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How to use the physical internet to an advantage in logistics

Anders Nordahl | 29. May 2019
4 minutes read

Logistics today is an activity mostly built on the premise of in-transparency, with a few large players struggling to make profits sustaining their global network. By building on a network model, you operate on the premise of trust. Herein lay the opportunity of The Physical Internet. With the right understanding of how to build a connectivity layer and with all participants communicating the same language, the principles of The Physical Internet will be much more dynamic.


What is the Physical Internet?

In simple words, the Physical Internet is applying the principles of the Internet to logistics. This means a global, open, interconnected network, using a set of collaborative protocols and standardized smart interfaces. All this in order to send and receive physical goods contained in standard modules – instead of packets of information, as does the Internet.

ALICE - Physical Internet

We see that most of the investments in the market focus on Port to Port optimisation, instead of the entire journey. This is “simple” to achieve as we are talking about a finite number of shipping lines. The next area of investments, still focus on legacy supply chain models that operate in a linear way. However, we are starting to see networks of e-commerce players eager to operate as per the principles of The Physical Internet. But, the connectivity between these players suffers from a lack of global standards like GS1 on the loading units and also from delivering on the various tracking- event standardisation.


Physical internet


Proper labeling systems

The adaptation of connectivity suffers from the lack of understanding of loading unit routing instruction, trade compliance as well as the choice of speed. In order for The Physical Internet to work, all players need to have a clear task to perform, with clear KPIs and payment expectations. The system that is set to control the connectivity layer also needs to consider the financial settlements. For the sake of sustainability, the network needs to make enough money to be self-sustained. In addition, subsidizing loss-making routes and ensuring that all participants get fair pay for the services they deliver. This may even include costs associated with customs formalities in countries other than where the shipper or consignee is located.

The network should also have business logic enabled with a high degree of machine learning and artificial intelligence. This is where the customer experience excels the legacy players.


nullIncreased efficiency and visibility

Another benefit for customers participating in The Physical Internet network will be the understanding of cost vs speed of bringing products from one location to another. With the digital booking process, the network can immediately respond with routing and cost promise. Each participant in the mesh will be compensated as per performance. Deliver on time and you get paid 100%. Fail the promise and the system will reduce the payment of services rendered.

With the Internet of Things data made available, the systems essentially become self-aware as we know exactly where any loading unit is at any time. If any of the units’ experiences deviations from the schedule, the network can speed up the movement when the shipment hits the next node. Real-time ETA will be available network-wide!

Source: https://www.etp-logistics.eu/

MIXMOVE believe that distributing goods through the Physical Internet represents the future of logistics. We can provide the digital capabilities needed to enable the physical internet, and create collaboration between parties and a network of hubs working together. 


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