In logistics, the Physical Internet is an open global logistics system founded on physical, digital, and operational interconnectivity, through encapsulation, interfaces and protocols. The Physical Internet is intended to replace current logistical models. The project currently has funding from the National Science Foundation as well as contributions from MHIA and CICMHE.
The Physical Internet Initiative's manifesto is "Transforming the way physical objects are handled, moved, stored, realized, supplied and used, aiming towards global logistics efficiency and sustainability." It attempts to achieve this by applying concepts from internet data transfer to real-world shipping processes.
The Digital Internet does not transmit information: it transmits packets with embedded information. These packets are designed for ease of use in the Digital Internet. The information within a packet is encapsulated and is not dealt with by Internet. The packet header contains all information required for identifying the packet and routing it correct to destination. A packet is constructed for a specific transmission and it is dismantled once it has reached its destination. The Digital Internet is based on a protocol structuring data packets independently from equipment. In this way, data packets can be processed by different systems and through various networks: modems, copper wires, fiber optic wires, routers, etc.; local area networks, wide area networks, etc.; Intranets, Extranets, Virtual Private Networks, etc.
The Physical Internet does not manipulate physical goods directly, whether they are materials, parts, merchandises or yet products. It manipulates exclusively containers that are explicitly designed for the Physical Internet and that encapsulate physical goods within them.
The vision of the Physical Internet involves encapsulating goods in smart, ecofriendly and modular containers ranging from the size of a maritime container to the size of a small box. It thus generalizes the maritime container that succeeded to support globalization and shaped ships and ports, and extends containerization to logistics services in general. The Physical Internet moves the border of the private space to be inside of the container instead of the warehouse or the truck. These modular containers will be continuously monitored and routed, exploiting their digital interconnection through the Internet of Things.
The Physical Internet encapsulates physical objects in physical packets or containers, hereafter termed π-containers so as to differentiate them from current containers. These π-containers are world-standard, smart, green and modular containers. They are notably modularized and standardized worldwide in terms of dimensions, functions and fixtures.
The π-containers are key elements enabling the interoperability necessary for the adequate functioning of the Physical Internet. They must be designed to facilitate their handling and storage in the physical nodes of the Physical Internet, as well as their transport between these nodes and of course to protect goods. They act as packets in the digital Internet. They have an information part analogous to the header in the digital Internet. The π-containers encapsulate their content, making the contents irrelevant to the Physical Internet.
From a physical perspective, π-containers must be easy to handle, store, transport, seal, snap to a structure, interlock, load, unload, build and dismantle.
From an informational perspective, each π-container has a unique worldwide identifier, such as the MAC address in the Ethernet network and the digital Internet. This identifier is attached to each π-container both physically and digitally for insuring identification robustness and efficiency. A smart tag is attached to each π-container to act as its representing agent. It contributes to insuring π-container identification, integrity, routing, conditioning, monitoring, traceability and security through the Physical Internet. Such smart tagging enables the distributed automation of a wide variety of handling, storage and routing operations. In order to deal adequately with privacy and competitiveness concerns within the Physical Internet, the smart tag of a π-container strictly restricts information access by pertinent parties. Only the information necessary for the routing of π-containers through the Physical Internet are accessible for everyone.
Physical internet initiatives around the world
CELDi Physical Internet Project
Establishing the logistics system gain efficiency of the Physical Internet was the focus of a research project funded by the U.S. National Science Foundation (NSF) and conducted in the Center for Excellence in Logistics and Distribution (CELDi). The project found that the expected annual benefits of the Physical Internet, if adopted in the U.S., would be: a reduction in costs of over $100B, a reduction in CO2 emissions of over 200 Tg, and a reduction in driver turnover of up to 75% . 
The objective of Modulushca project is to achieve the first genuine contribution to the development of interconnected logistics at the European level, in close coordination with North American partners and the international Physical Internet Initiative. The goal of the project is to enable operations with developed iso-modular logistics units of sizes adequate for real modal and co-modal flows of fast-moving consumer goods (FMCG), providing a basis for an interconnected logistics system for 2030. Modulushca will establish a robust and replicable methodology to develop and evaluate solutions for interconnected logistics looking at other elements of the supply chain. Two implementation pilots will be executed integrating key Modulushca developments in significantly different supply chains.
The Modulushca project aims to develop a new interconnected logistics organization based on containerization for FMCG supply chains. This new organization is motivated by the prominence of FMCG for Europe as an industry and as end consumer markets.
The analysis of FMCG supply chains shows dedicated, overlapped networks leading to fragmented flows of goods across Europe despite huge volumes. Actual operations of FMCG supply chains raise several issues relative to utilization of assets such as transportation means and warehouses; end customer service levels; ecological footprint with growing GHG emissions and materials wastes; and social responsibility with painful jobs. The main hypothesis explored here is that these facts are induced by the contemporary design of supply networks and operations. Thus a new logistic concept is required to solve these issues: the Physical Internet. This concept aims to change logistics as the Digital Internet changed computer networks. The Physical Internet is a new way to design more open and interconnected logistics networks and services, leading to a more efficient and sustainable way of moving, storing, realizing, supplying and using physical goods in general, including FMCGs.
The interconnection of logistics services is motivated by the inefficiency and the unsustainability of our current logistics organization, putting at risk the very core of our lifestyle. Transportation is a major problem with many negative well-known side effects such as oil dependency, CO2 emissions, congestion, and health-related issues for logistics personnel. Despite all efforts already undertaken to improve engine technologies, the flows are still growing, resulting in CO2 emissions growing too.
At least two approaches are currently explored to tackle this Global Logistics Sustainability Grand Challenge. These approaches focus on logistics organization and they are based on the fact that to significantly improve the use of transportation, handling and storage means we need to re-establish the economies of scale that today are diluted by smaller, dedicated networks, as well as Just-in-Time replenishment policies.
The scope of MODULUSHCA project is:
- To set the landscape by elaborating the Physical Internet enabled interconnected logistics vision and by developing and demonstrating core components of this vision;
- To achieve both a simulation-based and a field-based proof of concept by gradually implementing and testing key functions of interconnected logistics and involving key stakeholder groups through all development and implementation phases;
- To ensure a global synchronization with concurrent projects in the USA and Canada within the international Physical Internet initiative, and pave the way for a common and early market implementation at the intercontinental level.
Modulushca efforts will lead to the development of a road map towards a fully interconnected logistics system by 2030. The road map will address the changes and necessary steps to change the logistics system gradually, exploiting progresses in digital, physical and operational interconnectivity, building on current players, assets and infrastructures.
An international consortium coordinated by PTV Group leads the project, with relevant partners as the companies Procter&Gamble, Chep, Jan de Rijk Logistics and Poste Italiane; the Universities of Graz, TU Berlin, Laval and Lausanne; the research centers ILIM, ITENE and MINES PARISTECH; and the consultancies Inception Consulting, Kirsen Global Security and Meware SRL.
- Internet of things
- Logistics management
- Supply chain management
- Systems theory
- Fast-moving consumer goods
- Ecological footprint
- Economies of scale
- Just in time (business)
- Montreuil, Benoit. "Physical Internet Manifesto, version 1.11.1", CIRRELT Interuniversity Research Center on Enterprise Networks, Logistics and Transportation, Quebec, 28 November 2012. Retrieved on 6 February 2013.
- Montreuil, Benoit. "Towards a Physical Internet: Meeting the Global Logistics Sustainability Grand Challenge". CIRRELT. Retrieved Feb 13, 2013.
- Montreuil, Benoit. http://tedxtalks.ted.com/video/Benoit-Montreuil-at-TEDxBuchare
- Trebilcock, Bob. "Physical Internet Initiative: Pipedream or possibility?", Logistics Management magazine, 1 March 2012. Retrieved on 12 February 2013.
- Andel, Tom. "Supply Chain Managers Get Physical with the Internet", Material Handling & Logistics, February 2012. Retrieved on 12 February 2013.
- Montreuil, Benoit (2011). Towards a Physical Internet: Meeting the Global Logistics Sustainability Grand Challenge, Logistics Research. Vol. 3, No. 2-3. pp. 71–87.
- Extract from Montreuil, B., R. D. Meller and E. Ballot, "Towards a Physical Internet: the impact on logistics facilities and material handling systems design and innovation," in Progress in Material Handling Research, Edited by K. Gue et al., Material Handling Industry of America, 23 p., 2010.
- Meller, Russell D., Ellis, Kimberly P. "From Horizontal Collaboration to the Physical Internet: Quantifying the Effects on Sustainability and Profits When Shifting to Interconnected Logistics Systems","CELDi Physical Internet Project", September 2012. Retrieved on 18 June 2013.