Bus Rapid Distribution. Cost analysis of an innovative freight distribution model for urban areas

University essay from Göteborgs universitet/Graduate School

Abstract: Abstract Freight distribution in cities is a topic of growing importance and innovative solutions are needed in order to make urban logistics more sustainable. However, many projects fail and there are no standards for financial evaluations of such projects ex-ante. In this thesis a model for financial evaluation is developed and tested on the Bus Rapid Distribution (BRD) project that combines the use of a freight bus as a mobile depot with electric cargo bikes for emission free last mile deliveries. To investigate the cost variables and their implications and to assess the project’s financial viability both qualitative and quantitative data have been collected and analyzed. Findings show that the innovative model is not cost competitive to the conventional model in a base scenario in the city of Gothenburg. In a scaled scenario the innovative model reaches a break-even point at a daily demand exceeding 480 parcels. When different variables are simulated in a sensitivity analysis, the delivery speed has the most impact. For a 30% lower delivery speed for the innovative model a break-even point is never reached, whereas a 30% lower delivery speed for the conventional model shifts the break-even point to a daily demand exceeding 320 parcels. Furthermore, qualitative data show that governance tools and reluctance to change have large impact on the viability of a new model in urban freight distribution. Additional findings are the potentials of the innovative model to reduce negative externalities of urban freight operations. Conclusively, financial viability is a prerequisite for a successful business model and should be evaluated ex-ante. For the actual implementation of a new model other parameters such as stakeholder involvement and specific city characteristics must also be taken into account.

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