Applying Physical Internet characteristics to environmental network optimisation in the parcel delivery industry

Abstract

A promising vision to make the global logistics more sustainable is 'Physical Internet Logistics'. This vision, based on the way 'Digital Internet' sends packages information through a network, is focused on optimisation of handling, storing, realising and supplying objects. Physical Internet Logistics suggests an open, global and interconnected network with different spokes, hubs and modes. Objects are encapsulated in standardised containers whereafter they will be distributed through a network. Routing of the container is focused on network balancing. Every container will follow its own path through the network from origin to destination by using different hubs. Different origin-destination pairs will be bundled and transported on the same link. Besides, similar origin-destination pairs could follow different paths through the network. At hubs, transhipment takes place to transfer containers to different routes. This paper is focused on the application of Physical Internet characteristics in the parcel delivery industry using an optimisation model concerning fleet allocation on a service network. The objective is to find such a fleet allocation plan in which the total amount of emitted CO2 is minimised. Two different designs are suggested: a 'hub design' and an 'open network design'. For the hub network design, a couple of nodes are defined as hub where transhipment can take place. Paths from origin to destination are only possible by using at least one hub. This means that demand travels from origin to hub to destination. For the Open network design, transhipment is possible at every node. Paths from origin to destination are possible in one direct way or by using a hub. This means that two kinds of paths are possible, from origin to destination or from origin to hub to destination. By using a case study at PostNL, a carrier in the Dutch parcel delivery industry, this paper concludes that the application of Physical Internet characteristics do have its influence. In particular, the openness of a network result in a reduction in total amount of emitted CO2. During the case study at PostNL, it became clear that a CO2 reduction of 6% is possible when the elements of Physical Internet were applied on a hub network design. The open network design is able to reduce the total amount of emitted CO2 by 16%. When the demand is known by forehand this paper concludes that a less restricted network results in less CO2 emissions emitted. Destinations should be severed by more than one hub or directly by the origin depot. Transhipment should be possible at as much as nodes as possible. Concerning a case in the parcel delivery industry, it is hard to make forecasting more reliable on a daily base due to the short time windows of delivery. This means that a carrier as PostNL should innovate in the flow of information from shippers to make the application of Physical Internet feasible.