FROM SPRAWL TO proximity

Most of the logistics facilities dedicated to e-commerce are located in suburban settings, similar to distribution centres and warehouses serving other sectors and purposes. Based on an extensive data collection from 2014, Heitz and Beziat (2016) identified about 350 warehouses belonging to the parcel industry in the Paris Region.

Last update August 25, 2022 by Heleen Buldeo Rai.

The figure on the left illustrates the locations of these warehouses for parcels. As such, the e-commerce landscape represents at least 974,400 m2 of built surface, with a total footprint of approximately 2.5 million m2. The average size of a parcel hub in the Paris region is 8,000 m2, but this varies substantially depending on locations and functions (i.e., delivery, cross-dock, storage, etc.; Boïco, 2016).

In suburban settings, the demand for “XL” and even “XXL” warehouses increases in a quest to obtain large-scale savings. So-called “big box” warehouses serve as high throughput distribution centres and cross-docking facilities. Warehouses of more than 20,000 m2 represented 55% of volumes let in France, 47% of those are let in the Île-de-France region in 2015 (Boïco, 2016). Prologis research from 2019 shows that e-commerce requires three times the warehouse space than traditional retail (Mclaughlin, 2022).

Over the years, logistics facilities migrated ever further from urban centres. Also newer facilities followed this spatial tendency. This phenomenon has been termed “logistics sprawl” and is established in many cities around the world. Population growth, associated demand for recreational and residential areas within cities as well as policies supporting these developments are underlying reasons. Both have caused real estate values to go up, while the availability of larger lands and cheaper land price in suburban locations were promoted. According to Prologis research, city centre warehouse locations experience rent of 2-3x higher than those in peripheral locations (Mclaughlin, 2022). The figure below represents the number of warehouses and the average rent price in each hexagon for Paris.

In the Greater London area, the amount of industrial land declined from 8.3 thousand hectares in 2001 to 7 thousand hectares in 2015, repurposing 1,300 hectares in total (CBRE, 2017; JLL, 2017). Based on a case study of 74 metropolitan areas around the world, Dablanc, Palacios-Argüello and de Oliveira (2020) demonstrate logistics sprawl in all but 15 cases. The case studies include cities in Europe (12), North-America (55), South-America (4) and Asia (3). The authors found that there are more warehouses per inhabitant in medium and large cities compared to smaller cities. Similarly, the increase in the number of warehouses over time is found to be larger as well in medium and large cities, compared to smaller cities (Dablanc, Palacios-Argüello & de Oliveira, 2020). Overall, Prologis research finds record demand for warehouses all over the world, as the figure below shows.

The Paris region has experienced logistics sprawl as well in the past few decades. Only 1% of logistics facilities within the region are located within the City of Paris (Heitz et al., 2017). Most of those facilities have been developed as part of the City's projects and have been funded (in parts) by public stakeholders. They include “micro-hubs”, i.e., facilities that serve logistics activities in spaces between 500 and 5,000 m2, and “logistics hotels”, i.e., multi-storey and multi-activity facilities that also serve logistics activities.

Operators such as Chronopost, Star Service and FedEx use underground municipal car parks at Beaugrenelle, Concorde, Louvre and Opera as micro-hubs in the middle of Paris (Dablanc, 2022). Urban logistics real estate developer Sogaris inaugurated the first logistics hotel called ‘Chapelle Internationale’ in 2018, designed by the A26 architectural firm. Together with Poste Immo and Icade, it is currently developing Paris’ second logistics hotel in the future Bercy-Charenton district, ‘Quai Bercy’, designed by the Marc Mimram agency, enia architects and Coloco.

Aware of the need to consider logistics real estate as an asset, the City of Paris decided in 2006 to employ regulatory tools to preserve and complete the logistics network in densely populated areas. The 2006 Paris local urbanism plan introduced several measures to preserve and promote urban logistics activities. The modification of the plan in July 2016 reinforced this will, by developing new tools and completing the previous ones. One of the levers in favour of urban logistics introduced in 2016 was the establishment of around sixty perimeters for the location of urban logistics facilities. To assess the effectiveness of this regulatory tool, the Parisian urban planning agency Apur made an inventory in 2020. It found that fifteen out of sixty-two sites were already the subject of major restructuring or modification projects between 2016 and 2020 and almost half of them included an urban logistics space in the programming (Apur, 2020).

In a report published in 2021, Apur listed all logistics facilities linked to e-commerce in the City of Paris, including sites for temporary or permanent e-commerce storage, as well as courier sites for sorting or temporary storage of parcels - see figure on the right. Among the sites mapped, there are small or even very small cross-docking facilities, as well as medium-sized platforms. Apur (2021) shows that some neighbourhoods have few logistics facilities, despite having a large number of inhabitants, e.g., in the east and north-west.

All around the world, demand for logistics real estate in densely populated urban areas has spiked among private stakeholders as well. It is anecdotally observed in various cities including Amsterdam, the Netherlands (Ploos Van Amstel et al., 2021); London, United Kingdom (Steer & Cross River Partnership, 2020); Paris, France (Dablanc, 2018); Seoul, South Korea (Lim and Park, 2020); Shenzhen, China (Xiao et al., 2021); and various cities in the United States (Kang, 2020). As such, these Parisian examples can be fitted within a larger trend of “proximity logistics”, in which logistics facilities are developing in cities’ dense, mixed-use areas (Buldeo Rai et al., forthcoming).

A first force of change is represented by consumer demand and supply, characterised by a growing e-commerce sector, an “omnicanalisation” of retail models, an accelerating urban logistics start-up scene, and a maturing platform-based “gig economy” facilitating “instant deliveries”. E-commerce plays a special role in pushing forward technological and other types of innovation that directly impact urban logistics (Dablanc, 2018).

A second force of change is represented by policies and planning, characterised by increased attention for and sensitivity to urban transport and its negative externalities. More and more urban authorities implement dedicated access regulations and launch policies in support of low and zero-emission urban logistics, a goal established by the European Union for 2030 (European Commission, 2011). Although only 15 to 25% of urban transport kilometres travelled can be attributed to goods vehicles, they occupy 20 to 40% of motorised road-space, cause 20 to 40% of CO2 emissions, and are responsible for 30 to 50% of air pollutants (Smart Freight Centre, 2017). Some of these regulations are restrictive, limiting goods vehicles’ access to certain areas, during certain times or to certain vehicles, others are supportive, granting access when adhering to certain conditions (Gonzalez-Feliu, 2018).

Furthermore, cities are introducing low and zero-emission zones as well, and experimenting with pedestrianisation initiatives, “eco-neighborhoods’’ redesigns, and “x-minute city” visions. The global pandemic related to COVID-19 accelerated these changes in demand, supply, policies, and planning (Villa and Monzón, 2021). In response, the urban logistics sector needs to become more efficient, “soft”, and zero-emission, while also responding timely and accurately to contemporary modes of consumption.

As such, “proximity logistics” allows to counteract some of the undesirable effects that logistics sprawl brings about (Sakai et al., 2015). However, it does not necessarily replace facilities from suburban or rural areas. Rather, it provides an extension and refinement of essentially global logistics facility networks more tailored to the city, from “XXL” to “XXS”, while proximity logistics facilities themselves also vary in size. However, the relationship between logistics sprawl and transport externalities is more complex than usually presumed. Sakai et al. (2019) show that preventing logistics sprawl in itself does not necessarily generate environmental advantages and Kang (2020) calls to take facility characteristics and urban sprawl, leading to sprawling demand for goods, into consideration. Yet Sakai et al. (2019) also demonstrate that prohibiting logistics facilities from high-demand areas does cause negative externalities to significantly increase.

Counteracting logistics sprawl is even more important in the case of e-commerce, with its deliveries more fragmented than store replenishments, according to calculations by the consulting firm Oliver Wyman (2021). In Europe, logistics sprawl causes a 2.5g increase in CO2 emissions per purchase for online shopping, compared to a 1g increase for store shopping. For e-commerce deliveries in particular, logistics facilities in urban areas are found to decrease transport distances and negative externalities, as demonstrated for a micro-hub in Paris (Morin et al., 2016) and by a case in the United States (Prologis, 2021). Houde et al. (2021) show that the increased proximity to consumers slowed down the growth of external costs associated with Amazon's long-haul trucking in the United States. In this e-commerce era, space for logistics processes in urban areas increases inevitably (Xiao et al., 2021). For cities, and large cities in particular, accommodating this demand while maintaining sustainable land use patterns is a major challenge. A careful examination of developments is needed to evaluate land use planning efforts and impacts, as well as update the theories of logistics land use (Xiao et al., 2021).