2013-02-21

Creating A Physical Internet To Save Money And Energy On Logistics

What if all companies in the world shared warehouses and truck drivers? That’s one audacious plan to make our shipping faster and more efficient, and major retailers like Walmart are getting interested.

In an age of containerization, and advanced IT, you might think the global distribution system is about as seamless as it gets. But that isn’t how Professor Benoit Montreuil sees it. He says it’s "becoming ever more inefficient and unsustainable—economically, environmentally, and socially."

Trucks and containers are filled with empty air. They return home empty. Distribution centers have big redundant capacity. Delivering into cities, and within them, is a nightmare. Roads are full of "cowboys" going dangerous distances. There’s too much traffic. Too many delivery companies. And so on.

Montreuil’s solution to all this—what he calls the "Physical Internet"—is radical. Instead of companies operating their own dedicated logistics, he envisions greater sharing, and less duplication of effort. Rather than many standalone warehouses, we would have "open hubs" as distribution centers. And, as with the Internet, there would be universal protocols for how goods pass through, and a universal packet size (as with the standard 40 foot shipping container, but a lot smaller).

The result, he says, would be less waste, and less harm to the environment. A recent study by researchers at Virginia Tech and the University of Arkansas found that converting just a quarter of the supply chain to Physical Internet principles could save U.S. companies $100 billion, cut their CO2 output by a third, and pass on consumer savings, as well.

Montreuil, who is based with Laval University, in Quebec, gives an example of a truck trip from New York to Los Angeles, which currently takes about 120 hours. "If you’re stuck with one driver, you have a lot of constraints. He has to sleep. He has to eat. He has working hour limits," he says. "What we propose is he would drive four hours two times, and drop off. Then, a few minutes later, someone else would drive." By having "relay transport" between hubs, Montreuil estimates the journey time could be cut in half.

Montreuil insists the Physical Internet isn’t "playground dreaming," or a command economy. As with the Internet, companies would adhere to the standards and protocols voluntarily, and make their own investments in equipment and infrastructure. The idea, though, would be to collaborate for mutual—and societal—benefit.

Many other researchers around the world are part of the effort, along with major retailers (such as Walmart and Walgreens) and fast moving goods companies. And, the idea has also received funding from the National Science Foundation, and the European Union.

Montreuil believes it is achievable. The issue, he says, is convincing people who like the system the way it is. "The technology is not a problem. We could do it all in 10 years. It’s the business models and the mental models in people’s minds."

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3 Comments

  • jwsmith708

    The idea sounds like a winner for society (although it will most likely increase unemployment in the short-term ...).  However, I have to question the math of the example presented here: It states that the NY to LA trip presently takes "120 hours" (which across the 2,757 miles would equate to 23 miles an hour).  Google Maps indicates the trip would take 41 hours (presumably at indicated legal speed limits).  I realize trucks are slower getting up to speed, but an average of 23 MPH does not compute.  Hopefully there is an explanation for this and the math used in evaluating the rest of the logistics passes muster, too.

  • Russell Meller

    Hours of service rules mandate rest for the driver (those 0 mph hours cut the average speed significantly!).

  • Reva Madison

    Sounds very doable and smart.  We used to have many less trucking companies on the roads.  I remember my grandfather working at a small warehouse where object were dropped off and picked up in our small Texas town.  One trucking company did it all.  I often equate them with a very early UPS company.  They dropped it off, he picked it up and delivered it locally.  He also delivered grocery orders from the two grocery stores, and picked up and delivered freight from the local railroad warehouse.  Then, all the big manufacturers started up their own transportation systems, and put his employer out of business.  Yes, many trucks are running empty on their return trips, although most of the smaller trucking companies, or owner/drivers have a phone number to call, which handles a central office, where the drivers can call, to pick up new loads, somewhere near where they arelocated at the present time.  That has helped the owners and operators, but a truly central system would cut down storage, transport, and more storage again.