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Evaluation of a city logistics business model: Impact of cost, revenue and goods flow on profitability

Katsela, Konstantina LU and Pålsson, Henrik LU (2017) In NOFOMA 2017 - PROCEEDINGS OF THE 29TH ANNUAL NORDIC LOGISTICS RESEARCH p.394-410
Abstract
Purpose
Many city logistics initiatives have failed to become economically sustainable. The purpose of this paper is to explain the impacts of cost, revenue and goods flow variables on the economic performance of a business model for city logistics.
Design/methodology/approach
A cost/benefit analysis, with data from transport providers and the municipality, on a six-month pilot implementation of a city logistics concept is conducted. The concept combines consolidation with logistics services for private and municipal goods.
Findings
The results highlight relations between goods volumes, revenues, direct and indirect costs and profitability for private and municipal goods. Sensitivity analyses highlight the impact... (More)
Purpose
Many city logistics initiatives have failed to become economically sustainable. The purpose of this paper is to explain the impacts of cost, revenue and goods flow variables on the economic performance of a business model for city logistics.
Design/methodology/approach
A cost/benefit analysis, with data from transport providers and the municipality, on a six-month pilot implementation of a city logistics concept is conducted. The concept combines consolidation with logistics services for private and municipal goods.
Findings
The results highlight relations between goods volumes, revenues, direct and indirect costs and profitability for private and municipal goods. Sensitivity analyses highlight the impact of changes in goods volumes, costing and pricing on the economic effects of the city logistics concept. The study shows that the relationship between goods volumes and profitability is not linear, but it follows a curve with logarithmic shape. It also shows that the terminal costs are much greater than the distribution costs and that the amount of goods is decisive for the total cost per parcel.
Research limitations/implications
The evaluation develops the knowledge for the value creation and value capture in business models for city logistics by describing the relative importance of various cost, revenue and goods volume variables.
Practical implications
Other city logistics initiatives get insights into general cost structures and the effect of goods volumes on economy of scale. Another implication is a need to focus more on terminal efficiency than distribution efficiency for total cost efficiency.
Original/value
The economic evaluation of the activities in city logistics initiatives is rare. The empirical insights about economic and goods volume variables are valuable for developing the knowledge of business models in city logistics.
Keywords: Economic efficiency, sustainability, feasibility, revenues, costs, business model, pilot implementation, Cost-Benefit analysis (Less)
Please use this url to cite or link to this publication:
author
organization
publishing date
type
Chapter in Book/Report/Conference proceeding
publication status
published
subject
keywords
conomic efficiency, sustainability, feasibility, revenues, costs, business model, pilot implementation, Cost-Benefit analysis
in
NOFOMA 2017 - PROCEEDINGS OF THE 29TH ANNUAL NORDIC LOGISTICS RESEARCH
pages
16 pages
language
English
LU publication?
yes
id
3c7c40f8-63e5-455c-aeb1-0c3107987b87
date added to LUP
2017-09-21 15:11:00
date last changed
2018-05-29 11:26:36
@inproceedings{3c7c40f8-63e5-455c-aeb1-0c3107987b87,
  abstract     = {Purpose <br/>Many city logistics initiatives have failed to become economically sustainable. The purpose of this paper is to explain the impacts of cost, revenue and goods flow variables on the economic performance of a business model for city logistics. <br/>Design/methodology/approach <br/>A cost/benefit analysis, with data from transport providers and the municipality, on a six-month pilot implementation of a city logistics concept is conducted. The concept combines consolidation with logistics services for private and municipal goods. <br/>Findings <br/>The results highlight relations between goods volumes, revenues, direct and indirect costs and profitability for private and municipal goods. Sensitivity analyses highlight the impact of changes in goods volumes, costing and pricing on the economic effects of the city logistics concept. The study shows that the relationship between goods volumes and profitability is not linear, but it follows a curve with logarithmic shape. It also shows that the terminal costs are much greater than the distribution costs and that the amount of goods is decisive for the total cost per parcel. <br/>Research limitations/implications <br/>The evaluation develops the knowledge for the value creation and value capture in business models for city logistics by describing the relative importance of various cost, revenue and goods volume variables. <br/>Practical implications <br/>Other city logistics initiatives get insights into general cost structures and the effect of goods volumes on economy of scale. Another implication is a need to focus more on terminal efficiency than distribution efficiency for total cost efficiency. <br/>Original/value <br/>The economic evaluation of the activities in city logistics initiatives is rare. The empirical insights about economic and goods volume variables are valuable for developing the knowledge of business models in city logistics.  <br/>Keywords: Economic efficiency, sustainability, feasibility, revenues, costs, business model, pilot implementation, Cost-Benefit analysis },
  author       = {Katsela, Konstantina and Pålsson, Henrik},
  booktitle    = {NOFOMA 2017 - PROCEEDINGS OF THE 29TH ANNUAL NORDIC LOGISTICS RESEARCH },
  keyword      = {conomic efficiency, sustainability, feasibility, revenues, costs, business model, pilot implementation, Cost-Benefit analysis},
  language     = {eng},
  pages        = {394--410},
  title        = {Evaluation of a city logistics business model: Impact of cost, revenue and goods flow on profitability},
  year         = {2017},
}