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CHEP backs Modulusha poject in the Physical Internet

Logistics sustains our lifestyle and businesses activities. Physical objects are moved in containers, stored, realised, supplied and used throughout the world, allowing the globalisation of world trade. But there is still a harsh fact to be solved due to the inefficiency and unsustainability of the processes from an economic, environmental and social perspective.

By Victor Leftwick, director Business Solutions & Innovation, Sales, CHEP

Despite all efforts already undertaken to improve transporttechnologies, CO2 emissions are still growing. Trucks and containers are often half empty at departure, with a 42,6% of average utilisation, and vehicle and containers often return empty, or travel extra routes to find return shipments (25% of travel). Besides this, multimodal routes are most often timeand- cost inefficient and risky due to badly designed interfaces.

To overcome this Global Logistics Sustainability Grand Challenge, the ‘Physical Internet’ is an international initiative that proposes a new efficient and sustainable logistics system. It is defined as an open global logistics system founded on physical, digital and operational interconnectivity through encapsulation, interfaces and protocols. This initiative is based on applying the Digital Internet metaphor to enable such an open network of networks for physical objects like the one employed in the World Wide Web. This new concept drives to high-performance logistics centres, movers and systems, making it seamless, easy, fast, reliable and cheap to interconnect physical objects through modes and routes, with an overarching aim towards universal interconnectivity.

The Physical Internet

Many years ago (say around 1990) we were in the midst of a technology revolution, but perhaps the most exciting of these developments was credited to Tim Berners-Lee, a British scientist best known as the inventor of the World Wide Web. The www phenomenon enabled the transition from a world of unconnected servers and computers to what we now know as the ‘Information Superhighway’ or the ‘Internet’, an open and interconnected distributed network collaboration that forever transformed industries, economies, culture and society at large.

Some 25 years on and a Professor Benoit Montreuil started another revolution. This time it’s in the field of logistics, which he has termed the ‘Physical Internet’. Even though there are fundamental differences between the physical world and the information world, the Physical Internet initiative aims to exploit the Internet metaphor so as to propose a vision for a sustainable and progressively deployable breakthrough solution to global problems associated with the way we move, store, realise, supply and use physical objects all around the world.

This work forms the foundation for a European funded project closely co-ordinated with North American partners and the international Physical Internet Initiative, whose aim is to address current perceived inefficiencies in supply chain and to achieve the first genuine contribution to the deployment of interconnected logistics at the European level. This is termed MODULUSCHA or Modular Logistics Units in Shared Co-Modal Network. The key enabler for this is the development and use of iso-modular logistics units of sizes adequate for real modal and co-modal flows of fast-moving consumer goods.

A number of inherent issues face logistics today. On a macro level these can be broadly classified into three areas: economic, environmental and social. On the economic side, roughly 5-15% of the GDP for most countries is spent on logistics, which means that it is growing faster than world trade. Environmentally speaking, logistics is one of the heaviest greenhouse gas generators, energy consumers, polluters and material wasters. Lastly on a social level we are faced with a complete lack of fast, reliable and affordable accessibility of physical objects for the vast majority of the world population.

The potential for logistics collaboration has been well understood for years. Anecdotally, the level of such collaboration has recently appeared to have increased, driven primarily by Green imperatives. But, there are barriers, and the practice is still minimal. Physical Internet research is trying to better quantify a wide range of benefits from such collaboration, and then take the idea further by some fairly radical concepts around how to better modularise and integrate the supply chain. That is where the ‘Internet’ part of the thinking comes in. The Internet works with amazing speed and efficiency because of modularisation and standardisation. Information to be transmitted is organised into small packets. A protocol (TCP/IP) understands those packets, and the collective network in turn understands how to route those packets based on the destination (IP address).

The PI is an open global logistics system founded on physical, digital and operational interconnectivity through encapsulation, interfaces and protocols. The PI enables an efficient, sustainable, adaptable and resilient logistics web.

The Global Logistics Sustainability Grand Challenge!

Design a system to move, store, realise, supply and use physical objects throughout the world in a manner that is economically, environmentally and socially efficient and sustainable.

Environmental goal: Sustainably reduce by an order of magnitude the logistics-induced global greenhouse gas emission, energy consumption, pollution and materials waste.

Economic goal: Sustainably reduce by an order of magnitude the global economic burden of logistics while unlocking gains in business productivity.

Societal goal: Sustainably and significantly increase the quality of life of the logistics workers and the world’s population by improving the timely accessibility and mobility of physical objects.

Interconnectivity: In the world of logistics today, many countries have unique standards. One supplier’s conveyor may not connect with another supplier’s conveyor. With the Physical Internet; the aim is for universal connectivity.

Encapsulation: The Physical Internet won’t deal with freight. It will only deal with packages of goods, much like ports only deal with containers. Once outside of the ports, distribution centres and logistics providers are dealing with hundreds of different kinds of boxes and they’re not easy to handle. The Internet, on the other hand, only deals with packets of information that are formatted very precisely. Imagine a portfolio of standard size containers that will be used around the globe. They would begin with standards for maritime containers and truck trailers. Shipping containers and cartons would be sized to maximise the space inside those standard containers and trailers. Regardless of the size, they would be environmentally sustainable, trackable by bar codes or RFID, and modular.

Out of the box: Now here is where the thinking goes really out of the box. Even for long haul moves by truck, the idea is that rather than a single driver and truck, the goods would be moved by a series of short relays. When I first saw this, my initial reaction was: “The cost of all this handling and trucks will be huge.”

But perhaps not so! Given Hours of Service and other constraints, the research found that a dedicated truckload moving from Quebec to Los Angeles would require a total transit time of 124 hours. Using the relay method, and an amazing 17 trucks, that time would be reduced to just 74 hours – two full days faster. And guess what happens as truckload freight transportation moves to shorter hauls? Drivers go home most nights. Quality of life improves. And the permanent problem of driver shortages in the industry is dramatically reduced. So how could such networks possibly transfer all that freight efficiently?

Let’s go back to the Internet parallel. The industry must adopt standardised containers and platforms. That would mean carriers/3PLs could plan and optimise handling and loads consistently, well in advance, without worrying what was inside or how a given shipper builds its pallets or sizes its cartons. And thesecontainers will also be smart. The containers would then be routed through the networks just like Internet packets are, based on their final destination. Carriers/3PLs would bid on moving those containers as a ‘black box’ over the web. Put those last concepts together, and you have the physical supply chain internet.

Physical encapsulation: This involves the physical encapsulation of goods in π-containers: modular, ecofriendly, smart and standardised worldwide. That is:

  • Merchandise is unitised as content of a π-container and is not dealt with explicitly by PI
  • Modular dimensions range from cargo container sizes down to tiny size
  • Conceived to flow more easily through various transport, handling and storage modes and means
  • Easy to handle, store, transport, snap, interlock, load, unload, construct and dismantle, compose and decompose
  • Light, made of environment friendly materials, with minimal off-service footprint
  • Smart tag enabled, with sensors if necessary: proper identification, routing and maintaining
  • Various usage-adapted structural grades
  • Conditioning capabilities as necessary (eg temperature)
  • Sealable for security purposes.


Interfaces optimised for universal interconnectivity: Physical and digital interfaces exploiting the characteristics of π-containers and standardised worldwide. That is: Whole logistics centres designed for the Physical Internet:

So how do we take this forward? All of this will require a great deal of innovation from a technology, business process and cultural perspective as well as willingness to change and above all collaboration.

Which brings us to MODULUSCHA!

Modulushca is a blend of the words: Modular Logistics Units in Shared Co-Modal Network.

The Modulushca project is the first real pilot held in Europe of a really innovative vision – the Physical Internet. Imagine an open network of networks for physical objects like the one employed in the World Wide Web. This new concept would drive logistics to high-performance logistics centres, movers andprotocols, making it seamless, easy, fast, reliable and cheap to interconnect physical objects through modes and routes, with an overarching aim towards universal interconnectivity.

So, the goal of the Modulushca project is to enable operating with developed iso-modular logistics units of sizes adequate for real modal and co-modal flows of fast-moving consumer goods (FMCG). This sector has been selected because it faces several logistical challenges due to: purchase frequency, non-durability, high volumes etc.

Modulushca will establish a robust and replicable methodology to develop and evaluate solutions for interconnected logistics looking at other elements of the supply chain.

In detail, this project integrates interrelated working fields: the development of a vision addressing the user needs for interconnected logistics in the FMCG domain; the development of a set of exchangeable (ISO) modular logistics units providing a building block of smaller units; the establishment of digital interconnectivity of the units; and finally, the development of an interconnected logistics operations platform leading to a significant reduction in costs and CO2 emissions that will be demonstrated in two implementation pilots for interconnected solutions.

Modulushca efforts will lead to the development of a road map towards a fully interconnected logistics system in 2030. The road map will address the changes and necessary steps to evolve the logistics system gradually, exploiting progresses in digital, physical and operational interconnectivity, building on current players, assets and infrastructures. The changes required to move towards interconnected FMCG logistics were assessed and linked to the industry perceived success drivers and obstacles.

Expected results

The main benefits can be summarised as:

  • Demonstrate technical, digital and operational feasibility of seamless handling of cargo within supply chain operations across companies and transport modes;
  • Recommending industry standards for iso modular logistics units to be deployed along the entire supply chain of different branches for a European wide and global market introduction;
  • Develop models to assess the supply chain benefits providing a methodology for cross process and cross company supply chain analysis for industry and policy makers;
  • A clear information handling approach, including data consistency and transport monitoring along the journey as model contributing to extend and enhance standardisation developments in eFreight and iCargo; 
  • Developing optimisation algorithms for loading capacity optimisation and scheduling transferring especially to SME user groups;
  • Enhance the innovation process at the interface material and transport flow to stimulate a gradual market take up and implementation process; 
  • Stimulate the market uptake of new interconnected logistics systems and other innovations developed and tested within the project and thereby increasing the viability of the implementation.

Participate

All companies involved in FMCG supply chain are invited to participate in the project’s activities.

Seminars and workshops: Several seminars will be organised to better understand how concepts developed in Modulushca could be adapted to fulfil FMCG sector needs.

Roadmap: The development of a transformational and technology roadmap is being planned, which will address the required step-changes needed for gradual modification to the logistics system, exploiting progress in digital, physical and operational interconnectivity and building on current players, assets and infrastructures.

Networking: Learn and share knowledge, documents and experiences about this new logistics concept.

LinkedIn: Search in the Groups, the items ‘Physical Internet’ or ‘Modulushca’; Twitter: @modulushca;

YouTube: youtube.com/modulushca

Also go to: http://www.physicalinternetinitiative.org  and http://www.modulushca.eu

Conclusion

The Physical Internet: Not a utopia, not a Big-Bang. The Physical Internet builds on the network effect, getting ever more effective as it gathers more users. It must gather critical mass, first exploiting existing infrastructures and means, then gradually fostering innovation. Even though it is to be ultimately global, it will have to grow first in fertile domains, where it must be collaboratively supported by key leaders from industry, government and academia.

So, is the Physical Internet a pipedream or is it a possibility? According to Montreuil, the technology is “a piece of cake. There’s no science fiction and nothing to invent in terms of software and the big picture where Business Meets Materials Handling data collection.” He believes the companies within MHIA could come up with the handling innovations to make this happen very quickly.

In Montreuil’s definition, quickly is about a decade. “The real challenge,” he said, “is overcoming the reservation of businesses to collaborate with one another to make the Physical Internet work. Companies will need to come up with new business models.”

The other challenge is convincing a group of shippers to do it now, rather than later. While it may take a decade to get a global Physical Internet up and running, Montreuil believes that a consortium of companies, or even an entire industry, could do it now. “I think the biggest hurdle is the reluctance of companies to do this until everything is in place to operate on a global scale,” he said, “I see it as something that can be phased in now and grow incrementally.” That could be the industry that is asking the question: “Isn’t there a better way?” Perhaps Modulsucha will form the starting point in answering this question.

Date: 29 Jan 2016

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