An Optimization-Based Approach to Evaluate the Operational and Environmental Impacts of Pick-Up Points on E-Commerce Urban Last-Mile Distribution: A Case Study in São Paulo, Brazil

Abstract

Online sales have steadily increased in recent years. Unlike the traditional retail shopping model, e-commerce must deliver custom orders to highly dispersed locations. Consequently, negative effects have been observed in large urban and densely populated areas, such as congestion and pollution. Pick-up points (PPs) are fast-growing solutions that provide parcel delivery and picking services at diverse locations throughout major city centers. This paper describes an optimization-based approach aimed to investigate the conditions in which a network of pick-up points can be more efficient than home deliveries from operational and environmental points of view in urban last-mile distribution. Differently from the related literature, in which analytical models were employed, we use optimization and algorithms to determine the economic and environmental benefits of packages destined for pick-up points instead of home deliveries. The framework was applied to the city of São Paulo, in Brazil. Several scenarios were evaluated, comprising different densities and percentages of deliveries destined for PPs. The results show that PPs can be a promising alternative for reducing the environmental externalities, as fleet and vehicle mileage can be reduced by more than 50%.