximity of locations • Increase in demand for goods as transport costs get more competitive from shared digital marketplaces • Increase in delivery frequency from increasing demand and closer proximity of stakeholders • Decrease in shipment size due to higher frequency of shipments • Decrease in truck share due to alternate delivery options (e.g., personal vehicles, bikes) Examples Related to Freight and Land Use: • Use of shared warehouses to save xed costs of inventory storage (e.g., rent, labor, and other costs associated with operations) • Shared digital marketplaces for freight truckers enable the matching of shippers and carriers/ drivers with reasonable prices for transporting goods • Crowdsourced delivery companies use on-demand services from individuals to make last- mile deliveries to local customers, ranging from grocery/food to retail products (Business Insider 2018). Key References: Verlinde (2018); Metzler (2016) Source: (CKGSB Knowledge 2014)

Emerging Market and Technological Trends A-17   Direct Impact: Unmanned Delivery Vehicles Causes: • Increase in expectations for higher pro- ductivity and operational performance due to the inuence of globalization processes • Increase in demand for more exible supply chains due to inuence of internet economy, and its impact on people’s preferences • Transformation of the supply chain • Innovation in technology Eects: • Faster and more exible supply chains • Increase in productivity, eciency, and reliability of the supply chain • Increase in streamlined processes Eects on Freight and Land Use: • Less distance between agents due to capacity and range constraints of the vehicles, and increase in supply chain links as accessibility increases due to ease of transportation • Decrease in establishment sizes due to better space utilization with more frequent deliveries • Increase in number of establishments as smaller, new points of distribution can be used • Increase in delivery frequency and decrease in shipment size in response to more exible/ demand-oriented operations Examples Related to Freight and Land Use: • Delivery robots • Delivery lockers • Drones Source: (Schwarz 2008)

A-18 Planning Freight-Efcient Land Uses: Methodology, Strategies, and Tools Direct Impact: Connected and Autonomous Vehicles Causes: • Increase in demand for more exible supply chains due to inuence of internet economy, and its impact on people’s preferences • Innovation in technology Eects: • Faster and more exible supply chains • Increase in alternative modes for deliveries • Increase in eciency of deliveries (both long-haul and last-mile) • Increase in eciency of transport • Improvement of assets and space utilization, and supply chain eciency (e.g., increase in vehicle usage eciency) • Increase of streamlined processes • Increase in productivity and customer experience • Increase in safety and security • Development of new business models • Increase in network connectivity and accessibility (e.g., by providing alternative transport modes) • Increase of service level • Decrease of fuel consumption and carbon emissions Eects on Freight and Land Use: • Increased distance of facilities from customers and suppliers due to both cost reduction and ease of transportation • Decrease in delivery frequency and increase in shipment size for long-haul deliveries due to longer distance shipments Examples Related to Freight and Land Use: • Connected and autonomous vehicles (CAV) • Truck platooning • Crowdsourced delivery companies use on-demand services from individuals to make last- mile deliveries to local customers, ranging from grocery/food to retail products (Business Insider 2018). Key References: World Economic Forum (2017) Source: (Kutadinata et al. 2018)

Emerging Market and Technological Trends A-19   Direct Impact: Urbanization Causes: • Increase in migration of people from rural to urban areas • Enhancement and expansion of public transit systems in urban areas, facili- tating commuting within the city • Decrease in accessibility to jobs in rural areas Eects: • Increase in urban sprawl • Increase in housing demand but also a decline in household size • Increase in the density of urban populations and land abandonment in rural areas • Increased demand for goods and services in urban areas • Increased productiveness in concentrated urban centers due to economies of scale • Decrease in household size and increase in number of houses built in cities Eects on Freight and Land Use: • Increase in freight demand in urban areas • Increase in delivery frequency • Increase in real estate prices in urban areas • Increase in land abandonment in rural areas • Decreased distance between warehouses and customers for fast last-mile deliveries • Surge of alternative modes of transport for delivering goods within the city Examples: • In 2017, about 117 million people lived in urban areas of Japan, compared with 11 million people in rural areas. Extremely populated cities and abandoned rural areas in Japan have caused government concern. Key References: United Nations (2014) Source: (UNICEF 2012)

A-20 Planning Freight-Efcient Land Uses: Methodology, Strategies, and Tools Direct Impact: Electrication Causes: • Rise in environmental awareness • Change in climate • Innovation in technology Eects: • Increase in renewable energy use • Increase in alternative modes of trans- port (i.e., environmentally clean vehicles) • Increase in eciency in energy usage • Increase in sustainable operations • Increase in network connectivity and accessibility (e.g., by providing alternative transport modes) • Decrease in fuel consumption and carbon emissions Eects on Freight and Land Use: • Closer location of agents to each other due to capacity and range constraints of electric vehicles • Increase in establishment size due to higher space requirements (e.g., for charging vehicle zones) • Increase in number of establishments since additional points of distribution might be needed due to vehicle constraints Examples Related to Freight and Land Use: • Electric trucks • Environmentally oriented facility designs Source: (Garden Style 2019)

Emerging Market and Technological Trends A-21   Direct Impact: Advanced Manufacturing Causes: • Advancement of technology, including Articial Intelligence (AI), automated manufacturing systems, 3D printing technology, etc. Eects: • Increase in productivity and reliability • Changes in the location of facilities (e.g., manufacturers move closer to cus- tomers) due to 3D printing technology • Increase in demand for customized products • Decentralization of production Eects on Freight and Land Use: • Facilities located farther from demand centers as technological advancements, such as 3D printing, increase productivity at manufacturing sites and delivery methods may not require a delivery truck. • Increase in establishment size of suppliers due to the space needed for technology and automation • Decrease in demand as prices may rise from the added value of technological innovation, but demand may increase for specialized products • Decrease in delivery frequency due to increased distances and lower demand • Increase in shipment sizes as a result of lower order frequency Examples Related to Freight and Land Use: • Instead of compiling parts produced in separate production sites, 3D printing technology enables companies to produce dierent parts in a single facility • e automated manufacturing system reduces labor costs, resulting in relocation of facilities closer to customer market (Transport Intelligence Ltd 2014) Key References: United Nations Industrial Development Organization—UNIDO (2018); Metzler (2016); McKinsey & Company (2018) Source: (General Electric 2016)

A-22 Planning Freight-Efcient Land Uses: Methodology, Strategies, and Tools Indirect Impact: Articial Intelligence, Big Data Analytics, and the Internet of ings Causes: • Increase in expectations for higher pro- ductivity and operational performance due to the inuence of globalization processes • Increase in demand for more exible supply chains due to the inuence of internet economy, and its impact on people’s preferences • Transformation of the supply chain through the inuence of the sharing economy pushing toward better asset utilization • Innovation in technology Eects: • Improvement of demand forecasting • Improvement of asset and space utilizations • Improvement of risk mitigation processes • Improvement of route optimization • Increase of streamlined processes • Increase in safety and security • Increase in productivity, customer experience, and level of service • Decrease of redundancies and costs, and enhancement of cost management capabilities • Surge of new business models (i.e., integrated, shared, and customer-driven markets) • Increase in network connectivity and accessibility • Increase in productivity, exibility, eciency, and reliability of the supply chain Eects on Freight and Land Use: • Increase in delivery frequency and decrease in shipment size due to demand-oriented operations • Decrease in delivery frequency and increase in shipment size due to longer distance shipments • Decrease in traditional truck share due to higher usage of alternative modes • Increase in traditional truck share for the sake for higher eciency Examples Related to Freight and Land Use: • Automatic inventory replenish system • Data-driven decision-making processes • Trac and eet management • Resource and energy monitoring, equipment and employee monitoring, physical security, connected retail Source: (Consultancy 2018) Source: (Hackernoon 2017)

Emerging Market and Technological Trends A-23   Indirect Impact: Rising Environmental Awareness Causes: • Increase in exposure to information relating to environmental issues and climate change • Increase in community awareness about how their actions cause environ- mental degradation • Increase in desire of communities to protect the environment, for them- selves and future generations Eects: • Increase in desire to use cleaner transportation modes for freight activities, and reduce carbon footprint • Increase in collaboration among stakeholders to reduce the impact of their activities • Increase in urban fulllment centers in the heart of the city to fulll the escalating amount of e-commerce-related deliveries Eects on Freight and Land Use: • Surge of environmentally friendly shipping alternatives (e.g., bicycle for short-distance deliv- eries, electric trucks) • Increase in payload of vehicles due to consolidation practices • Decrease in delivery trips • Closer location of warehouses to customers Examples: • e Sky Tree Tower in Tokyo, Japan, employed the use of two UCCs to manage all the deliveries to more than 320 businesses within the development. e number of delivery trips reduced from 800 per day to 337 per day, along with the corresponding emissions (Taniguchi 2017). • Concorde Logistics space in Paris, an underground freight park, was created for Chronopost, an express shipping and delivery service company. ey receive deliveries on trucks from a hub outside of Paris and deliver them using electric vehicles. As a result, diesel-fueled trucks and CO2 emissions are reduced (Dablanc 2016). • rough Amazon Packaging Certication program and other initiatives, Amazon is partnering throughout the supply chain to reduce waste packing to protect the environment. Key References: Taniguchi (2017); Dablanc (2016) Source: (U.S. Department of State Official Blog 2015)

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