Physical Internet: a last-mile deliveries model to free cities from traffic

In the last two decades the growth of e-commerce has significantly affected the traffic congestion in the cities. Consequently, the vehicle emissions have increased as well. For example, in 2019 the CO2 emissions from transport sector were caused for the 40% by freight transport. Particularly, urban freight transport, despite it represents only the 3% of the total freight transport, was responsible of the 20% of all freight emissions, and these numbers are likely to increase in the future (Urban Freight Logistics: An introduction to new modes of delivery, business models and policy recommendations). Another negative aspect has been the increasing costs for the logistics companies due the high number of deliveries. Indeed, the high velocity requested for each delivery has increased to over 50% the total logistics cost of the parcels, as explained by Rod Franklin in his article “Improving Last-Mile Parcel Delivery Processes– A Physical Internet approach to low emission deliveries”.

In order to mitigate this trend, the European Union has financed several projects to enable cities to experiment solutions which aim to reduce the negative impacts of last-mile deliveries as well as to reduce the vehicle emissions. In this context, various pilots that test emission-free commercial zones, urban consolidation centres, the use of electric vehicles and bicycle for the deliveries and further solutions have been experimented. Despite most part of these experiments has shown positive results, their impact in a large environment still needs to be proved. In order to be able to benefit from all these initiatives, the cities need to develop a system approach which optimizes the parcels delivery in the whole city. The objectives to achieve are the minimization of traffic congestion and emissions thanks to the reduction of empty movement of the vehicles which, in turn, can allow the costs reduction of the economies of scale. In other words, both consumers and logistics service providers could benefit from this scenario.

Despite the implementation of models which improve self-regulating systems are few, one that has emerged is the so-called Physical Internet. This model manages the parcel shipments in the same way internet manages data. 

In other words, Physical Internet is based on few agreed-upon standard rules and standardised inter-networking protocols which enable the optimization of last-mile deliveries and the consolidation of a system-wide parcel flows. The main characteristics are: 

• few constraints applied to the service providers in the delivery network; 
• strict interaction among the different service providers; 
• sharing of resources and information among service providers. 

A recent EU project (funded under the Horizon Europe programme), URBANE, aims to reduce the greenhouse gas emissions from last-mile deliveries by 20%, by demonstrating the efficiency of the Physical Internet model and encouraging the development of this approach in further cities worldwide. The project, composed by 39 partners, foresees three phases. In the first phase innovative last-mile services based on the Physical Internet will be developed and demonstrated in four cities designated as Living Labs (Bologna, Helsinki, Thessaloniki and Valladolid). The second phase will involve a comprehensive analysis and enhancement of the findings gained from the first phase in two Twinning Cities (Barcelona and Karlsruhe). Subsequently, in the third phase, the services developed and improved in the preceding phases will be tested to verify their broad applicability. This assessment will be conducted through six feasibility studies in six different cities (Prague, Antwerp, Aarhus, La Rochelle and Mechelen).

In May 2023 the “URBANE framework for optimised green last mile operations” has been published. The report identifies the principles and prerequisites of a Physical Internet inspired urban logistics operational model and establishes the strategic priorities and direction of the URBANE project. Moreover, an analysis on how cities can face the different challenges in the implementation of physical internet, such as commercial and regulatory constraints, has been carried out. The report provides guidance to improve the environmental, social, and commercial aspects of last mile delivery operations through the identification of innovative approaches. 

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