Heathrow Airport Consolidation Centre - Osmose

CASE STUDY
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Heathrow Airport Consolidation Centre (London, UK)
Topic
Freight and city logistics
Summary
Heathrow airport has seen a significant reduction in the number of vehicle
movements as a result of this scheme. On time delivery performance to the retail
outlets is currently 95%. BAA has been able to set targets at full implementation of a
75% reduction in the number of vehicles delivering to the airport and a 90% use of
vehicle load capacity.
Retailers operating within the airport receive more effective, on-time deliveries on
high security shared-user vehicles. The project has been so successful that any new
retailer uses the consolidation centre as a condition of contract. With such positive
commercial and environmental benefits, this type of solution may be adopted not
only by other airports but also by retailing operations with similar congestion
problems such as those based in city centre locations.
This case study was collected in the framework of the Bestufs project.
Case Study
Introduction
Retail development within Heathrow airport has increased dramatically over the past
ten years, but the infrastructure has seen little change to accommodate this growth.
The delivery operation across Terminals 1-4 had evolved over several years and was
no longer adequate to support the growing retail business at Heathrow. Particular
problems included:
• An overloaded central terminal area and single tunnel access;
• Poor infrastructure;
• A lengthy and unpredictable delivery service.
Congestion, both on airport roads and at loading bays, was a significant problem
with 439 supplier movements to 240 retail outlets being made each day.
These issues, together with growing environmental pressures and the potential
requirements of Terminal 5, demanded a radical re-think of the previous operation.
Basic facts
A study of truck movements at Heathrow was carried out. Various proposals were
produced as to how the number of vehicle movements supplying retail units at
Terminals 1-4 could be reduced. The study evaluated various retail delivery options
and reviewed both the planned infrastructure and new methods of approaching the
delivery problem. It was decided that the best combination of traffic volume, physical
infrastructure requirements and delivery/handling costs would be met by the
creation of a consolidation centre.
The study recommended that this consolidation centre be located away from the
airport and that all retail merchandise and catering foodstuffs be delivered to it. The
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only exceptions to this would be newspaper deliveries and high value, high insurance
cost deliveries such as cash / bullion. These items should be transferred into the
airport directly by their suppliers. This option would also provide balanced benefits to
all parties that use, or are affected by, the airport, i.e. retailers, airlines, flight
service companies, passengers and the local community.
Users and stakeholders
BAA then sought to develop an alliance with a key logistics operator in order to
manage the supply of goods to the retail outlets in the airport. This partnership had
four main aims:
• To improve methods of delivery to retail units;
• To reduce vehicle movements through consolidation of products;
• To improve handling at delivery point both on and off the airport;
• To improve management of packaging waste.
The consolidation centre is managed by the logistics provider Exel on behalf of the
British Airport Authority BAA.
Implementation set-up
Exel performed a trial of this off-airport consolidation method between March and
June 2000, with eight retailers that operated a total of 40 retail outlets across the
four terminals. The trial produced a 66% reduction in deliveries to the airport and
good feedback from the retailers. Exel was awarded a five-year contract worth 3
million Euro per year to operate the consolidation centre. Operations started in May
2001. Exel currently operate a 25,000 square ft warehouse at Hatton Cross with five
vehicles (4 x 17 tonne rigid box-vans with tail-lifts and 1 x 3.5 tonne with tail-lift)
and some 20 operational and clerical staff. Freight arrives at the centre in a variety
of packaging from the suppliers. It is subject to security checks, caged and sealed
ready for despatch. The vehicles used to deliver goods from the consolidation centre
to the airport initially on hire to Exel were replaced by a new company owned fleet in
summer 2002. This consists of three tractor units and three urban rear-steer 11
metre box van trailers, with tail-lifts. Two trailers are dual compartment, with a
moving bulkhead, and fitted with electric fridge motors to cater for chilled / frozen
food deliveries from the cold store.
When the Exel vehicle unloads at the delivery bay within the airport, an Exel
employee brings the goods to the store (or stockroom) in a roll-cage together with
delivery notes from both the supplier and Exel. Any stock that needs to be
transferred between branches within the airport can be labelled with the new
delivery address and will be delivered on the next visit to the named branch. A driver
and usually two terminal staff man operate each delivery vehicle, which remains at a
terminal until deliveries to all the retail outlets are completed. Security checking
procedures have been embedded into the system at the consolidation centre,
reducing the number of checks that need to be made for vehicles destined airside. All
the delivery and terminal staff are screened for security.
Deliveries can be scheduled to suit the retailers’ preference. The consolidation centre
is now open 24 hours a day, 7 days a week for deliveries and also provides onward
transportation and delivery to the airport at any time specified by the retailer. Exel
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also collect and remove recyclable packaging waste, such as cardboard and plastic.
The delivery staffs are trained to ensure that they are aware of the environmental
role that they can play.
Results
The approach is proving to be extremely effective and won the prestigious Institute
of Logistics and Transport Environmental Award 2001. It has gained increasing
acceptance as the retailers serviced by the consolidation centre see the benefits for
their organisations. In summary, Heathrow’s new consolidation centre has achieved:
• A reduction in the number of vehicles travelling to the terminals, thereby
reducing congestion both within the airport and on the approach roads. These
improved traffic flows within the airport benefit all airport users both in terms of
reduced congestion and improved air quality.
• A reduction in the number of vehicles passing through control points and driving
airside, thus reducing the number of less experienced drivers on these airport
roads. Flight operations (e.g. aircraft refuelling, baggage handling, flight
catering) have been greatly enhanced by this reduction in congestion.
• Faster deliveries being made to the consolidation centre by suppliers since there
is less congestion on approach roads and fewer delays in off-loading goods and
loading returns.
• More frequent and scheduled deliveries to the terminal buildings, enabling
retailers to know more accurately when goods will arrive, within agreed delivery
periods. This helps a retailer to receive merchandise in a shorter time, something
that is greatly appreciated.
• Potential savings in both supply chain and staffing costs for retailers using the
consolidation centre.
The saved time in deliveries, corresponds to a saving of 235.75 hours per week,
which translates to a cost saving of around 7,000 Euro, assuming a 30 Euro per hour
rate to cover the fixed costs of the vehicles involved. Annually this equates to a
saving in excess of 370,000 Euro, based on current levels of activity.
Annually, 22.15 tonnes of Carbon Dioxide are currently being saved which is equal to
the Carbon Dioxide generated by a family car over 123,067 km or 7,692 x 10 mile
journeys. This reduction in journeys also saves 1.35 kg of Carbon Monoxide, 1.06 kg
of NMVOC (Non Methane Volatile Organic Compounds), 3.79 kg of Nitrogen Oxide
and 0.28 kg of Particulates a week. Emissions are also expected to reduce when the
new alternative-fuelled fleet is introduced. The intention is to use compressed natural
gas fuelled vehicles, as they provide the best current improvement to local air
quality.
Future prospects and conclusions
Exel are currently introducing a computerised hand-held tracking system, based on
Palm Pilot technology, which uses software specifically written by Exel for the BAA
operation. Every carton will be given a bar-coded label, as will every cage so that
goods will be scanned in and out of the consolidation centre. Load planning will be
performed electronically, producing a full manifest by cage. Each cage will be sealed
and tracked as it moves around the airport and will also be scanned at retail outlets.
This development will increase the efficiency of this delivery operation still further.
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All new concessionaire agreements and renegotiated existing agreements at
Heathrow will require retailers to use the Exel facility.
Web links
http://www.bestufs.net/
More information:
This information has been collected from Heathrow Airport Retail Consolidation
Centre, Good Practice Case Study No.402 published by the Energy Efficiency Best
Practice Programme in May 2002. The full case study is available on the Energy
Efficiency Best Practice Programme website at:
http://www.energy-efficiency.gov.uk/document/gpcs/GPCS402.pdf
Author contact details
Author who did the material collection for BESTUFS:
Julien Allen, University of Westminster
City or region
London
Country
UK
Submission date
2002
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