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E-commerce is booming. What’s in it for urban transport?

Bianca Bianchi Alves's picture
Também disponível em: Português
 

Worldwide, e-commerce has experienced explosive growth over the past decade, including in developing countries. The 2015 Global Retail E-Commerce Index ranks several of the World Bank’s client countries among the 30 most important markets for e-commerce (China ranks 2nd, Mexico 17th, Chile 19th, Brazil 21st, and Argentina 29th). As shown in a 2017 report from Ipsos, China, India, and Indonesia are among the 10 countries with the highest frequency of online shopping in the world, among online shoppers. Although growth in e-commerce in these countries is sometimes hindered by structural deficiencies, such as limitations of banking systems, digital payment systems, secure IT networks, or transport infrastructure, the upcoming technological advances in mobile phones and payment and location systems will trigger another wave of growth. This growth will likely lead to more deliveries and an increase in freight volume in urban areas.

In this context, the Bank has been working with the cities of Sao Paulo and Bangalore to develop a new tool that helps evaluate how different transport policies and interventions can impact e-commerce logistics in urban areas (GiULia). Financed by the Multidonor Sustainable Logistics Trust Fund, the tool serves as a platform to promote discussion with our counterparts on a subject that is often neglected by city planners: urban logistics. Decision-making on policies and regulations for urban logistics has traditionally been undertaken without sufficient consideration for economic and environmental impacts. For instance, restrictions on the size and use of trucks in cities can cause a number of side effects, including the suburbanization of cargo, with warehouses and trucks located on the periphery of cities, far from consumers, or the fragmentation of services between multiple carriers, which may lead to more miles traveled, idle truck loads, and inefficiencies.

Motorization and its discontents

Roger Gorham's picture
Photo: Sarah Farat/World Bank
They say a picture is worth a thousand words.  While visiting the World Bank library the other day, I was struck by how many development publications featured pictures of motor vehicles on their covers, even though most of them covered topics that had little to do with transport.  The setting and tone of the pictures varied – sometimes they showed a lone car on a rural highway, sometimes congested vehicles in urban traffic, and sometimes a car displayed proudly as a status symbol – but the prevalence of motorized vehicles as a visual metaphor for development was unmistakable to me: in the public imagination, consciously or otherwise, many people associate development with more use of motorized vehicles.

Indeed, motorization – the process of adopting and using motor vehicles as a core part of economic and daily life – is closely linked with other dimensions of development such as urbanization and industrialization.

Motorization, however, is a double-edged sword.

For many households, being able to afford their own vehicle is often perceived as the key to accessing more jobs, more services, more opportunities—not to mention a status symbol. Likewise, vehicles can unlock possibilities for firms and individual entrepreneurs such as the young man from Uganda pictured on the right, proudly showing off his brand new boda boda (motorcycle taxi). 

But motorization also comes with a serious downside, in terms of challenges that many governments have difficulty managing.  Motor vehicles can undermine the livability of cities by cluttering up roads and open spaces—the scene of chaos and gridlock in the picture below, from Accra, is a telling example. In addition, vehicles create significant safety hazards for occupants and bystanders alike… in many developing countries, road deaths have effectively reached epidemic proportions. From an environmental standpoint, motorized transport is, of course, a major contributor to urban air pollution and greenhouse gas emissions. Lastly, motorization contributes to countries' hard currency challenges by exacerbating their long-term demand for petroleum products.

Given these challenges, how are developing countries going to align their motorization trajectories with their development goals?  What should the World Bank advise our clients about how to manage this process?