Sunday 11 December 2011

Tracking technology gets smart

In a recent interview with Craig Montgomery, a senior vice president at SkyBitz, an asset tracking company based in Sterling, Virginia, I was told something that might surprise observers: security spending has not increased for traffic crossing the US-Mexico border.

“We do a lot of business with trucking companies that serve maquiladoras on the border all the way to Chihuahua and Monterrey,” he said. “We haven’t seen an increase or decrease in demand for tracking technology on traffic crossing into Mexico.”

Montgomery thinks that’s about to change, because low-power satellite technology can now pick up data from door, light, motion, and temperature sensors. This would offer truly global coverage, but this container intrusion technology still costs money, and would be deployed first for higher-value goods.

He is seeing large demand in the domestic United States, particularly in the oil and gas space where there has been huge growth in monitoring “frac tanks”, which are essentially water storage tanks used to support the requirement for pressurized fluids used in hydraulic fracturing. This monitoring technology could come in handy in Mexico, where the energy industry has seen a spike in oil theft. It could also help secure assets in remote Mexican mining camps that are not only out of the reach of cell towers, but also operating in parts of the country that are essentially lawless.

As well, last summer’s trucking agreement between Mexico and the United States should heighten the need for tracking. As it is, trucking is recognized by law enforcement as a significant means to move drugs into the United States.

“It will open new flow,” Montgomery said. “There is a known narcotics issue that exists south of the border, and there are also terrorist issues. But how do you effectively track materials as they cross? If you attempted to inspect every single container or truck that came across the border or into a port you would virtually grind to a halt the supply chain and the economy of any country – materials would back up, and products would spoil.”

It’s a delicate balance. The border officials are in a defensive position, but if they could leverage reliable technology that would track a container from a secure place of origin, then transit would be both fast and safe.

“What I see is things evolving to where trucks that originate in Mexico are required to have a GPS tracking device on the trailer as well as in the cab,” he said. “There also might be a cargo sensor and a door sensor, and they might be connected to the bill of lading.”

The goal would then be to have an inspection process that was essentially randomized – you can’t check everything – but that would allow customs’ officials to demand electronic and driver logs for every cab and trailer. This could track goods back to Mexican manufacturers, and even Mexican ports, should they reach that level of expertise.

“Mexican ports still do a lot of investment in technology,” Montgomery said. “They are optimizing management, and they have been making appropriate investments. But when it comes to security, regardless of where it is, the government has to be behind a plan that mandates security. And it has to be a thoughtful plan that actually works.”

In a perfect world, in which humans can plan effectively and aren’t corrupt, technology of the sort provided by SkyBitz could secure a product originally packed as far away as Africa. A container would simply pass through the various secure touch points in the supply chain, and arrive securely in the Americas. In the example of Mexico, if the port of Veracruz could lock down that kind of traffic, then – particularly with the new trucking agreement – it could be an important supplier to the southern United States.

The technology would also be effective at hindering small-scale thieving, or what in retail is called “shrinkage”. In these scenarios, the thieves don’t want to disrupt supply; they merely want to bleed it a little, and allow it to keep on coming.

“The smart thieves take something but not everything,” Montgomery told me. “They want the gravy train to keep on coming. The owners don’t know what’s happening – just that they are losing something between point A and point B.”

But smart tracking technology could tell owners, operators, and law enforcement officials where and when doors are being opened and closed, if loads are being moved, and even if temperatures are fluctuating. Suddenly, if anything out of the ordinary is happening, they know.

There is, however, a small problem with this scenario.

I had another interview with Dominique Bonte, group director of research-firm ABI’s telematics and navigation group, based in Brussels, Belgium. Though he is impressed by the technology, he cautioned that intermodal business models were obstacles to widespread adoption.

“The problem is that the container is a commonly used asset employed by different players,” he said. “Theoretically, having a logistics firm act as the single owner and point of control adds value to those firms willing to provide this service; however, that is a tiny portion of the container market.”

In fact, Bonte wrote in a recent report for ABI that “uptake of more advanced GPS-based solutions has been disappointing, despite several solutions having been made available.” And while ocean traffic is understandably quite secure, once a container hits a Mexican port the domestic rail and road systems present a host of challenges.

“A lot can happen to a container, and there is not much tracking of road-based traffic,” he said. “And, as we all know, there are a lot security concerns for land-based transport between Mexico and the United States.”

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