Simply borrow the competitor’s ship

The ‘Physical Internet’ might be a solution for the transport sector as they look to take a step towards a cleaner and more efficient logistics system. The Port of Rotterdam Authority is participating in a research study within this new logistics concept.

Suppose you are sending an e-mail. You type a few lines, press ‘send’ and a few seconds later the recipient receives your message. Details of how that mail was sent to the recipient – via various servers and broken up into dozens of tiny pieces – are generally not of great importance to the user. As long as it arrives at the right place and with the right content. That is exactly what the transport sector might look like in the future. At least, if it is up to the inventors of the ‘Physical Internet’.

“Suppose you want to ship a couple of containers with wine from a vineyard in Argentina to a supermarket in Groningen. Right now, this involves a lot of logistical arrangements, and long-term contracts with transporters are concluded in advance,” says Iris Vis, Professor of Industrial Engineering, specialising in port logistics and transport network design, at the University of Groningen. “With the new Physical Internet paradigm, that logistics process can become just as simple as sending an e-mail: as a sender you don’t worry about how the goods get there, as long as they get there. On time and reliable.”

Iris Vis

To make this happen, more flexibility across transport networks is needed. “Distribution chains now have their own storage spaces, their own means of transport and their own contracts with transporters. Whereas things would be much more sustainable and efficient if, for instance, they were to share these means of transport, drivers or storage spaces,” says Iris Vis. So that competitors can borrow each other’s warehouses. Or use each other’s ships or trucks. Vis: “In that set-up, transport decisions would also be taken from the perspective of individual parcels and not just by focusing on groups of containers. Using and exploiting each other’s materials can lead to more flexibility inside the network.”

Why wouldn’t it be possible to split the contents of a container into smaller modules?

Iris Vis Iris Vis, University of Groningen

Invented five years ago

This new way of looking at transport is called the ‘Physical Internet’. Five years ago, this name was invented by scientists Benoit Montreuil, Russell Meller and Eric Ballot. They saw opportunities to improve the logistics sector and that is why they introduced the Physical Internet. Since then, scientists, businesses and policy makers are taking part in the discussion. Iris Vis: “The inventors’ starting point is that everybody who wants to join in the thought process can do so. We have a long way to go yet: together, we still need to take major steps to realise the chances the Physical Internet offers.”

One way to improve efficiency and sustainability in today’s transport sector is seeking to increase flexibility. Iris Vis: “By focusing more on how cargo can be combined and how means of transport and warehouses can be shared, time and money can potentially be saved while at the same time the environment will benefit.”

The Physical Internet fits in closely with recent social developments. Iris Vis: “Society is changing. There are all sorts of developments in society that also have an influence on the transport sector, such as the Internet of Things, 3D printing, and the rise of the sharing economy. Ownership is gradually losing its importance; this is the kind of development that can also affect the transport of goods.”

Ownership is gradually losing its importance; this development can also affect the transport of goods.

Iris Vis Iris Vis, University of Groningen

More flexibility

Collaboration and flexibility are already at the heart of several innovations in the logistics sector. European Gateway Services for instance, subsidiary of container terminal ECT, is offering ‘synchromodal transport’. The underlying thought is that transportation will become more reliable, efficient and sustainable if the customer indicates where and when the container has to be delivered, but if at the same time there is more freedom to select means of transport and route, so that transport capacity and transport options can be exploited much more effectively.

This is a major first step towards the Physical Internet, according to Iris Vis. But the Physical Internet goes further than that. Vis: “Until now, in transport we often think in groups of containers. But if ten containers carry the same cargo and possibly even have the same destination, this does not necessarily mean they also travel the same route. Why wouldn’t it be possible to split the contents of a container into smaller modules, or for instance send half of the containers a week later if that were an option? So then, we think from the perspective of the individual parcel and subsequently endeavour to combine it as efficiently as possible with other cargo that is headed for the same destination.”

Research has started

As ports play a key role in transporting goods, Iris Vis – together with fellow researchers – started a four-year NWO research project in January 2016: “Towards virtual ports in a Physical Internet” in close collaboration with Groningen Seaports and the Port of Rotterdam Authority. One of the objectives of the project is to determine the role of stakeholders, such as port businesses, in the Physical Internet. Vis: “Ports are the cornerstones of Physical Internet networks. Via ports, goods are transported to the hinterland. The first thing we will be doing is develop a blue print: what parties play a role in the Physical Internet and what is that role?“ From a global perspective, this is the first research project in the field of the Physical Internet that centres on the role of ports.

Michiel Nijdam is a strategist at the Port of Rotterdam Authority: “The Physical Internet is an interesting concept from the port’s perspective. It can lead to a huge efficiency gain in logistics, enabling us to handle even more cargo. We therefore find it important to take part in this research study.”

Physical Internet can lead to a huge efficiency gain in logistics.

Michiel NIjdam, Port of Rotterdam Authority

A reality by 2050

In the view of the European Commission, the Physical Internet should be a reality by 2050. The road towards it has not been further specified. Iris Vis: “Before we get there, many questions need to be answered, such as: what will the revenue models look like for parties involved? If you lend your warehouse to a competitor, you obviously want something back in return.“

The Port of Rotterdam Authority also realises that it is still early days. Nijdam: “Of course it is not yet as concrete as one would hope. But the idea is there, and step by step it can lead to logistics becoming more flexible and more sustainable.”

The Physical Internet: this article is part 4 of a series of articles about innovations that may influence the future of the port and the transport sector. Editorial offices are free to use these articles, videos and infographics. You can download them here.

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