Ports’ Technology Failure
The national debate over port ownership and cargo security often features this sobering statistic: only 5 percent of cargo containers arriving in the United States are inspected. But perhaps an even more disturbing statistic is that fewer than 1 percent of cargo containers – Pentagon cargo excepted – are tracked with simple radio-frequency identification (RFID) tags – a technology that could help pinpoint where a container has been and whether someone has broken its seal in transit.
Each RFID tag can store a unique ID number that is “read” by fixed or handheld electronic readers. Such tags can also store bits of information from attached sensors. They present an obvious and relatively cheap way to help address the cargo security question.
But the industry and government have barely begun to adopt this existing technology, says Daniel Engels, an MIT mechanical engineer and former research director at MIT’s Auto-ID Labs, a leading center of research on RFID technology.
The problem isn’t a technological one, Engels points out. Rather, the industry has been slow to recognize a business model, governments aren’t forcing the industry’s hand, and the global cargo industry has not been motivated to forge standards.
Technology Review: How many cargo containers today are logged with RFID tags as they depart and arrive at world ports?
Daniel Engels: Outside of the Department of Defense and a few pilot programs around the world, I would say there are virtually no general cargo containers being RFID tracked. It’s all done manually. There are some shipments within cargo containers being tracked with RFID; pharmaceutical companies have put tags on their shipments to get a temperature history, so they know when a refrigerator lost power. But those are shipments within containers. For containers themselves, the shipping companies have been slow to make a business case, and their customers are not forcing them along.
TR: What is the theoretical value of RFID tags for enhancing security?
DE: Of course, security starts by inspecting cargo when containers are loaded. Once that’s done, RFID has a great potential to provide real-time visibility and intrusion detection, as well as quality measures within containers. With RFID tags and integrated sensors I can know exactly where that container is. I can know that nobody has tampered with it. It can also speed customs processes on both ends, thereby reducing delays.
TR: Is it even feasible that all countries and ports will ever agree to one system? Can it be done on a practical level?
DE: It can absolutely be done. The problem is that it’s never been done before. And whenever something hasn’t been done before, it takes awhile to build up infrastructure. It takes time and money. Think of how long it took bar codes to get adopted. In 1974, the first bar code was scanned on a package of Wrigley’s chewing gum. It wasn’t until 1984 that Wal-Mart required it of all its suppliers. Now you have bar codes on all retail products. In 2004, the FDA required linear bar codes on all prescription drugs starting on April 26, 2006. So this year – 32 years after bar codes were first used – you are now required to put a bar code on a prescription drug. That’s an awfully long time.
TR: But nobody was ever worried that a pack of chewing gum would help smuggle a hydrogen bomb into the United States. What’s it going to take to get electronic tracking for cargo containers?
DE: The question is how fast is the U.S. government going to mandate the use of these tags? They do have new container security rules, but the affected companies oppose the rules, because it requires change and the expenditure of money. These industries have tremendous political clout.
TR: What would it cost?
DE: About $200 per container buys you active intrusion detectors linked to RFID tags that are on the market today. According to U.S. Customs, approximately 25,000 containers are offloaded daily in the U.S., which makes for an added cost of over $1.8 billion per year just for tags. Then you have to outfit ports with tag readers and information systems that support the readers. Who would pay for this infrastructure? This could be widespread on the U.S. side, and could potentially be [put into] handheld devices at the point of departure and be integrated into Customs rules and regulations. You need U.S. Customs people at departure ports, or someone trained and entrusted by the U.S. government, to perform the inspections prior to sealing the containers. Clearly, the U.S. government would need to pay for these people. And of course everyone needs to use standards.
TR: Government mandates aside, can a business case be made for RFID tags on containers?
DE: The DOD sees a very specific value. They’re willing to spend $100 per tag so they can know when containers have arrived, what’s in them, and to make sure troops are ready and able to fight. Wal-Mart is deriving value: they are now requiring manufacturers to put RFID tags on cases and pallets of goods.
The question is: Where is the value for port operators and container companies and shipping companies and the shippers? What is the value for Maersk [the cargo shipping giant] to know where all its containers are at any point in time? Having greater visibility of your assets can be as valuable to businesses as to the DOD. Many times, businesses will ship with containers and it can take them well over a day just to find where something is. Has it even been loaded on the ship? And containers fall off ships all the time, surprisingly enough. Providing that asset visibility is valuable – but the cost may not provide a sufficient return on investment.
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