Center for Engineering Logistics and Distribution (#1032062 & #1031956)
The Center for Engineering Logistics and Distribution (CELDi) is positioned to be the leading logistics and distribution research center by taking the American leadership role in basic research required for the international Physical Internet Initiative (PI2). The PI involves the intelligent standardization of shipments and coordination of resources to facilitate system-wide efficiency in a networked economy much in the way that the digital Internet is based on transmitting standards packets of information.
The intellectual merit of the proposed research lies in the transformative paradigm associated with PI, in general, and the optimization and simulation models formulated to establish the logistics system gain potential, in particular. These model formulations will be a contribution to the field as mathematically rigorous models, resulting in publications that will appear in leading archival journals. The studies utilizing the models will be disseminated in applications-based journals.
The broader impacts of the PI2 include the potential to dramatically reduce the cost of logistics transactions through intelligent standardization in a consumer sector that demands the efficient delivery of product over a worldwide supply chain. Such standardization will then unleash economic development capable of growing industries while reducing energy consumption and waste for the nation, as well as providing additional capacity to our nation's logistics system. Participation by students, including continued recruitment of students from underrepresented groups, will be emphasized and they will benefit from this collaborative research project with industry.
The Center for Excellence in Logistics and Distribution (CELDi) is an industry and university cooperative research center with the mission of enabling member organizations to achieve logistics and distribution excellence by delivering meaningful, innovative and implementable solutions that provide a return on investment. The objective of this project was to assess how the Physical Internet would impact freight transportation and to increase the visibility of CELDi. Freight transportation systems, which drive the prosperity and quality of life in the U.S., epitomize current economic, environmental and social contradictions in our society. The economic value of logistics enterprises reaches the trillions of dollars annually, but there is significant waste and inefficiency. In 2007, road-based freight transportation modes consumed nearly 30 billion (B) gallons of fuel [2]. Further, from 1990-2008, the CO2 emissions associated with road-based freight increased by 14.9% to 517 trillion grams (Tg) [2]. The transportation industry is largely segmented and more than three-quarters of freight is carried using dedicated resources. When carrying an average load, truck trailers are less than 60% full and 20-30% of all trips are empty [2], resulting in an overall utilization of 43%. The freight transportation industry provides millions of jobs, but also has one of the highest turnover rates in the country. Addressing these economic, environmental, and social contradictions is an integral part of the Global Logistics Sustainability Grand Challenge [1]. For this project, we ask: Why not transform our transportation system to allow us to effectively utilize our logistics resources? Such an evolution has significant economic, environmental, and social implications. One vision for this transformation is based on interconnected logistics, where goods are handled, stored, and transported across a shared network. This vision is enabled by an open, global, intermodal logistics system that utilizes standard, modular, reusable containers, real-time identification, and routing through shared logistics facilities. This framework is referred to as the Physical Internet. A simplified mental image of the PI vision for interconnected logistics includes a transportation "auction" that handles "black box" modular containers through an open and shared network with a vast community that utilizes supplier ratings to drive logistics performance. To assess the potential of the Physical Internet, we collaborated closely with representatives (Thought Leaders) from eighteen organizations. These organizations included consumer product manufacturers, retailers, transportation providers, pallet providers, diverse manufacturers, software system providers, and professional organizations. Before these partner organizations fully considered such a transformation, a realistic assessment of the logistics system gain potential of the PI was needed. Throughout the two-year project, we organized technical meetings and held monthly teleconferences with the Thought Leaders to discuss issues, collect input and feedback, and present results. We focused on the following questions for various supply chain stakeholders: How will the PI change how loads are distributed across the freight distribution network? What are the preferred container sizes in the PI? What is the subsequent impact on the performance of the system? As part of this project, we studied how adoption of the PI will change the average fullness of trailers, the average percentage of empty miles, and the resulting CO2 emissions associated with freight distribution. We developed new analytical models and solution approaches, and we evaluated data from various sources in the U.S. to represent regional and national transportation systems. The results suggest average trailer fullness can be increased more than 30% and the average cost per load will be reduced by more than 25%. We also studied how limiting package sizes would impact the volume of shipped freight, with the concern that fewer sizes would increase the amount of air shipped. We developed a mathematical model that optimized package sizes as well as measured the impact. The results suggest that at the case level there will be little impact, but more importantly, at the pallet level, the standardization to modular containers has the potential to reduce the shipped volume by 20%. The results from our system-level analyses suggest a win-win-win logistics cycle such that shippers, retailers, and transportation providers all benefit from the PI in terms of increased profit margins and smaller environmental footprints [2]. As described in the final project report [2], our conservative estimates of the PI impacts (at 25% adoption) in the U.S. include: $100B reduction in truck-based transportation costs, 200 Tg in reduced truck-based CO2 emissions, and 70% reduction in driver turnover. The Thought Leaders informed this project and also gained insight to the expertise available through CELDi. In addition, five new organizations are considering a full membership in CELDi. B. Montreuil, "Toward a Physical Internet: Meeting the Global Logistics Sustainability Grand Challenge," Logistics Research, 3(2-3), 71-87, 2011. R. D. Meller, K.P. Ellis, W. Loftis, "From Horizontal Collaboration to the Physical Internet: Quantifying the Effects on Sustainability and Profits when Shifting to Interconnected Logistics Systems," Final Research Report, http://faculty.ineg.uark.edu/rmeller/web/CELDi-PI/index-PI.html, September 2012.
