'Mesh networks' that unburden communications could drive the future of urban logistics.
Logistics is similar to the telecommunications industry. Data coming and going is like goods, and you need to organize an efficient network (logistics network) so that no point is overloaded. Min-Koo Kwon, co-founder of logistics startup VTOV in South Korea, introduces to Hankyung Geeks the concept of "mesh networks" that could be a game-changer for "urban logistics" centered around capital cities. It's an approach that's already been used in the telecommunications industry. The idea is to move away from centralized (hub) logistics and offload the load through multiple connections.
20 million items are shipped every day through ecommerce. That's 40% of the country's population ordering something through e-commerce once a day. Some goods move within the same city area, such as from Gyeonggi-do to Seoul, while others move between different city areas, such as from Gyeonggi-do to Busan in South Korea. The former can be defined as urban logistics and the latter as intercity logistics.
In 1992, when home delivery was first established in Korea, the volume of intercity logistics was much higher than the volume of urban logistics. This is why the 'Hub&Spoke Network' was adopted, which is more suitable for handling intercity logistics. Thirty years later, the volume of urban logistics is much higher. This is because during the rapid growth of the e-commerce market, fulfillment centers were introduced to locate the origin of goods as close as possible to the areas where the consumers receiving the goods are concentrated. Now, more than 40% of all shipments originating from and arriving in metropolitan areas are in the city.
Despite this, urban logistics is still handled in a hub-and-spoke network that is better suited to handling inter-city logistics. The time has come for a new way to handle urban logistics.
Multi-connected 'nodes' prevent delivery delays
The first expectation of both retailers and consumers using urban logistics is speed of delivery. This is why fulfillment centers were introduced in the first place - the main reason urban logistics volumes have skyrocketed - to speed up delivery by reducing shipping distances. It's not unreasonable to expect to receive an order from Gyeonggi Province to Seoul the same day. The distance is too close. At best, it is mutually incomprehensible that a fulfillment center is built near the consumer, but the goods cannot be delivered on the same day.
The second challenge that urban logistics needs to solve is mass transportation. Currently, the volume of urban logistics in the metropolitan area reaches 8 million shipments per day. Of these, only a small percentage are delivered to consumers on the same day. Some same-day deliveries are made using two-wheelers, but the transportation capacity of two-wheelers cannot handle such a large volume. When mass transportation becomes possible, economies of scale can be realized, lowering the unit cost of delivery. As a result, urban logistics today is increasingly demanding a method that enables mass transportation while maintaining fast enough delivery speeds for same-day delivery.
A mesh network is a network topology (way of organizing a network) used in the telecommunications industry. Since each "node" (data point) is connected to multiple other nodes in a net-like fashion, it can handle loads more evenly than hub-and-spoke networks that are connected to only one centralized location (hub). The successful application of mesh networks to urban logistics is expected to improve both delivery speed and mass transportation.
First, mesh networks can assign consistently short delivery distances to each item. This is because they don't have to stop at far-flung hubs, and can be "routed" (network path selection) to the most optimal path among many paths laid out between many nodes. As delivery distances are shortened, delivery times are proportionally reduced.
Delivery management systems 'must' collect continuous data
In a hub-and-spoke network, the infrastructure is expanded by "scaling up" (replacing and upgrading servers) to continuously increase the capacity of the hubs as the volume increases. As hubs become more dense, the square footage required grows exponentially. Since you need at least a few thousand square feet to handle large volumes, the capital intensity required grows exponentially as well. Worse, the speed of delivery is lost due to increased sorting and waiting times at larger hubs.
Mesh networks scale the infrastructure by "scaling out" (the idea of adding more servers to expand a system) by adding smaller nodes as the volume of goods grows, simply by plugging them into the existing network. Because the increased load is shared by all nodes rather than being borne by any one node, there is no spike in density on each node. This feature does not increase the sorting and waiting time at each node, allowing us to continue to maintain fast delivery speeds even as volumes increase.
The way to maintain speed and scalability when the origin and destination of goods are very closely intertwined in a small area of a city is to utilize a mesh network. However, it is very difficult to transfer this method, which works in the telecommunications industry through the medium of radio waves, to the logistics industry through the medium of vehicles.
Mesh networks have a very large number of nodes and terminals. It has the issue of managing "load balancing" at all times through continuous routing based on data collected in real time. In the telecommunications industry, all data is exchanged and collected in real time over the airwaves, so this is not an issue. However, this is where the current situation in the logistics industry becomes challenging.
Most transportation management systems (TMS) currently in use in the logistics industry collect data discretely, rather than continuously. Data is collected only when a specific event occurs, such as when a shipment arrives at a specific node or leaves a specific node. This approach to data collection is not feasible for mesh networks that require real-time load balancing.
Therefore, the first thing to implement a mesh network in the logistics industry is a real-time TMS. It is essential to have a system that can collect and stream all data in real time, including the time, location, and status of goods, vehicles, drivers, bases, and routes in the logistics process. Once you're able to collect data in real time, you're in the realm of load balancing through routing.
In the telecommunications industry, delays between nodes are measured in seconds, while in the logistics industry they are measured in minutes and hours. This difference in the scale of the observation world raises the issue that all of the default units for constructing routing protocols need to be reset for the logistics industry. The size, weight, speed, fuel efficiency, time-of-day traffic conditions, loading, unloading, sorting, waiting times at nodes, delivery capabilities of drivers, and a myriad of other units must be measured and reconfigured in the course of on-the-ground logistics operations.
The capability to solve these two technical problems is already inherent in the information technology (IT) industry, but the technology has not yet penetrated the logistics industry. I think it is a challenge worthy of the companies involved in the future.
The network topology of public transportation networks is a combination of various methods. However, there are many similarities with mesh networks in that they utilize many nodes and move people along optimal routes. If mesh networks are successful in urban logistics, the way goods move will be similar to the way we move through public transportation networks.
We look forward to the day when mesh networks are implemented in urban logistics, where large numbers of people can get anywhere in a metropolitan area within a few hours, and large quantities of goods can get anywhere in a metropolitan area within a few hours.
Resource: Shi-en Lee, The Korea Economic Daily (Mar. 27, 2003)
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