RFID: The next generation

Dogged by an ugly acronym and an unclear developmental path, RFID (Radio Frequency Identification), has the potential to impact truck security, asset management and freight tracking exponentially. But if pushed too fast too soon, experts warn, it could wind up a mere technological footnote, written off as expensive gadgetry that couldn't deliver on its promise. The one truly positive impact for trucking

Dogged by an ugly acronym and an unclear developmental path, RFID (Radio Frequency Identification), has the potential to impact truck security, asset management and freight tracking exponentially. But if pushed too fast too soon, experts warn, it could wind up a mere technological footnote, written off as expensive gadgetry that couldn't deliver on its promise.

“The one truly positive impact for trucking will come in terms of improved asset utilization when those assets are equipped with tags and their movements can be tracked in greater detail and reacted to more quickly,” says Marc Mitchell, transportation practice director for Enterprise Information Solutions, a technology consulting company.

“From a pure trucking perspective, RFID on assets will be far more important than RFID on shipped goods,” he points out. According to Mitchell, putting RFID tags on the freight itself will have very little benefit in terms of operational efficiencies for fleets or quality of service to their customers when compared to identification technologies like barcodes. “Don't get carried away by the hype,” he adds.

WATCH THE HYPE

Dick Schnacke, vp-industry relations for tracking systems provider TransCore, also cautions that the hype over RFID can be very seductive, especially when it comes to finding a cheap and fast way to unobtrusively beef up transportation security. “The rail, truck fleet and intermodal industries have had a hard time justifying on economic grounds the use of RFID, [yet] the push to improve security is beginning to break down the old arguments and create a home for this technology,” he says.

“Once an electronic tag or seal is installed on a container or truck for security reasons, the peripheral benefits will begin to be seen. RFID-based seals could prevent unauthorized access to a container or trailer, controlling undesired goods movement in both directions,” says Schnacke. In other words, it can be used to prevent a bomb from being put onto a trailer, as well as to keep cargo from being stolen. RFID seals offer one solution for two problems.”

Georgia Southern University Professor Bob Cook, a specialist in transportation technology issues, goes several steps further, proposing that the federal government use RFID devices to track commercial trucks. “Homeland security officials are still looking for a system to keep track of the massive volume of [truck traffic],” he observes. “I'm proposing that we create a system linking RFID devices, truck weigh stations and law enforcement vehicles together to gather information for a national truck tracking center.”

$15 A POP

Cook suggests attaching a small RFID tag — costing just $15 a pop — to each tractor and/or trailer. Every time a vehicle passes through a weigh station, an electronic reader would feed the location to a national truck-tracking computer system, he explains. Cook also proposes equipping law enforcement vehicles with RFID sensors, so they could collect truck-tracking information in the normal course of their patrols and transmit it back to the central computer system.

Cook has already assembled a prototype system and says he successfully tested it at a weigh station on Interstate 16 near Savannah, GA. He worked with the Georgia Ports Authority (GPA), a trucking company and a major retail distributor on this pilot project and believes that in addition to providing homeland security data, this RFID-based system would also allow legitimate customers to more easily and uniformly track deliveries.

RFID is not new technology, but Cook's proposal is a new application, says Tom Armstrong, director of strategic development and information technology for GPA. “As the technology matures and a national infrastructure is developed, the creative uses will grow,” he says. “That's why RFID is catching fire in the transportation industry.”

Keeping that fire lit, however, is a very different story. Potential drawbacks include cost, as well as current and future capability of the technology.

RFID can be used passively or actively. In the former, freight is outfitted with tags that send information only when they come within range of an RFID scanning device, or reader. In the latter, active tags, i.e. those powered by batteries, are attached to tractors, trailers, containers, etc. and used to track and manage the transportation asset itself.

According to Brent Forden, alliances manager for Provia Software, truckers are pretty much left out of the loop in the passive-tag scenario. “Passive tags only send out a signal when they are in close proximity to an RFID reader, which typically is built around a warehouse door or some other freight gateway and reads the freight as it passes though,” he explains.

FEWER EYEBALLS

In this application, shippers are trying to use RFID to cut costs and increase inventory accuracy. “The potential benefit is that you are reducing the labor necessary to keep accurate track of goods in transit. You reduce the hassle of confirming with human eyes that 45 cases of XYZ freight arrived at the right destination,” says Forden.

In reality, however, “the scanning technology isn't 100% effective, reading perhaps [just] 20% to 30% of the tags. So the gains from this form of RFID are still several years away,” says Forden.

Despite that technology lag, passive RFID is being pushed vigorously by mega-retailer Wal-Mart and the U.S. Dept. of Defense, both of which mandate that their suppliers use RFID tags on cargo.

But wielding RFID like a cudgel may not be producing the expected results, says Deryk Powell, COO for Velociti, an RFID system installer. “Using RFID requires nothing short of a complete business redesign; it turns the traditional thinking of the freight business model on its head,” he explains. “While RFID tags can make more information available about shipments and reduce the labor needed to verify data about them, it's super-sensitive … to other wireless systems and electro magnetic interference. It's still an emerging technology.”

Nonetheless, there are some compelling reasons to pursue RFID, adds EIS' Mitchell. “[It] has the potential of bringing a much greater level of detail to the tracking of materials and inventory throughout its journey through the supply chain than is possible with other existing technologies,” he says. “It's now practical to expect piece-level visibility from manufacturer to store shelf and consumer shopping cart without a massive human process and compliance effort.”

BEYOND COMPLYING

Many shippers view the demand to use RFID tags as just another cost of doing business with mega-size retail operations. They don't really consider the potential returns that RFID can provide, adds Provia's Forden. “Long term, the goal is to vastly increase the accuracy of what you are shipping with less labor,” he explains. “[RFID] allows you to correct inventory errors and make the human element guiding inventory more accurate with less skill and thus less cost involved. But we've been in the crawl phase for some time now. Hopefully, as retailers [become more] comfortable with the technology, they'll see ways to use it where the RFID investment can gain them cost savings.”

It's active RFID, however, that has captured the attention of fleets because of the potential to improve both asset productivity and security.

PILOT PROJECTS

Truckload carrier Celadon Group and TNT Logistics North America are both starting up active-RFID pilot projects this year. Phase One of the Celadon project focuses on yard management, while TNT is using the technology to better manage a “closed loop” network for delivering components to automotive production plants.

“Active RFID tags should provide us with a critical outbound perspective of our units. [We can make sure] we have the right trailer and tractor connected before they leave the yard,” says Rick Hainlen, Celadon's director of research and development.

“It's far more critical to get an exact read of the tractor-trailer before it leaves our yard, particularly since we do so much cross-border business in Mexico,” he says. “We also expect RFID will help us better identify which trailers are loaded and which are unloaded, to improve yard productivity overall.” RFID allows personnel to use hand-held barcode scanners to quickly take trailer inventory, rather than having to log each trailer manually on a clipboard and compare it against a master list.

Phase two of Celadon's RFID initiative involves linking the active RFID tag into the carrier's Qualcomm satellite communication system. This will enable the carrier to double-check the location data for each of its units, while giving customers more accurate updates on delivery delays, especially if a tractor-trailer gets tied up at the border.

“The tags themselves are rugged enough; it's getting the tags on all of our equipment that's a challenge,” Hainlen says. “We think 80% of the fleet can be tagged easily. But getting the remaining 20% — scattered throughout the country and in Mexico — is the hard part. However, we hope to be well on our way within five years.”

Terry McIntyre, manager of technical services at TNT Logistics, notes that getting a “big picture” view of the fleet without extra data entry on the part of personnel is perhaps the biggest benefit from RFID. TNT is equipping 18 tractors and 45 dedicated trailers with active RFID tags to more accurately manage the flow of time-sensitive materials for an automotive plant customer.

REAL-TIME VISIBILITY

“It helps streamline the communication process with drivers,” says McIntyre. “With RFID we know exactly when trailers depart, arrive, are loaded and unloaded. We are talking about a plant that can shut down if they are short just one out of the 800 components we deliver for them every day. So we are getting real-time visibility without involving the drivers, dock workers, etc.”

McIntyre stresses that as a closed-loop delivery system, RFID can only provide data within the established reader “grid.” In the longhaul environment, RFID tags lose their communication link. However, Celadon plans to avoid that pitfall by eventually integrating its active RFID tags with the Qualcomm satellite communication system already onboard its vehicles.

DOES AND DOESN'T

This is why EIS' Mitchell stresses that RFID is not an “instead of” supply chain technology, but rather an “enhancement” for existing systems. “It's important to realize what RFID does and doesn't do,” he says. “One of the things it doesn't do is replace the existing communication channels we have today,” he says.

“What RFID is going to do is help create the chain of custody within the supply chain,” explains APL's Cavage. “It's going to link the asset, be it a trailer or ocean container, to not only the freight inside but also to the electronic seals that lock the doors. That's going to combine security, inventory, and asset management together in one package. That's the attraction of RFID.”

“The potential for RFID to fundamentally change the way we manage supply chains is now beginning to be realized,” says David Lim, CEO for ocean-shipping giant NOL Group, the parent company of APL Logistics. “The RFID world is not one-size-fits-all. What works for one product in one setup may not work for another. But the focus has moved from the costs and technical challenges to the value of RFID, and how companies can implement this technology to enhance their corporate earnings. This is at the heart of RFID for the future.”

Pooling patents

To streamline the RFID development process, and thus bring more advanced technology to the market faster, 20 vendors have formed a “patent pool” consortium to share RFID licensing.

Erik Michielsen, director of RFID studies at consulting firm ABI Research, the consortium is intended to simplify user access to RFID intellectual property.

RFID firms identified as founders of the group include Alien Technology, Symbol Technologies, Avery Dennison, Thingmagic, Moore Wallace, AWID and Zebra Technologies.

Missing from the consortium altogether, however, is Intermec Technologies. According to ABI Research, Intermec “has been at loggerheads with end-users and other industry players over its insistence on tightly controlling licensing of a number of important core patents it holds.”

But Michielsen points out that “regardless of how Intermec's intellectual property issues are resolved, there are dozens of others in the market that are looking to profit from this licensing pool. They've spent large amounts of money on R&D and they want to be rewarded for that investment,” he adds. “Because of the number and disparity of such patents, the industry — in the absence of a process like the one now beginning — would be heading for stagnation and quagmire.”

The new group, says Michelsen, provides a clear migration path for future technology development and should extinguish user concerns about RFID intellectual property.

There are still some unanswered questions, however. One is the role of silicon manufacturers such as Texas Instruments and Philips, which are critical to the industry and yet not represented in the list of charter consortium members.

Another is whether the absence of Intermec's 140-odd critical patents from the consortium's license plans would significantly reduce the group's clout. “With or without Intermec,” Michelsen says, “the number of patent negotiations will be reduced from potentially hundreds down to a handful. If need be, companies can still address Intermec licensing on a one-to-one basis. The market will still move forward more quickly.

“RFID is about integrated solutions,” says Michielsen. “It's not about stand-alone companies taking ownership of the whole marketplace. Companies need to build cooperative solutions to move this market forward, and this is yet another example of how companies are working together to create more sustainable and scalable RFID solutions.”

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