Case study of a pickup and delivery terminal

Abstract: DHL is a global logistics company. Prior to the merge with Danzas in 2003
DHL was a global air express company. Today DHL offers other services such
as ocean freight and road transport. The Swedish road distribution network
is a merge of several distribution networks with strategically located
pickup and delivery (PUD) terminal. Because these terminals have
individually developed pickup and delivery terminal layouts and processes
for handling goods there are large potentials for savings. In an effort to
improve the efficiency of the pickup and delivery terminals DHL is
developing a European pickup and delivery terminal standard. This standard
is called Standard Equipment and Facility (SEF) and includes equipment,
handling process and facility standards.

The SEF facility standard describes two alternative layouts of the
terminals, which are 30 and 37.5 meters wide. However, there is an interest
in evaluating the SEF facility standard and comparing it with a 40.5 meters
wide terminal. There is also an interest in evaluating a modified layout of
the 37.5 meters wide terminal with Shorter Lane Length, SLL. The studied
terminal facilities are called SEF 30, SEF 37.5, SEF 37.5 SLL and SE 40.5.

The aim of this Master’s thesis is to determine the most cost efficient
facility standard in terms of annual total cost, which is the sum of
building, handling and equipment cost.

The thesis is based on a case study of different layouts for a PUD terminal.
Each terminal is set up according to layout planning theories and handling
and equipment cost is calculated by running the workload for each layout in
DHL’s terminal management tool Terminal Resource Planning, TRP.

The result shows that SEF 37.5 SLL is the most cost efficient layout.
However, it is not proven that it is possible to shorten the lane length and
this remains to be addressed.

SE 40.5 is the most cost efficient terminal if it is not possible to shorter
lane length. However, less than 0.9 MSEK differ between the top-four layouts
of the five layouts evaluated. The result also shows that building cost
corresponds to less than 25 percent of total cost when economic life is set
to ten years.

The small difference in total cost and the little significance of building
cost leads to a final conclusion. It is more important to plan the terminal
well, than to use the optimal terminal standard.