Abstract
With the arrival of autonomous driving technology, the logistics industry, particularly warehousing, is facing unprecedented changes. This study aims to explore how the expected drop in freight transportation costs due to truck automation may affect the number, size, and location of warehouses in a simple framework built around a monocentric city that receives supplies from a “port” located southwest of the city center. We formulated and solved a mixed-integer program that combine a static facility location model with a monocentric city model that provides simple estimates of population density and urban land rents. We found that as freight cost reduction increases from 0% to 90%, the optimum number of warehouses drops from 7 to 1, the average warehouse size expands from 8,125 to 10,833 square feet, drayage truck mileage drops by up to 24% while delivery truck mileage soars by up to 147%, for a net mileage increase of up to 18%. Our methodology and findings should be of interest to warehouse operators, retailers, and policymakers concerned with land use and environmental quality.