By DAVID ARMSTRONG
San Francisco Chronicle
February 23, 2006
These days, sophisticated descendants of that pioneering system are being deployed to track commercial cargo on ships, airplanes and trucks - to ensure the system is safe from terrorists and thieves.
That task has been given much more importance after Sept. 11, when fears of a terrorist weapon hidden in cargo container rose sharply. The fear of terror was raised again in recent days, as a company in the United Arab Emirates, Dubai Ports World, won Washington's permission to operate terminals at six major U.S. ports including New York and New Orleans.
While such fears have preoccupied shippers, politicians, transportation workers and law enforcement officers over the past 4 1/2 years, only a small percentage of commercial freight is tagged with state-of-the-art systems that can tell trackers what's inside a container, where it is at any given moment and whether the container has been tampered with.
Implementation of such systems has been delayed for a variety of reasons, including the cost of purchase and installation, the fact that such devices are not required by law, and the desire to balance the need for security with the need to keep the nation's commerce flowing, said William Corley, executive director of the International Cargo Security Council, a nonprofit association of shippers, ports, retailers, trucking firms and others.
"Standards on this technology are still kind of emerging," Corley said. "Our supply chains are part of the global supply chain, and security is part of global commerce. Before 9/11, there were security issues with imports and exports. Long after people are thinking about 9/11, they will still be there."
Even so, leaders in both major political parties have called a potential attack using a cargo container the weak underbelly of the nation's security.
In a statement opposing the Dubai deal, Sen. Dianne Feinstein, D-Calif., said, "Much more needs to be done by the United States to help secure our seaports. Each year, approximately 13 million shipping containers enter United States ports, including 6 million from overseas. Despite this high volume of cargo, only 5 percent of the containers are inspected."
Some fear the worst because of the present state of port security.
A number of U.S. companies make advanced security systems in a variety of forms.
So-called passive systems use an embedded chip similar to supermarket bar codes. Wal-Mart employs passive systems to track its cargo around the world.
Active systems using radio frequency identification go a step further, affixing small electronic seals to cargo containers to warn of tampering, but these devices are less common in the corporate world.
Sunnyvale's Savi Technology, a 17-year-old, privately held firm, makes a proprietary RFID system. Its most prominent customer is the Pentagon. Last week, the company said the Department of Defense had increased its outlay for a bundle of Savi RFID products to $424.5 million over the next five years. The contract used to be for $207.9 million for three years.
A spokesman for Savi Technology declined to provide pricing information on its RFID system. In 2003, the company sold an earlier model of an electronic seal for $5 to $80 apiece, depending upon the number of functions it was configured to perform.
"The extension of the ordering period and raising of the contract ceiling is necessary in order to continue to provide active RFID tags and associated supplies and services for shipments of materiel to the Middle East in support of Operation Iraqi Freedom," the Department of the Army said in a statement.
The potential market for such systems, whether they're employed at home or abroad, is significant. Chain Link Research, a Cambridge, Mass., consultancy, estimates that the U.S. market for radio frequency identification could reach $20 billion by 2010.
But the operative word here is potential, said Chain Link Chief Executive Officer Ann Grackin. "They're not being forced to do it," she said, referring to major shippers and port terminal operators in the corporate world. "They're taking their sweet time."
Savi Technology's contract with the Army is not atypical, she said. The Pentagon often gets first crack at cutting-edge technology, with corporate customers joining the queue later.
"Over time, Customs will probably give preferential treatment" to secured cargo, Grackin said, thus speeding entry into the country and saving money. But there's no firm date on when that might happen.
Washington officials point out that they have already taken a number of steps to secure the nation's transport system, especially its hundreds of seaports, which handle 90 percent of America's imports from overseas.
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