Global RFID in the Cold Chain Part 1: Trends, Restraints & Mandates

In this exclusive interview Nandini Bhattacharya, Senior Research Analyst - Auto Identification and Data Capture for Frost & Sullivan, speaks to Andrea Charles from Cold Chain IQ about current and future trends in the global radio frequency identification (RFID) cold chain market. In Part 1 of this interview she discusses how trends, restraints and regulations are shaping the market and shares insights from the recently released Strategic Analysis of Global RFID in Cold Chain Market report.

Cold Chain IQ: What sort of current trends have you seen in radio frequency identification (RFID) in cold chain monitoring solutions in the past few years?

N Bhattacharya: Food and pharmaceutical and healthcare are the primary markets for cold chain. It's a growth market, although it's in a nascent stage. We do see a huge amount of growth in this market and the market is expected to have a double-digit growth rate. It would be around 35%, 36% of growth rate for the coming seven years. And there are not many competitors, but then we see upcoming technologies, like battery-assisted passive or BAP.

These days, active RFID technology is being primarily used. However, there is a huge and significant growth potential for BAP RFID. The majority of the market is food. And as I said, active RFID is primarily being used, but in the long term we see that battery-assisted passive would actually have higher growth than active RFID and is likely to have the dominant share, dominant market share. The Americas, North America and South America of course are the biggest market right now, but there is a significant growth potential in EMEA as well as Asia Pacific.
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And some of the other drivers pushing the market forward would be mandates and regulations. Mandates and regulations are actually playing a huge role, and there is a demand that the food and pharmaceutical producers, distributors, transporters, warehouse operators and wholesale and retail shop to follow specific temperature, humidity and light requirements while handling the product. And of course there's this US Food and Drug Administration, FDA mandate, and the Food Safety Modernisation Act, FSMA, signed in 2011. These are the key governing authorities and monitoring bodies in the United States. These FDA mandates also require the value chain participants to track and keep a record of the food product temperature history, so these mandates are the key reasons for an increased adoption and installation of RFID for the cold chain market.

Apart from that. there are the recent concerns over security and test issues, increased profitability, reduced losses. These are also some of the other factors that are driving the market.

Cold Chain IQ: You highlighted food and pharmaceuticals as the primary areas where RFID technology is being employed. Were there any key differences between the two industries in how you saw the uptake of RFID technology?

N Bhattacharya: Food has been using RFID for quite some time. And as I said, these mandates require the transporters, distributors and retail shops as well as the farmers to monitor and track the temperature. But then these days, pharmaceutical and healthcare sector has also started using RFID more and more because of the benefits that they have accrued out of it. And the sensitive drugs, vaccines and high-prescription, temperature-sensitive medicines and drugs that need to be transported from one region to another or either from one continent to another continent need to be transported in a very controlled temperature environment. And it's good if they track the temperature of these drugs because if these drugs are not transported or not stored in a controlled temperature the drugs lose their potency, so it's actually a good tool.

The cold chain for RFID actually is an enhancement to preserve the drugs and keep the temperature record and keep the entire history of drugs right from the manufacturer point to the end user. So the hospitals and laboratories also use temperature control and tracking technologies quite often these days because they use a lot of biomedical samples. They need it for blood preservation and other critical medicine and laboratory sample storage. And so these are the key factors that are primarily driving the healthcare sector.

Cold Chain IQ: We have spoken about drivers, but what are some of the restraints that the market said they were facing with regards to implementing RFID cold chain technologies?

N Bhattacharya: Economic crisis is one of the restraints, of course. The economic situation is definitely an important factor for businesses to consider when implementing RFID or any modern technology into their applications. Although the prices of RFID has declined over the years; they still require some considerable investments considering they have to install tags, readers, software, printers and all the other. The entire RFID solution still costs, it's a huge amount. And when we compare this with barcode, which has been the traditional way, and there are other methods of temperature measurements and temperature record keeping, so of course RFID and RTLS are definitely the more expensive technologies.

After the economic crisis, customers were really sceptical about spending their money on new technology, so all the 2011 and 2012 had large-scale deployments and successful pilot projects across several verticals. The impact of the economic recession is expected to slow down rates of adoption. It's not a major restraint. And we forecast that the impact of this restraint is expected to be medium over the short term and the long term and as the economy stabilises the deployments would increase.

The lack of standardisation is of course a problem because the cold chain monitoring RFID technologies primarily use active RFID and the tags need to be embedded with sensors. And recently, battery-assisted passive has also gained momentum, even they do have sensors. The tags come with temperature sensors and various other sensors. So these technologies do not follow any type of universal standard. Unlike passive, active RFID and BAP do not have a universal standard, and because of which there is an incompatibility among the various infrastructures that are available and it results in high implementation costs for the consumers.

Recently we saw that there was a new standard. 802.15.4f 2012 for active RFID has been published by the IEEE, but it's still in the very initial stage and there is a long way to go. So as the market participants and industry associations collaborate and agree upon a common platform or architecture this may result into development of a common standard for active RFID technology and that might help with the installations or the deployments.

Cold Chain IQ: So we can expect to see more regulations and standards around RFID?

N Bhattacharya: Yes, of course. In the last year, 2012, we saw new guidelines being published by IEEE. And GuardRFID is a company that was kind of instrumental in developing this new standard, 802.15.4f. So yes, a lot of work needs to be done on this, but then, yes, we do see that guidelines would be set around active RFID worldwide.

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