Creating Value from Last Mile Deliveries to First Mile Recycling : A Case Study of an Urban Consolidation Center

Abstract: This study is a part of the HITS-project at the Integrated Transport Research Lab at KTH. The demand for urban freight transportation has continued to grow during the last decades due to increased urbanization. Road-based freight transport contributes to air pollution, traffic congestion and noise pollution. The dependency of these services and because of their emissions of greenhouse gases there is a need for new sustainable initiatives.  To investigate the possibility of consolidating the delivery of parcels and collection of recycling materials, a pilot initiative called Älskade Stad has been implemented in Stockholm. Traditionally, similar initiatives have encountered problems when municipalities have stopped the funding and it has also been difficult to convince companies to cooperate. Therefore, the aim of this study is to investigate what values that are being created from an urban consolidation center (UCC), as these could be seen as incentives for joining. Furthermore, it will identify what value propositions that are being offered for the city and the involved companies and how these companies capture these values.  The thesis is conducted as a qualitative case study and uses the business model approach as a conceptual framework. The result from the study shows that four key resources and activities were related to value creation: a smaller truck which increased the filling rates, exemptions received from the municipality, new garage space utilization, and goods and waste flow consolidation. Furthermore, sustainable value propositions are offered to the companies and the city, such as, more attractive streets, higher profitability on trucks, increased publicity, improved work environment and finally green transportation solutions. This has entailed changes to the value capturing for the involved companies. Changes that are related to savings, revenue, and cost streams. The analysis from the study showed that the implementation of an UCC can help the city when facing urbanization challenges, and lead to a cleaner, safer, and more attractive city.