The COVID-19 pandemic has exacerbated inequities in urban freight and the delivery of goods. This misalignment in the supply chain is perpetuating food insecurity, especially in areas where grocery store access is limited or non-existent and for those who have limited access to e-commerce.
With the support of a $325,000 grant from the National Science Foundation, researchers from Rensselaer Polytechnic Institute will develop mathematical models that allow them to study how this urban freight gap could be closed. Among other issues, they will consider the potential effects of traffic network and route reconfiguration, the sustainability of offering free or low shipping fees, and the supply chain costs associated with healthy food items. They will also explore what policies could support equitable market change.
“These extreme cases illustrate what happens if we leave the markets to their own devices,” said José Holguín-Veras, the director of the Center for Infrastructure, Transportation, and the Environment at Rensselaer. “The markets work fine in a wide range of conditions, but there are some instances where the markets don’t provide an optimal solution.”
Holguín-Veras said e-commerce vendors are incentivizing people to buy more than they need by touting free deliveries and returns in order to gain market share. This produces an excessive number of deliveries, leading to increased congestion and pollution. Underserved areas are experiencing the opposite challenge, with suppliers lacking a profit incentive to deliver healthy food and other necessities. Holguín-Veras said a systematic approach is required to address this inequity.
The Rensselaer research team will develop dynamic game theory models that accurately capture numerous market dynamics — including the behaviors of customers, vendors, and shipping companies. Using these models, they will test and evaluate potential policy changes.
“We expect to gain insight into how to advise policymakers to address the effects of over-subsidization, in the case of e-commerce, and under-subsidization, in the case of food deserts,” Holguín-Veras said.
Holguín-Veras and his team have been gathering survey data over the past 18 months about consumer behavior during the pandemic, including in-store and online purchases, which will help inform the models developed as part of this project.