Electronic Cargo Seals: Context, Technologies, and Marketplace
3. The Electronic Seals Marketplace
We scanned the market for electronic cargo seals that are in use, test, and development. Major sources included web searches of RFID, auto ID, and security trade resources; the March 22 edition of Customs Commercial Operations Advisory Committee (COAC) Border Security "Report on Seal Technologies," and extensive informal networking with industry technical and marketing personnel. The latter included those involved in the standards effort, present and former executives in the trade, consultants, researchers, government officials, and the points of contact in most of the firms reflected in this report.
There are at least three related efforts in progress that may add to—or perhaps draw from—the material gathered in this report:
- The COAC Border Security Subcommittee Technology Team updated their report of March 22 and a new report may be available shortly.
- The Cargo Handling Cooperative Program recently started a project on electronic seals. It's first task, in progress, is clarifying requirements.
- The Finland Ministry of Transport and Communication initiated the "Finland ITS (FITS) e-seal project: Implementing of electronic container seal in Finland." The first phase of their project, to be completed in September, is modeling essential business processes, including distribution and recycling of e-seals.
Types of Market Participants
It is somewhat helpful to divide the participants in the e-seal market into four groups—only "somewhat helpful" because the lines blur case-by-case.
Electronics technologists are firms with core capabilities in RFID or related technologies. Some, such as TransCore, focus today on selling RFID technologies and components to seal manufacturers. Others, such as Savi, mix active technology relicensing with production of selected products, including electronic seals, and with system integration services. Still others, such as Encrypta and Hi-G-Tek, keep responsibility for the entire process.
Manual seal manufacturers are especially important to successful deployment of e-seals. The good ones work closely with their customers and understand their business. They are good at manufacturing. While there may be 40 reputable manual seal manufacturers in the world, the five principal ones are shown below in alphabetical order. The cargo seal business, however, is not huge. According to a former marketing vice president responsible for calibrating the competition, the largest of these firms may do about $30 M per year in seals; the second largest about $20 M; and the others appreciably less. All but one are actively engaged in an electronic seal program. The exception is TydenBrammall, which discontinued its joint venture with Hi-G-Tek; TydenBrammall expects to re-enter the market when it is more stable.
- E.J. Brooks
- Mega Fortris
- OneSeal
- TydenBrammall
- Universeal
Resellers and distributors help manufacturers move product to different markets, especially the small-to-medium customers. ABRIC and Aquila are examples that seem to simply resell products. CGM both resells and creates suites of products for enhanced capabilities.
Large system integrators will play an important role in global deployment if e-seals take off. Examples include SAIC, TransCore, and Accenture.
Market Status
A principal goal of this paper is to report on the current market for e-seals. The author developed a simple product status index and made a judgement about where specific companies and products stand in regard to the index; that judgment appears on each product matrix. Exhibit 5 shows the index together with explanations of the categories and the number of unique products in each category (products offered by multiple firms were counted once.)
There are very few electronic cargo seals in use today. Of twenty-one separate products, eleven are "Entering Market" or higher. (The Summary Matrix on page M-1 shows twenty-five product entries, but four are duplicates because of reselling or manufacturing agreements).
Of the five products "In Use," Encrypta, SecuReSeal, and Supra aim at truck markets with reusable products; two offer active RFID indicative seals and the third sells a contact padlock/seal. Most customers appear to ship high value goods or have closed loop operations. Encrypta's infrared indicative seal is also aimed at shippers of sensitive or classified materials. CGM sells a remote indicative seal/sensor that is specialized, expensive, and used in small numbers.
Both products in "Early Market" are active RFID seals. One is Hi-G-Tek's higher-end reusable product, and the other, which seems to have less penetration, is eLogicity's single-use seal. The four products "Entering Market" include two disposable products from CGM, a contact memory locking bar and a passive RFID breakaway indicative label. There are also two reusable products, the Crown Agents infrared e-seal and Savi's active RFID seal.
| Scale | Description | Number of Products |
|---|---|---|
| In Use | Products deployed in significant numbers relative to likely demand at current prices | 5 |
| Early Market | Some product in use with paying customers | 2 |
| Entering Market | Product available for sale. Some test and pilot units in use | 4 |
| Near Market | Product approaching the market. (Applied more loosely for simpler products than for complex ones.) | 4 |
| Testing | Prototypes and early pilots | 3 |
| Developmental | No product available | 3 |
 |
Total | 21 |
Four products are "Near Market." Bulldog and Porter propose reusable and fixed systems, one with active RFID and the other with a contact electronic key. TransCore and OneSeal have products that fit less neatly in this category. TransCore has a passive RFID chip applicable to e-seals ready for sale and the firm is in discussion with seal manufacturers; there is no e-seal, however, based on the chip. The latter, OneSeal, plans to deploy a single-use active RFID seal in October. While there is no product today, the core is a Savi platform that is already entering the market as a seal and is in use as a tag. Since both firms are confident about fielding and the platforms are stable, near market seems the best description
Three products are in "Testing." Loran's highly configurable contact PDA internal lock and seal is close to the border between "Testing" and "Near Market." Mega Fortris is testing a very low cost, low frequency, low read-range passive bolt seal. It would be usable globally but require person-in-the-loop interrogation. CET is testing a passive RFID seal.
Two of the three "Developmental" products aim to produce moderate cost remote reporting seals. NaviTag asserts they can have a product in six months, and e-2-e appears to be further behind. Alien is developing a battery-assisted passive RFID seal using 2450 MHz.
Pricing
Price information on developmental and early market products can be elusive and confusing. For example, some vendors quote prices reflecting startup costs and small batch sizes, while others cite costs at full-scale production rates.
Life cycle assumptions are critical when comparing per-use cost estimates among reusable products. For example, one manufacturer uses a product life of 1000 cycles based on the engineering limits of their seal. Another manufacturer reports that a seal exceeded 50,000 test cycles, but estimates 300 trips as a practical limit. A third vendor assumes a limit of 200 trips based on likely loss and damage over time.
Two conclusions relate to such life cycle assumptions. First, it is fair and reasonable to compare fully amortized costs per use of reusable seals with the costs of disposable seals. Second, there is insufficient experience with portable reusable electronic seals to make credible assertions about expected cycle counts.
To help readers make fairer comparisons across all of the products, the author asked vendors to provide unit costs for devices only, without support services. The request was at multiple purchase sizes: 50, 5,000, and 50,000 seals; and 10 and 100 fixed or handheld readers. The lots roughly represent an evaluation batch, a meaningful prototype; and the initial phase of a serious deployment. (The Summary Matrix shows the 5,000 lot unit price).
The resulting numbers are useful as comparative gauges, not building blocks to support budget estimates or potential project costs. In all cases, the cost information is a snapshot in time. Almost all of these costs seem subject to significant reductions as technologies mature and if volume sales materialize.
Looking Ahead
The market for electronic seals is in its early stages, with several approaches in development through relatively early stages of use. The market has not anointed a winner and, without September 11 and the threat of more attacks, it might be some time before a winner emerged.
There are three broad paths to choose from to identify and deploy new technologies, such as electronic seals, that may improve both freight transportation security and productivity. One path is too slow but the others may offer credible options that can be pursued in parallel. The too-slow path is a variation of business-as-usual, letting market forces and international standards processes work. The second path includes governments acting as catalysts to speed the normal market cycle. An invaluable way to do this is to sponsor and encourage vigorous pilot tests of products, technologies, and different operating practices with those products. This approach also calls for coherent and independent assessment. The third path is to aim for de facto commercial standards. Adoption of a set of electronic seals, for example, by the world's major container terminals or container carriers would probably drive global adoption faster than normal ISO and IMO timeframes. The third path also has an important role for governments, starting with mandating higher freight security measures.
Another challenge cuts across all of the paths—how to share lessons learned in pilots and operating deployments. Two constraints to wrestle with are information security and what we night call political security. The former aims to preclude giving unintentional target information to potential terrorists, and the latter seeks to avoid embarrassing stakeholders who participate in pilots and early deployments. An example is a firm that volunteers to participate in a project such as Operation Safe Commerce, which then uncovers meaningful security gaps. It is difficult to help other firms benefit from this information without helping terrorists or reducing the willingness of firms to participate in deployments because of possible bad publicity. previous | next