Category: Parameters/Inputs

These are the issues surrounding AVs and E-Commerce that will affect urban form and development

The Blight of Failing Malls – A Rising Burden of E-Commerce

A new article from Business Insider looks at the continuing decline of indoor malls around the country.  Of the 1,300 malls in the US, a staggering 310 are ‘in high risk of closing’.  The largest culprit is the loss of anchor tenants like Macy’s, JC Penny, and Sears – all of which have been seeing large numbers of store closings in part due to the rise of e-commerce (see earlier post about this).

The article discusses the range of consequences of these closings including a rise in crime, increasing blight in the surrounding area, and the loss of municipal revenue coupled with a rise in costs for needed fire and police services.  Dead malls – and the e-commerce that is contributing to their demise – have large repercussions for cities.

As e-commerce expands and potentially reduces the number of strip malls as well (in addition to enclosed malls), these repercussions will amplify.  A recent conversation with the planning director of a suburb city focused around the devastating effects the reduction of strip malls and commercial activity in his city would have on municipal revenues.  This was especially difficult as he saw limited abilities, compared to more urban locations, for suburban cities to redefine themselves and create vitality, draws, and their associated revenues.

Drone Delivery Model from UPS

Drone delivery is on the horizon and could take a bit off the edge of the congestion cliff that will come with increased AV use and increased E-commerce.  UPS just tested a delivery model where a drone, attached to the top of a truck, can deploy to deliver a package while the driver continues on to do their own delivery at another site.

Some large caveats exist with the ability to use this in urban areas (as opposed to the rural example they describe).  That said, this is one step closer to the package delivery model where trucks become mini-distribution hubs and a fleet of drones go to and from a parked vehicle.  Obvious implications for trip generation, for potential design changes to buildings (say hello to your new rooftop mailbox!), and for distribution of warehouses in cities.

Graphic of how this would all work is below.

Walmart vs. Amazon II

Walmart seems intent on not losing out to Amazon and is investing heavily in E-Commerce to keep themselves competitive.  The WSJ article states that while brick-and-mortar sales are slowly rising, online sales have skyrocketed up 16% over the last quarter (and that quarter was a 21% rise from the quarter before).

In a separate article from SupplyChain247, Walmart’s CEO talks about the future of retail.  In short, in his view we will all be shopping online, will want to know the sourcing of our products and will want to make sure social and environmental sustainability is being considered.

 

Walmart vs. Amazon

In a continuation of how investment may be a sign of things to come (see two previous posts), Warren Buffett just divested from nearly $1 Billion of Walmart stock.  He cited the rise of e-commerce as part of his reason for doing this and said “Its a big, big force, and it has already disrupted plenty of people, and it will disrupt more.”

The article goes on to wonder is the US is not ‘over-stored’ with “23.5 square feet of retail space per person compared with 16.4 in Canada and 11.1 in Australia.”

Of note in the article as well was the graph below, showing the change in share price of Walmart vs. Amazon.  The picture is even grimmer if you look back 10 years.  Walmart stock has risen 48% during that time versus Amazon’s 2,024% increase.

AV’s – Yes They Are Truly Coming (Cont.)

As a follow up to our last post on how large investments in AV technology by automakers may be somewhat of a gauge as to how real and soon this technology will be arriving, we recently came across this rundown of investments and advancements in AV’s by large firms.  This text comes from the late 2016 Rocky Mountain Institute’s ‘Peak Car Ownership’ report.

  • “Apple is likely working on an advanced electric autonomous vehicle and recently invested $1 billion in Chinese ride-hailing service Didi Chuxing.
  • Google has been testing electric autonomous vehicles in Mountain View, California, and Austin, Texas, for many months and recently expanded to Arizona and Washington.
  • Uber recently began testing autonomous Ford Sedans and Volvo SUVs in Pittsburgh. CEO Travis Kalanick called autonomous vehicles providing Uber rides “existential” to the company’s survival.
  • GM, which recently invested $500 million in Lyft, is testing autonomous electric Chevy Bolts in San Francisco.
  • Tesla may be close to launching a mobility service. Morgan Stanley recently indicated that Tesla is in good position to launch its own electric, automated, on-demand mobility service by 2018 and modeled this insight into its relatively high valuation of the company. More recently, CEO Elon Musk released his “master plan part deux,” which details Tesla’s plan to launch an electric automated mobility service.
  • Daimler’s carshare subsidiary, Car2Go, has autonomous ambitions.
  • Volkswagen’s $300 million investment in European TNC Gett signals that it too is entering the mobility services market.
  • Ford CEO Mark Fields recently announced that Ford will mass produce autonomous vehicles (with no steering wheel) for use in ride-hailing services by 2021″

 

AV’s – Yes, They Truly Are Coming Soon

On this blog we are not in the habit of talking about the pace of AV adoption as we focus mainly on the secondary effects of this adoption.  That said, we are often asked if AV’s are imminent or even a true pending reality.

While we cannot say for certain when AV’s will be fully out and part of our daily lives, we believe the investments that have happened around AV technology by the large auto manufacturers should give any skeptics pause. The string of these types of investments over the last 18 months was just expanded significantly as  Ford just bought a majority ownership of Argo – an AV startup – for $1 Billion.

While it is no guarantee, a $1 billion investment seems to be a fairly good indication that AV’s are no longer anywhere near the realm of science fiction.  They are coming – and we would guess they are coming soon.

This makes the lack of planning and visioning of the secondary effects on cities, that much more pertinent and critical.  Much work to be done.

Getting out ahead: Regulating AVs

On the heels of USDOT announcing 10 pilot designees for testing AV technology, one state is getting out ahead of AVs.  Legislation proposed in Massachusetts would ” allow self-driving cars on public roads, but impose a mileage-based tax on their use, allow some large municipalities to ban them, and require all such cars to be zero-emissions vehicles.”  (Boston Globe, January 19, 2017)  As pointed out in the article, AVs currently fall into a legal gray area in Massachusetts and many states.

APA reports that Michigan, Arizona, California, the District of Columbia, Florida, Nevada, North Dakota, Tennessee, and Utah have statutes regulating AVs. (“Michigan joins small number of states with self-driving car laws.” – APA blog)

Article: “Mass law would tax autonomous vehicles by the mile,” by Dan Adams, Boston Globe, January 19,2017.

 

 

Warehouses Will Be Everywhere

As we continue to trend towards e-commerce and a range of delivery methods for products, warehouses – one of the key infrastructure elements of delivery – are going to both shift and proliferate.  A report from Colliers looks at these shifts broadly, but pertinent to this blog, there are sections on First Mile and Last Mile of delivery that outline the changes we will be seeing in the built environment.  Some takeaways:

  • Large consolidation of distribution facilities is happening as this facilitates logistics and the implementation of automation
  • Due to this consolidation, the size of facilities is greatly increasing – ‘First Mile’ facilities (these are distributions centers that are first accepting parcels from suppliers)  greater than 1 million square feet are becoming more commonplace. — Picture a single facility as large as 4-5 New York City blocks or 16-20 Portland blocks.
  • ‘Last Mile’ facilities (distribution centers that ship directly to customers) – on the other hand are locating in order to shorten and speed up final deliveries.  This is leading to smaller distribution centers (50-75,000 square feet) scattered around urban areas.

A great graphic that shows the complexity of new shopping and delivery methods is below.  Many forms of delivery and each has its own land use and transportation implications.

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E-Commerce?? – Depends on What you Are Shopping For

A new study in Transportation Research Record by Zhen et al. looks at the relationship between online versus in-store shopping based on the types of good you are shopping for.  Based on a survey of shoppers in Nanjing, China, they differentiate between experiential goods (ones with “traits that cannot be determined until the product is used” – such as clothing) and search goods (ones  “that consumers can ascertain fully before use” – such as electronics).  Unsurprisingly, they found more online purchasing happening with search goods than exchange goods.  A few other takeaways:

  • Cost consciousness is related to lower in-store clothing and electronics purchases
  • Shopping enjoyment increases in-store purchases for daily goods, but not for electronics – so “a particular shopping attitude does not always affect purchasing behavior for different products in the same way.”
  • More education is related to less in-store shopping and more online shopping for books and clothing

In terms of the effect on the overall transportation system, the results are not clear cut.  They state that “If returns of unsatisfactory products and freight transportation are considered, online purchasing generates even more travel demand. Therefore, transportation planners should expect growing challenges associated with the proliferation of Internet sales.”

E-Commerce: Brick-and-Mortar Slide Continues – 12% Drop in Store Trips This Past Holiday

A recent article in the Wall Street Journal documents the continued rise of e-commerce coupled with the inevitable slide of brick-and-mortar stores.  A few key numbers:

  • Overall, online holiday sales increased by 11% over the previous year while brick-and-mortar sales increased only 2.7%
  • JC Penny brick-and-mortar sales dropped by nearly 1% while its online sales grew by double digits.
  • Amazon was the clear leader in online sales with 38% of all online revenue

Probably the most striking number for the subject of this blog, brick-and-mortar shopping traffic (as in the number of times people went into stores) declined by 12%.  That number – if it continues – will inevitably lead to a drop in the amount of brick-and-mortar stores and major shifts in land use and transportation demand.  This will potentially also decrease the vitality and activity around commercial areas.

AV’s Future is Shared (at least initially) – Views from CES 2017

CityLab has posted a report from this years Consumer Electronics Show and – unsurprisingly – the roll-out of AV’s seems to be focused on shared fleets and they will focus on freight and high occupancy transport.  Cost seems to be the largest factor early on with AV technology being cost-prohibitive for individual ownership (although Tesla might have something to say about that).  Another reason is simply the ability to monitor and modify cars and algorithms – much easier to do roll-out and testing in limited contact points via larger shared fleets.

This is not to say that shared vehicles are the only future for AV’s – but thier initiation happening as shared vehicles is promising and gives a bit of time to figure out how best to promote and cement that future over individual ownership – probably the most critical issue in avoiding a dystopian future.

Chrysler Portal - Self Driving Car - Jae Hong/AP
Chrysler Portal – Self Driving Car – Jae Hong/AP

E-Commerce and the End of Department Stores…

Macy’s and Sears are closing stores throughout the country (250 stores in total) as trends continue to push against traditional bricks-and-mortar retailers.  While nobody suggests bricks-and-mortar will completely disappear, this is yet another step in the continuing shift away from traditional retail.  Previously considered anchor tenants that drove (almost literally) shoppers to large malls, the retail landscape has shifted towards smaller, more nimble, and often e-commerce linked retail.  This will have large implications on the amount of retail in the country, its distribution, and the size of parcels/spaces.  From recent discussions we have been having with industry experts, it seems that a quality sort is just beginning, where size and location of retail may start to give way to quality of experience and place.

What’s old is new: Efficient and space saving transportation gains traction

Part of the promise of new technological opportunities within transportation is the opportunity to use space more efficiently.  Connected and autonomous vehicles can travel closer together, ride-sharing can fill a portion of the staggering amount of empty vehicle seats on our streets and thus reduce some vehicles, and ride-hailing transportation may make it possible to reduce overall car ownership and the need for so much parking, freeing up space on streets and in our communities.  Yet, one of the most efficient inventions humanity has ever created also happens to be a space-saving form of mobility – the bicycle.  Cities of all shapes and sizes all over the world are “re-discovering” how space, efficiency, distance, economy, health, and sustainability can be addressed through investing in bicycle transportation. Along those lines, London just announced a massive investment in bicycle transportation, seeking to make it a rational option for both short and commute-distance trips.  Our challenge now, is figuring out how to right-size each form of transportation, from walking to biking to carsharing to transit to AVs, throughout our cities and communities to maximize not only our ability to reach our desired destinations quickly, but also to maximize the efficient use of limited space, as well as addressing issues of equity, health, and the environment.

The Amazon impact – more delivery trips and person-less stores

As online shopping continues to become commonplace, so do the number of delivery trucks delivering those goods directly to consumers, rather than centralized stores.  While there clearly is convenience in this approach, the increase in delivery vehicles on our streets is significant as 10-30% of the time the same package must be delivered more than once because no one is home and many goods are also returned this same way.  The space of our streets is limited – can space-efficient forms of transportation such as bicycles be designed into the center of urban delivery systems?

And at the other end of the spectrum, Amazon is experimenting with personnel-free shopping in urban areas where goods can be purchased without the help of a cashier at all – whether human or self-service machine.  This type of technology may have dual effects on the future of cities – there may be lower need for space for employee parking  (there are none), but what might it mean for cities to lose part of its entry-level workforce option?

AV’s and Residential Preferences (the city will expand…)

While there has been a good amount of speculation about how Shared AV’s (SAV) will push or hinder sprawl, little of it is based on research.  This new study (presentation linked) by Wenwen Zhang and Dr. Subhrajit Guhathakurta from Georgia Tech uses a sophisticated analysis of travel datasets from Atlanta coupled with home purchase information from Zillow to predict how fleets of SAV’s might shift where people will choose to live. While the study has some aspects to work out (value of travel time, pricing effects of new mobility on housing), the takeaway is a substantial shift in residential preference.

Author Zhang states that “The transportation system we investigated is Shared Autonomous Vehicle (SAVs) which is a ubiquitous transit system. Our results show that younger households (<40 years old) will move further away from downtown for cheaper housing units and better education resources. Meanwhile, elder households (>40 years old) will move towards the downtown area to avoid long average waiting time.  However, all workers will move further away from their working places. The best interpretation of our model results would be workers will have more freedom in terms of residential location choices, i.e. they can live closer to other education facilities and infrastructures that they need to consume, rather than being constrained by the location of their offices.”

The image below – from the study – sums up how a post AV/ridesource world will have more people choosing to both live and work farther from city centers.  (blue is current household distance from CBD or work, green is AV future distance from CBD or work).  The charts shown are for people under 40 with kids.

It should be noted that this study focuses on SAV’s where wait times are the key factor pushing some people to live closer in and within higher densities (to avoid wait times).  We might rightly assume that privately owned AVs (that eliminate wait times) could push people further out.

This should be a wake-up call to anyone worried about sprawl.

 

Distance of Household to CBD:
(Avg Current = 20.70 miles, Avg w/ SAV Fleets = 22.31 miles)

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Distance of Household to Work:
(Avg Current = 29.48 miles, Avg w/ SAV Fleets = 36.03 miles) zhang-hh

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AVs: Fleets or Private Ownership

This is probably one of the fundamental questions to how the future of AVs will roll out.  This article from Slate looks at three basic scenarios of AV ownership and use: Private ownership (what we have now), fleet ownership for private rides (think Uber/Lyft), and fleet ownership for shared rides (think Uber Pool).

While the article lays out convincing parameters for these scenarios, it doesn’t address the potential for differentiated models based on density.  Cities may lean towards fleet ownership and/or shared rides, but as we move further and further out into the suburbs, fleet management will be more difficult to do efficiently and profitably.  This seems like it would push towards more private ownership in these locations. If so, some of the parking related benefits of AVs – to name only one of many issues – may be uneven across urban areas.

 

AV’s, E-Commerce and Retail

This article talks about how the combination of AV’s and E-Commerce will create havoc for the retail industry.  More of our shopping will go online while bricks and mortar stores will start to act more like distribution warehouses as AV’s are sent to run errands and pick up things we need.  This will have large implications for how retail works in urban areas – where it is located, how much of it we need built, and a shift (already occurring) from retail being based on a need to retail being proposed as an experience.

Large implications for activity centers throughout urbanized areas as many of them have retail as a core vitality generator.

Cost of Autonomous Vehicles – Cortright

This is a two part series from City Observatory that talks about the projected cost of autonomous vehicles and the effects this will have on their adoption (and their marketshare).  The first article cityobservatory.org/how-much-will-autonomous-vehicles-cost/ has a collection of cost estimates from various sources.  The second article http://cityobservatory.org/price-of-autonomous-cars/ looks at the effects of pricing on everything from AV’s effect on transit to the behavioral effects of our being more aware of the cost of trips (as we may no longer have that sunk cost of the automobile).