The RFID Is in the Mail
International postal services and couriers are testing the waters with RFID solutions
By Dr. Peter Harrop, IDTechEx, www.idtechex.com
RFID first entered the postal service in Europe with active tags being placed on random samples of postal packages and letters. Many countries participated in order to assess the level of service and calculate equitable cross charges between the postal services of different countries.
This tagging practice continues today as new RFID applications arise. One of these applications is the tagging and tracking of postal bags. The Italian Postal Service has been a leader trying to increase efficiencies in this application, among others.
Recording postal deliveries
In late 2005, Microsoft started marketing its new RFID system for postal and courier services at the Taipei 2005 Stamp Exhibition in Taiwan. Microsoft wishes to persuade the Taiwan government postal service to go for a package device it claims can ensure the smooth, safe, and recorded delivery of tagged packages and parcels.
The key sponsor of the Taipei 2005 exhibition, Taiwan's Chunghwa Post company, is considering whether to use the Microsoft RFID package device, and a decision is expected soon. Microsoft has also had talks with India's postal service about using the RFID system. If RFID were deployed by India's postal service, it would probably be used for its premium SpeedPost service. Microsoft has developed the software for the RFID system and is working with companies like Texas Instruments for the hardware components.
Microsoft also offers Web site software that allows post offices to take orders online. The outgoing package RFID tag is about the size of a playing card with a sticker on one side to hold it in the package. It contains information about the package's contents, sender, and destination.
Reducing costs of returns
According to Direkk UK, a consultancy on e-commerce, returns cost up to two times the outgoing shipping cost of an item. Around 6% to 9% of Internet orders are returned, though this is much higher for clothing. About 5% of internet returns are due to incorrect ordering (up to 0.5% of the total sales). Further, delays in delivery can significantly increase return costs.
FedEx's NetReturn API shipping network has therefore begun a unique project with Intellareturn Corporation, USA, to reduce the cost and labor involved in handling returns. Any RFID label registered in the Intellareturn Smart Return Service database links to a Web site that triggers an automated FedEx pickup. The courier knows what the item is, who owns it, and where it needs to be shipped to for return. All billing, label generation, online e-mail notifications, and tracking are provided through the FedEx network.
The Smart Return Service integrates product identification, warranty administration, and return logistics. RFID labels are used to automate identification and trigger the return of any item. Intellareturn aims to create a seamless return supply chain network, where products or packaging labels wirelessly transmit their identification to the Internet. Real-time interaction between products and logistics networks via the Internet or local area network help reduce expense in lost, stolen, wasted, or delayed product returns, improving the efficiency of the supply chain.
The smart labels have a Return ID Stamp(tm) that is used to track items as they are being returned. Elliot Klein of Intellareturn explains the benefits. "This is especially effective for lost and found systems and methods," says Klein. "Our system and method serves as a registration incentive to register a new product warranty. The 'finder' of a missing item with a Return ID Stamp is encouraged to contact us (or the courier) based on the 'reward' notice on the label. Intellareturn enables low-cost automated methods for returns—in essence, building the basic communications protocols of the Internet directly onto low-cost labels."
The Intellareturn network builds on the existing infrastructure of express parcel carrier and airline transportation networks to help provide a global, real-time product registration, payment, tracking, and product return solution. "At this time, we have full flexibility to establish strategic alliances and market plans with any logistics carriers," says Klein. "Our relationship with the FedEx NetReturn service serves as our proof-of-concept partner. We continue exploring opportunities with leading parcel services to integrate the Intellareturn strategy and solutions for RFID and smart labels into their business plans for new customer services and internal operational efficiencies."
Deutsche Post and UPS
Deutsche Post of Germany has bought courier company DHL, so now it ships about 27 billion items yearly. DHL has carried out successful item level tagging using 13.56 MHz tags from Identec, and wishes to tag everything in this way using EPC coding. In late 2005, DHL was assessing bids for a one billion item requirement for HF tags and associated systems.
Cost reduction and service improvement are the main objectives, but crime reduction is also a consideration, as DHL wishes to eliminate barcodes. Both read-only and read/write tags with 96 bits of read-only ID have been used so far. Speaking at Smart Labels USA 2004, Trevor Pierce of DHL said they intend to roll out using 13.56 MHz tags that they are satisfied will be robust enough for their purposes.
UPS began a series of pilot tests in 2004 in both its package delivery business and its supply chain solutions business, serving many customers who must comply with upcoming RFID mandates. In one trial, passive RFID tags are replacing bar codes on reusable fiberboard tote boxes used to shuttle packages through UPS's automated facilities. The objective is to extend the life of the tote boxes and to reduce the read-failure rates of the barcodes, which tend to wear off over time. In another pilot, RFID tags have been attached to UPS trucks in an effort to monitor vehicle activity moving on and off the property at three different locations.
Much of the work to date on UPS tote boxes has involved tinkering with the details of specific applications to achieve the right costs and performance trade-offs. For example, UPS has tried to balance the longevity of the tote box with the life of the tag, or to balance distance from the reader with the speed of the truck. Another challenge has been reducing the high rate of reader failures.
Integrating RFID with UPS's software systems has not been difficult because, unlike most software applications, UPS's code is already designed to identify and track individual items uniquely and capture all the data associated with them. UPS sees many opportunities to expand its use of RFID, particularly by beginning with sensitive items. The handling of hazardous materials and high-value items, which currently require more human involvement, are a priority here. UPS has concluded that RFID read rate is not better than its current 2D barcode system, and it is not poceeding with item-level tagging.
Dr. Peter Harrop PhD, FIEE, FCIM is Chairman of IDTechEx Ltd. He was previously Chief Executive of Mars Electronics, the $260 million electronics company, Chairman of Pinacl plc, the $100m fiber optic company, and Chairman of Flying Null, the chipless tag company. He has carried out RFID consultancy for Kodak, GEC, Manchester Airport, Diageo, among others, and he lectures and consults internationally on low-cost RFID, from London to Dubai to Singapore. He can be reached at p.harrop@idtechex.com.
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