Article  ·  January 2025

Ten hurdles to overcome for better urban logistics

Nicolas Collignon
CEO

Minimal X light electric vehicles making deliveries in the centre of London.


The urban delivery challenge

Urban logistics stands at a critical junction. In Europe, transport represents the largest emitting sector in the economy at 29%, and has been the slowest to decarbonise. Primarily driven by e-commerce, global parcel volumes have grown from 87 billion in 2018, with projections to reach 200 billion by 2025. With this growth, the environmental pressure will only intensify. Current projections show delivery vehicles in the world’s top 100 cities will increase by 36% by 2030.

Despite current growth in van km driven, decarbonisation projections include a 20% reduction in traffic.

This growth collides with pressing efficiency problems. Delivery vans, despite comprising only 8% of urban traffic, generate 30% of urban road emissions. They spend 60%–80% of their time on non-driving activities (searching for parking, walking between addresses), worsen congestion, and cause disproportionate harm, while last-mile delivery consumes over 50% of shipping costs. Increasing consumer demand for same-day delivery adds further strain to this inefficient system.

The math doesn’t work. We need to achieve 70% transport decarbonisation in the next 5 years, yet van traffic continues to rise. Simply electrifying the current van-based model won’t solve the fundamental inefficiencies of urban delivery.

The promise and reality of LEV logistics

Light Electric Vehicles (LEVs) could transform urban logistics. At Kale AI, we have found over a number of research projects that cargo bikes and other LEVs outperform traditional vans in dense urban areas – faster deliveries, lower costs, zero emissions. They move through traffic easily, park without hassle, and slash emissions. The physics and economics both point to LEVs as the natural solution for urban freight.

Real-world successes reinforce this logic. DHL now delivers over half its express shipments by bicycle in numerous Dutch cities. In London, Amazon plans to handle five million last-mile deliveries annually with cargo bikes and has expanded across many cities in Europe. France’s La Poste aims to deploy 1,000 electric cargo bikes nationwide, targeting a 30% cut in CO₂ emissions by the end of 2025.

Photo sent by my grandma this year, a clear sign that mindsets are changing in France :)

The Light Electric Vehicle (LEV) industry is young, and early pioneers have now demonstrated the model’s potential. Cycloon, a Dutch cargo-bike delivery company, grew to serve 100 cities, delivering 2.5 million parcels in 2022 with their cargo bike fleet. However, the recent partial closure of their parcel operations, which was part of e-commerce company BOL.com’s restructuring, reminds us that progress isn’t always linear. In France, Coursier.fr evolved from a small courier service to operate 600 cargo bikes across ten major cities, winning contracts from retail giants like Amazon and Louis Vuitton.

Yet across major European cities, LEVs handle only less than 1% of urban deliveries. Traditional diesel vehicles still dominate, accounting for over 80% of urban freight movement.

This stark gap between potential and reality leads to a simple question:

If cargo bikes outperform delivery vans, why haven’t they taken over yet?

The answer is a good insight into how complex systems resist change, even when the benefits seem obvious.

In this post, we examine ten systemic barriers slowing LEV adoption, drawing from our operational research and market analysis. We hope that better understanding these barriers – and the ecosystem emerging to overcome them – can help in drawing a roadmap for transforming urban delivery.

1. Misconceptions about vehicle size and efficiency

Most people assume bigger motor-powered vehicles mean better efficiency, and underestimate the impact of parking search and congestion on the efficiency of delivery vehicles. This misses the reality of urban logistics – vans spend countless hours stuck in traffic or circling for parking, while their drivers walk long distances between vehicle and delivery point.

2. Cultural barriers to cycling adoption

Many still view cycling as casual or unprofessional, despite a number of companies proving otherwise with their large-scale operations. This bias helps explain why the Netherlands – where cycling is seen as a serious transport mode – leads in LEV logistics adoption, while other markets lag behind.

On top of this cognitive bias, the logistics industry has long equated innovation with automation, drones, and robot delivery, and rarely with nimbler pedal-powered vehicles. This mindset has led operators to overlook LEVs’ proven advantages in urban delivery.

France’s rapid LEV adoption over the past two years shows how these perceptions can change – strong policy support and professional operators have transformed cargo bikes into a legitimate business tool.

3. Established systems built for vans

Large logistics operators have spent decades building their operations around vans and trucks. Every aspect of their business – from depot locations to routing software to maintenance facilities to staff training – assumes traditional vehicles. These systems represent massive investments in both infrastructure and knowledge. More fundamentally, companies rarely disrupt profitable existing operations, especially when quarterly growth targets discourage risky transformation. Their innovation teams focus on optimising current systems rather than reimagining them. Even when LEVs show clear advantages, the organisational momentum, and financial incentives favour incremental improvements to van operations over systemic change.

4. Hidden costs in van operations

A recent London study revealed diesel vans create £2.46 billion in annual social and environmental costs – eight times higher per km than cargo bikes. But these costs don’t appear on company balance sheets, distorting decision-making. This disconnect between social and private costs creates a market failure that policy could address through measures like congestion charging, parking fees, or delivery vehicle permits. France has shown how policy can realign incentives, offering €2 per parcel subsidies for cargo bike deliveries while increasing restrictions on diesel vehicles.

This problem compounds as many parcel delivery companies also use gig economy models and push operational costs onto drivers. Delivery workers absorb the real costs of urban inefficiencies – fuel wasted in traffic, time lost searching for parking, vehicle leasing fees, and fines. This structure masks the true cost of van operations while making individual drivers bear the financial burden of a suboptimal system.

5. High upfront costs: Hubs and vehicles

LEV logistics demands significant upfront investment on two fronts. First, operators need micro-hubs in city centres – these facilities enable efficient operations but securing affordable space in prime urban locations remains expensive and complex. Second, transitioning to LEV fleets requires substantial capital, and while emerging leasing options help, many operators still struggle with the initial fleet investment.

6. The vehicle maturity gap

Today’s cargo bikes emerge from the bicycle industry, not automotive manufacturing. This creates challenges around reliability, maintenance, and fleet management. While a van can run 12 hours daily for years with established maintenance networks, LEV fleets need new infrastructure. Vehicle standards, spare parts networks, and professional maintenance expertise all remain underdeveloped compared to traditional vehicles.

7. Lack of performance data and fleet management tools

Data gaps exist on both sides of the transition. Most logistics companies can’t properly measure the full costs of their van operations – time lost to parking, traffic delays, fines, and maintenance all remain untracked, or fragmented across different systems. Meanwhile, limited operational data exists about LEV performance in different contexts. Companies lack the tools to determine optimal vehicle deployment across varied urban environments, or how to efficiently operate mixed fleets combining vehicles with different ranges, speeds, and cargo capacities. Without robust data on both current operations and LEV alternatives, building the business case for transition becomes unnecessarily difficult.

8. Poor design of pilot programs

Underfunded or poorly planned pilots often fail to showcase LEVs’ true potential. The limited scope of these programs also means staff cannot develop expertise or refine processes. Without proper resources and expertise, pilots become self-fulfilling prophecies of limited success – too small and slow to generate the changes needed for transformation.

9. The scale-up struggle

Even successful pilots prove difficult to replicate. Each city’s unique characteristics demand adaptation, requiring deep operational expertise to maintain efficiency. Success in Amsterdam or Paris often fails to convince operators in Milan or Manchester, who view their cities as unique cases with different terrain, weather, or street patterns. This “not-in-my-city” mindset persists despite evidence that LEVs can adapt to varied urban environments.

10. The dynamic operations challenge

Van-based delivery follows a simple model: load once, deliver all day. LEV logistics demands more sophisticated orchestration. Their limited capacity requires precise load planning. Missing parcel size data creates routing headaches when a parcel doesn’t fit. Vehicles reload 2–3 times daily, and may need to rely on a network of micro-hubs instead of a single depot. LEV specialist operators often handle both scheduled routes and on-demand deliveries. Traditional software can’t handle this complexity – LEVs need dynamic systems that optimise routes in real-time while juggling multiple constraints and opportunities.

The path forward

The transition to LEV logistics mirrors a pattern familiar to complex systems folks: change accumulates gradually until conditions enable rapid transformation.

The ten barriers we’ve highlighted illustrate why LEV adoption has been slower than their proven advantages would suggest. A van-based system that has dominated for over twenty years carries deep structural momentum – from established maintenance networks to standardised training, from fleet financing to insurance.

One of the key insights is that this transition requires more than just better vehicles. The ecosystem to support the transition to LEV logistics continues to mature, with new players emerging in manufacturing, financing, and operations. For example, a new wave of manufacturers, such as Mubea, or the recent Minimal X, bring automotive expertise to LEV production to ensure robust and agile vehicles, overcoming the maturity problems faced by early prototypes.

Although it doesn’t yet match the depth and flexibility found in the van sector, the burgeoning market for cargo bike leasing and financing is developing, with companies like Dockr and Zoomo making inroads. Investment in companies like Zedify and Fin Mile in the UK also show some early conviction for these new models to disrupt incumbents and scale.

Most encouragingly, the mindset shift appears to be accelerating. As more cities face the triple challenge of congestion, emissions, and delivery demand, LEVs are increasingly seen not as a novelty but as a practical solution. While people use to laugh at the idea of a cargo bike replacing a van, the idea is now being taken seriously by large operators, policy makers and around dinner tables. This momentum is anchored by customers who, having experienced LEV deliveries, refuse to go back to vans.

Bold policy initiatives are also emerging as powerful catalysts for change. The Netherlands’ recent implementation of zero-emission zones across 14 cities shows how national policy frameworks can accelerate the transition. By combining restrictions on polluting vehicles with generous subsidies for electric vans and cargo bikes, they’ve created a comprehensive “carrot and stick” approach that addresses multiple barriers simultaneously. This policy-driven transition gives businesses a clear timeline while providing the support needed to adapt, demonstrating how well-designed regulations can help overcome both financial and cultural barriers to LEV adoption.

The next few years will be critical. With transport decarbonization targets looming and urban delivery demands growing, the pressure for change is mounting. The pioneers have shown what’s possible. Now it’s time for the rest of the industry to follow – not just for operational efficiency, but for the health and livability of our cities.