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.
Jeremy Van Puffelen grew up in a family-owned contract warehousing business and is now president of that firm, Prism Logistics. As a third-party logistics service provider (3PL), Prism operates a network of more than 2 million square feet of warehouse space in Northern California, serving clients in the consumer packaged goods (CPG), food and beverage, retail, and manufacturing sectors.
During his 21 years working at the family firm, Van Puffelen has taken on many of the jobs that are part of running a warehousing business, including custodial functions, operations, facilities management, business development, customer service, executive leadership, and team building. Since 2021, he has also served on the board of directors of the International Warehouse Logistics Association (IWLA), a trade organization for contract warehousing and logistics service providers.
Q: How would you describe the current state of the contract warehouse industry?
A: I think the current state of the industry is strong. For those that have been focused on building good client relationships over the years, I think it’s a really exciting time. Coming out of all the challenges of the past few years, I think there’s a lot of opportunity for growth and deeper partnerships. It’s fun to see the automation and AI (artificial intelligence) integration starting to evolve [in a way that’s] similar to what we saw with WMS (warehouse management systems) in the early 2000s.
Q: You are now president of your family firm. Is it an advantage having grown up in the business as opposed to working elsewhere?
A: I definitely believe it was an advantage growing up in the business. Whether it’s working with family or someone else in the industry, there’s always an advantage when you have mentors[to guide] you. I’ve been blessed to have several mentors, some in the industry, others just in life, and I’m thankful that they were willing to mentor me and that I was willing to listen to them.
Q: What are the biggest challenges currently facing 3PLs, and how are you addressing them?
A: Labor and legislation are both tough right now. The two seem to have a lot to do with each other, and it can make it tough to find and retain people. So I think we’ll see more and more automation of processes industrywide.
Q: Third-party service providers often must handle a wide variety of products for a lot of different clients. Does this variety make it difficult to invest in automation and other new technologies?
A: It can make things more difficult when looking at certain automation, but it’s in the “difficult” that a lot of opportunities lie. It would be tough to find a single solution that fits every client’s needs, but there are always opportunities to improve in certain areas. It just takes a bit of vision and commitment, and a willingness to invest in your own long-term success.
Q: As a 3PL, what do you look for when selecting the clients you work with?
A: Quality relationships that will last a long time. When both parties are happy and working together in the same direction, everyone wins.
Q: You’ve been a board member of the International Warehouse Logistics Association since 2021. Why is your involvement with this organization important to you?
A: I think it’s important to understand what’s happening in the industry. IWLA is a great resource for staying up to date and getting a solid education when it comes to the latest logistics trends. I also think it’s important to give back and pass along what we’ve learned to those just getting started in the business. As important as it is to have a mentor, it’s just as important to mentor and help others.
“While there have been some signs of tightening in consumer spending, September’s numbers show consumers are willing to spend where they see value,” NRF Chief Economist Jack Kleinhenz said in a release. “September sales come amid the recent trend of payroll gains and other positive economic signs. Clearly, consumers continue to carry the economy, and conditions for the retail sector remain favorable as we move into the holiday season.”
The Census Bureau said overall retail sales in September were up 0.4% seasonally adjusted month over month and up 1.7% unadjusted year over year. That compared with increases of 0.1% month over month and 2.2% year over year in August.
Likewise, September’s core retail sales as defined by NRF — based on the Census data but excluding automobile dealers, gasoline stations and restaurants — were up 0.7% seasonally adjusted month over month and up 2.4% unadjusted year over year. NRF is now forecasting that 2024 holiday sales will increase between 2.5% and 3.5% over the same time last year.
Despite those upward trends, consumer resilience isn’t a free pass for retailers to underinvest in their stores by overlooking labor, customer experience tech, or digital transformation, several analysts warned.
"The 2024 holiday season offers more ‘normalcy’ for retailers with inflation cooling. Still, there is no doubt that consumers continue to seek value. Promotions in general will play a larger role in the 2024 holiday season. Retailers are dealing with shrinking shopper loyalties, a larger number of competitors across more channels – and, of course, a more dynamic landscape where prices are shifting more frequently to win over consumers who are looking for great deals,” Matt Pavich, senior director of strategy & innovation at pricing optimization solutions provider Revionics, said in an email.
Nikki Baird, VP of strategy & product at retail technology company Aptos, likewise said that retailers need to keep their focus on improving their value proposition and customer experience. “Retailers aren’t just competing with other retailers when it comes to consumers’ discretionary spending. If consumers feel like the shopping experience isn’t worth their time and effort, they are going to spend their money elsewhere. A trip to Italy, a dinner out, catching the latest Blake Lively and Ryan Reynolds films — there is no shortage of ways that consumers can spend their discretionary dollars,” she said.
Editor's note:This article was revised on October 18 to correct the attribution for a quote to Matt Pavich instead of Nikki Baird.
A real-time business is one that uses trusted, real-time data to enable people and systems to make real-time decisions, Peter Weill, the chairman of MIT’s Center for Information Systems Research (CISR), said at the “IFS Unleashed” show in Orlando.
By adopting that strategy, they gain three major capabilities, he said in a session titled “Becoming a Real-Time Business: Unlocking the Transformative Power of Digital, Data, and AI.” They are:
business model agility without needing a change management program to implement it
seamless digital customer journeys via self-service, automated, or assisted multi-product, multichannel experiences
thoughtful employee experiences enabled by technology empowered teams
And according to Weill, MIT’s studies show that adopting that real-time data stance is not restricted just to digital or tech-native businesses. Rather, it can produce successful results for companies in any sector that are able to apply the approach better than their immediate competitors.
“ExxonMobil is uniquely placed to understand the biggest opportunities in improving energy supply chains, from more accurate sales and operations planning, increased agility in field operations, effective management of enormous transportation networks and adapting quickly to complex regulatory environments,” John Sicard, Kinaxis CEO, said in a release.
Specifically, Kinaxis and ExxonMobil said they will focus on a supply and demand planning solution for the complicated fuel commodities market which has no industry-wide standard and which relies heavily on spreadsheets and other manual methods. The solution will enable integrated refinery-to-customer planning with timely data for the most accurate supply/demand planning, balancing and signaling.
The benefits of that approach could include automated data visibility, improved inventory management and terminal replenishment, and enhanced supply scenario planning that are expected to enable arbitrage opportunities and decrease supply costs.
And in the chemicals and lubricants space, the companies are developing an advanced planning solution that provides manufacturing and logistics constraints management coupled with scenario modelling and evaluation.
“Last year, we brought together all ExxonMobil supply chain activities and expertise into one centralized organization, creating one of the largest supply chain operations in the world, and through this identified critical solution gaps to enable our businesses to capture additional value,” said Staale Gjervik, supply chain president, ExxonMobil Global Services Company. “Collaborating with Kinaxis, a leading supply chain technology provider, is instrumental in providing solutions for a large and complex business like ours.”
However, that trend is counterbalanced by economic uncertainty driven by geopolitics, which is prompting many companies to diversity their supply chains, Dun & Bradstreet said in its “Q4 2024 Global Business Optimism Insights” report, which was based on research conducted during the third quarter.
“While overall global business optimism has increased and inflation has abated, it’s important to recognize that geopolitics contribute to economic uncertainty,” Neeraj Sahai, president of Dun & Bradstreet International, said in a release. “Industry-specific regulatory risks and more stringent data requirements have emerged as the top concerns among a third of respondents. To mitigate these risks, businesses are considering diversifying their supply chains and markets to manage regulatory risk.”
According to the report, nearly four in five businesses are expressing increased optimism in domestic and export orders, capital expenditures, and financial risk due to a combination of easing financial pressures, shifts in monetary policies, robust regulatory frameworks, and higher participation in sustainability initiatives.
U.S. businesses recorded a nearly 9% rise in optimism, aided by falling inflation and expectations of further rate cuts. Similarly, business optimism in the U.K. and Spain showed notable recoveries as their respective central banks initiated monetary easing, rising by 13% and 9%, respectively. Emerging economies, such as Argentina and India, saw jumps in optimism levels due to declining inflation and increased domestic demand respectively.
"Businesses are increasingly confident as borrowing costs decline, boosting optimism for higher sales, stronger exports, and reduced financial risks," Arun Singh, Global Chief Economist at Dun & Bradstreet, said. "This confidence is driving capital investments, with easing supply chain pressures supporting growth in the year's final quarter."