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U.S. Department of Transportation U.S. Department of Transportation Icon United States Department of Transportation United States Department of Transportation

Public Roads - Jan/Feb 2009

Date:
Jan/Feb 2009
Issue No:
Vol. 72 No. 4
Publication Number:
FHWA-HRT-09-002
Table of Contents

Electronic Freight Management

by Randy W. Butler

In 2007, the United States set a record year for freight transport, moving more than $2.5 trillion in goods into and out of the country. The Office of Freight Management and Operations within the U.S. Department of Transportation (USDOT) expects freight transport to grow rapidly in years to come as markets continue to open around the world. Moving freight across the globe is complex, involving processes for exchange of information among multiple partners and agencies as well as transfer of goods between modes of transportation.

Most of the Nation’s freight is shipped using a collection of organizations — referred to as supply chain partners — that include shippers and cargo handlers. Most of these partners do not communicate electronically, resulting in delays, lost goods, and reduced efficiencies along the way. Accurate, efficient, and inexpensive tracking methods — essential for both port security and business success — are limited.

 

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USDOTs new EFM system provides an accurate, efficient, and inexpensive Web-based method of tracking the transport of goods across the world.

 

American businesses that seek information on their freight as it is being shipped have two choices: contract with private, end-to-end shippers that track freight using proprietary systems, or ship through a patchwork of mostly unconnected companies and modes, foreign and American, that pass responsibility and paperwork along with the freight.

Private shipping companies, such as FedEx® and UPS™, use their own customized systems to track the status and location of their shipments as they cross the globe, resulting in accurate information from origin to destination. Shipping companies like these use electronic technologies to identify and track the movement of goods and to provide required information to government agencies as cargo crosses international, national, and State borders. Tracking freight electronically offers a variety of benefits: efficiencies and cost savings from continuous tracking, maximizations of carrying capacities, and more accurate forecasts of arrival and pickup times. Plus, no effort, fuel, or space is wasted.

Recognizing the value of improved freight tracking, USDOT launched the Electronic Freight Management (EFM) research initiative in 2006. The EFM initiative is addressing the challenge of tracking freight accurately and in real time. Specifically, the EFM system focuses on developing an open, Internet-based system for tracking freight as it moves across borders and from mode to mode, without the expense of engaging proprietary shipping services.

The EFM system, now entering its third and final phase of evaluation and deployment, will be available in 2009 as a Web-based tool accessible to all businesses and shippers in the United States or abroad to configure their supply chains and connect with their supply chain partners. An end-to-end system for tracking shipping information, EFM mimics the efficiencies of proprietary, integrated systems for enhanced tracking and security connecting all supply chain partners in the information loop rather than parsing information out on an individual, piecemeal basis. The EFM system provides near real-time information sharing — tracking the movement of goods from the time of order to the manufacturer to the time of delivery.

The Research Challenge

The EFM research has three main goals: (1) improving the efficiency and productivity of the freight logistics supply chain through the electronic exchange of shipping information from origin to destination, (2) improving data accuracy throughout the process, and (3) minimizing costs for shippers and supply chain partners.

Another goal of the initiative is to design a system to ensure that data are entered once but used many times, thereby eliminating data transcription errors. The EFM system aims to help companies replace paper trails with electronic information, freeing up human resources that were previously devoted to manual data entry. Data captured once can be shared with all parties engaged in particular shipments. Further, authorized supply chain partners will be able to use the system without having to replace or overhaul their existing information systems.

International Trade Growth Facts and Figures

  • The value of exports and imports rose in constant dollars from $2.1 trillion in 2002 to $2.5 trillion in 2007, and the tonnage increased from 1.7 billion to nearly 2.0 billion in the same period.
  • The value of merchandize trade has grown sixteen-fold in inflation-adjusted terms since 1951.
  • The sum of exports and imports in 2035 is expected to reach 3.5 billion tons worth $12.3 trillion in 2002 dollars. Source: USDOT, Federal Highway Administration, Freight Facts and Figures 2008, Washington, DC.

In developing the EFM system, USDOT and its partners are incorporating innovative e-business concepts, facilitating process coordination and information sharing through public-private collaboration. Further, the EFM team is working directly with the freight transportation industry to identify opportunities for implementing the tool.

The Research Roadmap

In 2006, USDOT defined three phases for the EFM initiative, with completion scheduled for 2010. To date, funding for EFM from the most recent transportation legislation — the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) — totals $7 million. The first phase, funded at $1.4 million and covering system development, standards, and architecture, is complete. Phase 2, an operational test of the system, was funded at $4 million and finished successfully in December 2007.

Phase 3, funded at $1 million and completed in fall 2008, involves an independent evaluation of the EFM system. The last set of activities under phase 3 will focus on industry adoption, with $0.6 million allocated for targeting central manufacturing and trucking locations, such as Columbus, OH, and Kansas City, MO, for early adoption. The goal is for 50 trade development zones to adopt the system by 2010.

An important tool for promoting EFM is a Web site developed for shippers, www.efm.us.com. The Web site is an expansion of the prototype deployed in phase 2 for the operational test. The new, expanded site includes a capability for cost-benefit analyses for shippers interested in using EFM.

System Infrastructure And Security

Typically, freight movements are supported by point-to-point communications, either paper-based or electronic. Using the Internet to make data broadly available to any authorized and authenticated user in real time is key to improving the exchange of information along a supply chain and, ultimately, making freight transportation networks more efficient and secure. This type of data exchange provides buyers and shippers (owners of the supply chain) with visibility into their supply chains, which enables them to see where the goods are located and provides critical status information.

 

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This diagram shows a schematic example of a typical supply chain network showing the modes and phases needed for a specific shipment from China to the United States.

 

Freight supply chain partners are likely to have a broad mix of technology infrastructures and application platforms that are usually incompatible and unable to share data. To help solve this problem, the EFM initiative developed an Internet-based system that provides an open platform (or architecture) built on data standards that enable partners to exchange needed information seamlessly and dynamically. The system features standard (off-the-shelf) technology and Web components already used successfully in a variety of industries. In addition, the EFM format offers uniform access to existing, customized database formats, computing platform independence, and customizable services.

 

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Homepage banner from the new EFM Web site.

 

The openness of the EFM architecture lends itself to the constantly changing business environments of supply chain transactions. By using this format, supply chain partners can automate daily business interactions and streamline business processes. Diverse technology systems can communicate with each other in a service-oriented architecture (SOA), and new Web services can be implemented incrementally, leveraging existing information technology assets by reusing them for EFM.

No central data repository needs to be deployed as part of the EFM concept; instead, cross-agency messaging is accomplished on demand and in real time. To facilitate customer use, EFM will contain a function similar to the familiar yellow pages of phone books, standardizing the directories of information on Web services and listing their capabilities, location, input requirements, and expected output or service performed. Supply chain partners will be able to use these entries to learn the specifics of communicating with other partners’ Web services.

Information sharing within EFM is implemented with strict data security requirements. Secure encryption and digital certificates are part of the system to ensure that information is sent and received only between authorized partners, is not corrupted along the way, and is complete and unadulterated. This type of security allows multiple supply chain partners to share data within the system with the confidence that only authorized partners will have access to sensitive business data.

According to Jon Bosak, distinguished engineer at Sun Microsystems™, EFM is “the most compelling illustration of the concept of service-oriented architectures in practical use that I’ve ever seen. It’s the most useful combination of SOA and electronic documents [Universal Business Language, or UBL] that I can imagine.”

Testing the EFM Prototype

In 2007, the USDOT Intelligent Transportation Systems (ITS) Joint Program Office funded and helped launch phase 2 of the EFM research, an operational test of the prototype to evaluate the system in a real-world, international air-freight supply chain. The Federal Highway Administration’s (FHWA) Office of Freight Management and Operations, in conjunction with the ITS Joint Program Office, conducted the 6-month test in partnership with Limited Brands, located in Columbus, OH, and its supply chain partners in Columbus and Hong Kong.

During this testing period, the ITS Joint Program Office tracked more than 850 completed freight consignments using the EFM technologies. Early conclusions from the prototype testing indicate that the EFM system improved freight tracking across the board.

 

Major Phases of the EFM Initiative

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This timeline shows the primary phases of the EFM initiative.

 

Dynamic Data Sharing Under EFM

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As this diagram illustrates, all partners throughout the supply chain can access real-time information throughout the freight transportation cycle.

 

Timeliness of the freight release process. Goods were released 6 to 24 hours in advance of normal release through an Automated Air Manifest System.

Status information. The system provided near real-time automated status reports containing all supply chain events. Previously, the reports either were unavailable or required significant manual effort to prepare.

Timeliness of supply chain data. The system provided downstream partners earlier access to data on purchases, booking, and tendering. Users could access status data on demand that previously were available only from manually prepared daily prealerts and status reports. The advance shipment notice was available either 6 hours or up to 1 day earlier than current practices allow. Shipment status information was available to the broker 4 to 6 hours earlier.

Data quality on the supply chain. The prototype test revealed few errors in data entry because of reduced occasions for data entry and no rekeying of data on the supply chain, making it easier for partners to respond to discrepancies. The system proved to be more accurate than existing systems, requiring fewer corrections of errors.

 

View of the EFM Web Application

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This diagram shows the status of goods movement for all partners in the supply chain.

 

In addition, the EFM initiative successfully initiated the first steps in developing internationally accepted standards. Without standards, the system cannot be adopted globally. The EFM operational test validated the exchange protocols and standards, and the EFM team now is working with national and international standards organizations to coordinate the many components involved in producing data standards.

Value of the EFM System

Phase 3’s independent evaluation, conducted by Battelle Memorial Institute, assessed a series of factors:

System usefulness. Will the system allow for improved tracking of goods?

Cargo visibility. Will government agencies find value in the improved visibility — obtaining information on the number of containers coming into their community in advance — so they can use the information to improve transportation planning, safety, and security?

Supply chain and logistics performance. Will the system improve productivity? Will it help measure or forecast congestion and pollution reduction?

Deployment and scalability. Are the standards appropriate and supportive of industry requirements? What are the costs and benefits? How well does the system work when expanded to include additional users?

The independent evaluators have conducted a rigorous analysis of the EFM test to validate the benefits and also have cross-tabulated findings from other industry survey organizations, such as Capgemini and Aberdeen, to support the overall findings.

The benefits of this system will include the following:
Value to businesses and related decisionmakers. Companies can set up the nonproprietary system for a fraction of the traditional cost of proprietary or customized tracking systems. Companies enhance their reputation for reliability, security, and just-in-time service. Carriers do not put trucks on the road until cargo arrival and clearance are assured. Costs go down, efficiencies improve, unnecessary truck trips are avoided, and competition increases.

Rick DeShone, president of Codeworks, LLC, says, “EFM offers supply chain partners increased shipment visibility by producing real-time status information by as much as 48 hours over current systems in place. Once the infrastructure is in place, the cost of adding visibility for new partners is a fraction of the cost of traditional systems.”

Improved security. For companies that order goods from around the world, more reliable tracking and tighter transfer will improve security conditions for freight coming into the country from abroad.

Test Highlights

  • The test showed that the EFM system:
    Reduced total travel time from Hong Kong to Columbus, OH, from 96 hours to 82 hours (14 percent) within the 6-month test period.
  • Saved 10 hours and $259 per day in labor costs across the entire supply chain by reducing paperwork (more than 75 percent per shipment).
  • Improved data accuracy at the container freight station by 25 percent, reducing the number of office trips to verify data or fill data gaps. Reduced data entry errors by eliminating manual data entry by multiple partners and thus reducing rekeying errors.
  • Customs brokers could process 18 percent more shipments per week, in part due to earlier document processing because of data availability. Earlier access to data would speed the processing time of a shipment by an average of 16 percent.
  • Provided the supply chain partners with an efficient, secure, and reliable tracking system without requiring changes in existing business processes or purchase of new technologies or systems. EFM is not a new standalone system but is integrated into existing legacy systems. Source: www.efm.us.com.

Value to the economy. Shorter duration and more reliable shipping will stimulate freight productivity and enhance transportation efficiency. The EFM system will produce improved security, transparency, and reliability for the Nation’s supply chain, and increased cost savings and competitiveness to individual businesses.

 

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Using the EFM system, the transit time from Hong Kong to the container station was reduced by 12 percent.

 

Value to the environment. Truckers will be able to schedule pickups to maximize their loads, thus improving fuel efficiency. They will be able to plan their trips to avoid idling at docks or distribution centers while waiting for late arrivals. Overall, less fuel will be consumed and fewer greenhouse gases will be emitted from tailpipes.

Value to the transportation infrastructure. Fewer but fuller loads translate into fewer vehicles on U.S. roads, decreasing congestion and improving the flow of critical goods and services that support the Nation’s economy and productivity.

As companies implement the EFM system, the benefits will include driving down deployment costs, increasing participation, and enlarging the total flow of benefits. These types of technologies, if implemented with international standards, can play a major role in expanding the effective capacity of the Nation’s transportation system, improving efficiencies and reliability, and enhancing shipment integrity, which will contribute to national productivity and prosperity.


Randy W. Butler joined FHWA in 2003 as a transportation specialist on the Operation and Technology Team. Prior to that, Butler completed 35 years in the private sector managing freight transportation operations, engineering, customer service, business process reengineering, information systems, and project management supporting freight movement. His education includes a B.S. in engineering technology from the University of Memphis, an M.B.A. and M.S. in management information systems from Bellevue University, and an M.A. in transportation policy, operations, and logistics from George Mason University. Currently, Butler is pursuing a Ph.D. in information technology at George Mason University.

For more information, see www.efm.us.comor http://projects.battelle.org/fih/Files/EFM_White_Paper_Final_APR06.pdf or contact Randy W. Butler at 202–366–9215 or randy.butler@dot.gov.