Universidad de las Amricas Puebla

Monograph: Megacities Logistics

Logistics ll

Ruth Chavez Jimnez

148383

Juan Pablo Almonte Huelitl

149279

Carlos Cruz Sarmineto

149060

Megacities Logistics
Introduction
In todays world, more and more cities are growing larger, not only in the matter of their
size by inhabitants but for demand as well, which will ultimately bring a vast number of
challenges to deal with in the near future. These cities are known as Megacities, and as
defined by the European Association of National Metrology Institutes (EURAMET) these
are cities with more than 10 million inhabitants (2013).
Currently, there are more than 30 cities around the world that fit this description including
Tokyo, Japan that accounts as the largest city in terms of inhabitants, New York in the US,
as well as Mxico City in Mexico. Challenges include mostly social, environmental and
economic factors in which logistics plays a huge role in bringing solutions to these
problems. For instance, the EURAMET takes a stance in which they say Reducing waste
will contribute to the sustainable development by less landfill waste, by decreasing the gas
emissions or by recycling waste materials which can also be converted in energy (2013),
making reference to the important use of reverse logistics.
Moreover, Blanco from the MIT Center for Transportation and Logistics mentions
Although urban freight vehicles make up a small share of all vehicle traffic, they generate
a disproportionate share of several externalities, such as congestion on local streets and
highways, infrastructure damage, pollution, greenhouse gases, and noise (2014),
highlighting the role of companies in the efficient use of distribution methods, not only to
satisfy demand but also for the stake of lowering carbon emissions, density of trucks and
efficient urban planning.

Megacities logistics brings forward a new way to scope logistics entirely in local
communities leaving questions for huge global companies on how to efficiently lower
costs, meet demand and prepare for the future.
Discussion
Megacities logistics work based on defining digital trends that will set general overviews
on solutions that can be provided towards retailing, distribution and consumer demand.
Colliers International states that The volume of mobile traffic generated by smartphones is
now about twice that of PCs, tablets and routers, despite having only surpassed them in
2013 and is predicted to grow ten-fold by 2019 (2015) meaning that communication has
now, especially in developed Megacities like Los Angeles, Tokyo and New York, a huge
impact on consumer demand; For example, in Tokyo mobile apps play a key role on daily
peoples lives, featuring nowadays apps that allow you to order goods while youre onboard
a train, picking them up on your way home without the need to do the stuff you normally
do when you enter a convenience shop; this idea was implemented by Tesco.
In developing megacities, technology plays a huge role in distribution, for instance, in
Mexico city with the help of telematics, companies can keep on check their freight, which
accounts for a great number around the region (see appendix 1), solving problems like
insecurity and high density traffic to provide better scheduling and re-stocking times just as
Garcia mentions la gestion de flotas no es una actividad independiente dentro del negocio,
muchos procesos administrativos necesitan datos que provienen de la flota de vehiculos
(2016).

However, regarding the increase of population and consumption trends will follow up high
urbanization in each city specially in developing countries, in other words, the rate of
growth at which each city is growing will bring many consequences, which include
transportation as the main one.
Moreover, in cities like Mumbai, India or Manila, Pakistan, income disparities are
unprecedented, Blanco mentions that This implies large portions of the population do not
have access to transport or any significant amount of disposable cash (2013) which can
account for different consumer behaviors and different standards to distribute within that
city, for example, Blanco also makes reference to a high risks in operating within these
cities, since much of the economy is a cash economy, this puts pressure on the operations,
as deliveries of goods and the returning flows of cash are subject to robbery (2013).
Moving forward with the obvious implications to urban freight movement in these
developing cities like more density in traffic, poor infrastructure, great deal of informality
like for example in Mexico city or Mumbai, these features within a city create a noticeable
emerging property for urban freight, whats more is that Tayaib mentions that there is a
large share of small, owner operated retail outlets that provide goods and services in urban
areas in emerging countries (2008), which means that a unique kind of supply chain is
blossoming within the developing but more importantly with origins from the emerging
areas. We can confirm this statement with a new concept that Fransoo describes as Nano
stores, A Nano store has a low barrier of entry: in most countries no formal barriers exist
in practice to operate a store. The front or garage of a house can easily be converted into a
store (2013) (see appendix 2). These are basically small convenient stores that can be
accounted as transformable or on the go stores that satisfy demand in an efficient way.

However, in the near future many can state that developed countries will lose their
competitive advantage (see appendix 3) due to a slow rate of innovation, making the
developing countries and even some emerging areas role models for planning and trends,
most importantly because of their unique behavior. According to a citation made by PWC,
Segun Naciones Unidas, en 2015 los mercados emergentes ya representaran casi tres
cuartas partes de la poblacion urbana del planeta5. India destaca como un pais que
necesitara grandes mejoras en sus infraestructuras, teniendo en cuenta que su ya de por si
elevada densidad de poblacion aumentara un 22% mas para 2030 (2011), this brings to our
minds one of the most important problems to take into account, Can these cities keep up as
population grows even larger?. Developed cities already have a good amount of
infrastructure built, however, constant upgrades are desirable.
Nonetheless, developing and emerging cities have it some how difficult, with there focus
towards industrialization they tend to focus more on public bills satisfying the population
with health, education and jobs, instead of having a view on economic development with a
focus on establishing infrastructure first. Whats more, cities like Rio de Janeiro, according
to the MIT Supply chain center, have already dealt with problems by timing the most
suitable hours in which they can supply fast and efficiently, The operation uses a network
of about 30 motorcycles to serve 50 routes in the city. The system flexes with shifts in
demand, and reduces carbon emissions by an estimated 50% (2015) (See appendix 4).
Emerging cities also have to deal with infrastructure investment problems, but these cities
have a huge gap against developed cities when it comes to technology. Being steps further
away in developing technology, emerging megacities will have to rely on investment in
order to keep up with the rest (see appendix 5); PWC describes this el desafio de

garantizar niveles su cientes de inversion en infraestructuras de transporte puede que se

anada a la dificultad de atraer el musculo financiero necesario del sector privado (2015),
which adds another problem in also attracting investment for companies.
However, Garcia states that China puede que supere a los paises industrializados,
mientras que India quiza no lo consiga (2016), discussing that even though the gap
between the developing of the countries may seem bigger, what really counts is their stand
towards the global economy, in other words, What is the country doing to attract
investment and opportunities?, Are they making the right policy decisions?, How do they
look on the long term?

Conclusion
Initially due to environmental problems and social pressure, transportation has gained the
attention mostly from developed cities as for the US and European cities. However, based
on the past discussion, a focus on freight within developing cities result more challenging
and therefore more complex to resolve. Nonetheless, companies have to upgrade their
relationships between the local communities and themselves to have a better understanding
of their everyday problems and possible trends in the near future. Industrial areas need to be
planned relatively to urban design, operations, local trends, infrastructure, regulations, and
maintenance of roads for instance.
Nano stores will continue to be a critical retail channel in big urban areas in emerging
markets, as well as in developing cities. Moreover, the design of the best suitable supply
strategy will have to focus not only on efficiency trade-offs, but increasingly take into

account consumer demand and local characteristics. In general, this has implications for
both for the private and public sector, but especially for those policy makers that try to
design urban logistics regulations.
Lastly, emerging cities have the potential to grow and develop themselves apart from the
developed cities. With the correct focus on policies, urban planning and a loyal
understanding of the local differences of what makes the area so unique, transformation and
development of these particular megacities will take on.

References
1.- Adebambo Olayinka (2010). Impact of freight flows on city logistics in a megacity of a
developing economy. Recovered from website:
http://www.academicjournals.org/journal/JGRP/article-full-text-pdf/5791B428228

2.- Blanco, Edgar E. (2014). MultiDonor Trust Fund for Sustainable Logistics (MDTF
SL) Position Note Urban Logistics and Port-Cities. The World Bank Group. Recovered
from website:
https://openknowledge.worldbank.org/bitstream/handle/10986/17835/858720WP0Posit00B
ox382171B00PUBLIC0.pdf?sequence=1
3.- Colliers International (2015). From First mile to last mile Global industrial & Logistics
trends. Recovered from website:
http://www.colliers.com/-/media/files/marketresearch/global/global-logistics-2015.pdf
4.- EUROMET (2013). Mega Cities. Recovered from website:
http://www.emrponline.eu/call2013/docs/MegaCities.pdf
5.- Fransoo, Jan C. (2013). Reaching 50 million nanostores: retail distribution in emerging
megacities. Recovered from website:
http://cms.ieis.tue.nl/Beta/Files/WorkingPapers/wp_404.pdf
6.- Garcia, Guillermina (2016). Visibilidad e Integracion Tecnologica para flotas de
Transporte. Recovered from website:
http://www.mundologistico.net/descargas/MundoLogistico.pdf
7.- MIT Supply Chain Center (2015). Redefining the Last Mile in Crowded Cities.
Recovered from website: http://supplychainmit.com/2015/12/17/redefining-the-last-milein-crowded-cities/

8. - PWC (2011). Infraestructura de transporte: Motor o Freno de mano par alas cadenas
de suministro globales? Recovered from website:
https://www.pwc.com/co/es/publicaciones/assets/transporte-y-logistica-2030.pdf
9.- Tayaib, Nada (2008). Transportation in Mega-Cities: A local issue, a global question.
Recovered from website: http://www.bu.edu/pardee/files/documents/BU-Pardee-PolicyPaper-004-Megacities.pdf

Appendixes
Appendix 1

Appendix 2

Appendix 3

Appendix 4

Appendix 5