Radio-frequency identification tags can deliver inventory accuracy rates as high as 99%, but the market still doesn’t appear to be willing to pay the price.
Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.
As e-commerce continues to boom and consumer shopping patterns shift in the wake of the pandemic, inventory accuracy has never been more important. Having a precise accounting of the amount of goods in a store, on a truck, or in a warehouse helps companies quickly locate merchandise needed to fill orders, avoid stockouts, and provide better customer service in general.
Suppliers, retailers, and third-party logistics service providers (3PLs) are all seeking ways to improve their inventory management practices. But in a lot of these efforts, one tool is conspicuously absent—radio-frequency identification (RFID) tags.
First introduced as a way to identify Allied airplanes during World War II, the technology slowly expanded into other applications, such as identifying rail cars and pallets of goods. By 2000, the U.S. Department of Defense was widely using RFID to track inventory, and in 2003, the tiny tracking tag hit the big time when retail giant Walmart decreed that its 100 largest suppliers must be ready to attach RFID tags to cases and pallets shipped to its DCs by 2005.
Manufacturers scrambled to comply. Buying the tags and readers was expensive, to be sure, but they risked losing access to Walmart’s marketing might if they refused.
But before that vision came into focus, the movement lost momentum, Walmart quietly shelved its mandate, and RFID began to fade from the headlines.
“With the Walmart initiative, RFID came out of the chute with a bang, but then it fizzled out,” says Doug Sampson, senior vice president at Acme Distribution Centers Inc., an Aurora, Colorado-based 3PL and supply chain solutions provider. “The reason it failed was because of cost and performance; other than that, it was a great idea.
FINANCIAL REALITIES RULE
As Sampson’s comment suggests, one of the primary reasons the vaunted RFID revolution stalled out was cost. In a sector where companies are constantly seeking ways to cut their transportation, labor, packaging, and other costs, few could justify the added expense for tags, especially when they already had a cheaper (albeit less-capable) method of tracking, the bar code.
“The cost never made sense,” says Simon Ellis, program vice president in the supply chain strategies practice for the analyst group IDC Manufacturing Insights. At the time, a consumer packaged goods (CPG) company might have spent 3 to 4 cents per item on the secondary packaging it used for logistics and retail display purposes. “But RFID tags were 10 cents, so they would be looking at quadrupling the cost for benefits that weren’t that great,” he says.
The cost of RFID tags has fallen in recent years to close to 5 cents per unit—especially for the most popular passive tag design (meaning the tag has no power source and cannot actively broadcast a signal)—but that still represents a significant overhead expense, particularly for an item that might cost 99 cents. For that reason, the technology is mainly found today on high-value merchandise, like $200 or $300 items of apparel, Ellis says.
Jordan Speer, a research manager in IDC’s global supply chain unit, echoes that assessment. RFID holds plenty of promise for retail applications, she says, noting that it can bring inventory accuracy up to 97% to 99%—far above the 60% typically found in busy retail stores where shoppers handle the merchandise. But there’s a limited universe of items that merit that level of precision, she says. “It still doesn’t make sense for a bottle of salad dressing, but it might work for apparel from Nike, Adidas, or Lululemon.”
In addition to tagging high-value items, some companies are using RFID for specialty applications such as serialization—where they need to identify each specific instance of a product instead of just the SKU (stock-keeping unit) type. Others are using recyclable tags that are removed by the sales clerk after purchase and returned to the manufacturer for re-use, she says.
Even in some of those cases, operations may still experience performance problems with RFID tags when they’re used with certain goods, Acme’s Sampson says. The radio signals from passive RFID tags can be blocked by the liquids in pharmaceuticals or food and beverage products, by the metal in warehouse racking, or by interference from other wireless systems, he explains.
As for the overall outlook for RFID, “it makes sense for some specific applications, like restocking a supply cabinet at a hospital,” Sampson says. “But the problem is that with mass-market consumer goods and warehouses, there’s just not enough return on investment.”
The technology itself has long since proved its value, Sampson says, citing its use in applications ranging from passports and credit cards to the transponders that allow vehicles to bypass highway toll booths. “But while the technology is getting used, it just doesn’t work well on mass consumer goods, with what we’re doing in logistics,” he says. “It’s just a matter of some company finding the right application to really drive down the cost of the tag, and then it could really be a solution in logistics. But until then, it’s just too expensive except for these specific cases.”
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”