Abstract

Speaking at the 2017 MetroLab Network Annual Summit in Atlanta, Mark Wallace, UPS’s senior vice president of engineering and logistics, said that if cities want to be smart and sustainable, they must pay as much attention to moving goods efficiently and safely as they do people.

Three years ago, Georgia Tech joined forces with Georgia State to bring the MetroLab Network model to Atlanta. Since then, the university and city have worked together to tackle everything from bikes and the Internet of things, to making the city safer and smarter. Thank you for all your hard work – I can’t wait to see what you’ll come up with next!

And thank you all for generously sharing your streets with UPS package cars and drivers every day.

And since your cities are also home to thousands of my fellow UPS employees, I guess that makes UPS not only a stakeholder, but also a constituent. We take the responsibilities that come with that seriously. … A quick story illustrates just how seriously.

A few months back, our CEO, David Abney, spoke at an event in a major city. As the mayor was introducing David, he casually mentioned that UPS trucks were double-parking and adding to the congestion in his city.

The audience chuckled, which was the reaction the mayor wanted. But David wasn’t laughing.

After his remarks, which followed dinner, David went to his room and woke up a few UPSers in the mayor’s city. Trust me, you don’t want to get a call from the CEO at midnight.  JJ

Our folks started scrambling to get to the bottom of the situation. Turns out, the mayor was mistaken. Those were not UPS trucks creating the problem.

As it happened, David was also scheduled to address the audience again the next morning. You better believe he took the opportunity to set the record straight.

I tell you that story simply to say that we do our best to be a conscientious corporate citizen in every city and community in the 220 countries and territories where we operate.

But if any UPS package cars are double-parking in any of your cities, please tell menot our CEO. J

Of course, congestion is a problem in most cities today. But it’s just one of the issues affecting the efficient movement of goods to and from cities every day.

But while many cities – much to their credit – have developed strategies to move people more efficiently and safely, we’ve all paid much less attention to the importance of moving goods.

That’s a problem, not only for companies like UPS. It’s also a problem for cities, their citizens and the larger U.S. economy.

I want to talk about that deficiency with you for a few minutes this morning. I’ll explain what many consider some of its consequences and also suggest some solutions.

Since I’m a numbers guy, and UPS has a deep respect for numbers, I’ll frame my remarks around a few numbers that have a bearing on this discussion.

They are…

2900 …
48 million …
200 million …
And 2.

The first number is 2900, actually 2900 BC. That’s about the time the first cities were built in what is modern-day Turkey and Iraq.

Before then, humans evidently spent the majority of their time of hunting and gathering, but not much time congregating.

As towns in Mesopotamia and Egypt began to grow, the need for self-sufficiency began to diminish, giving birth to the concept of trade.

Realizing that they could acquire goods they didn't have from other cities, farmers and merchants began to trade what they had for what they needed.

We’ve come a long way from the days of camels carrying silks and clay pots to market.  And it’s a good thing – those camels would find no place to park and unload in many of our cities today. JJ

The movement of goods is an essential function in any modern city, where residents and businesses depend on all manner of materials to support their lifestyles and needs.

But crowded streets, congested traffic and limited parking are severely restricting the last mile of urban commerce.

Add to that numerous regulations conceived to reduce pollution and congestion. While well intentioned, the focus of many of these regulations on personal vehicle use has given little consideration for their impact on commercial vehicles. 

The second number underlines the severity and urgency of the problem.

According to the Department of Transportation, 48 million tons of goods are transported across America each day. Cars, trucks, machinery, televisions, smart phones, apparel, food … and countless other goods that we buy and sell.

And while we don’t think about that every day, we do understand the ramifications of that movement of goods.

UPS recently completed some research with GreenBiz that examined challenges associated with logistics in dense urban environments, and offered solutions and strategies to making them environmentally sustainable.

And we’ll need solutions -- economically feasible ones -- as increased congestion, air pollution and demand for goods -- fueled and further complicated by e-commerce – make those logistical challenges even more challenging.

Not surprisingly, concerns about air quality and traffic congestion far surpassed other factors such as more convenient public transit, safety and traffic noise.

And when the GreenBiz study asked leaders of large and small businesses to identify issues resulting from these factors, nearly a third mentioned some impact associated with delivering goods in their cities.

Of course, we see this problem up close and personal. Traffic congestion … limited parking and curbside access … governmental policies … local regulations. 

Every obstacle that slows freight reverberates through our network. How serious a problem is it? Well, saving just one minute per driver per day over the course of a year adds up to $145 million.

Congestion and many of the other issues I’ve mentioned lead to increases in operating costs for shippers and carriers.

But these are not only problems for UPS and our freight-delivery brethren. Each carries implications for our customers and their customers because they affect the long and often vulnerable supply chains of high-value, time-sensitive commodities.

What’s more, they affect cities’ ability to compete for talent and the quality of life you are so proud of.

At UPS, we’re investing to be part of the solution, not the problem.

We’re investing millions of dollars in alternative fuel and innovative vehicle technologies … in network optimization … and in efficient building design to reduce our environmental impact.

We recently announced new sustainability goals that include a commitment to reduce absolute greenhouse gas emission from global ground operations by 12 percent by 2025.

In addition, by 2020 UPS plans that one in four new vehicles purchased annually will be an alternative fuel and advanced technology vehicle. We already have more than 8,500 of these city-friendly vehicles in our fleet.

And our engagement with cities allows us to be proactive and develop new city solutions.

Every day our engineers and experts work to shave just a few seconds off a route, off a package sort, off a driver’s single movement.

If there’s a greener and a more time efficient way to do something, we’ll find it.

But we’re also witness to another reality: the growing popularity of e-commerce and its impact on cities. Estimates – my third number -- put the number of daily e-commerce deliveries around the world at 200 million. And growing.

As e-commerce and on-demand shipments increase, along with demand for immediate delivery, the result is more single-item deliveries – which translates to more vehicles, more congestion and more emissions.

But the answer isn’t fewer e-commerce shipments, but greater delivery density. One delivery of 20 packages to a UPS Access Point or UPS locker, is 14 individual deliveries we don’t have to make. The more vehicles we take off city streets, the more pedestrians and bicycles those streets can support.

Not only are e-commerce and freight essential to livable cities, but the technologies and data systems behind them stand to positively impact areas beyond delivery services.

That’s why we believe there should be a public policy focus on the movement of goods.

You might expect me to say that, right?

After all, every day UPS delivers more than 19 million packages to more than 8 million customers.

It’s estimated that at any given time, the economic value of goods and services moving in the UPS network represents 6 percent of our country’s gross domestic product and 2 percent of global GDP.

But we need a focus on freight for more than self-serving reasons.

Simply put, the numbers demand it.

The Census Bureau says the U.S. population will increase nearly 20 percent by 2040.

That’s one new person every 12 seconds.

Remember that 48 million tons of goods we talked about a minute ago? As the population increases, so will that number. Our streets, roads and cities are going to get even more crowded.

Synchronizing all of those flows of commerce is what we do. And we have some ideas about how to do it more efficiently and affordably.

Clearly, data will play a leading role in understanding, planning for and managing complex urban issues.

Data sharing and analysis, coupled with real-world experience and emerging tech advances, offer cities the opportunity to improve urban mobility across the board.

While no two cities are alike, it is important to have the tools and governance in place to design and execute an urban freight plan.

Since implementing change on this scale is difficult to complete in the short term, this is especially important as city leadership changes with election cycles.

So a series of steps may be needed, with different technologies and solutions being implemented on a case-by-case basis.

This kind of practical and pragmatic strategy is one we’re familiar with. For years we’ve used what we call a “rolling laboratory” approach – learning in real time from our fleet of package cars and drivers – and applying those lessons to specific applications.

You may have heard that at UPS we love logistics.

We love logistics because logistics is the secret sauce that synchronizes transportation modes, technology and data.

But here’s the thing about logistics. While it can give us the most efficient route between two points, it cannot improve the underlying infrastructure that makes that efficiency possible.

For that, we need cooperation. Which brings me to my fourth number, which is 2. 

It takes more than technology breakthroughs to make a real difference in cities’ abilities to handle the increasing demands of delivering the goods they require.

It takes two – at least.

Partners – city officials, academics, technicians and business – or multiple partners – with a shared commitment to develop solutions together. In other words, to cooperate.

There are many reasons why urbanization continues to gain momentum.

One of the oldest has to do with a unique human trait:  the ability to cooperate. That’s the theory put forth in a recent issue of Scientific American magazine.

According to the magazine’s editor, we owe our evolutionary success not to a competitive nature, which has long been a popular theory. Not even to our superior intellect.

The key has been our ability to use our brains to cooperate with one another.

Think about it: without cooperation, cities and metropolitan areas could not function. They would resemble Congress on a huge scale. A scary thought.

One encouraging fact is that business believes it should play a role in developing and implementing innovative approaches to more sustainable urban environments.

72 percent of respondents in the survey I mentioned earlier believe that businesses should work closely with city officials to identify and address urban environmental and social challenges.

In fact, 65 percent of respondents said too little collaboration was a major barrier to creating and implementing sustainable and efficient logistics services in urban areas.

When asked which stakeholders should address congestion and other mobility-related issues in urban environments, those same business leaders said everyone should have a seat at the table.

Include UPS among those ready and willing to step up to shared urban responsibility.

UPS is working directly with a growing number of cities worldwide to create solutions that help reduce traffic congestion and air pollution.

Take Hamburg, for example.

Hamburg’s inner city is lined with narrow streets, where parking is almost non-existent.

The situation was bad for business and bad for the environment.

We needed a big idea. And we needed partners,” the city’s minister of transport wrote in a story for UPS’s corporate blog.

Hamburg is the kind of challenge we like.

The big idea we developed with city officials is as simple as it is creative. UPS drivers pick up deliveries from a storage container of consolidated shipments in the center of the city.

From there, we deliver packages throughout the city center, using electrically assisted tricycles.

We’re now making fewer trips to package centers while reducing congestion and noise.

The city minister calls the pilot program a “game-changer.”

This program is also a nice complement to Germany’s broader efforts to reduce carbon emissions 40 percent by 2020 and by about 80 percent by 2050, compared with 1990 levels.

We’ve tested and expanded our Hamburg e-trike model to other cities, including Pittsburgh, Toronto and most recently, Ft. Lauderdale.

We’re using a similar mix of technology and creative thinking in London, Dublin, Paris and Leuven, Belgium.

But alternative fuels and technologies are only half the equation. We’re also investing in ways to reduce traffic congestion and emissions by consolidating deliveries.

With app-based services like Roadie, which matches shippers with drivers headed in the same direction as the delivery address, we can greatly reduce what our industry calls “empty” miles.

Our company has also introduced the UPS Access Point network and UPS My Choice to give city dwellers more control over when, where and how they receive their packages.

These technology-driven solutions are helping to eliminate missed deliveries and the environmental impact of wasted trips.

If you haven’t joined the 40 million people who have signed up for UPS My Choice, and if you aren’t taking advantage of the 28,000 UPS Access Points and lockers, I encourage you to find more information about them at our website.

But remember what I said earlier? That it takes at least 2? A three-way partnership that includes the private sector, the public sector and academia – which, is, of course the MetroLab model – can do even more.

A prime example is a unique three-way collaboration between UPS, Georgetown University and the Washington DC Department of Transportation.

This summer, UPS coordinated a summer studio research class with the Georgetown University urban planning and data science graduate programs and the DC DOT.

The class used real-world UPS and DC DOT data, field trips and guest lecturers to help students understand the unique challenges of urban delivery. The students used what they learned to develop and pitch potential urban delivery solutions.

I’m happy to say MetroLab and GovTech magazine will be recognizing the summer studio class and its related, collaborative research as MetroLab’s December “innovation of the month.”

There’s no silver bullet to reducing congestion or our carbon footprint in urban environments.

No single technology that will be the best in every circumstance … in every city.

Social planners call this a “wicked problem.” One with fast-changing and complex requirements.

It’s essentially a problem of competing priorities.

One that will require collaboration and compromise.

We are excited to work with MetroLab and many of you to share our experience and the expertise of our people.

We want to be a partner in your great work to create more sustainable and livable cities.

Places where people and goods move efficiently and sustainably.

Thank you … and thank you for your work to improve the vibrancy and ensure the futures of cities across our nation.

 

Inquiries

For more information about this speech, contact:

UPS Media Relations

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