This study investigates the potential of modular vehicle concepts and consolidation to increasethe efficiency of urban freight and passenger transport. Modularity is achieved by connectingmultiple vehicles together to form a platoon. Consolidation is realized by integrating passengerand freight demand in the routing problem. Vehicles are specific for each demand type but canbe connected freely, allowing the transport of multiple demand types in the same platoon. Therouting problem formulation considers travel time costs, travel distance costs, fleet size costs,and unserved requests costs. The operations are modeled in a novel modular multi-purposepickup and delivery problem (MMP-PDP) which is solved using CPLEX and Adaptive LargeNeighborhood Search (ALNS). In an extensive scenario study, the potential of the modularvehicle type is explored for different spatial and temporal demand distributions. A parameterstudy on vehicle capacity, vehicle range and platoon cost saving is performed to assess theirinfluence on efficiency. The experiments indicate a cost saving of 48% due to modularity and anadditional 9% due to consolidation. The reduction mainly stems from reduced operating costsand reduced trip duration, while the same number of requests can be served in all cases. Emptyvehicle kilometers are reduced by more than 60% by consolidation and modularity. A large-scalecase study in Stockholm highlights the practical applicability of the modular transport system.The proposed model and optimization framework can be used by companies and policy makersto identify required fleet sizes, optimal vehicle routes and cost savings due to different typesof operation and vehicle technology