Delivery Costs II

5. Concluding Remarks

This paper presents several parametric log linear models for the outdoor delivery cost functions based on a survey of all the French delivery offices in 2001. The main empirical results derived from this set of estimations are the following:

The best approximation of the model by a constant elasticity model gives an elasticity of the cost to the traffic equal to 0.28, confirming the existence of a strong scale economy in the delivery process. A relevant selection of cost drivers for the unit cost of a delivery office uses the traffic per capita, the density and, at a lower level, the total traffic. The total cost elasticity is actually not constant: It increases with the traffic per capita and is a U shape function of the density.

This U shape, highlighted econometrically for the first time, is one of the main contributions of this paper: It is very well explained by the Economics of delivery and it reconciles different anterior results upon costs elasticities.

The design of the delivery process should be treated endogenously. In most of the previous models of the cost of delivery, the design of the process, i.e. the division of the territory into delivery area and the organization of rounds, is considered as given. We have shown that it is useful to treat it as an endogenous component and to explain this by the model. In this paper the design was catch by the use of rounds not dedicated and by the surface of area of each office. In future research we plan to consider jointly endogeneity of the design of the delivery offices and non constant elasticity models.