Imagine a world where logistics are as seamless as the movement of data on the internet. This is the vision behind the revolutionary supply chain initiative known as the Physical Internet (π). This initiative reimagines the physical movement of goods that promotes both collaboration and interoperability. Indeed, innovative organizations worldwide are already piloting these concepts to cut costs, reduce CO2 emissions, and enhance supply chain performance. While this transformation won’t happen overnight, even small steps toward adopting these concepts of shared logistics, interlocking containers, collaborative transport, and shared logistics nodes will yield significant benefits.

In this article, I’ll provide a short primer on what the Physical Internet Initiative is. Also, I’ll detail 11 major advantages of incorporating these Physical Internet concepts into our supply chains. Further, I’ll examine what is needed to implement the Physical Internet. This includes new collaborative business models, shared infrastructure, standard interlocking containers, true data interoperability, advanced automation, and a new policy framework to support these efforts. Lastly, I’ll suggest ways we can get started realizing the benefits of the Physical Internet.

1. Physical Internet: A Shared Logistics Network Concept to Optimize Shipping Assets.

The Physical Internet is a logistics and supply chain management concept that proposes a radical shift in how goods are moved, stored, handled, and supplied. It draws inspiration from the digital internet’s model of open access and shared use. Hence, the Physical Internet Initiative advocates a similar approach to the movement of physical goods that has unlimited potential to revolutionize the efficiency of shipping assets. By promoting interoperability and the seamless transfer of goods across various carriers and modes of transport, the Physical Internet aims to optimize and transform supply chains. Hence, this innovative logistics approach will reduce redundancy, increase efficiency, and improve service offerings.

Let’s start with a definition of the Physical Internet:

Physical Internet Definition

“The Physical Internet combines standardized, modular and intelligent containers with new logistics protocols and business models, resulting in a collaborative, highly distributed and leveraged logistics and distribution system. In this framework, goods are containerized in containers of modular dimensions and, as data packets in the Digital Internet, are routed using their Physical Internet identifier towards their destination using highly efficient, shared transportation, storage and handling means.”

TOWARDS A PHYSICAL INTERNET – Benoit Montreuil, Russell D. Meller, Eric Ballot

Benoit Montreuil, Director of the Physical Internet Center at Georgia Tech is the original organizer of this Physical Internet Initiative dating back to 2011. Indeed, the Physical Internet Initiative continues to evolve with on-going research and pilot projects being conducted globally. To detail, the modular components of the Physical Internet consist of interlocking containers, transport movers, and logistics nodes that enable the frictionless movement of Physical Internet (π) container types that act much like data packets on the digital internet. Below is a description of the key components of the Physical Internet.

The Primary Components of the Physical Internet

a. π-Containers.

These containers must be easy to handle, store, transport, seal, snap to a structure, interlock together, load, unload, build and dismantle. For optimal loading the containers are standardized and come in a finite number of sizes. Further, they interlock with each other much like Lego blocks. Additionally, these π-containers are collapsible when not in use. Lastly, each of these containers has a unique worldwide identifier just as Internet data packets have unique Ids based on MAC addresses.

b. π-Movers.

Here, different types of movers can transport, convey and handle containers within and between logistics nodes of the Physical Internet. For example, movers can include trucks, conveyors, robots, or cargo bikes to name a few.

c. π-Nodes.

The nodes correspond to geographic sites, facilities and physical systems of the Physical Internet. In this case, these nodes encompass much more than the logistics facilities commonly used in today’s supply chains. For instance, the Physical Internet initiative breaks down logistics “nodes” into new, definitive node types such as composers, bridges, and switches to name a few. This is done to emphasize the specialized functions of these logistics nodes to seamlessly facilitate the optimized movement of containers.

The diagram below depicts the three components of the Physical Internet and a breakout of their key characteristics and functions. For a more detailed description of the Physical Internet initiative and its components, see this 23-page research paper, TOWARDS A PHYSICAL INTERNET: THE IMPACT ON LOGISTICS FACILITIES AND MATERIAL HANDLING SYSTEMS DESIGN AND INNOVATION.

Currently, there is much on-going research on this concept of the Physical Internet. What’s more, there are many pilot projects going on globally. For instance, Europe is aggressively moving forward with the principles of the Physical Internet by building physical prototypes that demonstrate the many benefits of shared supply chain networks. In particular, a key driver of these European π initiatives is the Alliance for Logistics Innovation through Collaboration in Europe (ALICE). For details, see ALICE’s ROADMAP TO THE PHYSICAL INTERNET. Specifically, this recent document provides a 5-phased roadmap toward the Physical Internet. This includes a path from now to 2040 showing important milestones, required technologies and first implementation opportunities for π. 

2. Advantages of Supply Chains Applying the Principles of the π Initiative.

Indeed, supply chains that adopt the principles of the Physical Internet stand to gain a competitive edge through several significant advantages. In short, embracing the Physical Internet can lead to smarter, more sustainable, and cost-effective supply chain operations. Additionally, this initiative aims to drastically enhance the way goods are moved, stored, supplied, and implemented across the globe. To support the business case for you implementing a Physical Internet proof-of-concept (POC) within your supply chain, here are 11 key advantages.

11 Advantages of the Physical Internet

For a more detailed discussion of both the advantages and challenges with applying the tenets of the Physical Internet, see my article, Is The Physical Internet Logistics Concept Risky? Trade-offs With This Innovative, Awesome Way To Share Assets.

Is The Physical Internet Logistics Concept Risky? Trade-offs With This Innovative, Awesome Way To Share Assets

3. Five Actions That Supply Chains Must Take to Fully Benefit From the Physical Internet Initiative.

The Physical Internet Initiative is poised to transform the way supply chains operate. Indeed, it promises unprecedented levels of efficiency, sustainability, and collaboration. To reap the full benefits, however, supply chains must adapt and evolve. Indeed, this transition requires a foundational shift in several key areas. To detail, below are 5 critical actions that need to happen to fully capitalize on the Physical Internet.

a. Need Collaborative Business Models and Unified Infrastructure Facilities.

First, to thrive within the Physical Internet framework, supply chains need to embrace collaborative business models. Specifically, these models would depend on unified infrastructure facilities that act as π-nodes within a global logistics π-network. For instance, a consortium of companies could create a shared fulfillment center in a strategic location. This logistics center, equipped with common loading docks and standardized equipment, would process π-containers from various businesses. As a result, these nodes would optimize load consolidation, and minimize empty container movements, much like packets of data are routed efficiently on the internet.

Within the Physical Internet community there are several initiatives and pilots on-going to move toward collaborative business models and unified infrastructure facilities. As mentioned previously, one of the most comprehensive initiatives in Europe is ALICE. Specifically, their ROADMAP TO THE PHYSICAL INTERNET, details a 5-phase approach where they specify the advanced development of collaborative business models to achieve their Physical Internet objectives by 2040.

b. Standardize π-Containers that Are Interlockable, Secured, and Digitally Connected.

The success of the Physical Internet hinges on the widespread adoption of standardized π-containers. These containers must be designed to interlock seamlessly with other containers and with different transport modes. Also, they need to be secured against unauthorized access. Moreover, it is crucial that π-Containers include an Internet of Things (IoT) device for digital connectivity. For instance, picture a π-container that not only fits onto any truck, ship, or train but also communicates its contents, destination, and condition in real-time. Further, these containers are capable of interlocking with each other like Lego blocks reducing the need for pallets and warehouse shelving.

For a more detailed primer on π-containers, see this research paper, TOWARDS A PHYSICAL INTERNET: THE IMPACT ON LOGISTICS FACILITIES AND MATERIAL HANDLING SYSTEMS DESIGN AND INNOVATION. Also, see DHL’s article, Physical Internet: Trend Overview for ideas on the use of smart technology and the implementation of standardized sets of modular, interlocking boxes. Lastly, see European Commission (EU) Horizon Magazine’s article, How the ‘physical internet’ could revolutionise the way goods are moved. This article highlights several initiatives where Physical Internet concepts were implemented to include the use of six different sized modular boxes that would cover about 85% of cargo sizes. 

c. Accelerate the Development of a Unified Data Interoperability Framework That Ensures Real-Time Shared Visibility and Seamless Execution.

Achieving Logistics Interoperability: The Best Way to Breakthrough The Tangle Of Dumb Data Integrations

For the Physical Internet to function optimally, a secure data interoperability scheme is imperative. This system would ensure that all stakeholders in the supply chain have real-time, shared visibility into every element of these shared logistics operations. Imagine a platform that allows a manufacturer, a logistics provider, and a retailer to access and act upon the same shipment data instantaneously. As a result, this would enable seamless execution of tasks. What’s more, this level of interoperability would allow for the rapid response to any disruptions. Further, supply chains could proactively seize opportunities to improve service levels and lower costs.

Indeed, from my perspective there are three ingredients to achieving true data interoperability. This holds true for any type of modern logistics operation, not just a π-enabled supply chain. Specifically, this interoperability includes digital interfaces with other systems, logons, devices, and even AI agents. Positively, this need for data interoperability is especially true for a Physical Internet-based supply chain. These three data interoperability components include: 

The Three Components of Data Interoperability

• Data Communications Channels. Capability to exchange data between systems and devices. Click here to find out more about methods to transfer data.
• Common Data Terminology to Share Meaningful Information. Must have standard terms and knowledge frameworks to effectively assure that the data transmitted is understood. Click here to find out more about semantic interoperability and methods to send data that is understood.
• Method to Achieve Mutual Trust.  Need to leverage digital identity technologies to achieve both confidence in the data exchanged and to trust digital network partners, software agents, and devices. Click here to find out more about digital identity technologies and methods.

For more ideas and discussion on logistics data interoperability, see my article, Logistics Data Interoperability: Advice To Make It Understandable, Usable, Secure. Also, for a more ideas on how to unify shipping data, see my article, Better Shipping Data Analytics Results: Use Of Load IDs To Achieve The Best Efficiency, Visibility, And Financials.

Logistics Data Interoperability: Advice To Make It Understandable, Usable, Secure.

d. Enhanced Supply Chain Automation to Leverage Shared Containers, Transport, Nodes, and Data.

Microservices’ Advantages And Cautions: Spotlight On This Awesome Tech In The World Of Ecommerce

Advances in supply chain automation are needed to fully leverage shared containers, transport, nodes, and data. Automation technologies such as robotics, AI, and machine learning can drive the efficient sorting, loading, and unloading of π-containers. Also in warehousing, autonomous robots can both leverage and enhance the workings of the Physical Internet. For instance, robotics can intelligently select and move π-containers onto the appropriate conveyance. Further, they can pack and unpack containers. Hence, this type of automation will optimize the flow of goods with precision and minimal human intervention. Additionally, Software as a Services (SaaS) applications and microservices can leverage Physical Internet data interoperability standards to enable seamless information flows.

An example of a π pilot project is Imec’s Physical Internet Living Lab (PILL), a Flemish strategic fundamental research project. This project includes prototyping a software stack offering to support a π-enabled supply chain. Specifically, this prototype includes a governance framework for decentralized data sharing and standardized data and processes based on UN/CEFACT and DCSA standards. Further, this project is prototyping a universal π-client connector for network integration. Also, it is piloting a sophisticated routing engine for optimizing goods flow, agnostic of providers and modes. So, it is proof-of-concept initiatives like this that will help supply chains realize the benefits of a shared, decentralized Physical Internet.

e. Policy and Regulatory Support.

Finally, the widespread implementation of the Physical Internet Initiative will require robust policy and regulatory support. Specifically, Governments and international bodies need to establish policies that encourage the standardization and interoperability necessary for the Physical Internet. Indeed, consider the potential impact of a policy framework that incentivizes the use of π-containers and shared infrastructure. This would go a long way toward fostering an open and accessible logistics network for all stakeholders.

For instance, there are organizations like ALICE in Europe that are making specific recommendations to Governments to advance the Physical Internet Initiative. Specifically, ALICE’s ROADMAP TO THE PHYSICAL INTERNET, makes the following recommendations for the European Commission, their member states, and companies: 

ALICE’s Recommendations for Government to Advance the Physical Internet

• Explore the development of supportive rules and policies that allow collaborative and shared logistics networks to function.
• Implement European-wide frameworks and standards for data-sharing and electronic transfer of freight documents (eFTI and beyond).
• Integration of Physical Internet as an integral part of the European mobility system.

4. How to Get Started With Realizing the Benefits of the Physical Internet.

_{” … in the 1950s … Malcom McLean introduced modern intermodal shipping containers. Now, most international ocean shipping uses these same containers.”}

Hopefully from this article, the Physical Internet Initiative makes sense and you can see the many advantages of moving forward with this innovative concept within your supply chain. The greatest challenge with the Physical Internet is it requires a commitment to both collaborate and standardize. Indeed, this challenge is not inconceivable. Just look at what happened in the 1950s when Malcom McLean introduced modern intermodal shipping containers. Now, most international ocean shipping uses these same containers. So, here are some actions to get started to realize the benefits of the tenets of the Physical Internet:

a. Collaborate.

Let’s Breakthrough The Data Interoperability Nightmare: It Is The Best Way To Unlock Supply Chain Innovation

For instance, engage with industry consortia and working groups to stay abreast of developments and contribute to shaping the evolving standards of both the Physical Internet and logistics data interoperability. See Georgia Tech’s Physical Internet Center website for more on π. Also, see my article, Let’s Breakthrough The Data Interoperability Nightmare: It Is The Best Way To Unlock Supply Chain Innovation, for more ideas on advancing data interoperability.

b. Proof-Of-Concepts.

Also, consider initiating pilot projects with key partners. As a result, the supply chain industry will gain valuable insights and help refine logistical processes to advance toward the benefits of the Physical Internet. 

c. Invest.

For example, invest in modular and sustainable packaging. Also, look for ways to reduce air in your current shipping containers.  Start small, with a focus on interoperability and scalability so as to capitalize on your successes.

For additional  references on the Physical Internet and related concepts, see this YouTube video on ALICE. Also, for a related topic, synchromodality, see European Transport Research Review’ paper, Synchromodality in the Physical Internet – dual sourcing and real-time switching between transport modes. Lastly, as referenced previously, read this 23-page primer on the Physical Internet concept, TOWARDS A PHYSICAL INTERNET: THE IMPACT ON LOGISTICS FACILITIES AND MATERIAL HANDLING SYSTEMS DESIGN AND INNOVATION from Benoit Montreuil, Russell D. Meller, and Eric Ballot.

Emerging Tech For Supply Chain Visibility: The Best Innovations Available Now To Empower Businesses

For more from SC Tech Insights, see the latest articles on Supply Chains and Interoperability.