The Physical Internet Sets its Sights on Revolutionizing Global Logistics

By Eric Carlson | Senior Packaging Consultant, Chainalytics |  If I live long enough to see even part of the physical internet (aka, PI or...

By Eric Carlson | Senior Packaging Consultant, Chainalytics | 

If I live long enough to see even part of the physical internet (aka, PI or π) become a reality, this would be the second massive global logistics transformation in my lifetime.  

The first transformation–the intermodal container–happened “suddenly” over about 50 years. The U.S. Army is often cited as proving out the standard-sized container model in the late 1940s and early 1950s primarily as a way to support the Korean War.   

The intermodal container as we know it today went through years of design and size changes until the ISO standards published in 1970, which were quickly followed by the 1972 regulation, International Convention for Safe Containers by the Maritime Consultative Organization.   

Since then, intermodal container dimensions have not changed much, but we’ve seen a proliferation of container types and capabilities, including temperature controlled, open top, etc. The impact of this transportation system is pretty hard to measure: Current estimates show about 17-20 million active containers in the global market. But I’m sure there are probably a few million more lost of out-of-service containers  sitting in a rural backyards, fields and urban lots throughout the world.  

How Intermodal Containers Have Helped Transform Global Trade 

You could say that the intermodal transportation revolution has been the backbone of trade globalization and played a part in integrating international economies–maybe not a direct influence on international changes, but it’s moved right alongside:

  • the fall of the Berlin Wall 1989, which propelled the  economically isolated USSR/Russia into the world economy
  • virtually all free trade agreements put in place since ~1992
  • the formation of the European Union in 1993 and the introduction of the Euro in 1999
  • China’s transformation into a manufacturing powerhouse, after it joined the World Trade Organization 2001

During this same period, the internet and the World Wide Web (WWW) moved out of universities and government into the mainstream with broad adoption, largely because of the way information was “packaged,” routed and easily handled by virtually any hub or device.  

Today, forward-thinking people at the Physical Internet Initiative (PII)  envision transforming physical logistics by mirroring the way the internet packages and moves information. Despite the great successes the intermodal container has had, the PII–which has a handful of influential corporate sponsors–contends:

  • There is a LOT of inefficiency in the current logistics web from end to end (as noted in the graph below).
  • Logistics professionals should look at logistics holistically to gain efficiencies
  • The way physical objects are moved, stored, realized, supplied and used throughout the world is economically, environmentally and socially inefficient and unsustainable.  

The Global Logistics Sustainability “Grand Challenge”

PII’s goal is finding solutions to what they term the global logistics sustainability “grand challenge.” These holistic thinkers have undertaken to “design a system to move, store, realize, supply and use physical objects throughout the world in a manner that is economically, environmentally and socially efficient and sustainable.”  

Physical Internet ManifestoPII defines the PI as “…an open global logistics system founded on physical, digital and operational interconnectivity through encapsulation, interfaces and protocols.  The PI enables an efficient, sustainable, adaptable and resilient Logistics Web.”

The parallels to the internet are immediately obvious, as is the enormous scope of transformation required.  Every step in the entire logistics web has been considered and challenged for improvement.  Information and communication are foundational and key to this transformations’ efficacy.

Connecting PI, the Internet, the Internet of Things (IoT), Sensors & the Smart Grid

PI 2.3PII’s envisioned new PI infrastructure would be designed to maximize physical and electronic resources and interconnectivity: Every system component would be able to communicate with any other component necessary for maximum efficiency.  

Think of the way small parcel carriers have created proprietary systems to allow shippers and receivers access to information about where (approximately) their shipment is at any point.  The PI envisions a system so much more advanced it is hard to believe it’s possible.

The Role of π-Containers

In the new PI infrastructure, product manufacturing would take standardized container sizes into account. The “encapsulation” envisioned would use a small number of highly modularized and interconnectable shipping units called π-containers:

  • The π-containers would be able to communicate with each other and every node in the supply chain (pallets (?), trailers, warehouses, etc.).
  • Every system or node that moves products in the supply chain–from material handling conveyors to racking systems–would go through a similar transformation and reconfiguration to accommodate the new π-containers’ requirements.  
  • Embedded information, modularity and standardization of π-containers mean cross-docking and material handling can be automated (for example, unloading, routing and reloading trailers).  
  • Similar automated handling could happen at any node in the supply chain, ensuring fewer “touches” and more efficient performance.

PII envisions that with this system in place,  less infrastructure will be required at the warehouse level.  Shared resources, trailers, warehouse space and delivery vehicles would all become commonplace.  I still have a hard time believing that UPS and Fedex will cede this type of control, but the future is nothing like I would have imagined in my early days.

How Nodes Fit into the MixPhysical Encapsulation of Goods

PII envisions that, like the internet, all “packages” will transit through major and minor nodes.  Truck transportation and warehousing will be similarly transformed using shared lanes, nodes and resources.  Routing would take advantage of the node system and proprietary delivery would be rare or outmoded.  Small parcel carriers have developed very sophisticated delivery models as have LTL carriers, but information is not shared, nor do these relative efficiencies span all supply chains.   

As the PI network matures–including distributed manufacturing/assembly/customization–PII expects the network to make better uses of local infrastructures to minimize the cost of manufacturing.  

Currently, PI is such a vast transformation that it may be hard to imagine how drastically business practices would have to change for any implementation. Cost avoidance and efficiency gains are well known drivers for customers of the Chainalytics Packaging Optimization Practice. In order to transformation requires planning and thinking big. PI is BIG, bold thinking.  

If I were to make a comparison to the manufacturing industry, lean principles are designed to improve the system bit by bit (some bits bigger than others). Using overall PI principles and working steadily toward a leaner supply chain–maybe little by little–big changes can take place. 

We’re already seeing technological quantum leaps in not only the use of self-driving cars and trucks and drones, but also public and even political and governmental acceptance of these transportation game changers. Perhaps PI will prove to be an even larger transformation than the intermodal container.

A lifetime IoPP (Institute of Packaging Professionals) certified packaging professional, Chainalytics’ Senior Packaging Consultant Eric Carlson helps clients manage a high degree of complexity that stems from their unique combination of scale, variability and geography.

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