Issues in Emerging Home Delivery Operations

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Park and Regan

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ISSUES IN EMERGING HOME DELIVERY OPERATIONS
Minyoung Park Institute of Transportation Studies University of California, Irvine Irvine, Ca 92697-3600 mypark@uci.edu Amelia Regan Department of Computer Science and Department of Civil & Environmental Engineering University of California, Irvine Irvine, CA 92697-3600 aregan@uci.edu

ABSTRACT
Despite the recent economic downturn, electronic commerce (e-commerce) continues to show strong growth. According to the U.S. Census Bureau, e-commerce retail sales for 2002 reached at $45.6 billion, an increase of 26.9% from 2001, while total retail sales increased 3.1% during the same period. Although e-commerce sales account for only 1.4% of total sales, the digital economy continues to grow, albeit at a slower pace than earlier predicted. The logistical requirements of e-commerce goods may stimulate greater complexity in supply chain management and potentially cause higher costs in carrier fleet operations. It is important to encourage the development of a freight transportation system that will support the steady growth of e-commerce, while avoiding the possible negative effects from the changes in freight transportation. Advances in home delivery have the potential to promote e-commerce as well as to create sustainable urban freight transportation systems. The logistical challenges of home delivery are discussed and potential solution strategies for the issues that will lead to more efficient and reliable home delivery systems are presented in this paper.

Key Words: Urban Freight Transportation, Trucking Operations, Travel Behavior

Park and Regan

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INTRODUCTION
Despite the recent economic downturn, electronic commerce (e-commerce) continues to show strong growth. According to the U.S. Census Bureau, e-commerce retail sales for 2002 reached at $45.6 billion, an increase of 26.9% from 2001, while total retail sales increased 3.1% during the same period. Although e-commerce sales account for only 1.4% of total sales, the digital economy continues to grow, albeit at a slower pace than earlier predicted. At the end of 2002 The Economist reported that while conventional retailers faced soft sales, that many e-commerce companies were finally reaching profitability (1). E-commerce enables businesses to sell their products and services directly to the consumers without establishing a physical point of sale. While some products can be delivered digitally to households (for example, newspapers, airline tickets and music CDs), most products purchased online ultimately must be transported to the end-users in the physical world. An efficient and reliable delivery system is essential for gaining customer loyalty online and consequently obtaining profitability, home delivery is increasingly becoming a key element in e-commerce. The logistical requirements of supply chains that extend to each customer’s address may stimulate greater complexity in distribution systems management, potentially causing higher costs in carriers’ fleet operations. An increase in time-sensitive goods results in an increase in the number of delivery vehicles. More frequent home-based local deliveries will likely add to traffic congestion and environmental problems in urban areas, making it more difficult for carriers to meet customer demands. These changes create challenges for the freight community. Over the past several years, many researchers have investigated the likely impacts of online shopping driven by information technology on transportation, including the movements of freight (2,3,4). Although home delivery plays a crucial role in the distribution chain, limited attention has been paid to the issues associated with the home delivery in the transportation literature. A recent exception is the work of Campbell and Salvelsberg (5), which examines consumer direct service problems faced by individual retailers providing home delivery. That work points to the necessity of...
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