John Johnson joined the DC Velocity team in March 2004. A veteran business journalist, John has over a dozen years of experience covering the supply chain field, including time as chief editor of Warehousing Management. In addition, he has covered the venture capital community and previously was a sports reporter covering professional and collegiate sports in the Boston area. John served as senior editor and chief editor of DC Velocity until April 2008.
If you've ever had the dubious pleasure of taking a cab ride in Boston, you know what a harrowing experience it can be. If you're lucky, the air conditioning will be working while the taxi idles in one of the city's infamous traffic jams. And if you're really lucky, the shocks will be in working order too, since your driver is likely to hit at least one pothole the size of the Big Dig.
That may be about to change. Since the beginning of the year, 30 taxi cabs in the city have been outfitted with RFID tags. Combined with sensor technology, the tags are expected to help cabbies avoid traffic jams and provide information for a database on the city's worst potholes and ways to avoid them.
It's all part of a project called CarTel, backed by professors and students from the Massachusetts Institute of Technology (MIT). By the end of the year, the group hopes to have RFID tags and sensors on about 400 private cars as well, in an effort to build a more extensive database on potential bottlenecks as well as roads in disrepair. In an ideal world, information could be relayed to highway officials, who would then send a crew out to fix the road. The CarTel project will likely expand to include cab companies in San Francisco and Los Angeles later this year.
The goal of CarTel is to make personalized route recommendations to drivers, based on the driver's personal commute history as well as commute histories of other drivers who are willing to share their information. In addition, the system could help monitor the vehicle's performance by collecting data on emissions and gas mileage. These reports could be combined with historical data, thus highlighting long-term changes in a car's performance. Such a system would be able to provide the driver with early warnings of potential trouble.
It's just one example of how RFID technology, coupled with other technologies like sensors and GPS, is expected to make life on the road a lot easier to handle—and possibly less expensive—in the coming years. In fact, the technology is making its way onto the nation's roadways in a big way. From Boston to Alaska, RFID is showing its potential to provide visibility for cargo and ease congestion due to poor road conditions and isolated events like accidents or a ball game that affect traffic flow.
Early warning
MIT isn't the only university that's investigating ways to use technology to improve traffic patterns and safety. In June, researchers at Rensselaer Polytechnic Institute (RPI) and the New York State Department of Transportation finished installing six solar-powered mobile RFID readers that will monitor traffic flow by reading EXPass tags attached to passing cars. (Motorists use the tags to pay for highway tolls.) RPI began testing last fall with a single RFID reader in Troy, N.Y., and added six more readers this spring, enabling them to collect data for an eightmile stretch of highway in Rochester, N.Y.
Researchers at RPI received a $3.9 million grant from the Federal Highway Administration to fund the program, which could be used in the future to calculate how long it takes traffic to move from one stationary RFID reader to another. Someday, data collected from the system might help to reroute traffic when congestion occurs, or to alert motorists to slow-moving traffic by sending a message to their cell phones or GPS systems.
"We really hope to see if, in fact, the technology can be used to get a better handle on traffic and travel times," says Al Wallace, director of the Center for Infrastructure and Transportation Studies at RPI and a professor of decision sciences and engineering systems at the school. "I happen to think there will be a variety of technologies that will be used [to improve] traffic management. We're not just talking about congestion, but incident management. The better idea we have about traffic behavior, the better job we can do routing for commerce. It's not just the individual driver who benefits, but in the short and long term, commerce could benefit by saving energy."
Indeed, the federal Department of Energy's Clean Cities Program says that U.S. trucks burn about 800 million gallons of diesel fuel each year while idling. Although much of that idling occurs in parking lots while waiting to load and unload, a typical long-haul tractor idles approximately 1,830 hours per year, in part due to congested roadways. Aside from releasing damaging pollutants into the air, with diesel prices hovering near $3 a gallon, idling results in a waste of close to $2.5 billion a year.
Filling the black hole
As much as individual drivers may benefit from RFID-equipped autos and roadways, industry stands to gain even more. Some industries are already benefiting from the use of RFID tags—both active and passive— along U.S. highways. Since January, Horizon Lines, a domestic ocean container shipping and logistics company, has utilized RFID along its shipping lane in Alaska to track the movement of goods for customers like supermarket chain Safeway. Many of the RFID readers are deployed alongside the highway weather stations used by the Alaska Department of Transportation.
The advantage of using RFID—as opposed to GPS technology—is the cost. Although Horizon uses satellite GPSbased solutions to track refrigerated containers containing high-value goods like pharmaceuticals, the cost of deploying GPS technology across its entire container fleet would be prohibitive, says Greg Skinner, applications group manager for Horizon Services Group, a Horizon Lines subsidiary that provides transportation technology and consulting services. "The active RFID solution that we have deployed has a lower cost of ownership in regard to both the tags and the fixed-reader equipment," he says.
Skinner notes that his company has historically had little difficulty tracking cargo while it's at sea, at marine terminals, and on the rails. But when containers hit the highway, they often vanish from sight. To solve that problem, Horizon has outfitted many of its trailers with RFID technology, and new units manufactured overseas are being delivered with built-in active RFID tags.
The tags have been installed on the rear door of Horizon's containers. During the installation process, tags are scanned via a handheld reader, which reads the tag ID (each tag carries a unique serial number) and allows the user to enter the container number. This information is then uploaded into a computer system that marries the container number to the tag number for tracking purposes.
The tag on the container continuously broadcasts its unique serial number. As the tag-equipped container passes a reader, the reader receives and stores the tag's serial number along with the date and time it was read. Horizon's system polls the reader network every five minutes to process captured tag data. As the tag data is processed, the tag ID is transformed to the appropriate container number and a RFID sighting event is created with the container information, shipment information, reader location, and date and time.
The reader network includes the Horizon port facilities, key customer distribution centers, and store fronts, as well as locations along the highway in Alaska.
Safeway and Horizon Lines can both use the data collected by the RFID network to plan labor and operations at their facilities. An RFID reader on the highway about an hour away from a Safeway facility in North Pole, Alaska, helps the retailer track shipments to the store on a regular basis. When a truck carrying tagged cargo passes the location, the reader records the event and automatically notifies Safeway so it can have employees ready to unload the shipment.
Horizon, which hopes to have all of its 23,000 pieces of equipment outfitted with RFID tags by the end of next year, plans to extend the program to its shipping lanes in Puerto Rico and Guam. It is also looking into the possibility of working with state and federal transportation officials to test the feasibility of using the RFID reader infrastructure already in place on highways to create a national network for end-to-end, real-time intermodal container tracking, therefore filling the black hole that now exists.
"Our ultimate goal is to have our entire fleet tagged sometime in 2008," says Skinner. "The other piece we're looking at now is how to get better visibility in the lower 48, and we're talking to the federal government and state Department of Transportation to see what infrastructure is available, like cell towers or container yards."
Horizon sees this as an integral step in solving the missing piece in intermodal visibility. By having better visibility, Horizon could track assets in real time, reduce unnecessary repositioning of containers, address congestion issues, and increase supply chain security.
By gaining better visibility into its containers, especially as they enter and exit container yards, Horizon could also likely reduce the overall size of its fleet, resulting in increased asset utilization.
"We might not have to blanket the entire highway system," says Skinner. "If we target key trouble spots, like certain container yards where we don't get visibility for our equipment, or a certain corridor through Florida that gets lots of truck traffic, we might be able to accomplish the same thing.We have equipment that tends to sit longer at certain locations, and that will fit into how we start to deploy our future [RFID] infrastructure."
Horizon Lines also believes that in the post 9/11 world, much of what it is doing in its Alaska trade lanes will eventually be mandated by the federal government. "We want to be on the leading edge because we believe down the road a lot of what we're doing now operationally will become more of a requirement from a security standpoint, especially for hazardous containers or suspect cargo," says Skinner.
Even as a last-minute deal today appeared to delay the tariff on Mexico, that deal is set to last only one month, and tariffs on the other two countries are still set to go into effect at midnight tonight.
Once new U.S. tariffs go into effect, those other countries are widely expected to respond with retaliatory tariffs of their own on U.S. exports, that would reduce demand for U.S. and manufacturing goods. In the context of that unpredictable business landscape, many U.S. business groups have been pressuring the White House to pull back from the new policy.
Here is a sampling of the reaction to the tariff plan by the U.S. business community:
American Association of Port Authorities (AAPA)
“Tariffs are taxes,” AAPA President and CEO Cary Davis said in a release. “Though the port industry supports President Trump’s efforts to combat the flow of illicit drugs, tariffs will slow down our supply chains, tax American businesses, and increase costs for hard-working citizens. Instead, we call on the Administration and Congress to thoughtfully pursue alternatives to achieving these policy goals and exempt items critical to national security from tariffs, including port equipment.”
Retail Industry Leaders Association (RILA)
“We understand the president is working toward an agreement. The leaders of all four nations should come together and work to reach a deal before Feb. 4 because enacting broad-based tariffs will be disruptive to the U.S. economy,” Michael Hanson, RILA’s Senior Executive Vice President of Public Affairs, said in a release. “The American people are counting on President Trump to grow the U.S. economy and lower inflation, and broad-based tariffs will put that at risk.”
National Association of Manufacturers (NAM)
“Manufacturers understand the need to deal with any sort of crisis that involves illicit drugs crossing our border, and we hope the three countries can come together quickly to confront this challenge,” NAM President and CEO Jay Timmons said in a release. “However, with essential tax reforms left on the cutting room floor by the last Congress and the Biden administration, manufacturers are already facing mounting cost pressures. A 25% tariff on Canada and Mexico threatens to upend the very supply chains that have made U.S. manufacturing more competitive globally. The ripple effects will be severe, particularly for small and medium-sized manufacturers that lack the flexibility and capital to rapidly find alternative suppliers or absorb skyrocketing energy costs. These businesses—employing millions of American workers—will face significant disruptions. Ultimately, manufacturers will bear the brunt of these tariffs, undermining our ability to sell our products at a competitive price and putting American jobs at risk.”
American Apparel & Footwear Association (AAFA)
“Widespread tariff actions on Mexico, Canada, and China announced this evening will inject massive costs into our inflation-weary economy while exposing us to a damaging tit-for-tat tariff war that will harm key export markets that U.S. farmers and manufacturers need,” Steve Lamar, AAFA’s president and CEO, said in a release. “We should be forging deeper collaboration with our free trade agreement partners, not taking actions that call into question the very foundation of that partnership."
Healthcare Distribution Alliance (HDA)
“We are concerned that placing tariffs on generic drug products produced outside the U.S. will put additional pressure on an industry that is already experiencing financial distress. Distributors and generic manufacturers and cannot absorb the rising costs of broad tariffs. It is worth noting that distributors operate on low profit margins — 0.3 percent. As a result, the U.S. will likely see new and worsened shortages of important medications and the costs will be passed down to payers and patients, including those in the Medicare and Medicaid programs," the group said in a statement.
National Retail Federation (NRF)
“We support the Trump administration’s goal of strengthening trade relationships and creating fair and favorable terms for America,” NRF Executive Vice President of Government Relations David French said in a release. “But imposing steep tariffs on three of our closest trading partners is a serious step. We strongly encourage all parties to continue negotiating to find solutions that will strengthen trade relationships and avoid shifting the costs of shared policy failures onto the backs of American families, workers and small businesses.”
Businesses are scrambling today to insulate their supply chains from the impacts of a trade war being launched by the Trump Administration, which is planning to erect high tariff walls on Tuesday against goods imported from Canada, Mexico, and China.
Tariffs are import taxes paid by American companies and collected by the U.S. Customs and Border Protection (CBP) Agency as goods produced in certain countries cross borders into the U.S.
In a last-minute deal announced on Monday, leaders of both countries said the tariffs on goods from Mexico will be delayed one month after that country agreed to send troops to the U.S.-Mexico border in an attempt to stem to flow of drugs such as fentanyl from Mexico, according to published reports.
If the deal holds, it could avoid some of the worst impacts of the tariffs on U.S. manufacturers that rely on parts and raw materials imported from Mexico. That blow would be particularly harsh on companies in the automotive and electrical equipment sectors, according to an analysis by S&P Global Ratings.
However, tariff damage is still on track to occur for U.S. companies with tight supply chain connections to Canada, concentrated in commodity-related processing sectors, the firm said. That disruption would increase if those countries responded with retaliatory tariffs of their own, a move that would slow the export of U.S. goods. Such an event would hurt most for American businesses in the agriculture and fishing, metals, and automotive areas, according to the analysis from Satyam Panday, Chief US and Canada Economist, S&P Global Ratings.
To dull the pain of those events, U.S. business interests would likely seek to cushion the declines in output by looking to factors such as exchange rate movements, availability of substitutes, and the willingness of producers to absorb the higher cost associated with tariffs, Panday said.
Weighing the long-term effects of a trade war
The extent to which increased tariffs will warp long-standing supply chain patterns is hard to calculate, since it is largely dependent on how long these tariffs will actually last, according to a statement from Tony Pelli, director of supply chain resilience, BSI Consulting. “The pause [on tariffs with Mexico] will help reduce the impacts on agricultural products in particular, but not necessarily on the automotive industry given the high degree of integration across all three North American countries,” he said.
“Tariffs on Canada or Mexico will disrupt supply chains beyond just finished goods,” Pelli said. “Some products cross the US, Mexico, and Canada borders four to five times, with the greatest impact on the auto and electronics industries. These supply chains have been tightly integrated for around 30 years, and it will be difficult for firms to simply source elsewhere. There are dense supplier networks along the US border with Mexico and Canada (especially Ontario) that you can’t just pick up and move somewhere else, which would likely slow or even stop auto manufacturing in the US for a time.”
If the tariffs on either Canada or Mexico stay in place for an extended period, the effects will soon become clear, said Hamish Woodrow, head of strategic analytics at Motive, a fleet management and operations platform. “Ultimately, the burden of these tariffs will fall on U.S. consumers and retailers. Prices will rise, and businesses will pass along costs as they navigate increased expenses and uncertainty,” Woodrow said.
But in the meantime, companies with international supply chains are quickly making contingency plans for any of the possible outcomes. “The immediate impact of tariffs on trucking, freight, and supply chains will be muted. Goods already en route, shipments six weeks out on the water, and landed inventory will continue to flow, meaning the real disruption will be felt in Q2 as businesses adjust to the new reality,” Woodrow said.
“By the end of the day, companies will be deploying mitigation strategies—many will delay inventory shipments to later in the year, waiting to see if the policy shifts or exemptions are introduced. Those who preloaded inventory will likely adopt a wait-and-see approach, holding off on further adjustments until the market reacts. In the short term, sourcing alternatives are limited, forcing supply chains to pause and reassess long-term investments while monitoring policy developments,” said Woodrow.
Editor's note: This story was revised on February 3 to add input from BSI and Motive.
Businesses dependent on ocean freight are facing shipping delays due to volatile conditions, as the global average trip for ocean shipments climbed to 68 days in the fourth quarter compared to 60 days for that same quarter a year ago, counting time elapsed from initial booking to clearing the gate at the final port, according to E2open.
Those extended transit times and booking delays are the ripple effects of ongoing turmoil at key ports that is being caused by geopolitical tensions, labor shortages, and port congestion, Dallas-based E2open said in its quarterly “Ocean Shipping Index” report.
The most significant contributor to the year-over-year (YoY) increase is actual transit time, alongside extraordinary volatility that has created a complex landscape for businesses dependent on ocean freight, the report found.
"Economic headwinds, geopolitical turbulence and uncertain trade routes are creating unprecedented disruptions within the ocean shipping industry. From continued Red Sea diversions to port congestion and labor unrest, businesses face a complex landscape of obstacles, all while grappling with possibility of new U.S. tariffs," Pawan Joshi, chief strategy officer (CSO) at e2open, said in a release. "We can expect these ongoing issues will be exacerbated by the Lunar New Year holiday, as businesses relying on Asian suppliers often rush to place orders, adding strain to their supply chains.”
Lunar New Year this year runs from January 29 to February 8, and often leads to supply chain disruptions as massive worker travel patterns across Asia leads to closed factories and reduced port capacity.
That changing landscape is forcing companies to adapt or replace their traditional approaches to product design and production. Specifically, many are changing the way they run factories by optimizing supply chains, increasing sustainability, and integrating after-sales services into their business models.
“North American manufacturers have embraced the factory of the future. Working with service providers, many companies are using AI and the cloud to make production systems more efficient and resilient,” Bob Krohn, partner at ISG, said in the “2024 ISG Provider Lens Manufacturing Industry Services and Solutions report for North America.”
To get there, companies in the region are aggressively investing in digital technologies, especially AI and ML, for product design and production, ISG says. Under pressure to bring new products to market faster, manufacturers are using AI-enabled tools for more efficient design and rapid prototyping. And generative AI platforms are already in use at some companies, streamlining product design and engineering.
At the same time, North American manufacturers are seeking to increase both revenue and customer satisfaction by introducing services alongside or instead of traditional products, the report says. That includes implementing business models that may include offering subscription, pay-per-use, and asset-as-a-service options. And they hope to extend product life cycles through an increasing focus on after-sales servicing, repairs. and condition monitoring.
Additional benefits of manufacturers’ increased focus on tech include better handling of cybersecurity threats and data privacy regulations. It also helps build improved resilience to cope with supply chain disruptions by adopting cloud-based supply chain management, advanced analytics, real-time IoT tracking, and AI-enabled optimization.
“The changes of the past several years have spurred manufacturers into action,” Jan Erik Aase, partner and global leader, ISG Provider Lens Research, said in a release. “Digital transformation and a culture of continuous improvement can position them for long-term success.”
Women are significantly underrepresented in the global transport sector workforce, comprising only 12% of transportation and storage workers worldwide as they face hurdles such as unfavorable workplace policies and significant gender gaps in operational, technical and leadership roles, a study from the World Bank Group shows.
This underrepresentation limits diverse perspectives in service design and decision-making, negatively affects businesses and undermines economic growth, according to the report, “Addressing Barriers to Women’s Participation in Transport.” The paper—which covers global trends and provides in-depth analysis of the women’s role in the transport sector in Europe and Central Asia (ECA) and Middle East and North Africa (MENA)—was prepared jointly by the World Bank Group, the Asian Development Bank (ADB), the German Agency for International Cooperation (GIZ), the European Investment Bank (EIB), and the International Transport Forum (ITF).
The slim proportion of women in the sector comes at a cost, since increasing female participation and leadership can drive innovation, enhance team performance, and improve service delivery for diverse users, while boosting GDP and addressing critical labor shortages, researchers said.
To drive solutions, the researchers today unveiled the Women in Transport (WiT) Network, which is designed to bring together transport stakeholders dedicated to empowering women across all facets and levels of the transport sector, and to serve as a forum for networking, recruitment, information exchange, training, and mentorship opportunities for women.
Initially, the WiT network will cover only the Europe and Central Asia and the Middle East and North Africa regions, but it is expected to gradually expand into a global initiative.
“When transport services are inclusive, economies thrive. Yet, as this joint report and our work at the EIB reveal, few transport companies fully leverage policies to better attract, retain and promote women,” Laura Piovesan, the European Investment Bank (EIB)’s Director General of the Projects Directorate, said in a release. “The Women in Transport Network enables us to unite efforts and scale impactful solutions - benefiting women, employers, communities and the climate.”