I. Introduction and Summary

A. The Context for this Paper

Freight identification technologies are transaction-oriented tools: their purpose is to collect, record, or deliver data about events and process states—to perform source data automation. Over time they have grown from stenciled labels and paper documentation; through linear and two-dimensional barcodes; through passive license-plate-like radio frequency tags and more capable tags capable of holding specific shipment data; to integrated mobile location determination and two-way digital communication capabilities. Each capability has benefits and value in mode- and user-specific niches. However, there is also a clear long-term trend toward more automatic process- or event-triggered tools that do not need human intervention.

The use of freight and related identification systems is expanding in all modes of transportation and in many logistics applications. There is an increasing number of applications and approaches and a limited standards regime in place. Many people share a sense that more harmonization of approaches would make sense, yielding economies of scale that would drive down total system costs and produce more logistics and transportation operating efficiencies. However, to date this philosophical tilt towards harmonization has been matched only with limited albeit worthwhile action in communities such as ITS. Quite understandably, most constituencies continue to act primarily in pursuit of their own interests, adopting unharmonized, often unique approaches.

One can argue that it remains to be demonstrated that there are concrete business benefits to be derived from further harmonization of freight identification systems. If a broad, shared conviction existed about the reality and significance of such benefits, then that conviction would be reflected in greater investments of time, energy, and money by key leaders to broaden the scope of their freight identification efforts and harmonize their approaches with other communities. If more business and agency leaders were convinced that the benefits were real and significant, harmonization challenges would be further on their way to successful resolution.

This paper does not identify potential first and second order benefits of greater harmonization. Its goal is to facilitate a dialog about such benefits among groups of different experience and different backgrounds. The paper discusses trends in freight identification technologies with the focus on the use of such technologies, not their technical details. This is a paper on the business context for and logistics implications of developments in freight identification technologies. Given the constraints of time and space, the main focus is on US firms and practices, even though there is a significant international dimension to the issues.

B. Harmonization and Interoperability

An underlying theme of the paper is about fostering greater harmonization among freight communities in their use of freight identification technologies. Related terms include standardization, compatibility, and interoperability. Exploring the relationships, nuances, and implications of these terms is worth a separate paper and is beyond the scope of this one. However, there are several relevant points.

The application of freight identification technologies can be considered on three levels: physical hardware and software, operating practices, and business processes. Standards generally address the first level, that of fundamental device design or performance, of data definitions, and of software or telecommunications processes. Adherence to hardware and software standards generally assures no more than physical compatibility—that vendor A's reader in the lab can read vendor B's tags if both adhere to the applicable standards. This is insufficient for interoperability.[1]

Interoperability is the ability of different equipment and processes to work together seamlessly in the field. Interoperability requires consistent operating practices and effective business process agreements.

Operating practices cover issues such as tag and reader placement. As an illustration, U.S. and European railroads are using compatible radio frequency tags for car identification, but the U.S. railroads place two tags on the sides of their cars while the European railroads place one tag underneath their cars; these systems are not interoperable.

Business practice agreements often concern policy and financial coordination. For example, adjacent states may use the same standards for their electronic toll payment tags, and may also require the tags to be mounted and read in the same manner. Unless the states have agreed to integrate their accounting and settle payments, a truck passing from one state to the other still would require two "identical" tags. Interoperability would mean one tag and one account per truck.

Harmonization is about moving towards interoperability. For example, in the face of incompatible legacy systems, harmonization could mean agreeing to develop a "super reader" capable of interrogating otherwise incompatible tags. Harmonization could also mean establishing a new common standard toward which both legacy systems would migrate in the future.

Harmonization can be addressed in small bites or big ones: for example, among regulatory clearance bodies in an interstate highway corridor; or among all modes of transportation concerning Customs clearance; or across electronic toll collection, regulatory clearance, railroads, container carriers and the DOD. Choices would reflect judgments about strategy and tactics. Ideally, one would have a long range strategic framework for harmonization and pursue the goal with a series of more manageable but still cumulative projects.

There are, of course, powerful impediments to harmonization and interoperability, and they must be addressed in harmonization strategies and project. The impediments include:

• Legacy problems of an installed base
• Problems of scale and consistency
• Radio frequency choice
• Lack of clearly defined benefits attributed to greater interoperability
• User focus on short-term requirements
• Concerns about government intrusion and regulation

C. An Overview of the Paper

The principal enabler for improvements in freight identification technologies has been and continues to be the rapid changes in information technology—the growing capability and declining prices for computer processing power, data storage, and telecommunications. An important source of demand for improvements is the trend towards supply chain integration, the weaving together of business processes and information flows of suppliers, carriers, and customers in search of more efficiency, faster cycle times, and greater flexibility.

The Intermodal Freight Movement Process. Freight terminals and intermodal exchange locations are the most critical areas for freight identification processes. Transactions tend to happen in terminals. Complexity and opportunities for error concentrate in terminals.

Although shippers are concerned with their freight, many carriers spend considerable effort on and apply technology to identifying and tracking transportation equipment. The relationship between an item of freight and its means of conveyance is one aspect of a more complex situation.

Freight shipments are characterized by multiple nesting relationships, especially as small shipments are consolidated into larger units, combined on pallets, and stuffed into containers. An important challenge for freight identification technologies and supporting databases is to establish and maintain accurate and transparent relationships across the layers.

Freight Identification Trends and Strategies. As indicated earlier, there is a long-term trend toward more automatic process- or event-triggered tools that do not need human intervention. This trend is reflected in three overarching strategies, each with a freight and a network component.

• Mute Freight in Deaf Networks. This strategy is built around manual intervention, whether to record freight item information or to adjust operations in the freight shipment network. Although far from finished, its decline began partway into the information technology revolution, perhaps in the 1970s.
• Talking Freight in Listening Networks. The dominant feature of this strategy is the use of license-plate-like technologies that can be identified or read automatically—license plates that can "talk" to their readers. Their unique identification numbers are the keys to cross-referencing detailed shipment data in shipper, carrier, customer, or regulator databases. Network nodes are equipped with readers or interrogators that can capture transaction data or "listen" with little or no human intervention. This strategy is the state-of-the-art of good logistics practice today.
• Smart Freight in Smarter Networks. Smart freight means smart data and communications tags on moderate to high value shipments. The tags would include the ability to carry shipment-specific detail data, some processing power or decision capacity, and probably real-time location determination capability. Smarter networks would build upon improving decision support tools and add tighter, more transparent integration of source data, models, analytic tools, and user interfaces. A key feature of this strategy is the distribution of intelligence around the network, including with items of freight. Realization of this strategy depends on further advances that improve the capabilities and reduce the costs of information technology.

Transportation Modes and Freight Communities. Developments in freight identification technology are best addressed from two perspectives:

• Transportation modes.
  • Railroads. The only mode with a mandatory standard for automatic equipment identification, major American railroads and their customers have not realized all of the potential benefits of their system. The principal limitations appear related to installation strategies for tag readers and integration of data flows by some railroads.
  • Intermodal Container Carriers. Although there is a voluntary international standard for container identification tags, only one carrier implemented it on all of their containers. Another carrier is placing tags on container chassis. A third is looking forward to inexpensive Global Positioning System-based tags. Barring a major surprise, the existing standard seems likely to remain of little importance.
  • Air Freight and Small Package Express Carriers. Both groups depend heavily on their own unique systems. The small package carriers do an excellent job tracking package movement.
  • Motor Carriers. This is the most complex mode in terms of freight identification and related technologies. Large long-haul truckload carriers usually have superb fleet management capabilities drawing upon integrated real-time location tracking and two-way mobile digital communications. Less-than-truckload carriers, draymen, and pickup and delivery services have different profiles.
• Freight Communities
  • Shippers and Hubs. Shippers are the entry point through which transportation carriers become involved in supply chain integration. The demand for highly reliable time-certain transportation and distribution services helps drive shippers' attention to freight identification technologies.
  • Hazardous Materials Movements. Effective emergency response to hazmat accidents and incidents depends on fast access to detailed knowledge about the specific materiel involved in the incident. The best approach at this time does not depend on sophisticated freight identification technologies such as radio frequency tags.
  • Strategic Mobility and National Defense. DOD requires excellent access to detailed logistics information most of all when its forces operate in austere, chaotic, or potentially hostile environments. This translates into the use of high capacity radio frequency data tags that can carry up to 128 KB of shipment details. DOD is conducting parallel tests of these non-standard tags in different functional settings, and it is playing an important role in adapting related equipment identification standards.
  • Regulatory Facilitation and Customs Clearance. This is the Commercial Vehicle Operations segment of Intelligent Transportation Systems. Elements include electronic clearance of trucks, exchange of safety and fuel tax information, and relate closely to electronic toll payment. Most successful harmonization efforts are focused on major Interstate corridors, but a broader approach is nearing fruition to develop a national standard for Dedicated Short Range Communications.

Freight Identification Technologies. Most of the discussion concentrates on two non-contact technologies that show the most growth: radio frequency tags (RFID) and long range communications and location determination. Two highlights are:

• Dedicated Short Range Communications (DSRC). These vehicle-to-wayside technologies are commonly thought of in connection with ITS Commercial Vehicle Operations, where the DSRC standards activity is focused. There are two larger compatibility issues. The first, expansion to incorporate the developing European and Japanese DSRC standard, is on the agenda for the U.S. standards effort. The second, inclusion of the international container and related standards, is not on the agenda.
• Long Range Communications and Location Determination. There are about 400 positioning and navigation systems on the market and more on the way. Telecommunications forecasters expect the penetration of these tools in the U.S. long-haul truck market to grow from 15% this year to 40% in 2005. This forecast may understate the total growth because it does not consider a new market for untethered trailers and containers.

Looking Forward. The current array of modal and freight community approaches to freight identification technologies is high on variety and low on harmonization and interoperability. Although progress towards harmonization is possible, the fundamental diversity is likely to persist for some time—diversity in tags, in information systems, and in telecommunications.

Movement towards "smart freight in smarter networks" will tend to encourage harmonization by reducing some of the technical barriers to interoperability. However, even if "smart freight in smart networks" transforms the definition of good practice, it will not eliminate the diversity in freight identification approaches. People who support harmonization and interoperability are assured of a long-term challenge.

• Key Enablers of Coming Changes. Three developments or trends are most likely to change the definition of good logistics practice. The first is auto-networking tags, which would automatically handle some of the freight nesting relationships, such as adding or removing a pallet from a container. The second is the development of cheaper, smarter real-time tracking tools, which would permit widespread tracking of untethered trailers and containers. The third is the overall trend towards miniaturization and functional integration, which promises more capable, less expensive embedded microprocessors—which are key to implementing a strategy of "smart freight in smarter networks."
• Impediments to and Tools for Change. The June 1998 Freight Identification Technology Workshop is one opportunity to overcome the impediments to greater harmonization and interoperability of freight identification. Some of the approaches most relevant to that forum and beyond are:
  • Clarify user requirements and how they may change
  • Articulate potential benefits of harmonization
  • Accumulate lessons learned and success stories
  • Identify projects and activities to focus energy
  • Establish ways to follow-up and maintain communication

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