The New Wave in Cargo Count
By Henry E. Seaton

November 2004
Reprinted from

Q One of our major customers has asked us to accept computer-generated reports from an RFID system as evidence of its piece count for purposes of cargo loss claims. I do not fully understand this technology and do not understand whether this is a good idea. Should we agree to it?

A A radio frequency identification, or RFID, is an electronic scanning technology that, as increased use drives costs down, will allow more and more merchants to tag and track every item of inventory from production through to the end user. Wal-Mart and others are issuing mandates that their vendors move to this technology.

RFID uses a small electronic activation device affixed to an item to identify it in a number of ways, such as time and place of manufacture. Although RFID tags contain no batteries, they can transmit this information when activated by a scanner. This technology should eliminate any manual counting of inventory, reduce out-of-stock situations and save thousands of hours spent identifying products on hand or in storage.

Within a few years, I expect you will see RFID scanners installed on shipping and receiving docks throughout the country to read and identify items as quickly as they are loaded on or off a trailer — without even breaking the shrink wrap.

This technology could do wonders for eliminating miscounts that currently lead to carrier shortages because of purely human error. Yet, I am not sure I would be quick to surrender, based on RFID records, all recourse to dispute a claim. We know that to err is human, but by that same token, RFID technology isn’t infallible. Mis-scans can occur. For example, the signal reflected back from the tags on individual items might not be nearly as strong as the tags attached to the pallets and larger outside shipping units.

To the extent the industry appears to be heading toward the use of spotted trailers for loading and/or unloading, carriers are best served by insisting on shipper load and count service conditions with seals applied. However, if the shipper insists on abandoning this practice in favor of the RFID program, you should insist that seal integrity be maintained and that any shortage revealed by the RFID technology be noted on the bill of lading at time of delivery. That way you can be sure that all items can be re-scanned if something was inadvertently missed.
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