Knowledge Post: Logistics Standardization Drives the Transformation of Smart Logistics

The greatest inventions of the intelligent era are built upon standardization.

What transformed the world was the value of containers as a means of transport, not the mere existence of an iron box. It’s hard to imagine that, before containers, goods were shipped in sacks, baskets, wooden barrels, and the like. Upon arrival at port, dockworkers would embark on a long and laborious sorting process; since the cargo was often unpackaged, it was highly susceptible to theft. And the advent of the shipping container changed all that.

The father of the shipping container was an American named Malcolm McLean.

McLean and the Port Authority of New York conducted an experiment: when shipping beer, they first transported it in bulk—loading it onto trucks at the factory, then reloading it at the terminal for shipment onto the vessel—at a rate of four U.S. dollars per ton. By contrast, using containers—packing the beer directly into containers at the brewery and shipping them straight to the terminal—the cost was just twenty cents per ton. The resulting cost savings were as high as 95%, heralding a massive, entirely new opportunity for the shipping industry. First, ships and handling equipment were retrofitted to accommodate containers, marking the initial step toward intermodal connectivity; second, by focusing exclusively on containerized transport as a standalone business, McLean became an industry leader within his lifetime.

On April 26, 1956, the first container ship, the Ideal X, set sail, ushering in a new era for the global shipping industry—this is the story of the container.

Containers have transformed the world—what reshaped it was innovative thinking, standardization, and a comprehensive systemic approach. The advent of containers boosted transport efficiency and cut costs; far from causing job losses among port workers, it actually reduced their physical workload and increased employment rates. Today, containers are primarily used in maritime shipping, yet their original invention was linked to road transport. Following World War II, as economic growth surged and the automotive industry boomed, mounting traffic congestion prompted the idea of loading trucks onto ships. Subsequently, thanks to the large-scale, standardized advantages of containerization, costs and freight rates declined, enabling its gradual globalization.

01 The greatest inventions are built upon standardization.

The standardization of information‑flow interfaces gave rise to the Internet: the Internet is one of the greatest inventions of our time, built upon the standardized transmission of information flows.

The Hypertext Transfer Protocol and the Hypertext Markup Language are the cornerstones of the Internet, forming the foundation for the interconnection and interoperability of information flows across the network.

Standardizing physical logistics interfaces will change the world. : Logistics is the physical movement of goods, which is far more challenging than the transmission of information. What changes would result from the standardization of interface protocols across physical logistics networks? Consider how the shipping container transformed the world.

What interface standards underpin the interconnectivity of smart logistics? Just as data transmission requires standardized protocols and mappings of data units, the seamless interoperability of smart logistics systems first necessitates the standardization and unification of physical‑object units, establishing standardized interfaces for the physical network. Second, physical units must be mapped to their digital counterparts, with each logistics unit assigned a digital identity. Since physical goods are in constant motion, they also require a digital pass to facilitate their movement. Furthermore, the management of smart logistics operation systems calls for unified communication interface standards for intelligent hardware.

Five-character mnemonic for logistics operations :The Five-Character Formula of King of Logistics Operations: Stroke, hook, flick, sweep, and store.

Logistics network across system units : In logistics operations, the most fundamental unit of load within cross‑logistics systems is the pallet. Pallets serve as the critical operational unit for the mechanization and automation of material handling, the basic storage unit in warehousing systems, and the foundational data‑capture element in logistics information systems. Consequently, pallet standardization marks the starting point of unitized logistics.

The development path of logistics standardization is as follows: :
1. Standardization and unitization of “product” packaging specifications; 2. Standardization of the “flow” process; 3. Standardization of the supply chain; 4. Standardization of the “network” ecosystem.  

02 Unitized packaging Standardization of “Unit Specification Dimensions of Products” Unitized packaging :

Packaging that conforms to standard unit‑based specifications is referred to as unitized packaging. Containers serve as large‑scale packaging units in international ocean freight; truck‑load transport employs vehicle‑carried packaging units; pallets and palletized crates (or cages) constitute the most fundamental packaging units within logistics systems; standardized shipping containers represent medium‑ and small‑size standard packaging units; and individual‑item packaging is the smallest packaging unit. All such units should be anchored by pallet standardization, with the modular dimensions of product packaging, reusable transit containers, and shipping containers aligned and coordinated with pallet standards.

Standardization of objects : Starting with pallet standardization and leveraging pallet pooling and sharing, we can drive the standardization of unit‑level packaging, standardized logistics crates, freight carriages, shipping containers, shelving storage units, and related facilities and equipment throughout the upstream and downstream segments of the logistics system.

Standard Instrument : The concrete norms and standardization lay the groundwork for abstract generalizations at the metaphysical level, for the digitalization of logistics, and for the networking, intelligentization, and smartification of logistics systems.

03 Standardization 2.0: The standard unit of matter becomes a mobile unit.

Just as the hypertext protocol standard laid the foundation for the Internet, standardized building blocks—logistics containers—have transcended their physical form. Complex and diverse cargoes are transformed into standardized units that circulate across various logistics networks, and this circulation itself requires standardized procedures. This is what we call Standardization 2.0: logistics process standardization, which takes palletized transport as its entry point and leverages automation, mechanization, and intelligent technologies to advance the standardization of logistics operations on the basis of pallet standardization.

Standardization of Business Handover Procedures : Using pallets (or reusable containers) as the unit of order placement and handover in commercial flows, we standardize goods‑handover processes to minimize “pallet‑to‑pallet” or “container‑to‑container” transfers and enable seamless, inspection‑free handovers, thereby boosting efficiency. Standardizing service processes: By leveraging pallet standardization, we drive the standardization of logistics service workflows, enhancing the customer experience, reducing cargo damage and losses, and delivering tangible value to our clients.

Shangqiao Unitization : On medium- and short-distance routes, Shangqiao has tackled cost and efficiency challenges by deploying modular, compartmentalized vehicle units. This model, which the company markets as a “bus‑cargo van,” has delivered highly promising results in its first few months of operation. According to Chen Fengyu, in terms of costs, the bus‑cargo van is 35% cheaper than dedicated freight services and 50% lower than those offered by peer network‑based companies.

04 Standardization 3.0: Assigning Digital IDs to “Units of Things”

Unified Cargo Unit Code : Assigning a unique code to standard cargo units is akin to issuing them an ID card for the digital world, enabling the integration of cargo information, financial flows, and commercial transactions into a single, unified information stream. This creates a seamless link between physical and digital data, connecting upstream and downstream enterprises and forming a supply chain—marking the transition into the supply-chain stage of development.

A cargo unit also serves as an information unit, a measurement unit, and a standardized building block for logistics and supply-chain optimization. Item coding is the digital representation of physical objects and forms the cornerstone of supply-chain informatization and standardization, necessitating uniformity. Currently, however, there is a proliferation of disparate coding systems; establishing a unified national logistics‑unit coding framework has long been a priority I have championed. When selecting an item‑coding standard, the GS1 system stands out for its global consistency, unique identification, and broad applicability, earning recognition and endorsement from numerous international bodies, including the United Nations Economic Commission for Europe and the European Union. China has been promoting the GS1 system for more than two decades, and the development of a robust supply-chain infrastructure should build upon this foundation to create a unified item‑coding and identification system.

Achieving full-process digitalization: The key distinction between digitalization and informationization lies in the fact that data originates not from manual input but is automatically collected. The primary means of data acquisition is leveraging IoT sensing technologies, enabling simultaneous perception (collection), presentation, and analysis. This is the essence of digitalization, which in turn gives rise to big data. How should we define the granularity of data sampling during data collection? Clearly, logistics units serve as a critical foundation for data acquisition. By taking standardized logistics units as the objects of data collection and using coding as the interface that bridges the physical and digital worlds of these units, we can realize the digitalization of logistics processes and drive the development of smart logistics.

05 Standardization 4.0: Issue a network pass to the object’s unit

In the era of the Internet of Things, the internet will inevitably become more closed. : 
The Internet of Things is propelling the internet into the era of the industrial internet. As units of information, measurement, handover, circulation, and data, logistics units link physical assets with critical property‑rights information. In a market economy, every independent market participant has its own property‑rights boundaries, and corporate confidential information cannot be shared across the entire network. Consequently, the industrial internet is inevitably moving toward a closed‑loop architecture.

Smart manufacturing and smart logistics require the interconnection and interoperability of the logistics internet. :

The industrial internet is becoming increasingly closed, yet smart manufacturing and intelligent logistics inherently require seamless integration with it. To strike a balance between safeguarding information security for all market participants in the smart era and enabling interconnectedness, it is necessary to issue digital network access credentials and establish clear rules governing the interconnection between internal and external networks of each stakeholder.

The digital pass for the logistics internet is the electronic waybill. :

A standardized electronic waybill based on the unit of goods serves as a seamless “digital pass” within the parallel logistics network clusters of the logistics‑internet era. Building on the standardization of cargo units, digital identification codes enable integration across both air and ground networks, while standardized electronic waybills (network passes) break down information silos in the industrial internet. On this foundation, end-to-end logistics chains—encompassing multimodal transport, warehousing and distribution, sorting, and last‑mile delivery—are fully interconnected, while simultaneously linking manufacturers, wholesale distributors, brand owners, and end‑users. This holistic approach realizes a “single document from origin to destination” across the entire logistics value chain. In the e‑commerce logistics sector, electronic waybill standards have already taken the lead: by establishing a “digital pass” for e‑commerce logistics and advancing the standardization of electronic parcel waybills, they have directly propelled the intelligent transformation of express delivery and logistics, even catalyzing fundamental changes in the organizational models of express‑delivery enterprises.

06 Driven by modularity :Digitalization + Networking + Intelligence

Development Path of Intelligent Manufacturing : The Chinese Academy of Engineering organized a major research project on the development path of intelligent manufacturing in China, with nearly one hundred academicians participating in discussions and field investigations. The former president of the Chinese Academy of Engineering, speaking on behalf of the Academy, unveiled China’s next-generation theory of intelligent manufacturing. At the heart of this work is the proposal of a clear development pathway for intelligent manufacturing in China. :Digital manufacturing – digital + networked manufacturing – digital + networked + intelligent (next-generation smart manufacturing).

Development Path of Smart Logistics : Drawing on the fundamental principles underlying China’s smart manufacturing development path, we propose a roadmap for the digital and intelligent transformation of China’s logistics: Digital Logistics → Digital + Networked Logistics → Digital + Networked + Intelligent Logistics → Smart Logistics. Based on the preceding analysis, unitization serves as the foundational pillar of digitalization; the standardized coding of logistics units functions as a digital identity that seamlessly connects the “ground network” with the “sky network.” Building on this unitization, the standardization of electronic waybills provides a digital pass for the logistics internet, establishing the cornerstone of networking. Only through digitalization and networking can intelligence—and ultimately, true smart logistics—become feasible.

07 Smart Logistics : Establishing Three Major Smart Logistics Systems Based on Modularization

1. It is the cognitive system of smart logistics—akin to the “brain” of smart logistics—and is currently transitioning from digitalization toward programmatic control.

2. It is the information transmission system of smart logistics, serving as its nervous system. Currently, it is evolving from “Internet Plus” toward AIoT.

3. It is the execution system of smart logistics, akin to the hands and feet—i.e., the operational subsystems—of smart logistics. Currently, it is transitioning from automation toward flexible automation.

08 Job Execution : Promoting the development of logistics automation and unmanned technologies through modularization
The Five-Character Formula for Homework :Separation, assembly, relocation, transportation, storage

1. Automated Sorting Technology: Robot picking, automated conveyor sorting, voice‑guided picking, and goods‑to‑person picking, among others;

2. Intelligent Material Handling Technology: Through autonomous control technologies, intelligent material handling and autonomous navigation are enabled, endowing the entire logistics operations system with high flexibility and scalability—examples include transport robots and AGVs.

3. Automated Storage and Retrieval System Technology: An automated storage system, integrating technologies such as shelving systems, control systems, automated sorting systems, and automated conveying systems, achieves mechanization and automation across operations including automated storage and retrieval, order picking, material handling, and sorting.

4. Smart Freight Equipment: Freight Internet of Vehicles, intelligent trucking systems, drone systems, and delivery robot systems

09 Operating system : Hardware resource virtualization, with programmable management processes

At the hardware level, operations are primarily categorized into two types: operational facilities and equipment, and the cargo being handled. Operational facilities and equipment mainly include… : Warehousing facilities, warehousing equipment, freight‑handling gear, material‑handling equipment, and the like; the objects of operations are various types of goods. Virtualization of facilities and equipment: In line with the principles of modularization and standardization, the virtualization of logistics facilities and equipment resources is achieved by defining standardized functional modules for logistics operations.

The Five-Character Formula for Logistics Operations : By categorizing logistics facilities and equipment according to five core functions—sorting, consolidation, handling, transportation, and storage—and by standardizing functional modules based on the granular sub‑functions of logistics operations, it becomes possible to virtualize logistics facilities and equipment resources. On this foundation, management processes can be programmed, enabling the Logistics Brain to manage and dispatch intelligent hardware functional modules.

Unitized cargo virtualization :  Based on the principles of modularity and standardization, goods can be categorized into unit types such as individual items, standard cartons, pallets, and containers. By leveraging digital identification and network‑based permits, these cargo units can be virtualized, enabling programmable management and control of logistics operations.

Hardware resource virtualization digital technology : The teaching model for logistics hardware resource virtualization can leverage modern digital twin technology—virtual replicas of physical objects created in a digital format—to simulate their behavior in real-world settings. By establishing an integrated digital‑twin‑based logistics system that spans the entire operational workflow, it is possible to digitize the end-to-end process, from order picking and consolidation through warehousing, storage management, sorting, outbound processing, and last‑mile delivery. This approach elevates logistics model innovation, efficiency improvements, and the development of smart logistics infrastructure to a new level.

10 Smart Logistics Applications : The Internet of Everything, Hardware Awakens

At the application layer, the first step is to achieve ubiquitous connectivity, enabling real-time transmission of intelligent decisions generated by control-layer software to facility‑level functional modules and standardized cargo units. This triggers an “intelligent awakening” in hardware resources such as operational equipment and handled items. Through software‑driven control and empowerment, it enables smart management across diverse logistics operation scenarios and application environments, while fostering the integration of the logistics network’s aerial and ground infrastructures to realize intelligent, end‑to‑end operations. Thereby enabling the operating system to awaken, with the logistics brain orchestrating unmanned and automated systems. ;Once a cargo unit is “awakened,” it knows its origin and destination, enabling it to communicate with the logistics brain. The operations system seamlessly coordinates and transitions loading, unloading, and handling across cargo units, relying on standardization and automation.