Universal Locker System for urban areas

Abstract

E-commerce has led to a surge of parcel deliveries owing to the mix of lower price and higher convenience for consumers. This situation has significantly increased parcel shipments, resulting in congestion within the urban metros, leading to worsening traffic and pollution levels. A parcel locker system is a way to optimise deliveries. However, it is ineffective if individual companies take up this initiative in isolation, as customers tend to switch to the most convenient option. We explore the possibility of a universal locker system facilitated by the New York City government in the Manhattan area. We propose using the city’s public facilities as potential locker locations. We assess demand distribution using sample shipment data. The set covering method determines the minimum number of lockers needed for different levels of service. Subsequently, the p-median method recommends the actual locker locations to optimise the weighted average distance to customers. A solution with 360 lockers would ensure 93% (or 100%) of the population have access to at least one locker within 250m (or 750m). A full roll-out of the system decreases the distribution cost by 75% in comparison to a home delivery model. We recommend an incremental coverage of deliveries over a 3-year time-frame. The financial analysis shows a payback period of around three years (IRR of ~44%), making the project worthwhile. We can extend this study to any large urban area with support from the city government.