Urban logistics operations have become more complex and problematic for cities. The last mile delivery situation, driven by the growth in e-commerce purchases, is creating congestion and sustainability problems that cities must address if they are to meet the expectations of their citizens for a socially enjoyable and sustainable living space. This chapter explores the potential restructuring of how cities manage their infrastructure to achieve these objectives. Building on the fact that cities have increasingly built intelligence into their infrastructures through the installation of sensors, the chapter proposes using the example of the digital Internet to model and manage the various physical flows that arise in a modern city. In particular, the chapter outlines how the concept of the Physical Internet might be applied to urban logistics and last mile delivery operations to realize greater efficiency and effectiveness in these operations, thus reducing social and environmental impacts as well as costs.