The cost of safe commerce

Smart containers and sophisticated networks will make shipping more secure, but who's going to foot the bill?

It’s never too soon to worry. And when it comes to RFID and its related technologies, you might want to start now. Between private sector and government mandates, both large and midtier companies can count on being required to have what some call “edge-to-edge visibility” for any shipped product in the near future.

Currently, the United States mandates that, 24 hours before a container is loaded at its point of origin, a manifest must be sent electronically to the U.S. Customs Service. Even so, someone could potentially send a bogus manifest or tamper with the container after it is loaded.

That’s why U.S. agencies are currently piloting programs such as Operation Safe Commerce and Smart and Secure Trade Lanes, which will introduce so-called smart containers for the shipping industry. The special features of these containers include electronic seals that note a breach, light sensors for doors, gamma ray imaging to monitor for radioactive materials, and even chemical sensors to check for ammonium nitrate, a fertilizer that can be used to manufacture explosives.

Greg Cudahy, global head of supply chain at Cap Gemini Ernst & Young, gives this example of why IT needs to start thinking about these or similar solutions now. Imagine a refrigerated container carrying pharmaceuticals that must not exceed 120 degrees for more than two hours. If the temperature of that container hits 140 degrees for four hours, it might not make sense to continue to ship those pharmaceuticals. Maybe the container should be stopped in transit.

Cudahy believes that enterprise networks are going to need significant improvement to allow companies to make smarter decisions, including combining tracking and tracing with sensor data. The massive volumes of data that will be created will also have to be filtered, synchronized, translated, integrated, and communicated across the network. Plus, of course, data from RFID tags has to be affiliated with the databases that contain product information.

Most companies already have some form of internal integration for their own applications and RFID data, notes Andy Macey, vice president of global supply chain at Sapient. But if we’re talking about event management or exception management, companies will need to implement an integration layer to accommodate all the other partners that touch the shipment.

“The network has to be created that can track goods manufactured in China to the port of Hong Kong, to the port of Seattle, then on rail to Chicago,” Macey says.

Services organizations such as Unisys will be leading the race to create solutions in this area, as will third- and fourth-party logistics suppliers such as Ryder and UPS Global Logistics. But beyond the technology requirements of such a network, cost is a big issue: Who is going to manage it, and who is going to pay for it? The shippers want no part of either, nor do retailers such as Wal-Mart. They will try to push the cost back onto the suppliers rather than jeopardize consumer pricing.

Peter Regen, vice president at Unisys’ Global Visible Commerce business, estimates the cost at approximately $30 to $50 per container. That estimate might be too conservative. Whatever the price tag, though, change is coming. The sooner companies start planning a road map, the better positioned they’ll be when the regulators lower the boom.

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