Tippmann Innovation helping develop cold physical internet

July 20th, 2018

By Doug LeDuc | Greater Fort Wayne Business Weekly

Tippman Innovation and Georgia Tech researchers working to improve the transportation and storage of cold food believe the industry’s logistic systems would operate far more efficiently if they became integrated and hyperconnected in a way modeled after the internet.

Last month the Fort Wayne-based industrial cold storage builder launched a multiyear initiative for that purpose with the Georgia Institute of Technology in Atlanta, engaging industry, academia and government agencies in the development of a cold food physical internet.

Cold PI is an area of study identified and developed by Benoit Montreuil, the Coca-Cola Material Handling & Distribution Chair at Georgia Tech’s Stewart School of Industrial & Systems Engineering. Tippmann has supported Georgia Tech’s supply chain research since 2010 and helped it found the Integrated Food Chain Research Center there.

Delays, distortions, differences and disputes resulting from the length, complexity and high fragmentation of today’s conventional cold food chain have caused enough problems that the Food and Agricultural Organization of the United Nations estimates up to one-third of products reach destinations compromised or adulterated, according to a Tippmann statement.

“Cold PI is designed for achieving order-of-magnitude improvement of its efficiency, sustainability and resilience,” the initiative announcement said. “Simply stated, improving the cold food chain has huge benefits in reducing food waste and costs, minimizing logistics inefficiencies and greenhouse gas emissions, while shrinking social infrastructure costs.”

With about 2.1 million U.S. farms, 935,000 restaurants, and more than 200,000 registered food manufacturing, processing, and storage facilities accounting for close to one-fifth of the nation’s economic activity, “a more streamlined and efficient cold food chain is needed,” Nick Pacitti, Tippmann’s business development and cold chain consulting team leader, said in an email.

The European Union is working on its own cold PI initiative, and after running a simulation for it, Montreuil was helping it get a pilot research project underway a few years ago in the south of France.

A leader in the field before joining Georgia Tech, Montreuil co-authored The Physical internet: “The Network of Logistics Networks” and previously taught at Laval University in Quebec City, Canada, which hosted the first physical internet conference in 2014. He directs Georgia Tech’s Supply Chain & Logistics Institute as well as its Physical Internet Center.

At least 20 companies are planning to attend a conference at Georgia Tech’s Global Learning Center in October to learn more about participation in the Cold PI initiative.

Executives and academics expect the cold physical internet to get its start after about 20 core shippers, distributors and retailers, along with a host of other supply chain intermediaries, commit to tying their own logistics systems into those of third party logistics (3PL) service providers in a highly integrated way, Pacitti said.

“This approach will be a balance of collaboration and cooperation among competitors,” he said. “We are calling this ‘co-opetition’ as competitors now understand the need to collaborate among and between common shippers in improving service performance and distribution economics.”

Trends making it increasingly difficult for companies to maximize use of their own logistics assets already are encouraging the kind of shift to 3PL service providers that will benefit development of the cold physical internet, Pacitti said.

With “building and operating expense, labor shortage, particularly with the dramatic shortages for drivers and the overall lack of refrigerated transportation capacity, food chains recognize the need to shed their assets as they move to shared facilities,” he said.

“This broader shift is being called the development of the ‘agnostic supply chain,’” he said. “These shared facilities are more like food hubs where multiple food shippers can store and distribute products of all types and requiring various temperatures and trucking requirements, such as full truck load, less than truck loads, multi-stop loads, etc. These food hub centers will have the labor resources to flex when needed. Truckers will also be more inclined to provide capacity to these hubs. The food hub would be under the management of a 3PL.”

CRBE Group projects demand for cold storage space will be increasing, with a need in the next seven years for an additional 8.5 million refrigerated square feet.

“These newer types of buildings or food hubs will be owned by a 3PL or a developer where the 3PL would have a master lease with the developer to operate the facility for a number of food shippers,” Pacitti said.

The agnostic food chain is complemented by cold PI in that it is intended to link a host of food shippers and logistics hubs in hyperconnected ways where standardized methods and processes enable products to flow faster and more efficiently. By doing this, companies like the global cold storage giant Americold see the benefits for them and their customers.

“They have already signed up to participate in our work,” Pacitti said. “Cold PI will improve margins and profitability for existing and new entries into the ‘cold space’ as the process will streamline and leverage product flows into and out of a food hub.”

Mid-size companies have the most to gain from leveraging their volumes with other shippers and logistics services providers. Pacitti expects embracing the cold PI will reduce their distribution costs by up to one-third.

Meat companies are an example of cold storage users who could lower their costs by parking product in shared resources where volumes are consolidated, he said. The national Pork Checkoff website showed Indiana has the fifth biggest hogs and pigs inventory among the 50 states.

Selected third party logistics service providers “would be expert in the area of fresh and frozen pork products and the like,” he said. And they also would “have access to refrigerated trucks, containers, and a host of other services needed to support high volume, and highly regulated domestic and international distribution.”

Pacitti and David Sterling of Savills Studley will guide project management and deliverables for the initiative, according to a four-phase implementation plan Tippmann and Georgia Tech have for cold PI development.

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