“I’m eager for London to make use of its tide – it’s something that already happens, so why not utilise it?”

Head of Delivery, public trust

London is responding to the challenges, trends and opportunities facing freight through public policy and investment. But doing so is far from straightforward, and requires a sensitivity to the potential interactions between different interventions. The range of policies outlined below highlights the multiple approaches and actors needed to reduce congestion, improve air quality and shift to different modes of transport – all while ensuring that operators aren’t prohibited from carrying out deliveries successfully.

London Lorry Control Scheme

The London Lorry Control Scheme (LLCS), run by London Councils, prohibits HGVs over 18 tonnes (maximum gross weight) from operating at night and at weekends on restricted roads. Since 2003, failure to comply with the scheme no longer leads to criminal charges, but it does make it expensive for drivers who need to operate within those hours, and penalty charge notices can range from £130 to £550. ⁴¹

The scheme has been important in tackling noise pollution and the environmental impacts of HGVs, but some regard it as outdated and not fit for purpose in a large city with an increasing demand for goods. A 2015 review by London Councils’ Transport and Environment Committee showed that there was poor awareness and understanding of the scheme, with freight operators seeing it as a barrier to their ability to carry out core operations. ⁴² Some stressed that having to work out alternative routes and schedules was not only time consuming, but also led to longer journeys and therefore higher pollution and carbon emissions. ⁴³

Congestion charge

First introduced in 2003, the congestion charge requires motor vehicles entering central London to pay a daily charge of £15. The charge reduces traffic, improves air quality and raises revenue for the city’s transport infrastructure and services. ⁴⁴ In the first two years following its introduction, the scheme generated net revenues of over £90m. ⁴⁵ This rose to £247m in 2020, accounting for nearly five per cent of Transport for London’s income. ⁴⁶ Between 2003 and 2015, there was a 30 per cent reduction in the number of vehicles coming into the charging zone. However, this was mostly due to fewer privately owned cars entering the zone ⁴⁷, as the number of vans and privately hired cars increased significantly in the same period.

In recent years, the efficacy of the congestion charge has been questioned in light of growing freight traffic. Thinking about possible replacements, Centre for London’s Roads and Streets Commission looked at the potential for a London-wide road user charging scheme that charges drivers for the distance they travel and the amount of pollution they produce.

Ultra Low Emission Zone (ULEZ)

One of the world’s most radical urban policies for tackling air pollution, the ULEZ restricts older and more polluting vehicles from entering central London. As of October 2021 the ULEZ, which covered the same area as the Congestion Charge Zone, has expanded to include inner London to the North and South Circular roads. Six months after it was initially introduced, NOx emissions from road transport had fallen by 31 per cent, and the scheme achieved a high compliance rate of 79 per cent as more drivers transitioned to 36 vehicles meeting the ULEZ emissions standards. ⁴⁸ However, the zone makes it particularly expensive for freight operators and drivers to serve the city if they are unable to access vehicles meeting the standards. Subsidies such as the Mayor’s scrappage scheme attempt to overcome this barrier by helping Londoners with microbusinesses (as well as those with low incomes or disabilities) to switch their older, more polluting cars for cleaner models. ⁴⁹

Road access restrictions

The Mayor of London’s Healthy Streets vision is one where car-dominated spaces are reallocated to public transport, active travel routes and places where Londoners can spend leisure time. In some London boroughs, such as Waltham Forest and Enfield, vehicle access restrictions have successfully reduced overall vehicle traffic levels and created more attractive public spaces for active travel. ⁵⁰ Hackney has introduced Ultra Low Emission Streets, where only low-emission vehicles are allowed during morning and evening rush hours. While many residents arguably benefit from these restrictions, firms delivering to homes and businesses face additional challenges.

Electric vehicle charging

The Mayor’s ambition for London to have net zero carbon emissions by 2030 requires an urgent shift from petrol and diesel vehicles to electric cars and vans. London now has close to 6,000 electric vehicle charging points, leading the way among European cities. ⁵¹ However, only about 500 of these are rapid charging points, which are particularly important for delivery drivers who need to recharge throughout the day. According to the Mayor’s Electric Vehicle Infrastructure delivery plan, London will need up to 4,000 public rapid charging points – not just to meet demand, but also to make the transition to electric vehicles a viable option for those without access to private charging depots. ⁵²

Support for businesses to consolidate deliveries

Since 2018, Transport for London has used the Healthy Streets Fund for Business to help business groups reduce freight and van traffic. The Fund has also aimed to improve air quality by setting up local consolidation hubs and using electric cargo bike schemes. ⁵³ StreathamIN – one of the Business Improvement Districts (BIDs) that received funding – collaborated with Balfe’s Bikes to run a shared e-cargo bike service for local businesses. ⁵⁴ Additionally, through the Mayor’s Civic Innovation Fund, Transport for London has set up the London Freight Lab, which partners with a range of businesses to trial sustainable and safe freight solutions that will reduce congestion.

Encouraging river and rail freight

Transport for London’s Freight and Servicing Action Plan champions the strategic role of London’s railways and water networks, given their potential for making the movement of goods more efficient and less carbon intensive. The Thames and its wharves already move large volumes of construction materials, and every 1,000-tonne barge on the river takes the equivalent of 100 lorries off the road. ⁵⁵ Additionally, one freight train removes up to 76 lorries from the road, and in London there are already 32 rail freight terminals in use. ⁵⁶ Together, rail and river freight in London represent around 10 per cent of goods delivery miles – but capital investment could unlock greater use of wharves, piers and railways for deliveries. There are also new light freight services such as parcel deliveries coming into central London piers and then using cargo bikes for last-mile delivery. With investment to adapt passenger piers for freight use, there is potential to scale up significantly and reduce van journeys on the road network.

Reallocation of industrial land

The London Plan 2021 recognises the importance of having enough industrial land to meet the capital’s need for a booming logistics sector. Strategically placed urban logistics facilities are important for meeting the demands of last-mile delivery and reducing journey times. Additionally, making the shift to alternative modes such as river and rail will require wharves, depots and cargo handling facilities to be retained for such uses. However, London is releasing industrial land for other uses at a much faster rate than planned. These include much-needed homes for the city’s growing population, and office space as the capital’s economy has evolved. Between 2010 and 2015 the city released three times more industrial land than it had planned to, even as demand for logistics continued to grow. ⁵⁷

What consumers and businesses are doing

Consolidation

Consolidation can take different forms, but all aim to ensure that there are fewer journeys being made and fewer vehicles on London’s roads. Offsite consolidation – where all deliveries reach a warehouse before being “consolidated” into single loads – can achieve huge reductions in vehicle journeys, air pollution and carbon emissions, as the examples of Guy’s and St Thomas’ NHS Trust and 22 Bishopsgate show (see below and in Chapter 5).

With the last mile of operations often amounting to between 30 and 50 per cent of supply chain costs, ⁵⁸ it is already in the interests of businesses to consolidate wherever possible, especially when it comes at little or no cost to consumers themselves. Urban and micro logistics hubs are drop-off points for logistics operators where goods can be sorted, consolidated into mixed loads, and then delivered (often) via cleaner and electric vehicles. When suitably located and close to end customers, these hubs can reduce costs for operators, lessen congestion and improve air quality. Finding suitable, available and affordable places is particularly challenging, requiring coordination between a number of stakeholders including landowners, operators and boroughs. ⁵⁹

Consolidation can also occur through procurement. Several groups in a local area may agree to share the same supplier for specific goods, so that their deliveries arrive together in one journey. Transport for London’s evaluation of consolidation projects in the capital found that businesses often need strong incentives to switch to preferred suppliers, and that consolidation is not suitable for those with specific supply chain needs. On the other hand, waste consolidation projects in the West End and Copeland Park that allowed businesses to share the same waste company were well received, as businesses saw the benefits of being able to reduce the cost of private waste and recycling collections.

Pick up / drop off points

Pick-up and drop-off points (PUDOs) are designated shops or lockers where people can go to pick up or return deliveries typically made online. They’re also an efficient and convenient option for operators to offer, as an estimated 60 per cent of untimed home deliveries end in failure and add to traffic volume by requiring redelivery.72 Rather than delivering to individual homes, PUDOs allow carriers to deliver large numbers of packages at once to fewer specified locations. They’re also beneficial for consumers, who can pick up their parcels at more convenient times. According to research by Delivering London, 73 per cent of those they engaged found “parcel place local network” appealing, as it made dealing with returns easier. However, for PUDOs to be a worthwhile option for consumers, they have to be well located. They work best when located near the places that people live, work or spend time – such as local corner shops and local high streets. In this way, they can also play an 38 important role in driving footfall and creating a culture where picking up a parcel becomes part of running an errand, going to a local café, or doing a weekly shop.

Electrification

As couriers and operators set their own organisational goals for net zero carbon emissions, electrifying their vehicles has become a major part of their strategy. Large companies such as DPD, Amazon UPS and DHL are increasingly rolling out electric delivery vans, and electric-only vehicle companies such as Gnewt have run pilots with the Mayor of London demonstrating the benefits and challenges of increasing the use of large electric vans in the capital.73 The cost and availability of electric vehicles remains an obstacle, especially as Brexit affects supply chains and creates a backlog of orders coming from the EU.

In particular, smaller operators and businesses face barriers to adopting electric vans, often requiring subsidies, incentives or support to do so. In Brixton, a partnership between Cross River Partnership, Lambeth Council, Brixton BID and Zipcar led to an initiative that provided small businesses with a shared electric van that could be used freely. The success of the project led to its extension, with businesses offered a discounted rate so that they could continue using the service.

A further challenge to more widespread electrification is ensuring that London’s constrained energy grid can keep up with the high power demand needed for this transition. One decarbonisation expert we spoke to highlighted the excessive costs that large operators face in electrifying their depots and paying for grid upgrades.

Case study: Consolidation of deliveries to cut vehicle trips

Guy’s and St Thomas’ (GSTT) is one of London’s largest NHS foundation trusts. Prior to the construction of its consolidation centre, it received up to 160 deliveries daily. This contributed to congestion around the hospital sites, as well as air pollution and carbon emissions. ⁶⁰

In 2019 GSTT partnered with CEVA logistics to create an offsite storage and distribution facility in Dartford that consolidates the Trust’s daily inbound deliveries. ⁶¹ Upon arrival in Dartford, goods are sorted and organised into efficiently distributed loads that are then delivered to the hospitals. The distribution of loads in conventional supplier-to-customer deliveries is often inefficient, with vehicles less full than they could be. By gathering deliveries offsite, there are fewer last-mile deliveries, and deliveries can wait until trucks are fuller, ⁶² thus reducing the number of vehicles in congested central London. This resulted in a 90 per cent reduction in GSTT inbound delivery traffic to central London, or 36,000 deliveries per year. ⁶³

By using the consolidation centre, the Trust was also able to reclaim 1,300 sq m in the warehouse and put it to clinical use, potentially as bed space for patients. ⁶⁴ The site also offers improved security for goods, as well as more efficient waste management. The consolidation centre can strip exterior cardboard packaging before sending the delivery on to the hospitals, speeding up deployment of equipment to clinical practice. ⁶⁵

The GSTT scheme was successful because of stakeholder buy-in and prior consultation at all levels of the organisation. This may have been easier because the GSTT is a single entity, rather than multiple firms sharing one consolidation centre.

Following the success of the consolidation hub, GSTT again partnered with CEVA Logistics and Livett’s Group to pilot a daily riverboat delivery service for a three-month period starting in June 2021. Running twice daily, five days a week, the service brings parcels loaded at Dartford International Ferry Terminal (Kent) into central London at Butler’s Wharf Pier. The parcels are then transported by electric cargo bikes to Guy’s Hospital. If deemed successful, the service will continue to operate at a larger scale.

Case study: The failings of Leiden’s consolidation centre

In 1997 the Dutch city of Leiden opened a consolidation centre to reduce the number of heavy goods vehicles entering the city centre. The solution consisted of a large (1500 sq m) warehouse facility where incoming goods were merged onto smaller vehicles for transport into the city. ⁶⁶ Five electric trucks handled the shorter journeys, while two diesel trucks were available for longer distances.

The consolidation centre was expected to reduce the total number of commercial vehicles in the city daily by 80 per cent, from 24,000 to 5,000. ⁶⁷ For the facility to break even financially, it needed to handle 600 shipments a day. However, even at its peak it only handled 90 shipments a day, leading to its closure in 2000. Contributing factors to its failure may have included the poor location of the facility – too far from the highway to receive incoming shipments quickly, yet too far from the city centre for sending goods on to their destination. ⁶⁸ The additional fees involved in using the facility also meant freight firms were reluctant to use it, because their deliveries were already operating on thin margins.

The lack of stakeholder consultation meant there was little understanding on the part of the municipal authorities of the business case for the consolidation centre – or where it needed to be constructed to see widespread use. So far, successful consolidation centres (like the GSTT facility described above) have largely been implemented internally within firms – possibly because they have better knowledge of their own requirements.