Michael P. Onder, presenter USDOT Talking Freight Seminar November 17, 2004

1. Uses of Freight Technology The Electronic Freight Manifest (EFM): Program Overview Michael P. Onder, presenter USDOT Talking Freight Seminar November 17, 2004

2. Table Of Contents Program Overview Concept of Operation Developmental Components Value to Stakeholders Data Storyboard

3. PROGRAM OVERVIEW The EFM program aims to improve freight transportation across the supply chain by using mature information technologies to promote universal manifesting of data. • The primary objectives are to improve the operational efficiency, productivity, and security of the freight transportation system. • The program intends to meet these objectives by applying data standards, biometric technology and web portals to improve the speed, accuracy and visibility of information transfers in freight exchanges, and the security of the physical exchanges. • The program builds on ITS freight operational tests, including the US Department of Transportation’s Electronic Supply Chain Manifest (ESCM), which demonstrated labor savings for a US domestic supply chain that translated to $1.50 to $3.50 per shipment.

4. PROGRAM OVERVIEW Trends in international trade are fueling the need for action. • Freight volumes are increasing significantly. • In the US, some project that freight volumes will increase 70 percent by 2020. Capacity strains demand efficient processes. • Global freight volume is increasing, and is increasingly intermodal, containerized, and crossing international borders. This exacerbates the challenge of a lack of standards. • There is greater awareness of the need for security. • Destructive acts of terrorism have triggered a need for improved security. Risk management approaches stress the need for preventive measures. • In most regions of the world, freight pilferage and tampering are common, difficult to detect, and meaningfully affect the economics of supply chain logistics.

5. PROGRAM OVERVIEW EFM respects these observations about the business environment: • There are international, institutional and technical barriers challenging the efficient movement of goods across national boundaries. However, there is also a significant movement in the worldwide trading community to eliminate these barriers. • The stakeholder community is very broad; the essential transport provider industries are under significant competitive pressures. Private concerns are often technology laggards and low-margin operations. • Partial technology solutions already exist in the marketplace, in the areas of identity management, supply chain visibility and tracking, and supply chain event management. EFM should bolster them, not compete with them. • Numerous bodies have developed or are developing responses to the broad data standardization issue. EFM is addressing gaps in standardization, and is otherwise seeking to harmonize with existing efforts on the part of internationally-represented bodies.

6. Table Of Contents Program Overview Concept of Operation Developmental Components Value to Stakeholders Data Storyboard

7. CONCEPT OF OPERATION Consider this notional representation of the truck-air-truck supply chain, which, in the EFM concept, begins with a request for shipment and ends with successful delivery to ultimate consignee.

8. CONCEPT OF OPERATION The core of the EFM are data messages, real or virtual, that will overlay atop existing electronic messaging infrastructures. This “conduit” is a key component of EFM and is referred to as the “Freight Information Highway”.

9. CONCEPT OF OPERATION An information supply chain occurs in parallel with the physical chain. Various actors create information transactions* throughout the supply chain’s duration, as required by business processes. * Can include documents, messages, unstructured communications, etc.

10. CONCEPT OF OPERATION The supply chain-spanning manifest is incrementally built up as event milestones are realized. Note these messages are virtual: there is no inherent requirement for a data repository.

11. CONCEPT OF OPERATION There already exists numerous commercial IS applications and data repositories to store and process this information.

12. CONCEPT OF OPERATION EFM is being designed to be generally compatible with these systems, and will not replicate information stored by them without reason. Messages can be created on demand within EFM. * Unique Consignment Reference, which, as defined by WCO Customs Cooperation Council, may be a license plate identifier as per ISO Standard 15459.

13. Table Of Contents Program Overview Concept of Operation Developmental Components Value to Stakeholders Data Storyboard

14. DEVELOPMENTAL COMPONENTS The EFM solution includes these key elements: • Standardize, structure and improve end-to-end flow of consignment-level data throughout the shipping portion of the international, intermodal freight supply chain. • Augment existing data collected with data describing and verifying the identity of parties who are in “possession” of the consignment at each stage of the chain. • Harmonize with existing government data requirements in this domain space. • Develop and operationally test secured, multimodal electronic supply chain transaction systems with willing supply chain partners. • Promote operational deployment by attracting early adopters, and achieve growth by letting the market observe the early successes.

15. DEVELOPMENTAL COMPONENTS The EFM is defined by three pillars of development. Each must be deployed for supply chain partner networks to fully realize the program’s potential benefits.

16. DATA STANDARDS ISO has approved a work item to create an international standard for an intermodal freight data dictionary and message set. • Title: “Data Dictionary and Message Set for Intermodal Transfer and Tracking of Freight-Road Transport Interfaces”, Number ISO 24533 • Scope: "The emerging need for security of transport information makes it imperative for standards development organizations interested in freight data exchange standards to coordinate the development of those standards. Given that the motor carrier segment of the intermodal move constitutes both the origin and destination ends of the information flows it is not sufficient to only look at structures and formats of the land surface modes. It is also critical to share information between land surface and the other transportation modes to provide maximum benefits to the total supply chain. Given there are no international standards development organizations focusing specifically on land transportation data exchange needs for the international supply chain, ISO Technical Committee 204 seeks to fulfill that role and support the roles of other modal data exchange standards developers." • Schedule: Approved as new work item, February 2003. Anticipated adoption as Draft International Standard, October 2005. • Technology: The Standard will be prescribed using Abstract Syntax Notation One (ASN.1), which separates the specification of the message content (e.g., data elements) from the specification of the encoding or syntax of the messages. The syntactic definition of the messages using the Standard is unspecified. For example, adopters may choose EDI, EDIFACT or XML.

17. DATA STANDARDS The Data Standard uses the framework of the Intelligent Transport Systems (ITS) Information Interchange Model. Interface dialogues: data concept; collection of all the temporal sequences of messages, including variants such as multiple responses, that are used to accomplish the services that the interface dialogue provides Interface Dialogues Messages: data concept; grouping of data elements and/or data frames, as well as associated message metadata, that is used to convey a complete unit of information expressed as an ASN.1 module. Messages Data Frames Data frames: data concept; grouping of data elements primarily for the purpose of referring to the group with a single name, and thereby efficiently reusing groups of data elements that commonly appear together (e.g. ASN.1 SEQUENCE, SEQUENCE OF, SET, SET OF or CHOICE) in a message specification Data Elements Data elements: data concept; some single unit of information of interest (such as a fact, proposition, observation, etc.) about some (entity) class of interest (e.g., a person, place, process, property, concept, association, state, event) considered to be indivisible in a particular context.

18. DATA STANDARDS The Data Standard is currently comprised of approximately 75 data concepts, in five primary functional areas: Functional Area Example of data concept • Bill-level Consignment Data • Line Item Level Details • Conveyance Data • Possession Data • Referential Data • Shipper-AccountNumber • GoodsItem-GrossWeight • FinalDestinationAirport-location • Possessor-Signature • Event-DateAndTime

19. DATA STANDARDS To help engage the correct freight standards organizations, we have mapped them and their inter-relationships. The EFM team also led the creation of a Memorandum of Understanding in the supply chain arena to foster coordination between the many committees with roles in this domain.

20. DATA STANDARDS ISO 24533 is a first step towards a fully intermodal standard that supports an integrated cargo chain of possession. It should be viewed as a Base Standard on which extensions can be built.

21. SECURITY EFM can potentially contribute to an international supply chain cargo security solution primarily by promoting freight visibility. It can also help identifying high-risk cargo to authorities. Eight Critical Capabilities Required to Secure the Cargo Supply Chain This refers to tracking the movements of freight to locate and isolate any freight requiring inspection without disruption to the rest of the system. EFM can provide this through its positive identity management and end-to-end manifest. Source: Booz Allen Hamilton and Accenture, June 2003

22. SECURITY The EFM implements a Chain of Possession concept of the supply chain at the consignment level. * Can include documents, messages, unstructured communications, etc.

23. FREIGHT INFORMATION HIGHWAY The IT infrastructure that will enable the virtual manifesting of data is referred to as the “Freight Information Highway”. • The FIH is a conceptual framework for sharing information among supply chain partners and government agencies. It arose as a critical project for government and industry collaboration in a forum sponsored by the Intermodal Freight Technology Working Group in 1998. • The US FHWA will develop a concept of operations for a FIH by mid-2005. • The FIH will intend to improve supply chain partner collaboration, reduce integration obstacles, foster ubiquitous visibility, and enable the deployment of universal and distributed applications.

24. FREIGHT INFORMATION HIGHWAY The FIH replaces direct data connections with “pipelines” of virtual connections. TODAY: Disparate legacy systems each require direct connections to support data collaboration between supply chain partners.

25. FREIGHT INFORMATION HIGHWAY Conceptually FIH is a trusted messaging intermediary suppor-ting a broad range of stakeholder communications.

26. FREIGHT INFORMATION HIGHWAY Existing supply chains with functioning communications would continue: their registration into FIH and use of accepted data standards would allow them EFM benefits. Example of an exchange that could continue unaltered in an FIH environment.

27. Table Of Contents Program Overview Concept of Operation Developmental Components Value to Stakeholders Data Storyboard

28. VALUE TO STAKEHOLDERS Through interviews and the conduct of two operational tests, the US FHWA has developed an EFM value proposition. • EFM’s potential value differs somewhat depending on a stakeholder’s role in the supply chain. • Some benefits are of a general nature: • Information flow is expedited; in some instances this will permit the physical freight to move faster (by reducing or eliminating information-related bottlenecks). • Better end-to-end freight flow visibility through linked information systems that use standardized data elements and definitions of data elements. Among other benefits, this can provide feedback about a shipment’s safe delivery. • Other initiatives are modally-focused or otherwise leg-to-leg in their approach. EFM is shipper-focused, therefore it is end-to-end in nature. • Visibility should also reduce the threat of cargo theft. • Opportunity to make access to cargo information more secure.

29. VALUE TO STAKEHOLDERS Consider the stakeholders involved in a typical truck – air – truck supply chain:

30. VALUE TO STAKEHOLDERS These stakeholders may be grouped into four classes:

31. VALUE TO STAKEHOLDERS Potential benefits unique to SUPPLIERS: • Support for quick and timely shipments by minimizing the need for paper-based communications. • Error reduction due to less repeated manual data entry of bill data. • Improved ability for transactional shipment management.

32. VALUE TO STAKEHOLDERS Potential benefits unique to INTERMEDIARIES: • Provide more flexibility to react to last-minute shipment changes. • More complete and timely advance shipment information, which helps various resource planning activities. • Opportunity to reduce dwell times at facilities where freight is picked up or dropped. • Many are now “drowning in paper”. EFM could help alleviate this. • Appreciation for the security features of a driver identification (e.g., TWIC) card. • EFM could help enable some carriers better manage advance notification requirements that some Customs agencies now impose. • An EFM-like approach is preferable over more comprehensive physical screening as a regulatory burden that government regulators might impose. • Improved human resource management due to having workload data quicker. • EFM levels the playing field by reducing the entry cost for small/medium transportation service providers to have technology-enabled information flows.

33. VALUE TO STAKEHOLDERS Potential benefits unique to AUTHORITIES: • EFM might help prevent a public incident, such as a terrorist event, through early detection of security issues (via threat assessments). • Enhanced enforcement of safety regulations by previewing incoming loads. • If an incident occurs, EFM can create a more robust data environment to assist event forensics. • Government authorities permitted access to EFM data have a more standardized platform for analysis.

34. VALUE TO STAKEHOLDERS Potential benefits unique to CONSIGNEES: • Improved shipment visibility can improve inventory management processes, if the data is available and in a useful format. • EFM can help enable dynamic decision making, reacting in near real-time to disrupted schedules.