The Physical Internet Would Revolutionise Freight Movement
A physical internet would work in a similar way to how an email is transmitted. When you send an email to someone across the world, it is usually received quickly and seamlessly.
Your message passes through a network of servers until it reaches its destination. But you would not be aware of the route it took.
With a physical internet, transport and logistics companies would be able to access a network of routes connected by hubs, and involving different modes of transport, which would allow them to streamline how goods are shipped from one place to another.
Digitisation for the Physical Internet
Transporting goods from one place to another is currently not as efficient as it could be. Vehicles are typically not loaded to their full capacity – on average they are less than 50% full – while trucks may drive back empty after making a delivery. A higher fill rate would reduce costs and emissions and create a much more sustainable system.
Companies also largely operate independently where warehouses and modes of transport are not shared. However, one of the principles of the physical internet is to open them up to everyone, similar to how the internet is built on the concept of open access.
Two competitors, for example, would be better off collaborating if they are shipping goods along the same route. Resources can be utilised much more efficiently.
In order to create such a network, the first step is to digitise all available information.
Whereas today, a lot of decisions about how to ship cargo are made intuitively, analysing data will be key in the physical internet. Every mode of transport, warehouse and customer location, for example, would have to be recorded electronically, along with real-time information such as traffic congestion, use of ports and bottleneck locations.
The idea is that every element of the network would have a digital twin that could be updated with relevant details, such as how much space is available in a warehouse or the schedules of different modes of transport. Installing sensors will be required to capture some of this data.
As part of the ICONET project, whose goal was to produce a prototype of the physical internet, it was found that an optimal route could change depending on a company’s requirements.
Whereas some wanted goods delivered quickly, for example, others were more concerned about reliability. In this case, the digitised network could help by identifying ports or warehouses that are less dependable or have uncertain processing times.
A powerful characteristic of the physical internet is that it can customise solutions. With fully digitised information, it would be possible to reroute or avoid specific locations depending on the demands of each client.
Standardisation will also be key to developing the physical internet. At the moment, cargo from different companies may be of different shapes and sizes so it can be hard to pack them into a truck while making the best use of space.
Research at PTV Group in Karlsruhe in Germany found that using six different sized modular boxes would cover about 85% of cargo sizes. Using these boxes would result in cost savings since they improved the fill rate of the cases and the pallets for manufacturers by 15% and up to 50% for retailers.
Standardised containers would also make the packing process less time-consuming and digital visualisations can be used to help. Once you have modular sizes it becomes much easier.
Retailers and the Physical Internet
The physical internet is likely to benefit some types of companies more than others. EU funded research focused on packaged consumer products such as items found in grocery stores, found that large retailers would benefit most from the network since they often combine different types of goods when sending them to outlets.
Producers, however, would have to get on board by changing their boxes to standard sizes to facilitate the process. This could complicate how costs are distributed.
The physical internet is likely to have start-up and fixed costs which participating companies will have to cover. Although there will be savings along the whole supply chain, it might be hard to share the benefits equally among all parties involved.
Collaborative activity and in a collaborative earning situation is new for a lot of business operators. There has been some research in this field which looked at how competing companies could work together and coordinate the transport of goods. Game theory, which involves mathematically modelling the interactions of competitors in social situations, could help provide a solution.
The research has focused on logistics hubs such as ports, airports and freight villages, where different companies of the logistics industry are located in close proximity but don’t interact. The idea was to see whether they could better cooperate using a communal system such as the one that currently exists in ports, where different stakeholders exchange information about incoming ships and types of cargo for example.
One of the outcomes of the project was a slot-booking web app that can be used by different cargo transport companies to help optimise freight delivery. It was trialed at Brussels airport in Belgium, where the availability of ground handlers that sort different types of freight can be checked and time slots can be booked.
Using the app helped reduce waiting time, which in turn resulted in cost savings for companies, while it also helped ground handlers with air freight cargo scheduling and personnel planning.
Customers and the Physical Internet
The physical internet is likely to have benefits for customers too. A company’s goods are currently sent to a primary distribution centre from where they are shipped to outlets. With the physical internet, the storage of goods would be decentralised, which should allow shipments to be delivered faster.
There could be cost savings for consumers too as a result of a more efficient service. And greener credentials are likely to appeal to many EU consumers who consider the environmental impact of products to be the third most important factor when deciding to make a purchase. There are many emissions benefits from driving more efficient transport operations that use multiple modes.
The next challenge will be to see how the physical internet could be implemented globally. So far, research has been focused on specific transport corridors and hubs in Europe.
But part of the PLANET project, which started in the middle of last year, will now look at how to create a much larger-scale network, that would allow freight to be transported efficiently between Europe and China, for example. This could incorporate the Silk Road, a network of land routes that connect China to the Middle East and Europe, into the physical internet and are investigating what information would be required to do so efficiently. Different modes of transport will have to be integrated as well, from planes to rail to inland waterways.
This article was originally published in Horizon, the EU Research and Innovation magazine by Sandrine Ceurstemont.
We welcome informed contributions from professionals working in logistics on topics of interest. Download our Guidelines for Contributors or Contact Us if you wish to contribute an article.
