Strategic Assessment of RFID Markets in the Indian Transportation & Logistics Segment
A Frost & Sullivan White Paper
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.......................................................................4 2.....................................................10 Automatic Toll Collection .........................................................................................................................................................................................................................Strategic Assessment of RFID Markets in the Indian Transportation & Logistics Segment
1............................................................................12 E-passports (TBD)........................................................................................................................................................................................................................5 Market Drivers .....................5 Key Drivers and Restraints.........11 Automatic Fare Collection ................................................................................................5 Market Restraints ......3 Intro to RFID Technology .......................................................................................................................................................7 Market and Technology Trends ....................................................... Applications in Transportation and Logistics.3 Benefits of RFID in Transportation & Logistics.......................... Market Dynamics.............................................10 Tracking and Tracing................................................................................ Introduction ..................9 3.......................................................6 Total Market Forecasts and breakdown by application ................................14
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Passive tags have no internal power supply— they get powered by the reader’s signal and send a response to the reader.1. however they are more expensive and larger in size than passive tags.56 MHz High frequency are used. The following chart depicts the various components that make up the RFID ecosystem:
RFID tags can be broadly classified into: Active or Passive tags. are considered more reliable and robust. and printers. These tags typically have lower read distance of a few centimeters. if the transponder (an active tag) is placed inside the car. Ultra-high frequency (UHF) or UHFID tags. These cards have a read range of tens of centimeters. However. Active tags can work over long distances. On the flipside. There are various types of radio frequencies that facilitate communication between the tag and reader. The complete RFID solution comprises of: hardware (tags. they have longer lifespan. and processes. It works by retrieving data from a remote device called a tag and transmitting the information to an associated tag reader. some toll stations utilize contactless smart cards where the driver has to slow down at the toll booth and wave his card before continuing. middleware (interfaces between the hardware and application software). Active tags have their own internal power source and as a result. property.
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. For transit ticketing applications. smaller size and are cheaper to manufacture. Introduction
Intro to RFID Technology
Radio-frequency identification (RFID) is an automatic identification technology that can be used to track and identify people. with frequency between 300MHz and 3GHz. readers). For the toll collection application. depending on the specific application and distance between the tag and reader. UHF is an option to allow the vehicle to pass without slowing down. are predominantly used for tracking containers or shipments since they have a read range of hundreds of meters. contactless smartcards (ISO 14443) operating on 13.
cases. Real-Time location of the parcel/vehicle is a key advantage of RFID in logistics and Transportation. efficiency and visibility in operations in tracking pallets. reduction of fuel consumption and operating expenses • Improves traffic flow/reduces commute times • Reduces traffic congestion • Reduces emissions that are a major cause of pollution • Reduces operating costs for toll operators • Provides proven reliability and unparalleled accuracy Automatic Fare Collection Use of this technology helps in traffic management and easy access to public transportation such as trains. Easier and more reliable object identification will contribute to more secure and efficient transportation of goods. with the improved infrastructure and modernization of India airports. and RFID embedded in materials allows easy traceability. RFID supplements or substitutes other identification systems. and others. RFID can help airline companies to avoid misplacing of the baggage and is anticipated to reduce the waiting times. When used on baggage. Use of RFID can improve the supply chain of the courier companies. as more companies begin conducting new pilots and implementations. The RFID transponder can be integrated with technologies such as VSAT and GPRS for real time information.Benefits of RFID in Transportation & Logistics
Use of RFID technology has brought in significant advantages in transportation. Track & Trace • RFID can offer improved accuracy. and match them to their owner. RFID provides the advantage to the courier companies by tracking the goods as they flow through logistics systems without requiring line of sight presence. Long queues and waiting times can be reduced with the use of RFID. which require line of sight for identification. Major benefits of RFID in ATC are listed below: • Increases patron convenience and safety with payment on the move • Reduce transaction costs in terms of time and effort. or in postal and courier services. RFID helps in tracking and recording information.
Automatic Toll Collection Toll Management involves automatic toll clearance by the vehicles. It is found in a wide array of applications. RFID in baggage tracking is expected to become more prominent. This is evident by the increase of toll lane capacity. it helps these companies to track their goods. baggage. Following are the benefits for transit ticketing: • Reduce fraud and theft by being able verify the fare paid in transit ticketing • Increased convenience for transit passengers by eliminating the need to carry correct change for fare and reducing queues for buying tickets at stations • Transparency in transactions • Reduction in the waiting time • More reliable mode of ticketing
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. buses etc.
and can act as credible reference sites to build confidence in viability of RFID technology • The short term impact is medium. • The success of these RFID projects can trigger similar interest in private sector. Growing government interest and investment in RFID projects • The government agencies and public sector companies have taken the lead in piloting and implementing RFID for transportation and logistics-related applications. 2. The success of these pilot projects can trigger immense growth in this market over the long term.•
Reduced transaction time with automatic recharge facility on ticket
2. Increasing awareness level of RFID technology’s benefits among end-users
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. Pilot projects converting into full-fledged implementations • A large number of RFID pilot projects done in 2006 started to convert into real-time deployments in 2007 • Ongoing pilots projects such as the one by Indian Railways and India Post are expected to generate over Rs. with various government agencies engaged in pilots in various stages. Market Dynamics
Key Drivers and Restraints
High Market Drivers
Growing government interest and investment in RFID projects
Pilot projects converting into full-fledged implementations
Increasing awareness level of RFID technology’s benefits among end-users
Decline in prices of hardware through expansion of user base and local manufacturing
High cost of RFID compared to competing technologies Lack of regulations that mandate RFID adoption Lack of standardization and interoperability
1. • The sheer volume and size of these projects are generating enormous revenuegenerating opportunities for RFID suppliers. the document tracking initiatives by Indian Army 3. for example. 3000 Million during the forecast period if they manifest into live projects • Success of pilots can encourage other large government agencies to invest in RFID.
awareness levels are high among endusers End-users have a strong desire to go “high tech” by adopting new technology such as RFID Increasing awareness and knowledge of the benefits reduces barriers to adoption
4. the presence of alternate/existing technologies makes it difficult to change their conventional methods. RFID has been plagued by cost concerns • Given the large number of objects that need to be tracked in logistics applications. Lack of regulations that mandate RFID adoption • Unlike the U.. Hence integration is a challenge for global companies. the lack of alternative technologies forces end-users to adopt RFID. • Lack of interoperability is a concern where systems installed by one supplier are not able to interoperate with other suppliers’ systems
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. For example. However in track and trace. if DHL were to implement a RFID-enabled package tracking system. High cost of RFID compared to competing technologies • Despite having numerous advantages over other tracking technologies such as bar coding. it has to ensure that it runs the same system globally in order to ensure seamless integration. where large customers such as Wal-Mart and the Department of Defense have mandated the adoption of RFID for specific applications.S. there are very few reference sites to measure or predict the ROI that RFID can bring 2. unless mandated to do so 3. there are no mandates in India • This creates a scenario where potential customers still view RFID as a “good to have” rather than a “must have” solution • In certain applications such as transit ticketing. costs can reduce further • Lower cost can significantly boost uptake of RFID
1. Lack of standardization and interoperability • Different countries operate in different frequencies.• • •
Due to the “hype” over RFID over last few years. price of the tag is a key restraint • Increase in local manufacturers is likely to push prices lower and make RFID tags an attractive option • Due to low penetration levels of RFID in India. Decline in prices of hardware through expansion of user base and local manufacturing • Various companies have set up manufacturing facilities to produce RFID tags as well as smartcards locally • As the end-user base and volume of RFID hardware sales increase.
3 percent.1 depicts the revenue forecasts of the total Indian RFID Transportation and Logistics Market from 2006 to 2011. tracking & tracing application was the leading segment with 48.0 600.0 2006 2007 2008 Years 2009 2010 56. Chart 2.2 depicts the percent of revenues by application for the Indian RFID transportation and logistics market in 2007. Source: Frost & Sullivan
Chart 2.0 400.0 1200. the market was worth Rs. In 2007.2 percent of total revenues.8 percent share of revenues.0 0. In 2011.1
Note: All figures are rounded.1 percent. Automatic Toll Collection accounted for 2.2
1540.0 1000. 105.1 by 2011. the base year is 2007.
Chart 2. growing at a compound annual growth rate (CAGR) of 95. 1540.9 percent of total revenues. In 2007.
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.Total Market Forecasts and breakdown by application
Chart 2.0 800.6 105.0 Revenues (INR Million) 1400.8 1472.8 180.9 933. tracking & tracing application is expected to remain the largest application—growing to 92.8 million and it is expected to reach Rs.1 Total RFID in Transportation and Logistics Market : Revenue Forecasts (India).7 percent. with 48.0 200. with automatic toll collection accounting for only 0.3 depicts the percent of revenues by application for the Indian RFID transportation and logistics market in 2011.3 percent from 2007 to 2011. 2006-2011
Revenues 1600. Automatic Fare Collection was a close second. Automatic fare collection is expected to decrease to 7.
Tracking and Tracing 92.8%
Note: All figures are rounded. Source: Frost & Sullivan
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. 2011 Automatic Toll Collection 0.3%
Automatic Toll Collection 2.7%
Automatic Fare Collection 7.2 Total RFID in Transportation and Logistics Market: Percent of Revenues by Application (India).Chart 2. Source: Frost & Sullivan
Note: All figures are rounded. 2007
Automatic Fare Collection 48.9%
Tracking and Tracing 48.3 Total RFID in Transportation and Logistics Market: Percent of Revenues by Application (India).
and allow them to make purchases at merchant locations. smart cards are used in a variety of applications. RFID with barcodes and GPS can be used for track and trace. RFID together with barcodes. and Microsoft have released software products for various RFID applications. biometrics. Wipro. Software companies entering the RFID space Middleware/Software suppliers are entering the RFID system integration value chain by partnering with hardware suppliers. the transport agencies are beginning to offer value-added features in the smartcards. Multi-application Contactless smartcards in transit ticketing With the growing popularity of contactless smartcards for ticketing application. with an Indian company--Gemini Traze setting up an indigenous tag manufacturing facility in Chennai. Though the pricing of the tag is dependent on the application. The highly fragmented competitive environment is also a restraining factor in growth. However. The passengers can use it as a regular credit card. Similarly. The current standard for RFID is ISO 15693. higher usage levels is anticipated to result in decline in the hardware prices thereby more RFID deployments. thus proving the technology maturity and interest level in RFID. vendors are expected to effect lower pricing thus making their systems interoperable. which is EPCglobal Gen2 standard. with emerging standards and an open-architecture in the long term. the ‘Go Mumbai’ transit smartcard in Mumbai is expected to allow users to use it as a debit card. even when it is coupled with complimentary technologies. The lack of common standards and the lack of interoperability have kept the cost of RFID solutions high. In May 2008.
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. Sharp decline in cost of tags expected Prices of the tags are expected to drop in the near term. the Delhi Metro released the ‘Delhi Metro Citibank Credit Card’. GPS. Higher cost of the middleware in the rapidly growing applications is driving the overall Middleware market during the forecast period. IT giants such as TCS.Market and Technology Trends
RFID integration with complementary technologies RFID has huge potential in transportation applications. while a container or cargo is in transit or to be transferred from one place to the other. The Wireless Planning and Coordination (WPC) wing of India's Ministry of Communication assigned the 865-867 MHz UHF band for use by radio frequency identification devices. in addition to using it as a metro smartcard. Emerging Standards GS1 India has been launched to help Indian companies implement Electronic Product Code (EPC) based RFID applications. within short and long ranges. Within transportation applications.
i.0 2006 2007 2008 Years 2009 2010 2011 51. 902-928MHz and 950-956MHz. cargo tracking. tracking the movement of highly confidential documents.6 113. Track & Trace is expected to grow at a rapid pace of 129.2500 million for tracking all of its 200.e. Source: Frost & Sullivan
The Indian Railways has invested Rs.51.
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.6 Million in 2007 and is forecasted to reach Rs. it is conducting a pilot project for tracking its Speed Post shipments between Mumbai and Delhi.0
Note: All figures are rounded. The hardware market constitutes 60 percent. The Indian Army has piloted RFID by tagging 1000 documents for this purpose. Tagging large volume of documents has large potential for mass deployment of RFID tags in this application. 2006-2011
Revenues 1500. Another emerging RFID is document tracking.0 250.000 wagons over the next 4 years. Applications in Transportation and Logistics
Tracking and Tracing
Track & Trace applications such as parcel tracking.0 826.0
1420.3.20 million in a pilot project for tracking 1000 wagons. Emerging applications such as cargo tracking and vehicle tracking are expected to take-off in the long term (beyond 2011). The pilot was initiated by CDAC. the base year is 2007. Depending on the pilot’s success. Noida-.0 43. The Indian Postal Department is also dabbling with RFID. followed by Middleware and System Integration with 20 percent share each.0 1000.deploying UHF passive tags with frequency ranges of 865-870MHz.0 0.5 750. baggage handling and vehicle tracking are forecasted to be the key revenue generating applications in the Indian RFID market.
Chart 3. wagon tracking. Track and Trace application is estimated to be Rs. railway officials are planning to invest Rs.0
Revenues (INR Million)
1250.0 1356.1 RFID in Tracking and Tracing Market: Revenue Forecasts (India).0 500.0 percent during the forecast period. Government initiatives— especially for wagon tracking and parcel tracking are driving the Track & Trace application.1420 Million by 2011.
the processing time at tolls is targeted to be minimized. All the major ports are expected to embrace RFID for efficient traffic management and identification of containers. Increasing government expenditure in laying world class roads is entailing NHAI to improve the process efficiencies at toll plazas. Indian Airlines and Jetlite are also showing interest in RFID. Toll automation is estimated to be Rs. The decision making on RFID adoption by these companies is centralized at their respective global headquarters. Airlines are evaluating RFID for cargo tracking application.6000 to Rs.2 percent from 2007 to 2011.1 Million in 2007 and is expected to grow to Rs. Each RFID transponder costs Rs. RFID is expected to gain momentum among these courier majors by the end of forecast period. By the end of the forecast period. Major challenge faced by courier companies is that each country operates in different frequencies and hence integration of all the countries is a challenging task for the system integrators. Airport automation is an area of improvement for the authorities in order to be abreast with the latest technology
Automatic Toll Collection
Toll Management involves automatic toll clearance by the vehicles. Container Tracking is another budding application that is expected to witness strong growth during the forecast period.8000. Kingfisher Airlines has pioneered in RFID by conducting a pilot for cargo tracking. Baggage handling has not yet been explored by airline companies. DHL and Aramex are currently using barcode technology for courier tracking. RSRTC is planning to invest in tracking all its passenger buses in the coming years. growing at a CAGR of 37. and planning to test it in a few years.11 Million by 2011. Effective vehicle tracking capability of RFID is creating interest among the logistics and transportation companies. Indian subsidiaries of these companies follow their global technology for parcel tracking. but with quality of roads improving. RFID grids have been placed along with VSAT terminals at four locations that are about 50 km apart from each other. Pilot projects are anticipated to convert into full-fledge implementations by 2011-12. all the Toll Plazas are expected to upgrade their toll automation. Barcodes are still used for baggage tracking in the airports. These companies consider RFID as an impending technology of the future globally. NHAI is still a laggard in adopting RFID for toll collection.
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.3. Poor airport infrastructure is restraining the airline companies to adopt RFID for baggage handling. National Highway Authority of India (NHAI) is currently using contact less smart cards for 10 toll collection. Rajasthan State Road Transport Corporation (RSRTC) has implemented a pilot project with RFID transponders fitted into 56 Volvo buses running between Delhi-Jaipur and Jaipur-Agra. Contact less smart card with pre-paid features is deployed on optional basis for the commuters.Courier companies such as Blue-Dart. RFID is also used in combination with Very Small Aperture Terminal (VSAT) to track road vehicles. Safexpress is planning a pilot in 2009-10 for tracking its vehicles. Long queue and waiting time can be saved with the usage of RFID tags glued onto the vehicles. Managing the container traffic is posing a challenge for the authorities driving them to adopt RFID.
Source: Frost & Sullivan
NHAI is in the course of finalizing the technology for its toll automation. the base year is 2007. A key trend is the future would be to integrate the ticketing systems of different intra-city public transport systems.0 8.56 MHz contactless smartcards (ISO 14443).0 2. 2006-2011
Revenues 12. System integration involves tagging the vehicles and installing the readers at the tolls.0 9. and Washington D. 000.0 4. Delhi Metro was the first one to implement RFID-based AFC since its inception in 2002. NHAI is assessing RFID technology for Electronic Toll Collection. The benefits of this application to passengers and operators have generated strong demand from Indian transportation systems as well. or metro. train.1
Revenues (INR Million)
10. In large volumes.10.bus. all using AFC. This specific application is popular and widespread in parts of Europe. 25. Each reading point is estimated to cost Rs.1 Million. so a single card is valid for trips on all modes in the city-. and Chennai MRTS. thus the total expenditure on readers will be Rs. The success of this implementation has triggered demand from other public transport networks such as Mumbai Suburban Railways. North America and Asia Pacific— with the metro systems of London.
Automatic Fare Collection
Automatic fare collection (AFC) refers to the use of RFID-enabled contactless smartcards and tokens as a form of payment to travel across a public transportation system. Singapore.C.0 0. 90 percent of the total RFID solution cost is from the hardware market in this application.
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. The opening of Mumbai’s metro line and Bangalore metro is expected contribute immensely to the growth of contactless smartcards beyond 2011.0 2006 2007 2008 Years 2009 3.0 6. RFID-enabled contactless token are also sold.Chart 3. For single-rides.0 0.1
Note: All figures are rounded. the cost of AFC cards can be as low as Rs. In the long term.0 11. The readers would cost 5000-7000 rupees.0 6. Delhi-Gurgaon toll plaza works on Infra-Red technology in identification of the vehicle.2 RFID in Automatic Toll Collection: Revenue Forecasts (India). Kolkata Metro. An overwhelming majority of cards are 13. AFC reduces the need for ticket checking staff and helps prevent fraud.0 4.
The Chennai Mass Rapid Transit System (MRTS) initiated its smart card ticketing project in May 2008.0 40.8 percent from 2007 to 2011.1
Note: All figures are rounded. it was announced that the Mumbai Suburban Railway system would also allow travelers to use the same smartcard in its network. The Kolkata Metro.0
Revenues (INR Million)
101. short-term revenues earned from this project are expected to be low. implemented contactless smartcard in January 2007. due to low patronage of this system.Since 2007.1
109. approximately 5 lakhs smart cards have been sold.0 80.1 million by 2011. Close to 1 lakh cards have been sold till date. growing at a CAGR of 20. when new routes and 80 more stations of the Delhi metro will be open.3 100. and 70 readers have been installed across 17 stations. there exists an opportunity of up to 4 million cards being sold between 2008 and 2011 in the combined BEST and commuter train network. the number of smartcards and readers sold are expected to double by 2011.0 20.0 63. However. 2006-2011
Revenues 120. numerous real-time AFC implementations have been initiated in India.9 60. and it is expected to increase to 109.0 2006 2007 2008 Years 2009 13. which was the first metro to open in India. Over 6 lakh cards were sold till date and in June 2008. As of year-end 2007.1
107.0 0. With over 80 new stations expecting to be open after 2009.1 million. the base year is 2007.3 RFID in Automatic Fare Collection: Revenue Forecasts (India).
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.6 51. making it the most widespread deployment of RFID in the Indian transportation sector. The highest adoption is expected to be between 2009 and 2011. 51. of which close to 2 lakhs use smartcards.
Chart 3. Source: Frost & Sullivan
Some of the key features of the various implementations are as follows: • The Delhi Metro has a ridership of over 6 lakhs per day. Given the high ridership level in Mumbai’s public transport systems. revenues earned were Rs. The ‘Go Mumbai’ card introduced by Brihanmumbai Electric Supply and Transport (BEST) bus system in 2007 has been hugely popular. In 2007.
By September. along with a digital photograph and an optional fingerprint image. On June 25. when the United States mandated that visitors to the country should carry passports with machine-readable tamperresistant features. However. The larger memory capacity (32 kb or 64 kb) of a passport chip can store demographic details. (BMTC) and Karnataka State Transport Corp. This technology is a more secure and sophisticated form of travel document compared to the conventional paper-based passports since it is difficult to duplicate and modify the information stored on the chip.
Electronic-passports are essentially conventional passports with an integrated circuit chip embedded in the cover pages. In addition. The anticipated opening of the Bangalore Metro in 2011 is expected to boost ridership with the expected integration of BMTC with the BMRC ticketing system.5 lakh cards have been sold in Bangalore. all its member nations should comply with e-passport standards. It will be rolled out to government officials and diplomats in nd the 2 half of 2008. 2008. (KSRTC) piloting and eventually deploying contactless smartcards for student bus passes in 2007. The technology used to read the data stored on the chip is similar to a contactless smartcard (ISO 14443). e-passports for the general public are expected to roll out. the International Civil Aviation Organization (ICAO) has mandated that by 2010.3 million. the first Indian e-passport was issued to the Indian Prime Minister and President. By 2011. when 6 more Indian cities are expected to open metro networks with AFC.
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. 90.1 million rupees. The Indian Ministry of Exterior has been evaluating the switch to e-passports since 2006. Close to 1. the largest opportunity lies beyond 2011.
Current adoption in near term is likely to be seen in the two most popular mass transit networks – Delhi Metro and Mumbai’s public transportation. 2009.•
There have been key developments in Karnataka – with both Bangalore Metropolitan Transport corp.000 e-passports are expected to be issued in 2008— amounting to revenues of 3. An estimated 25. They came in to prominence after 9/11. revenues generated are expected to reach Rs. In order to meet the (ICAO) mandate.