Fast-Tracking the Physical Internet

By Carolina Ciprés y Dr. María Teresa De la Cruz

The Physical Internet (PI) is a universal, open logistics network that is economically, environmentally and socially efficient and sustainable. Some initiatives have been undertaken to develop such a system, but a fully functioning PI is still some way off. A project supported by the European Commission (EC) called SENSE (Accelerating the Path Towards Physical Internet), aims to change that by increasing our knowledge of PI and the logistics benefits it can deliver.

A simulation experiment carried out in 2015 by two leading retailers, Carrefour and Casino, along with 100 of their top suppliers, provides a glimpse of the concept’s huge potential. The project showed that a PI model could deliver a 60% reduction in greenhouse gas emissions and a 50% shift in freight from road to rail transportation. The overall economic benefit of moving to a PI model was estimated as 32%.

Essentially, this new supply chain model eliminates inefficiencies in logistics systems in much the same way that the internet transformed the flow of information around the globe. It consolidates fragmented cargo flows and improves the utilization of assets.

But building such a system is a complex undertaking that requires a complete rethink of traditional supply chain models. The challenge is how to accelerate PI’s evolutionary journey towards turning the concept into reality.

The objective of the 30-month SENSE project is to establish advanced implementations by 2030. By that time, the working PI systems should be contributing to a 30% reduction in traffic congestion, greenhouse gas emissions and energy consumption across the EC region.
Four key pillars of activity support SENSE’s mission.

1. A shared framework. To promote a common understanding of the PI concept, the project team is creating a framework of knowledge around related projects and outcomes. Stakeholders from academia, government and industry will use the framework to gain information on what has been learned about PI barriers, opportunities and best practices. A framework exists as part of the Alliance For Logistics Innovation Through Collaboration in Europe (ALICE). However, SENSE participants such as ZLC will enhance and update this framework by carrying out in-depth analyses of PI projects and other relevant initiatives.

2. Awareness building. With the support of the EC, the SENSE project will use various communications channels such as conferences and forums to raise awareness levels. PI is not a simple notion, so the team will use actual examples of applications as far as possible to explain the concept.

3. A knowledge platform. There is a need for a common source of reference on past and current development work that stakeholders can draw on. This platform will include implementation assessments, information on start-up ventures, and details of relevant programs and activities sponsored by public, private and research organizations. The structure of the platform is under development, but it could take the form of a social network. Also, the intention is to ensure that the platform continues to function after the SENSE project is completed.

4. Assistance and support. The SENSE project will provide a roadmap with the aim of supporting industry, the EC, EC member states and regional governments that are in the process of defining high-impact projects designed to fast-track PI networks. A key goal is to help these organizations develop and implement projects that have the maximum impact and make the best use of investment funds. For example, it’s important that project sponsors focus their efforts on specific objectives rather than trying to “boil the ocean” with overly ambitious goals. A useful approach is to operate a PI model in parallel with existing, established logistics models. The procurement of transportation is an example of a well-defined area that can be tackled by pilot projects. Also, stakeholders need to be aware that collaboration between trading partners across supply chains is essential to the success of the PI model, and they should not underestimate the challenges of promoting collaboration between disparate entities.

SENSE is due to be completed at the end of March 2020. It is hoped that the momentum built by the project – and the resources it creates – will continue beyond that date and support the realization of the PI concept in Europe and across the globe. Supply chains are global in nature, and PI must succeed in a global environment.

For more information on SENSE and the PI model contact Carolina Cipres, Director of Research, ZLC, at: [email protected]