What Is the Physical Internet? And Why It Matters at the Border

By Daniel Covarrubias, Ph.D.

The Physical Internet is a way to move freight the way the internet moves data: in standard packets, over open networks anyone can use, routed through whichever node is free.

It sounds abstract until you watch a truck leave a warehouse half empty. That truck is the problem the idea was built to fix.

The definition

Benoit Montreuil, Russell D. Meller and Eric Ballot developed the concept. They define it as an open, global logistics system built on physical, digital and operational interconnectivity.

In plain terms, today's logistics runs on private networks. A company owns or contracts its own warehouses, its own lanes and its own trucks, and data rarely crosses from one network to another. The Physical Internet asks those networks to connect, the way thousands of private computer networks connected into one internet.

It rests on 2 precepts.

Open, shared networks. Companies share warehouse space and trucks through standard protocols, so a warehouse with empty racks or a truck with empty deck space is available to the next shipper.

A new kind of container. In the 1950s, the standard shipping container rebuilt maritime trade because every port could handle the same box. The Physical Internet proposes smaller, modular, smart containers that do the same for trucks and warehouses. You move the container, and the goods inside never get re-handled.

The payoff shows up in 4 numbers every logistics manager already watches: fuller trucks, fewer empty trips, more deliveries per stop and less idle warehouse space.

Why the border is the hard case

Most Physical Internet research comes from Europe, and most of it assumes freight moves inside one customs territory. A border breaks that assumption. Every shipment stops, changes hands, gets inspected and often gets reloaded.

That's where the idea gets interesting to me. Make goods move as standard units through a border, and you've solved the hardest version of the problem.

Laredo is the place to try. Port Laredo moved $354 billion in trade in 2025, and Laredo alone handled 38.8% of all truck crossings on the U.S.-Mexico border that year (BTS).

Much of that freight is unloaded and reloaded on the U.S. side before it reaches its final distribution center. Each touch adds cost and risk.

What the research has found so far

Gastón Cedillo introduced me to the Physical Internet in 2022, and we've worked on the cross-border version since. Our first result was a model, published in Computers & Industrial Engineering in 2024, that uses Physical Internet principles to cut the risk of cargo theft in road transportation. (It's now my most-cited paper, which tells you how badly the industry wants that problem solved.)

The nearshoring wave raises the stakes. Companies moving production to Mexico want shorter, more reliable supply chains, and they only get that reliability if the border stops behaving like a chain of handoffs.

What comes next

In my opinion, the Physical Internet will arrive one shared warehouse and one standard container at a time. The border regions that test those pieces first will set the standard for everyone else.

We're testing them in the TAMIU Logistechs Living Lab, in Laredo.

This essay updates "The Physical Internet: A Potential Game Changer for Cross-Border Logistics," first published September 12, 2022.