Physical Internet Market Analysis

Physical Internet (PI) Market (Global, 2023)

Introduction

Physical Internet (PI) is a new way of thinking about logistics and supply chains, a way of thinking that seeks to optimize the efficiency, sustainability, and interconnectedness of all networks. The PI framework, which draws on advanced technology such as the Internet of Things (IoT), big data, and automation, makes it possible to move goods and information seamlessly across the entire supply chain, thus creating a more responsive and agile supply chain. The PI framework is gaining momentum as companies increasingly recognize the need to optimize their operations in order to meet changing customer demands and the growing demands of the environment. This market analysis examines the key drivers, challenges, and opportunities that are shaping the PI framework. It also discusses how to benefit from the new, more interconnected and efficient logistics framework.

PESTLE Analysis

Political

The Physical Internet (PI) market in 2023 is influenced by various political factors, including government policies to increase the efficiency of the logistics industry. In the European Union, for example, the European Commission has allocated €1.5 billion to support the development of sustainable transport and logistics, which will directly influence the emergence of the principles of the Physical Internet. Moreover, the agreements of the parties to the trade between countries are increasingly promoting the use of digital logistics solutions, and more than 30 countries will have concluded such agreements by 2024.

Economic

The economy of the physical Internet is shaped by the increasing costs of traditional logistics. In developed countries, logistics costs are expected to be a staggering eight percent of GDP by 2023. As a result, companies are looking for more efficient ways to operate, and that’s where PI comes in. In addition, the global logistics market is expected to reach $96 billion in the coming years. And logistics costs are expected to fall by as much as 30 percent in the next few years, according to recent studies.

Social

Social factors are very important in the development of the Physical Internet, especially when the public becomes more and more concerned with the environment. In 2023, a survey showed that 72% of consumers are willing to pay a premium for greener transportation services. This is consistent with the focus of the Physical Internet on reducing carbon emissions. Also, logistics will also be transformed. By 2025, logistics will recruit more than 1 million people, and the demand for specialized talents will also be greatly increased.

Technological

The physical Internet is driven by technological developments. By 2023, global investment in logistics technology is expected to reach $200 billion. In particular, IoT, blockchain, and other Internet of Things technologies will be of great benefit to the physical Internet. By 2025, the number of IoT devices used in logistics is expected to exceed 50 billion. The number of IoT devices has become a major driver of the physical Internet, and real-time data sharing has improved the performance of the physical Internet.

Legal

Legal factors affecting the market for physical Internet are privacy and transportation laws. In 2023, the General Data Protection Regulation will continue to influence how logistics companies deal with customer data. Non-compliance will be punished with fines of up to 20 million or 4 percent of the turnover. In addition, new transportation laws are being introduced in some countries, including stricter emissions standards for vehicles used in logistics, which will also affect the use of physical Internet solutions.

Environmental

Among the more important issues in the market for the Physical Internet is the environment. By 2023, the logistics sector will be responsible for approximately ten percent of all global greenhouse gas emissions, and a shift to more sustainable practices will be demanded. The implementation of the principles of the Physical Internet will help logistics companies reduce their emissions by up to fifty percent by 2030, through the sharing of resources and more efficient routing. By 2023, it is expected that more than sixty percent of the logistics companies will be pursuing carbon neutrality. This is a clear indication of the increasing importance that logistics companies are attaching to their own and their customers’ commitment to the environment.

Porter's Five Forces

Threat of New Entrants

The physical Internet has a medium barrier to entry because of the considerable technological investment and the establishment of the necessary physical network. The barrier to entry is also influenced by the existing players with their own network and customer base. Technological developments can reduce the barrier to entry. But the growing demand for efficient logistics solutions could also attract new players willing to be innovative.

Bargaining Power of Suppliers

The bargaining power of the suppliers on the Physical Internet is relatively weak. The market is characterized by a large number of suppliers who offer various components and technologies required for the implementation of PI systems. This gives the companies the possibility of changing suppliers relatively easily and reduces the power of individual suppliers to set prices and conditions.

Bargaining Power of Buyers

“High. The buyers in the physical Internet have great bargaining power, because of the increasing availability of alternatives and the competitive nature of the logistics and supply chain industry. As companies seek to optimize their operations and reduce costs, they can use their buying power to demand better terms and conditions from service providers, and thus push them to offer more value.

Threat of Substitutes

The threat of substitutes in the physical internet is moderate. There are still many other transport and logistics methods, but the unique advantages of the physical internet, such as high efficiency and real-time data, are more than enough to make it a good choice. However, with the continuous development of science and technology, new solutions will emerge and become the only substitutes.

Competitive Rivalry

The competition on the physical Internet is high, driven by the presence of many players who are fighting for market share. To differentiate themselves, companies are constantly innovating and improving their services, which results in a highly competitive market. The rapid technological progress and the growing demand for efficient logistics solutions are intensifying the competition.

SWOT Analysis

Strengths

• Enhanced efficiency in logistics and supply chain management.
• Reduction in transportation costs through optimized routing.
• Increased collaboration among stakeholders in the logistics ecosystem.

Weaknesses

• High initial investment required for infrastructure development.
• Complexity in integrating existing systems with PI frameworks.
• Potential resistance from traditional logistics providers.

Opportunities

• Growing demand for sustainable and eco-friendly logistics solutions.
• Advancements in technology enabling real-time data sharing and tracking.
• Expansion into emerging markets with increasing e-commerce activities.

Threats

• Regulatory challenges and compliance issues in different regions.
• Cybersecurity risks associated with increased data sharing.
• Competition from established logistics companies adapting to new technologies.

Summary

The Physical Internet market in 2023 has a unique advantage and an opportunity, especially in terms of logistics efficiency and environmental protection. The main obstacles are the high initial investment and the resistance of traditional industries. The industry is in a stalemate, and the market is unable to develop, unless the government and industry associations cooperate to push forward the reform of the supply chain. The logistics industry needs to find a way to integrate and optimize the logistics industry with the development of the Internet.