Trends-Jan 2008

Trucking will increase its share of the nation’s freight pool and continue to dominate domestic freight movement into the next decade, according to the American Trucking Associations’ (ATA) U.S. Freight Transportation Forecast to 2018.

Despite recent bumps in the road, the forecast, which reports on the present and future of the entire U.S. freight transportation industry, predicts growth for all modes, but an even greater role for trucking in moving and shaping the country’s economy.

“We’re an important part of the quality of life in this country,” says ATA President and CEO Bill Graves. “The United States achieved economic greatness with the help of a state-of-the-art transportation system. And trucks will continue to lead the freight landscape.”

The forecast projects trucking’s total tonnage share to rise to 69.7 percent in 2012 and to 70 percent by 2018 from 69 percent in 2006. Above-average growth in key truck commodities and the inherent flexibility and on-time delivery associated with trucking is driving industry growth.

Although trucks will remain the largest mode of freight transport, other transport modes also are expected to carry more freight as overall tonnage in the United States increases.

The report predicts robust growth in rail/intermodal and air freight as well. These two modes represent the fastest-growing segments during the forecast period, although neither mode will have more than two percent of the total tonnage market by 2018.

Total rail tonnage (including carloads and intermodal units) will edge up to 14.7 percent of domestic tonnage in 2018 from 14.6 percent in 2006. Water passage tonnage, which accounted for 6.5 percent of the domestic transport market in 2006, is expected to expand by 1.6 percent a year, on average, over the next six years and 1.5 percent a year thereafter through 2018.

With future volumes tied to petroleum and natural gas demand, pipeline transport is expected to grow 1.6 percent per year, on average, between now and 2012, according to the forecast. Pipeline’s share of total tonnage, however, will drop to 9.5 percent in 2012 from 9.8 percent in 2006.


RFID Predictions: Take Five

Is this the year radio frequency identification (RFID) floods the marketplace? Or will acceptance and application continue to trickle as industry tentatively tests the waters? Does it even matter?

The global industry for RFID technology is expected to grow rapidly before stabilizing and settling on a steady path, according to a recent study by Research and Markets.

The Dublin, Ireland market research company predicts RFID spikes in countries such as the United States, United Kingdom, Japan, China, and Thailand and fore.casts the market to grow at a moderate compound annual rate of 20.7 percent during the 2008 to 2016 period.

A recent study by ABI Research, a New York-based think tank, reveals a similar growth pattern—with the global RFID market expanding from a base of more than $3.8 billion in 2007 to $8.4 billion in 2012.

Within the RFID industry, a primary impetus for this growth has come from established applications such as security/access control, automobile immobilization, animal tracking, and toll collection.

However, emerging application segments such as security-based solutions, contact-less payments, and supply chain management are in their last test stages, driving growth in new markets and presenting new opportunities.

“Given the recent amount of activity and anticipation surrounding RFID technology, one might be tempted to believe the RFID market has been experiencing explosive growth,” says ABI Research Director Michael Liard. “But while uptake of full-scale RFID systems remains slower than many in the industry had hoped, steady growth continues. There is an overall sense of cautious optimism in the market.”

While few large RFID implementations have been announced, extensive pilot programs and closed-loop deployments are demonstrating the technology’s value proposition and cost justification.

For example, asset tracking in health care; work-in-process tracking in manufacturing; and visibility of returnable transport items such as pallets and containers provide significant return on investment and the opportunity to amortize the cost of transponders over several years.

What are the micro trends driving this rollercoaster RFID ride? AIM Global, an industry trade association for automatic identification and mobility solutions, shares five predictions that highlight important developments and innovations that are impacting the landscape of the RFID industry:

1.Consumers will see more innovative, practical RFID applications in familiar settings, such as sports, toy, and food safety. In 2007, the technology sector made a concerted effort well beyond the supply chain to extend the promise and benefits of RFID to consumers. Such innovative deployments are seen today in the sports, health care, toy manufacturing, and food processing sectors to guarantee product integrity and safety.

For example, in the sports world, numerous companies now use RFID to authenticate sports memorabilia; speed skiers through lift lines at resorts; validate tickets at sporting events; and track marathon runners to ensure race time accuracy.

With many recalls of contaminated foods and unsafe toys in 2007, RFID can enable firms to immediately track the origin of compromised food and toys, cease production of goods, and return products to manufacturers before harming consumers.

2.Expanded integration of RFID into mobile devices and other electronics products will provide consumers with new services and greater convenience. Handset manufacturers, network providers, search engine companies, and software providers increasingly view mobile devices and other consumer electronics products as important tools for interacting with, and providing services to, consumers and businesses.

Consequently, consumers are now using multi-functional mobile devices to manage voice calls, email, text messages, multimedia, location-based information, personal finance accounts, and many other aspects of their personal lives.

As RFID readers begin to be integrated into these mobile devices, a greater number of consumer-oriented applications will become available for business use. This will allow users to become more efficient in utilizing devices to interact with other technologies and service providers.

3.The convergence of RFID and other wireless technologies is inevitable. Today, individuals and organizations are more demanding than ever. Access to more granular information about the location, identification, movement, temperature, and security of products can provide convenience and value to exacting businesses, and in turn, to consumers.

As a result, the ongoing convergence of RFID, GPS, sensor, and other wireless technologies will continue in 2008.

4.RFID technologies will continue to enhance homeland security initiatives. From transportation worker identification cards (TWIC), to border cards, to RFID-based e-Seals on cargo containers, RFID is currently being deployed in numerous ways to improve homeland security without hampering international trade.

The ability to automatically identify transportation workers with a combination of biometrics and wireless authentication, as well as alert officials upon unauthorized openings of containers, are just two examples of how RFID can address current vulnerabilities in the global supply chain. e-Seals, which automatically locate containers, improve operational efficiency and ultimately reduce the overall cost of transporting goods.

5.RFID deployments will gain traction within “the first 100 feet” of the supply chain, as well as “the last 100 feet” of retail. International shippers and manufacturers are now focusing on item-level tagging of goods, as well as the tagging of containers at source factories, known as “the first 100 feet,” because it is cost-efficient to do so, and provides enhanced end-to-end visibility. This strategy results in more effective management of goods, and manufacturing and shipping cost reductions.

In addition, this approach enables product authentication at the beginning of the supply chain. It also facilitates detection of tampering, such as theft or terrorist intrusions to the container, at any point in the process—which typically involves 10 to 20 container “hand-offs” by different parties.

In retail environments, commonly referred to as “the last 100 feet,” consumers will see further penetration of RFID technologies in storefronts, as well as other applications that enhance the shopping experience.

These innovations will further demonstrate the value of RFID throughout the entire retail supply chain by increasing sales and ensuring the availability and cross-selling of related items.

Supply Chain Xs and Os

When they line up to tackle supply chain management, global players face a multitude of challenges, including increasing transportation spend, labor issues, escalating energy costs, and changing customer requirements. So a little coaching never hurts.

Capgemini, Georgia Southern University, and the University of Tennessee have teamed up to put together the 16th-annual Logistics Playbook—a report on trends in logistics and transportation that polls more than 1,300 supply chain executives representing 14 industrial sectors.

The 2007 report lays out a game plan for businesses to follow based on market situations and company profile. It specifically focuses on three functions: sales and operations planning, distribution management, and transportation management.

With 19.5 percent of companies reporting little integration of supply planning systems and 10.8 percent confirming transportation and distribution operate as separate functions, a little game time strategy can go a long way toward transforming supply chain pretenders into contenders.

The report indicates that an enterprise’s playbook should account for a number of variables including size, financial performance, visibility into the supply chain, and strategy.

However, there are four overarching plays that most companies should diagram:

  1. Focus on understanding how your supply chain meets customer needs.
  2. Focus on recruiting the best talent and providing them with access to real-time information.
  3. Focus on working together with customers and suppliers on logistics. Participants suggest they spend 10 percent or less of their time collaborating with customers, suppliers, and other departments across the company.
  4. Focus on a few key metrics.

“While leading firms have turned complexity into competitive advantage, many firms have made little progress over the past six years in integrating basic logistics processes,” says Karl Manrodt, study co-author and associate professor of logistics at Georgia Southern University.

“This is not a reflection of the lack of technology; to the contrary, software capabilities have improved greatly. What is missing is a holistic view of the firm’s internal and external processes, and the ability to manage them.”

Among other key findings:

  • 29.2 percent of participants report they spent more than five percent of sales on domestic transportation.
  • For all the different categories involved in strategic planning and operations information, more than 70 percent of respondents receive information in real time.
  • In only 36.6 percent of the cases reported does a single manager control both transportation and distribution.
  • 43.7 percent of all distribution volume is sent directly to the customer.
  • The largest companies (those with $3 billion or more in annual sales) report having more integrated systems across all functions than medium-sized and small firms.