Physical Internet: the next step for logistics
The Internet Revolution:
Internet transformed the way information flows around the world. The word slowly switched from analog to digital. The border between the internet and the physical world used to be a clear and defined line.The only point of entry/output to this new network was a computer. The frontier became blurred with the IoT (Internet of Things). Internet became a part of our lives, with more and more connected tools : cars, light bulbs, watches etc. The internet isn’t only about information and data anymore. It has impact on our reality: controlling the temperature in a room, increasing our security during car rides etc.
The one last barrier between Internet and the physical world is the logistics. While purchasing an item online, everything is seamless and fast, except for the delivery. You can choose an item and issue a payment within seconds. However, you still have to wait up to several weeks to effectively receive the item.
The world is demanding speed and efficiency. Customers expect seamless services. While the transport industry has been taking advantage of new technologies, internet innovations are still not used to their full potential.
Need for change in the logistic:
Logistics is the invisible backbone of our current way of life. We shop clothes made in India, electronics designed in the US and produced in Asia, Fruits from Africa. The growth of e-commerce fosters our need for logistics. It also shows the limits of the current system.
Most of the trucks and vans are not driving fully loaded. Some of them are driving empty for many kilometers between 2 deliveries. Our transport capacity needs to be used in a more efficient way.
This need for change is all the more urgent as, according to the European Commission, the transports industry is responsible for almost a quarter of European greenhouse gas emissions. We need to switch from an extensive growth to an intensive one. Improving the efficiency would allow us to transport more with less vehicles. We have to look for a more sustainable alternative.
The physical internet is about improving the efficiency of supply chain:
The concept of the physical internet was developed by Benoît Montreuil, professor of Material Handling and Distribution at the Georgia institute of Technology. It’s a field of research and practice which tries to optimize the logistics, to create a more efficient supply chain. The Physical Internet aims to transport physical goods as efficiently as data flows around the web. When a file is sent across the world, it can be split into smaller pieces to take the most efficient and fastest route. Of course the same method cannot be fully applied to the logistics, but it can be used as an inspiration. As for internet, Logistics needs to work seamlessly. The final customer doesn’t need to be aware of all technical details.
To achieve this goal, we need to optimize our system. It’s not only about reducing empty mileage but also making sure each vehicle is loaded to its full potential. B. Montreuil gave a broad estimation that, on average, trucks are loaded to only 60% of their capacity (volume or weight).
The first step is to have a reliable access to data: efficient tracking of vehicles, knowing their direction, how full they are etc. Once you have all the needed information, the optimization process can begin.
The easiest and most important thing to tackle is the dead mileage. Many trucks are driving empty on their way back to a new location. Dead mileage needs to be reduced to its minimum. The next step is to promote co-loading solutions. Instead of dedicating one vehicle for one delivery, free space should be used for other deliveries. Depending on the material being transported you can have trucks being loaded to their full capacity but with available capacity in terms of weight or volume. In fact, feathers are not heavy but take up much space whereas steel is heavy. Combining transport to reach full capacity in terms of volume and weight is also a significant improvement in terms of optimization.
The physical internet is about standardizing and sharing information:
All this can be implemented to a certain degree in one single company. While it’s already a great improvement, the physical internet concept aims to take things even further. The keystone of the internet of things is about collaboration between companies. In order to avoid any waste of capacity, companies should share their information and collaborate. Two competitors should collaborate if they need to transport goods along a same route. This collaboration needs a neutral player to gather the necessary data without compromising all parties.
In order to make the Physical Internet a reality, the transport and logistic system need to evolve and to standardize procedures. Just like containers changed the transport in harbours and ships. Standardized packaging, centralized data for location and availability. The ultimate goal is to have vehicles drive for shorter distances, from one hub to another: the goods would then be moved from one truck to another for maximum efficiency.
Such a change would bring many benefits. Beyond the optimization of our transport system, it would reduce the carbon footprint of the industry, and improve traffic in and around cities. More efficiency would also significantly drop the price for transport. The benefits of the Physical Internet are both for the consumer as a well as for the supplier. However, This concept isn’t just an idea yet, some first steps have already been made.