City centre emissions regulations and the impact on urban delivery models

The UK government is pushing hard to achieve zero-emission status by 2030 and UK cities have set ambitious plans to decrease their carbon emissions over the next ten years. In city centre locations, vehicles are increasingly facing emissions charges, traffic congestion and parking restrictions. Several cities across the UK have introduced charges for vehicles that do not meet certain emissions criteria. The roll-out of these Ultra Low Emission Zones (ULEZs), Clean Air Zones (CAZs) and other pollution-reducing schemes in cities across the UK is accelerating. Urban logistics operators are therefore exploring cleaner, alternative methods of transportation such as Electric Vehicles and bicycle couriers.

Clean Air Zones

Clean Air Zones (CAZ’s) are designated areas where vehicles are subject to certain emissions standards, the vehicles subject to these criteria varies according to the class of CAZ and minimum standards vary across vehicle types. There are four classes of CAZ (A-D), class D is the most wide-ranging. Depending on the class that is applied to the CAZ, certain vehicles will be restricted from driving in the zone. Restrictions are based on how much pollution is caused by certain vehicles (based on European emissions standards).

Larger vehicles like HGVs, coaches and buses that do not meet emissions requirements are charged around £100, although this varies between cities.

London’s expanding Ultra Low Emissions Zone

In 2019, London became the first city in the world to introduce an ultra-low emission zone, or ULEZ, designed to encourage people to drive less polluting cars or use other methods of transport in order to improve air quality.

When introduced, the ULEZ covered the same area as the London Congestion Charge zone. Reaching from Vauxhall bridge in the south west, up to Paddington in the north west, up to Angel in the north, Whitechapel in the east and Elephant and Castle in the south east.

From 25th October 2021, the ULEZ will be expanded to incorporate all areas between the north and south circular ring roads. An area 18 times larger than the original 2019 ULEZ.

The 2021 ULEZ will have significant impacts on businesses, especially those that require larger vehicles. Whilst there is an abundance of ULEZ compliant alternatives for smaller vans and private vehicles, these alternatives become increasingly limited and expensive as vehicle size increases.

More logistics schemes are moving towards cleaner industrial use, distribution centres and warehousing facilities with electric vehicle options, and this trend is set to continue. However, there are questions over whether the new boundary will influence location decisions for some logistics operations. The requirement to upgrade fleet vehicles or face paying the charge could mean some SMEs and heavy industry operations are no longer able to afford to operate within the ULEZ and may look to relocate outside of inner London.

Businesses with a client base located within the ULEZ must adapt their fleet and delivery networks to operate efficiently and competitively within this area. This will influence their location preferences, space requirements, fleet choices and thus the specification of facilities they require.

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Traffic congestion and the higher operating costs for older, large petrol or diesel vehicles, are driving a trend toward smaller, electric fleet vehicles. These vehicles often have a shorter range, meaning a smaller catchment area per facility. At the same time, urban consumers are demanding faster turnaround times and the ability to select delivery windows. Together, these factors are driving an impetus for operators to locate closer to consumers and adjust their operating networks – away from a few, largescale units to more numerous, smaller units.

Fleet changes have implications for vehicle route optimization and scheduling as well as the requirements for facilities in terms of yard configuration and amenities. Operators increasingly require cargo bike parking, EV charging facilities as well as staff facilities for couriers and this is changing their fit-out requirements.

New multi-modal delivery models are evolving as a response to road congestion and clean air initiatives. For example, DHL launched London’s first riverboat parcel delivery service last year (2020), aiming to reduce road traffic, carbon output and improve air quality, while providing a reliable and efficient way of transporting deliveries across the capital. The shipments will be loaded from electric vehicles onto the riverboat at Wandsworth before travelling along the Thames into central London, docking at Bankside Pier for final mile delivery on DHL courier bicycles.

The need for more consolidation centres is rising and with the expansion of the ULEZ, it seems likely that these will locate outside of the zone. A network of consolidation centres (and micro-consolidation centres) could also support SMEs currently located in within the ULEZ in helping them drive down emissions within the city and reduce costs associated with bringing goods into London.

A Construction Consolidation Centre for South London is one of the projects supported as part of the Mayor’s Air Quality Fund, announced in 2019, to improve air quality in the capital. The Consolidation Centre initiative aims to consolidate construction deliveries across six south London boroughs and cut at least 150 construction vehicle movements per day. Aside from government-led projects, companies located within the ULEZ are likely to look to operate such centres in order to reduce the cost, traffic congestion and emissions associated with bringing multiple deliveries into London each day.

Elsewhere in the UK

Other cities are also introducing emissions regulations. However, some cities have delayed or cancelled their CAZs, with many citing the Covid-19 pandemic as part of the reason. Birmingham introduced a class D CAZ in June 2021 (originally planned for 2020).

Manchester plan to implement a class C CAZ in May 2022, which will include most local roads in Greater Manchester. While Bristol are to introduce a small CAZ D, covering the centre of Bristol, due to come into force in Summer 2022. Newcastle was originally set to launch a CAZ in January 2021, but the plan has been delayed and Sheffield's proposed class C CAZ has been delayed until at least 2022. Plans to introduce a class B CAZ in Leeds were scrapped in 2020. Cardiff have also decided not to introduce a CAZ and will instead roll out other measures to combat air pollution.

Emissions regulations and clean air zones provide financial incentive for urban logistics operators to reduce emissions. However, the push towards more sustainable transport methods is not being driven by these measures alone. Consumer choices are increasingly being made with sustainability in mind and this is adding to the incentive for operators to improve their environmental credentials and embrace greener delivery methods. Traffic congestion in city centres can also mean that bicycles, e-bikes or motorcycles are a faster delivery method (compared with delivery vans) and can thus offer a competitive advantage, as well as save fuel costs.

The introduction of clean air zones in urban areas may encourage the use of consolidation centres, with these centres located outside of the clean air zone or urban area, thus reducing traffic movements and heavy vehicles within central city areas. They may also encourage other modes of transport within urban areas and this may give rise to more multi-modal logistics, as we are seeing in London, with warehousing requirements arising around modal interchanges.

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