A new evaluation approach to City Logistics projects A business-oriented Agent-Based model

Supplying goods to urban areas is a fundamental economic process because the majority of the world population lives and buys goods in cities. Freight distribu-tion activities in urban areas account for roughly 40% of supply chain costs and 60% of supply chain CO2 emissions. Moreover, surging e-commerce trends shape the urban freight transportation arena, increasing its complexity and the pressure on private actors. Thus, urban freight transportation activities generate negative externalities, but are relevant to a great amount of enterprises that compose the economic and social fabric. In this context, City Logistics (CL) emerged as a comprehensive concept driv-ing solutions to reduce negative externalities while interfering as little as possible with private actors’ operations and profitability. CL scholars and practitioners are facing several issues arising from e-commerce and population growth. In particu-lar, logistics service providers are called to optimize their operations in order to increase the speed of delivery. At the same time however, CL is dealing with technological and systemic innovation that might enhance optimization capabili-ties and network usage. As a response to the changing environment and within the mandate of CL paradigm, local authorities and private actors have invested on a wide range of initiatives. The variety of approaches adopted and stakeholders involved, at multiple governmental levels, are responsible for a mixed landscape of CL experiences across different regional contexts. Furthermore, despite their relatively large dif-fusion, CL initiatives often fail in taking up after a first pilot implementation, unable to reach paying customers after public subsidies are removed. Therefore, un-derstanding the major business aspects that underline the reasons for adopting CL initiative by private stakeholders is key to a more long-term vision on CL implementation and assessment. Previous research has given little attention to understanding the commercial and business aspects of CL projects before actually designing and implementing them, even though CL scholars have ascertained that evaluation methodologies need to encompass all aspects relevant issues for CL schemes. Several methodol-ogies have been proposed since the inception of CL with the evaluation objective in mind. However, they fall short in different ways. For instance, qualitative methods adopt a short-term feasibility approach to CL evaluation, and the subjec-tive evaluation of quantitative outcomes may potentially influence the ranking between different alternatives. On the other hand, modelling techniques need high quality data to simulate traffic flows and consumers’ demand, but fail short to ad-dress other important decision-making factors related to the business model of stakeholders. Research opportunities therefore lie in mixing the advantages of quantitative and qualitative approaches to include stakeholders in quantitative ex-ante evaluation of CL projects. My thesis will try to answer to the following research questions. -Research question 1: What is the state-of-art of CL projects modelling and evaluation meth-ods/frameworks? -Research question 2: How can an integrated qualitative-quantitative framework for CL evaluation be conceived? -Research question 3: How can a new evaluation framework effectively integrate a business-oriented view of CL systems? The first objective of this thesis is to highlight advantages and disadvantages of assessment methodologies with respect to the integration of the business mo-tives of CL actors into non-project specific, a long-term view on CL project as-sessment. The second objective of this work is to define a theoretical framework for designing and assessing CL projects business models on a qualitative level. To this end, CL systems are here compared to business ecosystems, which are a network of interrelated business entities. In the framework, CL actors can play multi-ple roles, and their decisions are based on their objectives, information, and con-straints. The business model of a business entity within the system is the set of the roles it plays, the business and operative relationships formed with other business entities, and the monetary and intangible values exchanged through these relationships. New quantitative methods are needed for a more sound representation of the patterns emerging from the different behaviours of agents. Hence, the third objective is to build an agent-model proposal for modelling, simulating and ultimately evaluating CL projects business model. In agent-based modelling, each actor can be modelled as an agent possessing objectives and decision-making attributes. Agents act autonomously and their interactions are defined formally by means of ontologies and model narratives built as a representation of real-life system. Finally, an experiment design will be constructed to provide insights on an ex-isting case study related to the introduction of automated parcel locker station. Two CL ecosystem configurations are modelled together in order to simulate the decision to adopt a new logistics service by potential customers. Then, the effect of the decision regarding the allocation of marketing and R&D budget is also evaluated. From the simulation runs, it becomes clear that the outcome for each ecosystem configuration in terms of profits and customers is strongly influenced by the decisions taken within the other configuration. In summary, this thesis provides a first modelling and simulation tool for as-sessing the implications of business model decisions within specific CL business ecosystems. For instance, the strategic decision to adopt a service proposed by a CL company is associated with the evaluation of intangible benefits offered by such company. Moreover, the modelling tool highlights the links between such strategic decisions and the operative ones, such as vehicle routing or inventory policies. Therefore, it proves that qualitative approaches can be used to integrate all stakeholders, while quantitative modelling provide a simulation environment to test long-term effects of different scenarios. However, this study has some limita-tions. For instance, more strategic decisions should be included in the model to investigate endogeneity stemming from agents’ actions. Furthermore, the implica-tion on the business ecosystem of the value of information are not assessed. Finally, the scope of the computational experiment should be widened to include a per-formance evaluation phase, which would then lead to more decision-making by the agents. Further research is aimed at using the tools developed in the thesis to understand how to drive retailers to change their attitude towards CL by under-standing and designing value proposition that might appeal to them. Moreover, the implications of the entrance of new CL players one traditional ones’ business model need to be explored more deeply from the strategic perspective of power relations.