Radio frequency identification (RFID) technology relies on compact circuitry and transmission capabilities to track objects, people and animals through radio waves. Although RFID tags are already in use in a vast range of applications, including passport security, vehicle and product tracking, inventory management and even human implantation, the RFID market has maintained dramatic growth throughout 2009. Analysts predict the technology will soon be even more prevalent in commercial and industrial fields.

A new report from consultancy firm IDTechEx says the global RFID market has grown by 5 percent in 2009, reaching $5.56 billion worldwide, with orders for RFID products rising by 10 percent in some sectors.

This expansion is continuing despite last year's completion of the $6 billion China National ID Card program, the world's largest RFID project to date, according to IDTechEx. Moreover, the research firm forecasts the market will quintuple in the next ten years, with new growth driven largely by the 3,800 documented RFID projects currently under way.

The United States leads global RFID development, with 2,174 projects in place, while the United Kingdom (383), China (240), Germany (199) and Japan (188) round out the world's top five contributors.

A separate report from market research firm RNCOS also predicts robust growth but at a more reasonable pace. According to the new research, the global RFID market will continue to expand at a compound annual growth rate of 28 percent through 2013, but previous years' sales will slow down by about a third before the end of 2009.

In its latest monthly report on the RFID market, capital markets firm Robert W. Baird & Co. states that government purchasing is one of the key motivators behind immediate growth. Meanwhile, strengthened sales in the financial, warehouse and health-care industries coupled with gains in manufacturing, transportation and retail are helping the RFID industry remain healthy amid the recession.

Recently, IBM and CSC secured a $570 million project to upgrade the U.K.'s RFID-based e-passport and identity database system, while the U.S. Army has ordered an RFID program with a contract value of up to $428 million, IDTechEx reported last month. At present, RFID tags are already included in approximately 125,000 weekly shipments of U.S. military supplies.

A specific set of business factors are motivating these large orders for RFID products. According to a survey by the Centre for Business Services Science at the University of Wollongong in Australia, "Those firms that presently adopt RFID are more concerned with 'information visibility' and 'competitive differentiation' and less concerned with the 'costs.'"

Meanwhile, firms that consider but do not choose to implement RFID technology are cited as being more concerned with acquisition, replacement and ongoing costs rather than technological upgrades. Perhaps surprisingly, concerns over privacy and security threats were two of the least important factors in RFID selection among small, medium- and large-sized businesses.

Despite the costs and potential risks, new applications for RFID technology are being researched across a wide range of fields. The results of a year-long field study conducted by the Michigan State University School of Packaging and the Reusable Packaging Association (RPA) recently showed the feasibility of using RFID tags to track reusable containers across long distances and under extreme environmental conditions, Material Handling Management reports.

"By combining RFID technology with reusable containers, industries gain the ability to better track their product and their containers as they move through the supply chain," Bob Klimko, chair of the RPA board, told Material Handling Management.

"This will result in a stronger return on investment on the containers, as well as provide opportunities for improved supply chain management through analysis of the data provided," Klimko added.

Increasing the role of RFID tracking in the global supply chain may be the most significant avenue for the technology's future growth. At the RFID Journal LIVE! 2009 conference, Martin Wildberger, a vice president at IBM's software group, spoke of his support for "opportunities to leverage RFID and sensor technologies in food and cold chains, to improve product safety... by enabling companies to track the location of goods in a supply chain, as well as temperature, humidity and other conditions." (Source: RFID Journal)

As the number of RFID applications continues to grow, we can expect to see the RFID market expanding alongside them.

Resources

RFID - Progress in Mid 2009
IDTechEx, July 8, 2009

Global RFID Continues to Grow Despite Economic Crisis
RNCOS, July 18, 2009

Supply Chain Technology - RFID Monthly
by Reik Read and Dan McIntosh
Robert W. Baird & Co., July 2009

RFID - A Surge in Orders
IDTechEx, June 23, 2009

RFID Adoption Issues
by Samuel Fosso Womba, Byron Keating, Tim Coltman and Katina Michael
Centre for Business Services Science (University of Wollongong), April 2009

Groundbreaking Field Study Confirms Feasibility of RFID for Reusable Container Tracking
Material Handling Management, July 1, 2009

IBM, Motorola Execs Say RFID is Key to Better World
by Beth Bacheldor
RFID Journal, April 30, 2009