whether bar code or manual methods, depend on employees to record information, RFID relieves them from this time-consuming and error-prone process. Th

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1 The Application of the RFID and E-Seals in Container Shipping Yih-Ching Juang 莊義清 Department of Shipping and Transportation Management, National Penghu University of 摘要 Science and Technology 國立澎湖科技大學航運管理系 近年運輸物流產業不斷發展帶有資訊的 RFID ( 無 線射頻辨識系統 ), 如附著於海洋貨櫃運輸上之 E-Seals ( 電子封條 ), 可將實體物流與資訊同步 化, 解決在國際物流中資料收集所面對的問題 根 據統計 世界上約有 90% 的貨物用貨櫃運輸, 在美 國有一半的進口貨物是利用貨櫃船運抵達 隨著世 界海運供應鏈的發展, 對貨物運輸的即時性 可控 性 貨櫃安全和貨櫃追蹤的要求越來越高, 現有海 洋貨櫃運輸系統存在的缺陷, 如無法實現即時作 業 隨時獲知貨物的情況 隨時確定貨櫃在整條供 應鏈中所處的位置等, 制約了世界海運供應鏈的發 展若業者能利用 RFID 預測庫存量 訂購等, 並降低 缺貨 庫存過多 商品過期等 在全球分工競爭下, 競爭版圖已經突破了地理位置的限制, 為了使台灣 能以此技術減少人工錯誤以及加快通關檢查速度 已是唯一法門 本研究以海運公司貨櫃運輸作為研 究 導出 RFID 的流程技術, 比較傳統方式跟引進 RFID 技術之後, 了解 RFID 所帶來的利益及建議 關鍵詞 :RFID ( 無線射頻辨識系統 ) E-Seals ( 電子 封條 ) 貨櫃安全 貨櫃追蹤 海洋貨櫃運輸 Abstract Recently it has been focused on the role of Radio Frequency Identification (RFID) in logistics industry, there is much more to RFID than the current generation of disposable tags. Electronic door seals (E-Seals) were tested on shipping containers that traveled through ports, over borders, and on highways. The findings showed that using these RFID devices could increase supply chain efficiency and improve the security of containerized cargo movements, particularly when E-seals replace common mechanical seals. Even the benefits of E-seals can be realized, several barriers must be addressed. Whereas other forms of data collection, whether bar code or manual methods, depend on employees to record information, RFID relieves them from this time-consuming and error-prone process. Routine use of E-seals would also require new processes that might slow their acceptance by the shipping industry. Disposable E-seals, which decrease industry concerns about costs and enforcement agency concerns about security by eliminating the need to recycle E-seals, are not common because they need to be manufactured in large quantities to be cost effective. Compatibility with existing highway systems could also promote E-seal acceptance, as containers could be tracked on highways. Key Words: RFID (radio frequency identification device), E-Seals (electronic container seals), container security, container tracking, container shipping. 1. Introduction While much of the attention has recently been focused on the role of Radio Frequency Identification (RFID) in retail logistics, there is much more to RFID than the current generation of disposable tags. RFID has been successfully used in transportation and manufacturing since the mid-80s and its use is growing rapidly as costs come down and benefits are recognized. The primary advantage to RFID in a port/terminal application is that it is an automatic data collection technology. That is, no operator intervention or action is required. Whereas other forms of data collection, 883

2 whether bar code or manual methods, depend on employees to record information, RFID relieves them from this time-consuming and error-prone process. The two direct benefits of this are: accurate and complete data collection; and better utilization of employees time. In addition, security measures can be significantly enhanced through the use of RFID. Some of these applications offer benefits to the terminal/port operator; either directly or as added services for shippers. Other benefits must be seen more as a means of simplifying compliance with increasing governmental security regulations and record keeping requirements. While many of the applications cited in this article will require the cooperation of ship owners, shippers, carriers and terminal operators in employing RFID and may, therefore, seem to be excessively forward-looking, the regulatory environment will likely encourage adoption in a much shorter timeframe than might be evident at this moment. The use of Radio Frequency Identification (RFID) in container shipping can lead to great benefits, improving the efficiency of both the identification and the handling activities, thanks to the better use of the equipment. Moreover, it allows a better tracking and tracing of the containers both at the terminal and the supply chain level. Despite the interest in RFID applications and their great potential, literature still lacks models to assess the RFID impacts on container port activities. This paper aims at filling this lack by presenting an activity-based model to evaluate the costs and benefits that stem from the adoption of RFID in a container port. The model takes into account a general container terminal which manages different kinds of containers and it considers all the activities from the container arrival to the shipping, including different actors. The economic impact of RFID adoption is quantified, and several useful information regarding feasible adoption scenarios are provided. Around the world, millions of standardized intermodal shipping containers are used to transport freight. Because of the sheer volume of containers, securing them from threats such as terrorist attacks while also efficiently processing the containers through the freight supply chain is a major challenge. One technology application that potentially addresses both security and processing concerns is the use of RFID (radio frequency identification device) electronic seals (E-seals) to secure the doors of the containers. (Zhang and Zhang, 2007; Mueller, 2005; Tsilingiris, Psaraftis and Lyridis, 2007a; Tsilingiris, Psaraftis and Lyridis, 2007b, Moskal, 2009). Since the late 1990s, the United States Department of Transportation has been testing E-seal technology in container shipping. E-seals replace the mechanical, one-time use seals commonly used by the shipping industry. E-seals, which are functionally transponders, have the capability to record and transmit information about the integrity of the sealed container at pre-defined intervals. can also be recorded when the container passes by a stationary reader, or when it is read by a handheld reader. 1.1 Terminology A basic understanding of the types of RFID and E-seal systems available is in order. However, a full discussion of all the types and capabilities of RFID is beyond the scope of this article. Briefly, the two types of RFID tags that are of primary interest are active and semi-active. Active RFID tags contain a battery to boost reading range. Active tags can have a range up to 100m. These tags have a relatively large memory 884

3 capacity to store relevant data that is typically encrypted to prevent unauthorized reading of, for example, a shipping manifest. Active tags may contain sensors, global positioning (GPS), satellite links, or other enhancements. Semi-active RFID tags contain a battery but this is not used to enhance reading range. The battery is used to power sensors or volatile memory. Read range depends on the frequency and type of tag. Also of interest are RFID identification cards, which may be contactless smart cards. These are passive since they contain no battery and have a more limited range. Passive RFID tags may also be found on pallets and other load devices within shipping containers. The European Conference of Ministers of Transport, in a review of container security, noted that E-seals were an "appealing solution" for both security and processing concerns but also called for more technical standards and operational experience before the technology is mandated and concluded that a complicated hardware and software infrastructure must be developed for E-seals to be effective. Different E-seal designs have been developed over the last decade and include devices that communicate by using RFID, infrared, direct contact, long-range cellular, or satellite transmissions and will use the handheld reader to process the delays for cargo inspections (Figure 2). 1.2 E-Seal Overview E-seals are transponders that can be used by shippers and enforcement agencies desiring to track shipments and that can also help determine shipment status and shipment integrity. E-seals can report their positions and are able to record the time that they were activated, compromised, or removed (Zhang, Liu, Yu, and Zhang, 2007; Kim et al., 2007). E-seals are electronic replacements for common mechanical container door seals (Figure 1) and use the locking bar on the container s back door. Fig 2: E-seal and handheld reader. Fig 1: Common mechanical container door seal While each seal has its own characteristics, RFID E-seals were selected for the State of Washington test because they were a relatively mature product that showed promise for both increasing container security and reducing the RFID. E-seal design involved relatively simple technology that potentially could be mass-produced at a reasonable cost. The RFID E-seal is the most common type in use today because of its reliability and ease of integration with current infrastructure (Wolfe, 2002; Le-Pong and Wu, 2004). RFID E-seals 885

4 are typically either active or passive. A passive seal relies on a signal from the reader to activate the E-seal from a period of inactivity and electronically prompts the unit to transmit its information. This information can include the E-seal identification number; time and date when the seal was affixed; whether the seal has been tampered with; and the time of any event that occurred since the seal was activated. These E-seals tend to be short-range and directional because they rely on the power from readers. Because a passive E-seal does not require a constant power source, it can usually be operated for an extended period of time with batteries. The batteries power the signal transmission when the seal is interrogated by a reader. They also keep an internal clock running, run internal checks, and log any events. E-seals powered by batteries can have a signal range of up to 30 meters. Active E-seals have the same capabilities as passive seals, but they can also initiate transmissions. The advantages of using this kind of seal include a much greater range of up to 100 meters and a much stronger signal, which allows the signal to be transmitted around and beyond minor obstructions. Active E-seals cost more because of their enhanced capabilities and the number of batteries needed to power them. These seals also have greater maintenance costs because of the requirement to more frequently replace the batteries (Englert, Parmar and Byambajav, 2007). The State of Washington project tested active seals because they were better at seal-reader communication in a more challenging roadway environment, with higher vehicle speeds and longer distances between the seals and the readers (Figure 3). Fig 3: E-seal reader antennas on gantry. 2. RFID Adoption in Logistics Industry To deliver products quickly to customers, many companies seek to outsource their logistics activities to logistics service providers. This reflects the trend of using logistics service providers to satisfy the increasing need for logistics services (Lieb and Miller, 2002). New modern facilities such as logistics parks, distribution centers and warehouses are being built at a record setting pace. To fully satisfy the diversifying requirements of customers, many logistics service providers improve their service efficiency by continuous adoption of information or automation technologies (Sauvage, 2003). RFIDs represent a specific type of information technology that can potentially impact a firm s competitive environment by enabling the tracking of location information of personnel, goods, or equipment anywhere within a firm s value chain. Nixon (2001) suggests that logistics service providers should employ new information technologies to raise their service capability in the e-commerce age. Chapman, Soosay and Kandampully (2003) suggest that the logistics industry should pay more attention to innovation in logistics service, and the innovation in logistics can be implemented through technology, knowledge and relationship networks. Adopting 886

5 RFID technologies might enable logistics service providers to enhance their service abilities. The majority of RFID applications have centered on firms increasing efficiencies in the supplier management process, which ultimately results in lowered costs. However, RFID is also currently being used by logistic service companies in order to enhance the service effectiveness to the customer, thus enhancing the overall value perception. Instead of focusing on efficiencies of supplier relationships for manufacturers, these service firms seek to employ the technology to generate additional value for the customer (Leea, Fiedlera, and Smithb, 2008). Through the value-chain concept, managers are able to target strategic uses of technologies at these primary activities that add the most value to the firm s products or services. It has been claimed that RFID offers the potential to greatly improve supply chain efficiency and effectiveness because it enables companies to track product information and allows greater control and flexibility in managing goods as they move through the supply chain (Jabjiniak and Gilbert 2004). Ideally, when RFID becomes fully implemented in distribution centers, it may eliminate the need for bar code scanning and manual counting at receiving docks. The RFID system can facilitate the exchange of necessary information in real time and then resolve the lack of communication problems among the supply chain members. RFID location tracking-based delivery planning to improve traditional logistic operations in the shipping yards of automotive assembly plants, which provides visibility and appropriate operational decisions for vehicle deployment and load makeup (Lin, 2008). 3. Access Control and Container Security 3.1 Employee ID In addition to helping comply with the U.S. Smart and Secure Tradelanes (SST) and Container Security Initiatives (CSI), ensuring that only authorized personnel are admitted to the terminal area is necessary to prevent loss and possible mischief. The use of RFID identification cards, either contactless smart cards or proximity RFID tags with a very limited range (in the range of millimeters) can not only store access information such as shift, job function, allowable vehicle access, etc. but can also contain biometric information such as a photograph. For entry to secure areas, having an employee s photograph encoded in an RFID badge significantly reduces the possibility of forgery. For unmanned entry points, closed circuit TV (CCTV) can be used to compare an employee s picture stored on the RFID card to the individual. The picture can either be transmitted from data on the card to the guard station or a unique serial number could access the photo from a company database. RFID employee ID badges can provide automated time and attendance and can also be used to associate an employee with a particular piece of equipment. Employee identity can be used to ensure that an employee is qualified to operate a certain piece of equipment or enter a certain area. In many cases, security or operations personnel can be relieved of these duties because the RFID badge will contain the necessary clearances or permissions. In an increasing number of applications, RFID badges also function as stored value cards, allowing workers to make purchases within the workplace without the need to carry cash. This feature means that the RFID badge provides benefits to the worker as well as the employer, improving worker acceptance. 887

6 3.2 Vehicle Control Equipping tractors and other equipment with RFID tags is becoming increasingly common in fleet and yard management operations. Readers placed at fueling stations, gates and other access points can be used to enable access or egress as well as to record the exact time at which a particular truck and container entered or left the terminal. RFID employee badges can be used to validate that the right driver has the right vehicle and load. Tags on vehicles or RFID badges can be used to unlock fuel pumps and record fuel usage. 3.3 Container Security A great deal of attention is being focused on a new generation of smart seals to ensure the integrity of a container and its contents. Whereas conventional security seals will provide evidence of tampering, they require visual inspection to do so. Evidence of tampering is usually discovered long after the fact and offers little benefit other than proof of loss. RFID seals, on the other hand, can alert terminal personnel at the time of tampering. Smart seals are active RFID tags and will broadcast the fact that they have been opened or removed without authorization. Typically, these tags would be purchased and affixed by the shipper. However, terminals must be equipped to receive signals from these tags if they are to be effective. Smart tags can also be equipped with sensors to monitor environmental conditions within the container. It s not possible to counterfeit tags so there s no possibility that one tag will be removed and another used to replace it. Some tags, such as those used by the U.S. military on high security containers, also contain GPS, sensors, and satellite phone capabilities to constantly report the location of the container and the conditions within it. For perishable, sensitive, or high value cargos, this type of tag offers the highest level of security. These tags, and the satellite phone portals, are available to commercial shippers. Because they can report breaches to the shipment owner directly, terminals do not need to make special accommodations for them. 4. Container Tagging, Location and Activity Tracking 4.1 Container Tagging While there has been an ISO standard for tagging of maritime containers for a number of years, few container owners have implemented tagging; primarily because tag costs were initially very high. A new generation of active tags, however, has brought the cost down considerably, making it more feasible to tag the tens of thousands of containers in use. A continuing problem with intermodal containers is the presence of multiple identification numbers on many containers. There may be one number on the side and another number on the end and terminal operators have little guidance as to which is correct. The increased concerns over the possible use of maritime shipping containers as a means of entry for illegal immigration, weapons, and chemical or biological agents means that positive identification of each container, under SST and CSI, will only increase. RFID tags provide a secure answer to this requirement. Readers placed on gantries and yard vehicles will be able to automatically record the identity of each container as it s offloaded and transported within the terminal. 4.2 Location Tracking Even with sophisticated management software, containers are not always placed where they should be. RFID tags can be buried at regular intervals in the aisles to serve as location markers. These tags can be read by RFID readers in yard vehicles and provide 888

7 information on the exact location of the vehicle. These readers could also capture the ID of the container being transported. Communicated to the office via a wireless LAN, the location of any vehicle or container can be automatically recorded and displayed. 4.3 Activity Tracking Productivity is an issue that is of concern not only to terminal operators but to the ship owners, shippers and consignees as well. Ensuring the most efficient loading and offloading of container ships is critical to profitability. Certainly time spent looking for containers that have not been placed where they should have been is time wasted and, in the case of perishable goods, may result in the loss of the entire shipment. The use of RFID tags to record the location of containers and monitor the location and activities of yard vehicles will improve the overall quality of data and, therefore, the efficiency of the entire operation. In addition, it will enable collection of detailed data that may uncover inefficiencies in established procedures that could not previously be identified. RFID provides the ability to automatically collect real-time data without burdening employees. This provides managers with an up-to-the-minute picture of activities and that, in turn, allows them to respond to developing situations in a timely manner. 5. Regulatory Compliance Without question, the world is becoming more regulated. From the U.S. SST and CSI initiatives to the U.K. food tracking mandates, more and more burdens are being placed on every link in the supply chain to record the movement of goods from the point of origin to the point of consumption. The use of automatic identification and data collection (AIDC) technologies, including bar codes and RFID, will permit companies within the supply chain to efficiently cope with these data collection regulations. With the U.S. SST and CSI regulations, there are increasing burdens on suppliers and terminals to ensure the integrity of containers once they have been inspected. The use of RFID technology for employee ID badges, access control, security seals and terminal operation will provide assurances that container integrity has been maintained. Containers that can meet all these requirements will be fast tracked on arrival in the U.S., allowing them to be moved out of the terminal faster. While there is currently no mandate for RFID in any of the current regulations, there is every indication that it will be recognized within a few years as a means of compliance. Containers with RFID container seals will enable shippers and carriers to the following benefits: 1. Consistently monitor container security and integrity. 2. Speed shipments through the supply chain. 3. Verify that a container was loaded at a secure loading point. 4. Significantly reduce the likelihood a tamper event happened in transit with container accountability from point of origin to destination. 5. Gather enough data to conduct a virtual inspection in advance of arrival. 6. Guarantee that shipping containers meet governmental security regulations. 7. Receive fast track or green lane handling through customs at the point of dispatch and / or the point of receipt. 8. Avoid extensive delays in the shipment and receipt. 9. Minimize the cost of handling. 6. Conclusion 889

8 A number of leading port facilities around the world have already become, or have contracted to become, RFID-enabled. Even if you do not yet feel an urgency to implement RFID technology within your facility, it would be prudent to explore the options and benefits of RFID. Use of E-seals that are technologically compatible with the widespread highway transponder network could help increase their value to the container industry, as a compatible seal would allow containers to be tracked on the highway network. Because RFID is coming and it s coming faster than you may think. References Chapman, R.L., Soosay, C. and Kandampully, J. (2003). Innovation in Logistic Services and the New Business Model: A Conceptual Framework, International International Journal of Physical Distribution & Logistics Management, 33(7), Englert, B., Parmar A., & Byambajav, D. (2007). Evaluating and improving the security of RFID tags in shipping containers. California State University, Department of Computer Engineering and Computer Science. Jabjiniak, B. and Gilbert, G. (2004), RFID warrants a strategic approach, Business Integration Journal, 6(1), Kim, D., Lee, M., Kang, Y., Chung, S., Yoon, W., Min, J., & Kim, H. (2007). Design and Performance Analysis of Electronic Seal Protection Systems Based on AES, ETRI Journal, 29 (6), Leea, L.S., Fiedlera, K.D. and Smithb, J.S. (2008). Radio frequency identification (RFID) implementation in the service sector: A customer-facing diffusion model, Int. J. Production Economics, 112, Lieb, R. and Miller, J. (2002). The Use of Third-Party Logistics Services by Large US Manufacturers: The 2000 Survey, International Journal of Logistics: Research and Applications, 5: 1, Lin, C.Y. (2008). Determinants of the adoption of technological innovations by logistics service providers in China, International Journal of Technology Management and Sustainable Development, 7: 1, pp Le-Pong, C. & Wu, C. (2004). The role of electronic container seal (E-seal) with RFID technology in the container security initiatives. In Proceedings of the 2004 International Conference on MEMS, NANO and Smart Systems, Moskal M., (2009). Case Study: The Reality of DF Technology Transition for Maritime Domain Awareness with a Focus on Container Security In Shahbazian et al. (eds.), Harbour Protection Through Data Fusion Technologies, Springer Netherlands, Mueller J. (2005). Emerging technology in German port security: electronic container seals, U.S. Commercial Service, Germany, June 27. Retrieved from June 4 th 2009 from wnload/isa_1962/$file/x_ pdf. Nixon, M. (2001). Innovations in logistics technology: generating top-line value and bottom-line ROI, World Trade, 14, pp Sauvage, T. (2003). The relationship between technology and logistics third-party providers, International Journal of Physical Distribution & Logistics Management, 33( 3), Tsilingiris, P., Psaraftis, H. & Lyridis, D. (2007a). RFID in the ocean container transport Paper presented at the Annual conference of the International Association of Maritime Economists (IAME 2007), Athens, Greece. Tsilingiris, P., Psaraftis, H., & Lyridis, D. (2007b). RFID-enabled innovative solutions promote container security, Paper presented at the Annual International Symposium on Maritime Safety, Security and Environmental Protection (SSE07), Athens, Greece. Wolfe, M. (2002). Electronic cargo seals: context, technologies, and marketplace. North River Consulting Group, Prepared for the Intelligent Transportation Systems Joint Program Office, Federal Highway Administration, D.C., July. Zhang, J, Liu, Y., Yu C., & Zhang, C. (2007). Smart container security the E-seal with RFID technology, Proceedings - 7th International Navigational Symposium on Marine Navigation and Safety of Sea Transportation, Gdynia, Poland, June, Zhang J. & Zhang C., (2007). Smart Container Security: the E-seal with RFID Technology, Modern Applied Science 1(3), olo 890