Toward the Physical Internet—Logistics Service Modularity and Design Implications

Abstract

The Physical Internet (PI) is a modularization of logistics services: standardized protocols, full interoperability and standardized packaging, PI‐containers, and encapsulated freight. The PI‐containers are a core component of the PI; however, previous PI studies have not addressed those containers’ repositioning, despite its importance and effect on the PI network efficiency. In this paper, we analyze how the PI‐containers’ design and characteristics will determine the containers’ flows in a domestic network context. The flows are studied strategically using a linear programming model minimizing flow imbalances between hubs and simulating the effect of PI‐container compatibility. The model is tested using inter‐regional freight data from Sweden, and the results are framed using modularity theory. Our analysis reveals that PI‐container compatibility in terms of forward and reverse flows determines whether PI presents increased or decreased empty runs compared with the existing conventional logistics system. Departing from modularization theory, we discuss our results, emphasizing not only the importance of keeping synergistic specificity low but also how the characteristics will affect the urgency of technology use. Our implications are important to supply chain managers and policymakers for the future research on the Physical Internet, PI‐container repositioning and routing, and packaging design.