Balanced and Bounded E-commerce

We envision an e-commerce system that considers impacts and opportunities along the entire domestic supply chain, from port to doorway. A functional and beneficial e-commerce system is one that advances:

• improved air quality via clean ports and trucks and alternative goods movement approaches

• safe and maintained roadways through targeted capital investments

• thoughtful and engaged community planning around warehouse siting

• investments in a robust public transit system that connects workers to jobs

• creative re-use of retail space and planning for future development

• reduced congestion in urban areas through congestion pricing and other means

• smart and balanced use of the public right-of-way, with curbside management and lower impact, last-mile delivery vehicles such as cargo bikes, e-bikes, and modified urban delivery vehicles

• incentivized consolidation of package delivery and reduced packaging to decrease waste and to increase efficiency

Such a vision strikes a balance between a system focused solely on immediate goods movement, with one that has beneficial practices along the entire chain.

Imbalanced and Unbounded E-commerce

Changes stemming from singular goal of increasing delivery speeds would include those that we already are seeing today, but they would become much more pronounced and would have reverberations throughout the region, including:

• Unmanageable port activity coupled with increased reliance on non-local supply chains

• Increased truck traffic from ports to warehouse facilities

• Increased need for roadway maintenance and repair

• Increased greenfield development for strategically-placed warehouses (“warehouse sprawl”)

• Increased concentration of commercial and industrial uses in and around historically segregated communities

• Increased proportion of workforce working in low-wage jobs with limited public transit access

• Declining demand for local retail, and increased vacancies in downtowns

• Competing demand for other beneficial port land uses, such as offshore wind support

• Increased roadway congestion in developed areas, and decreased safety for pedestrians and cyclists

• Diminished air quality in communities along the supply chain, and in concentrated areas of delivery

• Increased greenhouse gas emissions

• Imbalanced use of street and curb space for e-commerce, diminishing opportunities for a re-envisioned right-of-way that mitigates flooding and urban heat, supports GHG-free transportation alternatives, and provides critical community space

• Unsustainable levels of waste generation

Supply Chain Management

Supply chain management can be defined as the handling of the entire production flow of a good or service - starting from the raw components all the way to delivering the final product to the consumer. E-commerce is disrupting the way supply chains have generally operated for the past century by shifting from more of a centralized system to a decentralized one. A centralized system sees large amounts of goods - determined by retailer demand - move between ports, warehouses, distribution centers and retail outlets. A decentralized system sees a diversity of goods - determined by individual consumer demand - move between ports, warehouses, fulfillment centers, and individual residences.

This shift, along with the ever-increasing demand for a greater number of products in a faster amount of time, has reverberated across the supply chain leading to changes in the amount, size, and location of warehouses and fulfillment centers and the means by which they are delivered. The pandemic-driven lockdowns and caution around public gatherings throughout 2020 and 2021 are largely thought to have driven more people to e-commerce, further solidifying changes to the supply chain.

Symposium Takeaways

In a panel moderated by Rohit Aggarwala, then Senior Fellow at Jacobs Cornell-Technicon Institute at Cornell Tech and now NYC Department of Environmental Protection Commissioner and Chief Climate Officer, panelists discussed the implications of e-commerce on supply chain management in our region. Panelists included Marc Wulfraat, Founder & President, MWPVL International; Marc Levinson, Author, The Box; Stephanie Finch, Program Manager, Goods Movement Action Program at the Port Authority, discussed the implications of e-commerce on supply chain management in our region. The following are some key takeaways from that conversation.

E-commerce has rapidly grown globally and in our region with one company, Amazon, dominating the space. As of 2021, Amazon had over 400 million square feet of distribution center space globally, building out a supply chain infrastructure system in just 22 years that took Walmart nearly 50 years to do. Amazon was on track in 2022 to increase its footprint 39%, the majority of which was to occur in the US. Amazon’s e-commerce network, which now includes its own delivery system, is designed to transport goods faster and at a lower cost to meet consumer demand.

E-commerce growth requires a different supply chain than the one we’ve relied on for the past century. Crossings by large trucks at Port Authority bridges and tunnels decreased from 4.5 million annually in 2008 to 3.5 million annually in 2019, while small and midsize trucks intended for personal delivery increased. Warehouse employment has doubled across the US since 2010, with warehouse space increasing in the outer boroughs of NYC and in Northern New Jersey.

The trend towards next-day delivery has encouraged a ​“warehouse to warehouse to last-mile” model away from large, condensed deliveries to outlets in commercial city centers. Some cities and private associations have sought interest in advancing alternative delivery systems to trucking, including maritime and freight and passenger rail, but thus far they are either not economically viable or feasible under existing regulations.

The growth of e-commerce in our region has resulted in negative consequences that could become worse without better planning and public policy including: questionable labor practices; the inability for small retailers to compete in the market; increased packaging waste; and issues of congestion and air quality.

Despite its rapid and prolific growth, there is still room for e-commerce to grow nationally and in our region, driven in part by public subsidies that encourage its growth. Amazon currently comprises 50% of the e-commerce market for retail in North America, but still has room to grow particularly in the food/grocery space. Subsidies and incentives aiding e-commerce include: waste removal; subsidized construction of many distribution centers; roadway, bridge, and port improvements; free parking and use of sidewalks for delivery vehicles.

Amid these changes, public policy can shape the e-commerce framework going forward.

• Change the amount of subsidies/levy fees

• Impose delivery hours and other regulations

• Green the delivery of e-commerce

• Implement consumer behavior policies that encourage smarter consumption habits with less waste

Areas for Further Research

• Where will the greatest demand for warehouses and fulfillment centers be moving forward and how will communities, and state and local governments respond?

• How can our current supply chain infrastructure be adapted to better accommodate the e-commerce supply chain, including regulatory changes that allow freight and passengers to mix on trains?

• How can we use public policy (subsidies, fees, etc.) to shape the e-commerce supply chain in ways that lead to better outcomes?

• How can we advance e-commerce while balancing it with other goals such as healthy communities and a clean environment?

Symposium Takeaways

In a panel moderated by Tiffany-Ann Taylor, then of NYC Department of Transportation and now RPA’s Vice President for Transportation, panelists discussed a range of topics around transportation and e-commerce in our region from congestion pricing, to air quality and environmental justice, to last-mile delivery. Panelists included Axel Carrion, Vice President of State Government & Public Affairs, UPS; Sarah Kaufman, Associate Director, NYU Rudin Center for Transportation; Danny Harris, Executive Director, Transportation Alternatives; and Charles Komanoff, Public Policy Analyst. The following are some key takeaways from that conversation.

Roadway congestion in New York City and the surrounding region is both an outcome of and an obstacle to the growth of e-commerce. More than 120,000 trucks enter and exit New York City each day, a quarter of which access via one crossing: the George Washington Bridge. The pandemic dramatically increased the share of packages being delivered to residential recipients. Congestion, which is increasingly comprised of e-commerce-related movements, diminishes the quality of public transportation on NYC streets, particularly buses which are among the slowest in the nation.

Policy approaches that address delivery and congestion will need to balance the many competing demands for street space, including parking, biking, pedestrian use, and electric vehicle charging, among other uses. With 40% of existing unloading and loading positions in New York City occupied by vehicles not performing that function at any given time, enforcement of policies will be essential.

Inequity and environmental justice must be addressed or could be furthered through the growth of e-commerce. E-commerce itself is used more by wealthier residents, while its impacts (truck traffic, air and noise pollution, unsafe streets, etc.) have a disproportionate impact on lower-income residents and communities of color. Planning that engages affected communities and aims to mitigate injustice is essential.

Areas for Further Research

• How have trucking and delivery trends changed since e-commerce has taken root?

• How much has e-commerce impacted air quality and greenhouse gas emissions, and where has air pollution increased the most?

• What policies and best practices around traffic congestion and last-mile delivery options will lead to e-commerce that works for the region?

• What are the trucking demands on the curb?

Land Use & Economic Development

“Land use” can be thought of as a means by which we manage land to bring about a degree of order, meet basic needs such as housing and clean water, and foster economic development opportunities. As consumers increasingly move away from purchasing goods at retail outlets, opting instead to purchase online, all while still demanding the products quickly, the more reliable trends around land use of the past few decades are shifting.

The practice of ​“home rule” allocates the authority over decisions involving land use to local governments in our region, meaning communities throughout New York, New Jersey, and Connecticut are each individually grappling with how to respond to the changes that e-commerce is driving in how we plan for and use land, and what economic benefits can be gained. At the same time, retailers and building owners are seeking ways to stay afloat and be creative in a dramatically changing environment.

Symposium Takeaways

In a panel moderated by Jim Hughes, former Dean of the Bloustein School of Planning and Public Policy at Rutgers, panelists discussed a range of topics around the impact of e-commerce on land use and economic development in our region, including the growth in share of e-commerce retail, the need for warehouse development to keep up with demand, and creative solutions for buildings to welcome the e-commerce age. Panelists included Larisa Ortiz, Managing Director, Streetsense; Kate Wittels, Partner, HR&A; Jun Choi, Chief Executive Officer, Menlo Realty Ventures; and Aditya Sanghvi, Senior Partner, McKinsey & Company. The following are some key takeaways from that conversation.

Demand for e-commerce is outpacing some of the land use changes needed to meet distribution needs. 2020 saw a 35% increase in demand for e-commerce, but only a 1% increase in available distribution space. Northern and central New Jersey are prime locations for warehouses/distribution centers due to proximity to New York and dense suburbs. In addition, 72% of new distribution centers were leased before they were completed.

Warehouse development on undeveloped ​“greenfield” sites comes with challenges and better planning is needed regionally. Such sites are further from urban centers and are not able to attract the necessary labor pool with the necessary skills to work in warehouses. The lack of public transportation limits access to jobs, leading some companies to provide their own transportation systems. A lack of regional and proactive planning has resulted in underutilized land around the region’s ports and outdated industrial parks. Agricultural land not protected under the farmland preservation program is at risk of development from warehouse interests.

Buildings, both residential and mixed use, will need to be adapted to better accommodate e-commerce and deliveries. Residential buildings need to be adapted for the reception of e-grocery, which saw a 200% increase in delivery during the pandemic lockdown. Public housing is particularly poorly suited for e-commerce grocery deliveries. Rethinking the lobby will be an important part of making e-commerce work.

In central business and mixed-use districts, companies will need to rethink retail in strategic and creative ways. The US is already over-retailed, with five times more retail square footage per capita than any country in Europe. Retailers need to focus on an ​“omni-channel” experience with a mix of retail, food and beverage, and entertainment, to survive. More work-from-home will invite opportunities for more retail in residential areas. Central business districts will need to find new ways to be vibrant. Declining shopping centers and malls will need to be repurposed.

Areas for Further Research

• How are warehouse development trends and forecasts changing in the city, suburbs, and rural areas?

• How can regional planning be used to ensure warehouse development occurs in beneficial ways?

• How is retail space changing in the city, suburbs, and rural areas?

• What is the future of the suburban shopping center and mall?

• What are the tax base impacts of warehouse versus retail land uses?

Environment & Sustainability

As e-commerce continues to grow, it is critical to understand the environmental impacts of this shift, but also how e-commerce done right can substantially improve environmental outcomes. For example, products packaged and delivered to individual customers throughout the region are sure to generate additional waste, but does it also reduce the amount of greenhouse gasses and air pollutants emitted by avoiding individual driving trips to stores? While the panel described below focused primarily on sustainable waste streams - or lack thereof - environmental and sustainability issues were discussed in every panel, including air pollution, greenhouse gas emissions, environmental justice, and more pedestrian-friendly spaces.

Symposium Takeaways

In a panel moderated by Paul Gertner, CEO of Starborn Industries, panelists discussed a range of topics around sustainable waste streams, including waste management, the supply chain dynamics of waste, waste reduction, and societal issues around consumption. Panelists included Bridget Andersen, Deputy Commissioner of Recycling and Sustainability at the New York Department of Sanitation; Kevin Lyons, Associate Professor of Supply Chain Management at Rutgers Business School; and Eric Goldstein, the New York Environmental Director at Natural Resources Defense Council.

E-commerce may not yet be changing the amount of waste generated, but it is changing the type of waste generated. NYC Sanitation has marked an upward trend in the share of waste that is cardboard as e-commerce has been on the rise. More detailed analyses are needed to better track these trends.

Producers can help to reduce waste by taking responsibility. It should be the producer’s responsibility to avoid single use plastics in favor of more recyclable and reusable packaging. The goal should be to reduce the amount of waste generated to keep waste out of landfills and incinerators, which are often sited near low-income communities and communities of color. Extended producer responsibility is a policy that can address waste generation.

The full lifecycle of products should be considered when thinking about waste and environmental impacts. Upstream manufacturing needs to be sustainable, and certifications can help to drive that. Between 25-30% of products ordered online are returned, versus traditional retail where less than 10% of products are returned, leading to additional emissions, packaging, and waste. The plastic bag ban in New York could serve as a model for regulating certain materials out of the waste stream. Consumerism is driving e-commerce trends and its impacts, and should be critically examined.

Areas for Further Research

• How much additional waste is generated from e-commerce?

• Where does the waste go and who is affected?

• How does e-commerce affect pollution and greenhouse gas emissions and what policies can reduce its impacts?

• What policies can reduce the amount of waste generated from e-commerce?