The Physical Internet from shippers’ perspective

 

By Carolina Ciprés, Director of Research and Dr. M. Teresa de la Cruz, Project Manager at ZLC

Logistics and supply chain management is full of inefficiencies: one third of trucks travelling across Europe is empty, with an average load factor around 50%. This lack of efficiency not only has an associated operational cost, but also an environmental one.

The Physical Internet (PI) concept challenges the current situation, proposing a new way for handling, transporting and storing freight in the value chain. The PI Concept was first introduced in 2011 (by the Physical Internet Manifesto). It is a metaphor taken from the Digital Internet, where goods in the Physical Internet are moved as data flows through Internet. Building upon this metaphor, the Physical Internet would be a logistics web with open, interconnected and shared networks. Such networks would provide an open logistics system which is both efficient and sustainable.

First steps towards the realization of this new open logistics systems are being taken. Indeed, innovative companies are starting to test this model, with new start-ups and projects blooming around this new paradigm.

In a preliminary roadmap, the European Technology Platform in Logistics, ALICE, identified several areas towards the implementation of the Physical Internet:

• Components & technical developments (including standards) needed to achieve PI implementation
• Transition management: business models, regulations and governance
• Expected impacts of Physical Internet realization
• Barriers, opportunities/triggers and Infrastructural Investments for PI.

Undeniably, technical developments are building blocks towards the PI realization, with enabling technologies such as Internet of Things, big data analytics, additive manufacturing, 3D-printing, 5G mobile networks or robotics.

Additionally, transition towards PI requires new business models to guarantee the sustainability of the system, through fair cost and value sharing. Such a system would even allow potential coopetition scenarios, i.e. collaboration among competitors. For this to happen, anti-trust issues should be solved, through the involvement of a neutral trustee and new regulations allowing this kind of cooperation.

On the other hand, PI would also face some obstacles before its realization. In an open system, data sharing can introduce vulnerability, calling for new cybersecurity measures to ensure a resilient logistics web.

Mental shift is also essential when implementing such a revolutionary concept. This new paradigm can create market opportunities for new players but current ones may become obsolete. Additionally, in times where governments call for climate change mitigation measures, sustainable logistics approaches such as the Physical Internet may blossom.

In this new playing field, shippers’ position on Physical Internet can either foster its deployment or deter its realization. To ensure their support, ALICE is deploying new activities to further engage industry, but also to build consensus with academia and governments on the positive impact of Physical Internet.

Indeed, ALICE presented its updated roadmap towards the Physical Internet in the International Physical Internet Conference, that took place in London, 9-11 July 2019. This roadmap incorporated five specific areas for the development of Physical Internet (PI): PI Nodes, PI Networks, PI System, Governance, and Access and Adoption. Its final version will be released in the coming months.

For more information on the Physical Internet concept, please contact Carolina Ciprés, Director of Research at ZLC: [email protected]
Note: see related work from the authors in:
Ciprés, C., de la Cruz, M. The Physical Internet from Shippers Perspective. Towards User-Centric Transport in Europe, Challenges, Solutions and Collaborations. January 2019. Part III, pp. 203-222.