The trend of Physical Internet is a new logistics paradigm envisioning a worldwide open network that is hyperconnected physically, digitally, and operationally. Mimicking how data packets are efficiently handled by the digital internet between senders and receivers, the physical internet seeks to improve supply chains through the standardization of interfaces and protocols, the synchronization of modes and channels, and the modularization of containers.
Conceptualized in 2011, the physical internet was modelled on the digital internet in hopes of reaping efficiency benefits similar to those in digital communication.
In the digital internet, information to be sent is perfectly encapsulated by data packets, and only these packets, not the information inside, are handled by the communication system. The packet itself contains identification data, as well as the important information needed to route it to the correct destination. Additionally, these packets are only built for a specific transmission; when they reach their destinations, they are disassembled to reveal the sent information they once contained.
Furthermore, the digital internet has protocols that enable each packet to travel with ease along different types of medium like copper wire and fiber optics and be processed by different equipment, such as cloud servers and wireless routers, regardless of where the packet was generated. Perhaps most importantly, with the digital internet, users do not have to care so much about how the information is sent but rather that the information arrives uncompromised, in perfect condition, and on time.
Described and portrayed this way, similarities to supply chains become apparent as shipments of palletized or containerized goods travel through hubs and along highways to the doorsteps of customers with high expectations. However, unlike the digital internet, the physical world of logistics is fragmented into thousands of players along and across supply chain networks with different standards and protocols, numerous private vehicles and facilities, and only limited levels of data sharing and communication. While some standardization exists, like 20-foot equivalent unit (TEU)-scaled shipping containers and pallet sizes, many industry leaders are imagining a physical internet in which logistics partnerships can be further integrated and synchronized to achieve seamless and efficient delivery of goods as in the communication of data in the digital internet.
Once materialized, the trend of Physical Internet will have high impact on logistics. It will greatly influence how the supply chain operates, shifting from closed networks to open, agnostic ones with a hyper level of connectivity in a more globalized world. However, this trend will take perhaps decades to fully develop and be realized, but we here at DHL believe experimentation with some components of this trend will begin within several years.