The airlines and airports have considered RFID
Radio-frequency identification - Wikipedia, the free encyclopedia bag tags but don't like the start up cost. The singular advantage of these tages, as already demonstrated around the world, is that you can read the label without having to manually grab the label, orientate it, and 'snap it' with the hand held reader.
With RFID tages, if a conveyor belt was running bags at two per second, a controlling computer could read them all with ease, check against the required item and divert it off the belt to a human.
The fact that start up costs will be overtaken by benefits is true BUT, unfortunately, it would require every airport and handling agent on the route to have installed the equipment. No one wants to install equipment that might not be fully utilised for five years - or more.
The first introduction of RFID bag tagging is happening in places like Australia, which are large - yet easily managed. Whilst Europe has far too many ports of call and the USA, whilst one country and language, would also be very complex to set up. HKG has started a system. The rest will follow - but slowly.