North American Supply Chain Resilience: Why Is the Physical Internet a Solution Against Cargo Theft?

Abstract

In times when supply chains’ regionalization, also known as “nearshoring,” is viewed as a new stage of globalization and resilient supply chains will be the new competitiveness cornerstone, cargo theft is becoming a growing “Achilles heel” for logistics in all economic regions around the world, but especially in emergent markets. Consequently, companies are now continuously designing new strategies to mitigate the risk of cargo theft on the roads. One of the most popular strategies is to implement updated satellite tracking technology. However, in many cases, it is not enough because the GPS signal can be jammed. Thus, other areas for reducing the risk of cargo theft are currently being explored. An approach that has shown promising results in this regard is known as “Physical Internet.” In this sense, the objective of this paper is to expose a quantitative model that allows, based on the risk level of cargo theft for each type of product to be transported, to state a mix of products that substantially mitigates the risk of cargo theft for a consolidated shipment. Both the demand and the risk for different products were studied, and as a result, it was possible to identify which of these could be combined in a single consolidated shipment with a lower total risk. An original model called the "Cargo Theft Model" was designed, which is the result of coupling a model of stochastic inventories of a single period, with one of evaluation of the risk of cargo theft. In addition, a real-world analysis was developed allowing us to know its advantages and limitations to consider before massively implementing this approach. Finally, useful conclusions and recommendations are presented for both academics and decision-makers, as well as future lines of research to extend the results here presented.

Keywords: Physical Internet, cargo theft, supply chain resilience, transportation, logistics.

JEL Classification: R490