Radio Frequency Identification (RFID) is fast evolving as a major technology enabler for tracking sea freight around the world. Indeed, while other industries have experienced greater efficiency by implementing the technology, it is actually port operations where RFID is really starting to make waves.
RFID is essentially a system that wirelessly transmits the identity of a tagged object using radio waves. The systems being implemented today consist of three different components: tags, readers and the host computer system.
The tags are actually tiny radio devices, comprising of a simple silicon microchip, typically less than half a millimetre in size, which is attached to a small flat aerial. The device can be encapsulated in a variety of different materials, ranging from simple plastic labels to specially shaped screws inserted into crates.
The reader, also known as the interrogator or scanner, is responsible for sending and receiving radio frequency between the tags, through a special antenna. This has a major advantage over barcodes, because RFID does not require line-of-sight to operate. Instead, the tag can be read when hidden inside a consignment, eliminating the need for operators to physically scan anything.
This system allows containers to be monitored in an automated fashion throughout port facilities, with stock moving across the supply chain more efficiently, reducing out-of-stocks and lowering excess inventory in warehouses.
The Independent European Centre for RFID predicts that activity in the retail sector alone is likely to impact on around 200,000 manufacturers and suppliers globally and will further increase demand in the supply chain for hardware and ‘middleware’ to support developing logistics networks.
Having envisaged the business benefi ts of RFID early, major international retailers and organisations, including Wal-Mart and the US military, have adopted RFID tagging for pallets and case shipments. While these big names have certainly garnered much of the media spotlight, Joe Iarocci, director of Psion Teklogix in the Middle East, is keen to point out that it’s really the maritime industry and intermodal terminals that have led the way.
“Ports are our biggest customers,” he says. “They’re the ones who develop infrastructure first. Typically, there is a huge investment in port operations - just look at Dubai for evidence of that.”
A major driver for RFID application in the marine industry has been the security climate. The container security initiative (CSI), launched in 2002 by the U.S. Bureau of Customs and Border Protection, declared that ‘since terrorist organisations have increasingly turned to destroying economic infrastructure to make an impact on nations, the vulnerability of international shipping has come under scrutiny.”
Faiszal Al-Gharabally, CEO of Tagstone, a wireless solutions consultancy based in Dubai, explains that while RFID can add security to commercial shipping, it can also increase efficiency too.
“Unlike a port worker, electronic tags cannot be bribed and the coding is encrypted, so they cannot be duplicated,” he says. “By replacing paperwork with an RFID tag, a secure container can be recognised, its whereabouts tracked, you can see whether it has been tampered with, and automatically know whether it should enter the facility and be shipped.”
Al-Gharabally adds: “The gate pass would not rely on paperwork because the data would be stored electronically. We could even see a point where an x-ray scanner could confirm the container has been examined and automatically issue the gate pass to an RFID tag.”
Benefits in this respect are being felt further along the supply chain too. For example, if cooperating ports share this information, the electronic tag will inform port authorities that a container scanned in Dubai need not be scanned again when it arrives in the US.
“This is having an impact on ship turnaround times,” says Tarek Hassaniyeh, sales manager of Symbol Technologies Middle East. “These days, it is not just a matter of getting the cargo out, you have to provide a lot of information regarding the container, especially if it is going to Europe or the US. Having such information on a tag – and quickly and reliably being able to communicate that to the authorities - speeds the whole process.”
Whilst the potential benefits touted for the supply chain are frequently trumpeted, it is process management that has so far seen the keenest take-up. “The fastest growing use of RFID is currently in human applications,” Iarocci attests. “An airport facility in Asia is using RFID to track over 5000 workers, so it’s possible for managers to see where workers are at every stage of the day. This is a distinct leap from the swipe card system, which is open to abuse and, even when used properly, merely confi rms presence on the site.”
Al-Gharabally adds that benefits go beyond effi ciency management too. “There’s an offshore company we are working closely with in the region, which wants to track personnel on platforms and is using RFID to improve evacuation techniques,” he says.
The data derived from RFID enabled operations can provide managers with a quantifi able set of figures that can be used to improve decision-making and planning. However, the amount of data automatically generated can be vast, with some operations running to several terabytes per day - far too much for many existing IT infrastructures to cope with. Also, without having the proper systems in place to apply this knowledge, the acquisition of raw data alone will do nothing to improve performance, and in fact, may throw up further problems regarding information management.
Middleware applications are available that filter this data so realtime tracking can be digested. Through marrying technologies, logistics managers will be able to get the most from these systems; the cautionary caveat is the notion that tags and readers can do this in isolation has proved a common misconception. Iarocci uses the analogy of a golf bag: “There may be 14 clubs in the bag; you don’t play every shot with your favourite one. Just as a putter is best for the green and a sand wedge suited to the bunkers, RFID will perform where it is best placed to, but other technology, including barcoding, should be in the armoury too.’’
Disparate rates of implementation across global supply chains do, however, mean the humble barcode is likely to remain a key feature of shipping and freight management for at least the foreseeable future. That said, Balasubramanian Rajagopolan, managing director of Swift Freight International, issues a warning to logistics managers and freight forwarders who intend on playing a waiting game with RFID. ‘‘As more seaports adopt this technology, it will become diffi cult for freight forwarders who have not moved with this yet. Those who have already adopted the technology will be able to do tasks such as container tracking and clearance faster than those who haven’t.’’
Regional take-up rates differ for a variety of reasons, but low wage economies, unsurprisingly, seem the most reluctant to adopt RFID. ‘‘There are parts of the world where labour costs are so low it’s hard to convince people that the technology is worth investing in,’’ says Iarocci. “What they don’t see is that with the right application, technology can be more reliable; you can’t always just rely on bodies on the ground.”
To that end, inventory management throughout the Middle East, and third party logistics (3PL) operations from ports is already being automated via radio frequency scanning. From receipt of goods, right through to tracking, and shipping out, firms such as Swift have automated their processes.
Symbol Technologies’ Tarek Hassaniyeh confi rms the regional enthusiasm. “Certainly, Middle Eastern facilities are ahead of much of Western Europe with the implementation of this. Usually they are more cautious and would rather wait and see,’’ he says.
In talks with both providers and end-users, SFME found a consensus that at existing price levels RFID is mainly viable for pallet tracking, not per unit item, unless you’re dealing in high cost or security sensitive goods. Iarocci doesn’t see cost as a barrier for future take-up though. ‘‘Sure, this is currently a major factor, but in the next couple of years we’ll see tag costs drop dramatically,” he says.
Rajagopolan hints that the real takeoff with RFID, on a per unit level, will probably occur within the next three to four years, as more and more producers and retailers demand the capability from their suppliers.
This feeling is backed by the analysis of In-Stat, the technology market research experts, who predict that from 100 million tags shipped in 2005, the figure will be in the region of 2.9 billion tags by 2009. With the anticipated worldwide adoption of the technology, a ubiquitous global network of radio frequency enabled shipping will be with us well within a decade.
Although much of the media spotlight is focusing on lifestyle changing applications on a consumer level, it is obvious that huge benefi ts lay in wait for shipping companies too. ‘‘Now that shipping is consolidated, you could have a variety of goods in a 40ft unit, so you want to maximise the unit capacity and get as much in there as you can,” says Iarocci. “When the 3PL pulls that out, they can get it out quickly and immediately know where it needs to go and get that freight moved forward.’’
The progress made with RFID applications for the cargo business in the last few years has been substantial and will no doubt be key in adapting future port logistics. There are exciting times ahead for those willing to embrace the technology and its centrality to the sea freight market in the Middle East now seems assured.