The freight sector is pressured to become more efficient, sustainable, and resilient. Global trade flows are increasing, e-commerce continues growing, urban congestion intensifies, and climate change demands rapid transport decarbonization. Against this backdrop, the Physical Internet (PI) concept has emerged as a radical and transformative vision for the future of freight.
Interconnected, modular, and open logistics system
Inspired by the digital internet, the PI proposes a fully interconnected, modular, and open logistics system that enables seamless, efficient, and collaborative movement of goods. This paper outlines what the freight sector may look like once the Physical Internet becomes a reality and explores the implications for key stakeholders.
The full implementation of the Physical Internet promises many economic, environmental, and societal benefits. One of the most significant advantages is increased efficiency: logistics costs could be reduced by up to 30% through better load factors, fewer empty trips, and optimized routing. In addition, the Physical Internet could deliver substantial environmental gains, with CO₂ emissions potentially dropping by as much as 60%, thanks to a modal shift, widespread electrification, and reduced energy consumption.
Supply chain networks would also become more resilient, as redundant and diversified networks reduce the impact of disruptions. Furthermore, accessibility would improve, enabling small businesses and peripheral regions to benefit from fast, reliable, affordable logistics services. Finally, urban quality of life would be enhanced, with fewer delivery vehicles on the roads leading to less noise and lower pollution levels in city centers.
Key Principles of the Physical Internet
The Physical Internet is not simply a technological upgrade but a paradigm shift in freight and logistics operations. The concept is built on several core principles:
- Modularity: Standardized, innovative, connected, and reusable containers (comparable to data packets on the Internet) carry goods of all sizes and are designed to fit into each other like Lego blocks. These modules—called PI-containers—range from parcel-sized to pallet-sized and container-sized units.
- Interconnectivity: Transport modes, hubs, infrastructure, and logistics service providers (LSPs) are interconnected, enabling freight to move seamlessly across networks, independent of who owns or operates the infrastructure.
- Open networks: Like data traveling through routers on the internet, goods are routed dynamically through open logistics hubs, known as π-hubs, based on real-time conditions.
- Decentralized intelligence: Smart routing algorithms, AI, and blockchain coordinate the flow of containers, continuously optimizing for speed, cost, and environmental impact.
Operational Changes in the Freight Sector
With the adoption of the Physical Internet, the freight sector of the future will look markedly different across five key dimensions:
1. Routing and Network Design
Today’s logistics networks are often closed, proprietary, and sub-optimized. The PI introduces hyperconnected, dynamic routing, where freight is constantly re-routed in real-time through open PI-hubs, based on traffic conditions, hub capacities, and environmental constraints. This will lead to:
- Shorter lead times through intelligent multi-modal routing
- Load consolidation and shared capacity across companies and sectors
- Lower empty vehicle movements
2. Infrastructure and Hubs
In a PI-enabled system, logistics infrastructure becomes open-access and interoperable. Existing hubs (e.g., lockers, (micro)hubs, distribution centers, ports, rail and hyperloop terminals) are transformed into PI-hubs, serving multiple carriers and customers in a neutral, standardized way. These hubs:
- Facilitate transshipment between vehicles and modes without delay
- Offer plug-and-play logistics services (storage, cross-docking, recharging, repair)
- Operate with automated handling systems and predictive analytics
Urban consolidation centers become essential nodes in the last mile, enabling silent night deliveries, cargo bike transfers, and zero-emission zone compliance.
3. Assets and Vehicles
Fleet operations are transformed through shared access to modular PI-containers and the increased use of autonomous and electric vehicles. Trucks, trains, public transport, vans, drones, and vessels are decoupled from the ownership of goods, reducing fragmentation. Instead of point-to-point deliveries, vehicles serve pooled transport tasks across industries.
- Vehicles become platform-agnostic movers of PI-containers
- Electrification is accelerated due to predictable, optimized routes
- Shared fleet models increase asset utilization and reduce costs
4. Digital Infrastructure and Governance
A key enabler of the PI is the digital backbone that manages the physical flow of goods. This includes:
- Open APIs and data-sharing protocols to ensure interoperability
- Digital twins of PI-containers and hubs to track and simulate movements
- Smart contracts to manage transactions, liability, and payments
- Trust frameworks and decentralized control to balance openness and competition
- Urban access control and curbside management
Governance is based on federated models, with industry consortia and public authorities co-developing standards and protocols.
5. Business Models and Ecosystems
The shift to the PI radically alters competitive dynamics. Logistics has evolved from a transactional, asset-heavy service to a collaborative, service-oriented ecosystem. Key shifts include:
- Logistics-as-a-Service (LaaS) platforms offering dynamic freight booking
- Cross-sector collaboration to pool flows (e.g., retail, pharma, construction)
- SMEs gaining access to high-quality logistics through shared infrastructure
- A decoupling of physical movement from ownership and brand identity
Challenges and Roadblocks
Despite its promise, the path to a PI-enabled freight system is complex. Major challenges include:
- Standardization: Agreement on container, hub, and interface standards across countries and industries
- Data governance: Ensuring secure, trusted, and equitable data sharing
- Business model shifts: Overcoming resistance from operators and rethinking value propositions based on collaboration
- Investment needs: Upgrading infrastructure, vehicles, and IT systems requires coordinated public and private funding
- Policy alignment: Regulation and incentives must support openness, collaboration, and sustainability
Conclusion
The Physical Internet presents a bold and systemic reimagining of the freight sector. Applying the principles of modularity, openness, and interoperability transforms how goods are moved, stored, and managed. While its implementation will be incremental and require deep collaboration between stakeholders, the potential payoffs—in efficiency, sustainability, and inclusivity—are transformative. The future freight sector will be fluid, intelligent, and people-friendly logistics designed to move goods and enable thriving economies and livable cities.
Check out the results from the URBANE project. URBANE stands for Upscaling Innovative Green Urban Logistics Solutions Through Multi-Actor Collaboration and PI-Inspired Last Mile Deliveries.
Also, check out the DISCO project, which focuses on interconnected urban freight organisation and city planning through data sharing and digitalization based on a Physical Internet (PI) approach.
Walther Ploos Amstel.