New network expands RFID's scope of traceability
network to track and manage containerised ocean cargo, a move that
could save companies billions and guarantee supply chain safety,
writes Anthony Fletcher.
RFID supplier Savi Technology and port developer Hutchison Port Holdings (HPH) have formed a new company to build and operate this active RFID-based information network.
The company, called Savi Networks LLC, will build the network by installing active RFID equipment and software in participating ports around the world to provide users with information on the identity, location and status of their ocean cargo containers as they pass through such ports.
Shippers, logistics service providers and transportation companies will be able to connect to the network by installing compatible equipment at their own locations to further improve the efficiency, effectiveness and security of global supply chains.
The network presents several possible advantages. Managing ports is a highly complex operation - a variety of data and operations must be handled, from the control of crane movements and parking of lorries to loading freight onto ships.
Savi's solution could simplify this, helping to reduce costs for manufacturers and suppliers.
Indeed, food suppliers and manufacturers will be very interested whether this concept can lead to cost cuts. There was a huge squeeze on the supply of shipping containers last year, caused partly by China's insatiable demand for raw materials and higher fuel costs, which caused shipping rates to rise 10 per cent to 25 per cent.
In addition, traceability of the food chain is now an obligation, and since 9/11 fears have been heightened over possible terrorist attacks on the food chain. The loss from a security breach of just one shipping container could cost companies billions in recalls and lost markets, according to an alarming new report from Deloitte Touche Tohmatsu.
An RFID-based network with the ability to trace and track freight at any point along the supply chain would go some way to ensuring complete transparency.
The new company will be initially capitalised with an investment of $50 million from the joint-venture partners. Savi Technology will hold a 51 per cent interest in Savi Networks, and HPH will hold the remaining 49 per cent interest. Savi will take the lead in operating the joint venture and contribute a license to the software to operate the network, and HPH will provide access to its port facilities.
Savi Networks will seek to establish relationships with additional port partners to further extend the network, as well as with providers of complementary technologies and services to the global supply chain.
"We believe the availability of a shared RFID network will enable greater supply chain visibility and efficiency throughout global supply chains," said Vic Verma, Savi's president. "Savi is excited about entering into this agreement with HPH, which as one of the world's largest port operators has the knowledge, experience and vision to understand the needs of the global shipping community."
John Meredith, HPH group managing director, says that global concerns about supply chain efficiency, effectiveness and security are set to continue to grow. "These must be addressed with new and better ways to manage cargo," he said. "We have worked closely with Savi Technology in a number of government and industry initiatives, and we're eager to leverage our collective experience to deploy a shared network."
It is expected that Savi Networks will function much like a telecommunications network service provider. Savi Networks will own and operate the network's core infrastructure and will provide information services, to be called SaviTrak, on a per-container trip basis.
The company will also sell active RFID-related hardware and services to customers to extend the network to the customer's own origin point, such as a manufacturing plant, and/or destination point, such as a distribution centre.
The new company expects to offer customers a family of active RFID tags, including data rich, visibility and sensor tags, based on ISO 18000-7 standards. These tags would be affixed to containers, transforming them into "smart containers" able to communicate with the network, which will enable users to receive information on location, security and environmental conditions, such as temperature, humidity and light, as well as the container's contents.
The network will be built on an interoperable architecture designed to accommodate Automatic Identification Data Collection (AIDC) technologies, such as barcodes, passive RFID technologies such as EPC, and Global Positioning Systems (GPS) used to track ships and trucks that transport ocean containers. These complementary technologies will form the basis of a "nested visibility" solution, which provides users with greater visibility and management of both their container shipments and the contents they transport.