Collaborative Logistics’ Role in the Emergence of the Physical Internet

Today, the physical Internet is an amorphous construct, with its scope and limits undefined. If its full potential is ever realized, then it will have the power to transform the movement of goods and people. Indeed, it will not only optimize entire supply chain ecosystems but also reshape and reengineer them. Many already believe that freight exchange platforms, dedicated to maximizing payload efficiency and reducing empty miles, have a role to play in making this vision a reality.

Zach Zacharia, an associate professor of supply chain management at Lehigh University, is part of a team developing a handbook on the physical Internet. He says, “I believe that collaborative logistics platforms demonstrate and validate the need for the physical Internet. In many ways, they are forerunners to it. That is not to say that freight exchanges will cease to exist. On the contrary, as technology advances, the most innovative freight exchange platforms could help mold the interconnected and collaborative freight landscapes of tomorrow. If they succeed, this will ultimately lead to more efficient, effective and sustainable freight supply chains.”

Zacharia stresses that the seismic change, which some predict the physical Internet will bring, will not happen overnight. “It is quite a nebulous and fluid area of research at present,” he says. “It is important to note that we won’t see the benefits in a single wave. Rather, its impact will be felt in smaller ripples that will become more powerful over time.”

The Alliance for Logistics Integration through Collaboration in Europe (ALICE), a platform funded by the European Community, shares this view. ALICE, which is currently conducting research on the physical Internet, projects that 2020 will yield the “full alignment of economic, social, environmental and security goals.” Key infrastructure such as “fully operating open logistics networks,” however, won’t be fully functional until at least the 2040s.

In the following Q&A, Zacharia addresses some key questions on collaborative logistics’ role in the emergence of the physical Internet.

When the physical Internet begins to effect real change, how will it—and the collaborative logistics platforms it supports—positively impact the freight industry?

Zacharia: By 2050, the physical Internet will change the way we think about the movement of freight. Data-centric freight exchanges and intelligent multimodal cross-docking hubs will allow haulers to move cargo effortlessly by road, rail, sea and air and seamlessly change carrier, or even transport mode, in real time. How? When the freight exchange calculates a potential delay, or simply uncovers a quicker or cheaper way of getting goods to market, it will automatically re-route the consignment. This level of visibility will be possible with the core foundations of the physical Internet in place.

Where does such change begin?

Zacharia: Change must begin with the standardization of the physical load-carrying infrastructure.

Before interoperable logistics hubs with intermodal visibility can even begin to hold sway, the 40 foot × 8 foot shipping container, which is the industry standard, must be replaced. It is simply not suited to the multidimensional supply chain landscapes of tomorrow.

Will the industry embrace such change?

Zacharia: There is a body of research that validates the merits of revolutionary containerization innovation. In fact, history teaches us that invention nearly always pays. Take Malcom McLean and Keith Tantlinger, the American inventors of the intermodal container, for example. Before they made the breakthrough in 1955, shippers had no choice but to pay about $16,000 to transport a single consignment.

With the arrival of internationally standardized cross-modal transport containers—each with a capacity of 58,600 pounds—the cost of transporting goods fell by about $10,000 almost overnight. The number of days needed to transport goods across the Atlantic also dropped, not because the ship traveled faster but because the time to unload a fully loaded ship dramatically decreased.

So how exactly will the standardized containerization template change to meet the requirements of the Information Age?

Zacharia: It is easy to over-complicate the physical Internet, but peel away its husk and it really is an attempt to move goods in the same way as we move data. Take the path of a file being sent over the Internet, for example. Large data files are first broken down into small packets of information that are routed through the fastest network stream available. Then the file is recombined into a single document before being read by the receiving device. The next step in the journey to implement the physical Internet is to apply the same thinking to containers.

An extensive body of research already exists, and more concept studies are underway. The latest findings indicate that the containers of tomorrow likely will be intelligent RFID-chipped ones that can be broken down into eight separate, different size modules that fit together like Lego blocks to form one 40-foot container.

Paint a picture of what the future will look like.

Zacharia: No one knows what will happen 20 or 30 years down the line. I can only make an educated guess about the logistics landscape of tomorrow. It is likely that data-driven freight exchange platforms will be able to harmonize intermodal freight movements. And, smart cross-docking hubs will be able to integrate modular container blocks into this new architecture. Thus, in the future, a shipment of goods could be broken down into eight separate units, each prioritized using the full gamut of intermodal operability, depending on the customer’s budget and delivery time requirements.

At the final destination, the smart container would be reassembled. And, its empty capacity status would be flagged on the collaborative logistics platform in real-time so it could be reused promptly. Freight exchange platforms also could provide “the collaborative data bridge” that enables different manufacturers to share a modular container, increasing capacity utilization and significantly reducing transportation costs.

What will it take for the physical Internet to revolutionize freight supply chains?

Zacharia: If the physical Internet is to get off the ground, on one level it will need intergovernmental cooperation. At the country level, it will require industry support across the various transportation modes and for these different sectors to address a number of challenges. If freight is to move from road to rail in the United States, for instance, governments, industry and the public may need to pay for infrastructure improvements and maintenance in the same way that taxpayers currently pay for the upkeep and expansion of America’s road network.

I believe the backing of states will be particularly important. Data-integrated collaborative logistics platforms could help the industry improve efficiency, simplify state regulation and improve a truck driver’s quality of life. How? If industry adopted the multi-modular container system, it would pave the way for building intelligent cross-docking hubs that would allow drivers to transport goods to a hub five hours away from base and, via the app on a smartphone, seamlessly book another consignment to take home.

The driver would not violate the 11-hour driving limit imposed by the Federal Motor Carrier Safety Administration. The platform would then assign another driver, local to the hub, to drive the next leg of the journey. Ultimately, after several relays, the goods would reach their final destination more quickly while still allowing drivers to return home every day.

This approach could, in theory, help alleviate the shortage of truck drivers in the United States. When you consider that the driver shortage could exceed 174,000 by 2026, and that 70% of America’s freight is currently transported by truck, perhaps this argument is the most powerful one for breaking with convention and embracing an interconnected and multimodal freight sector with the physical Internet as its cornerstone.

Simon Bunegar is senior vice president of marketing of CX North America Information Services Inc., a provider of freight collaboration and communication solutions for the transportation industry.