LIFT TRUCK INNOVATION
THE FLEET MANAGER’S 2019 FORECAST
REEVALUATING WMS NEEDS
Food Logistics
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Global Supply Chain Solutions for the Food and Beverage Industry
AUTOMATION ALLEVIATES LABOR PAIN THE ANSWER TO WAREHOUSING’S LABOR AND EFFICIENCY TROUBLES IS GREATER INTEGRATION OF AUTOMATION
Issue No. 203 January/February 2019
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© 2 019 Utilit y Tr a ile r M a nu fac tu r ing C o.
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20K Duct Floor System Utility’s reefer duct floor is the new standard. Built to handle a concentrated load better than any other standard floor in the industry, Utility’s new light weight 20K Duct Floor System delivers more strength and an increased service life. Get more details from your local Utility dealer. Find them at utilitytrailer.com
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ON THE MENU
OCTOBER 2015 ISSUE NO. 171
ON THE MENU
January/February 2019 ISSUE NO. 203 COLUMNS FOR STARTERS
R obots: Friend or Foe?
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With robots and AI-driven machines expected to perform half of all productive functions in the workplace by 2025, it’s no wonder the industry is raising legitimate concerns. COOL INSIGHTS
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COVER STORY
Automation Alleviates Labor Pain The pressure is on warehouse operators to adopt automation not only for greater efficiencies but to simply survive in the market.
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Analyst Phil Kafarakis recommends trends the industry should keep its eye on in the year ahead. FOOD (AND MORE) FOR THOUGHT
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UrosPoteko, iStock / Getty Images Plus
FEATURE
TRANSPORTATION
THIRD-PARTY & REFRIGERATED LOGISTICS
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hat Can Fleet W Managers Expect in 2019?
Industry experts weigh in on what to watch and how it will impact the food supply chain, especially the refrigerated transportation sector. SPECIAL REPORT
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he 2018 FL100+ T Special Section
SECTOR REPORTS WAREHOUSING
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L abor’s Impact on Lift Truck Innovation
How the warehousing sector’s labor challenges are driving trends and innovation in the lift truck.
A re Autonomous Vehicles the Next Wave of Last-Mile Technology?
Fully driverless trucks are still a way down the road, but they might solve the driver shortage, save money, improve efficiency and help the environment. SOFTWARE & TECHNOLOGY
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W MS and the Digital Transformation of the Warehouse
Industry pressures have forced many warehouse managers to reassess their operations—beginning with their WMS. OCEAN PORTS & CARRIERS
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T he Rise of Smart Containers
The use of connected shipping containers is growing as the industry continues to fill the visibility gap in the global supply chain.
2 019: A Big Year Ahead for the Food Industry
O vercoming the Organic Food Market Challenges
For organic producers, the basic task of moving products from field to market is a considerable obstacle.
DEPARTMENTS 10 14
Supply Scan Food on the Move
WEB EXCLUSIVES • The Importance of Prevention in Safe Quality Food Programs foodlogistics.com/21044937
• AI Makes Forecasting Easy foodlogistics.com/21044968
• Which Material Handling Vendor Is Right for Your Business? A 12-Step Selection Guide foodlogistics.com/21044974
Published and copyrighted 2019 by AC Business Media. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording or any information storage or retrieval system, without written permission from the publisher. Food Logistics (USPS 015-667; ISSN 1094-7450 print; ISSN 1930-7527 online) is published 10 times per year in January/February, March, April, May, June, July, August, September, October and November/December by AC Business Media, 201 N. Main Street, Fort Atkinson, WI 53538. Periodicals postage paid at Fort Atkinson, WI 53538 and additional mailing offices. POSTMASTER: Send address changes to Food Logistics, P.O. Box 3605, Northbrook, IL 60065-3605. Canada Post PM40612608. Return undeliverable Canadian addresses to: Food Logistics, Station A, P. O. Box 25542, London, ON N6C 6B2. Subscriptions: U.S., one year, $45; two years, $85; Canada & Mexico, one year, $65; two years, $120; international, one year, $95; two years, $180. All subscriptions must be paid in U.S. funds, drawn from a U.S. bank. Printed in the USA.
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FOOD LOGISTICS | JANUARY/FEBRUARY 2019
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FOR STARTERS
3alexd FROM THE EDITOR’S DESK
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ROBOTS:
FRIEND OR FOE?
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SOWINSKI
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ith robots and AI-driven machines expected to perform half of all productive functions in the workplace by 2025, it’s no wonder many of us are raising legitimate concerns over the future role of human employees, as well as fears about safety and other issues. “Danger, Will Robinson!” That’s the warning heard often from the robot in the 1960’s TV series Lost in Space, as he kept a watchful eye on the boy actor. While the robot dutifully protected his young companion, scientists and others caution that AI must be applied responsibly and ethically in order to avoid creating future “monsters.” BCG Digital Ventures’ CTO Dharmesh Syal wrote in a recent column for the World Economic Forum that, “The only way to make sure we don’t create a monster that could turn against us is to incorporate ethical safeguards into the architecture of the AI we’re creating today.” There are three ways to help assure this, he says, including: • Bring in a human in sensitive scenarios. AI should be part of a human-in-the-loop, or HITL, system, in which machines do the work with people ready to handle questionable situations. • Put safeguards in place so machines can self-correct. Ideally, these defenses should be built into AI products when they are being built. • Create an ethics code. There should be standard AI operating
policies around data privacy, personalization and deep learning. This last item “may seem obvious,” says Syal, “but you’d be surprised how few companies are actually doing this.” Arizona State University professor Nancy Cooke offers a few more best practices, such as giving robots specific roles in a team setting. Similar to a surgical team whose members may include a nurse, surgeon and anesthesiologist—individuals with separate, yet interdependent roles and responsibilities—members of a human/robot team should be assembled to take on different elements of a complex task. “Robots should do things that they are best at, or that people don’t want to do—like lifting heavy items, testing chemicals and crunching data. That frees up people to do what they’re best at—like adapting to changing situations and coming up with creative solutions to problems,” advises Cooke. “Most importantly, humans should not be asked to adapt to their nonhuman teammates. Rather, developers should design and create technology to serve as a good team player alongside people.” And if you end up working alongside a robot named HAL, and your name is Dave, it’s probably wise to keep a safe distance. Enjoy the read.
LARA L. SOWINSKI, EDITORIAL DIRECTOR LSOWINSKI@ACBUSINESSMEDIA.COM
DETAILS
Published by AC BUSINESS MEDIA 201 N. Main Street, Fort Atkinson, WI 53538 (800) 538-5544 • www.ACBusinessMedia.com
WWW.FOODLOGISTICS.COM PRINT AND DIGITAL STAFF Group Publisher Jolene Gulley Associate Publisher Judy Welp Editorial Director Lara L. Sowinski lsowinski@ACBusinessMedia.com Editor John R. Yuva jyuva@ACBusinessMedia.com Assistant Editor Amy Wunderlin awunderlin@ACBusinessMedia.com Web & Copy Editor Mackenna Moralez mmoralez@ACBusinessMedia.com Contributing Editor Barry Hochfelder Senior Production Manager Cindy Rusch crusch@ACBusinessMedia.com Creative Director Kirsten Wiskus Audience Development Director Wendy Chady Audience Development Manager Angela Franks ADVERTISING SALES (800) 538-5544 Associate Publisher (East Coast) Judy Welp (480) 821-1093 jwelp@ACBusinessMedia.com Sales Manager (Midwest and West Coast) Carrie Konopacki (920) 542-1236 ckonopacki@ACBusinessMedia.com National Automotive Sales Tom Lutzke (630) 484-8040, tlutzke@ACBusinessMedia.com EDITORIAL ADVISORY BOARD Jaymie Forrest, Chief Supply Chain and Commercial Officer, ScanTech Sciences Inc. John Haggerty, Vice President of Business Development, Burris Logistics Robert A. Norton, Ph.D., Professor of Veterinary Microbiology, Public Health and Biosecurity, Auburn University; Coordinator of National Security Initiatives, The Futures Laboratory Jon Shaw, Director of Sustainability and Global Marketing Communications, UTC Climate, Controls & Security Smitha G. Stansbury, Partner, FDA & Life Sciences Practice, King & Spalding CIRCULATION & SUBSCRIPTIONS P.O. Box 3605, Northbrook, IL 60065-3605 (877) 201-3915, Fax: (847)-291-4816 circ.FoodLogistics@omeda.com LIST RENTAL Jeff Moriarty, InfoGroup (518) 339-4511 jeff.moriarty@infogroup.com REPRINT SERVICES Carrie Konopacki (920) 542-1236 Fax: (920) 542-1133 ckonopacki@ACBusinessMedia.com AC BUSINESS MEDIA CEO Barry Lovette CFO JoAnn Breuchel Vice President, Sales & Marketing Amy Schwandt Editorial Director Greg Udelhofen Digital Operations Manager Nick Raether Digital Sales Manager Monique Terrazas Published and copyrighted 2019 by AC Business Media. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage or retrieval system, without written permission from the publisher.
FOOD LOGISTICS | JANUARY/FEBRUARY 2019
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SUPPLY SCAN
NEWS FROM ACROSS THE FOOD SUPPLY CHAIN Daily Updates at FoodLogistics.com
FESTIVAL FOODS SELECTS SMARTSENSE FOOD SAFETY SOLUTION
Fairbanks Scales announced the Fairbanks AxleSurance Weight System in November as a cost-effective option for those who need to check weight loads but lack the space or need for a full-size truck scale. The axle scale system reduces real estate as well as install and operation times. A simple backhoe can prepare the install site and set the scale in place. Additionally, the full system can be installed and calibrated in as little as four hours. The system provides axle and gross truck weights that can be displayed, printed and saved for easy record keeping. The unattended console provides a self-contained control unit that drivers can operate independently and allows transaction records to be saved and transmitted as CSV files for a user’s ERP system. The standard AxleSurance scale is 11-feet wide and arrives in a precast base. The full system comes with an unattended instrument console, remote LED display, data and homerun cable. It also includes an information management software package available in farm, aggregate and base formats.
MCDONALD’S ELIMINATES OVERUSE OF ANTIBIOTICS IN BEEF
McDonald’s became the first major fast-food chain to establish a comprehensive policy to reduce the use of medically important antibiotics in its beef supply chain in December. The company is committed to reducing antibiotics use in 85 percent of the beef it purchases. The move has transformational implications for the beef industry and for public health. “We expect this to be the first of many commitments from food companies to purchase beef raised without medically important antibiotics; importantly, this means that the beef industry will need to change their practices to meet this growing demand,” says Christy Spees, environmental health program manager at As You Sow. “There is still significant work to be done by food companies to curb the use of antibiotics. With McDonald’s leading the way, there is no reason why other major fast-food chains should not follow with their own commitments to source responsibly raised beef.”
FOOD LOGISTICS | JANUARY/FEBRUARY 2019
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FAIRBANKS SCALES ANNOUNCES NEW WEIGH SYSTEM FOR HEAVY CAPACITY PRODUCT LINE
roxanabalint, iStock / Getty Images Plus
Festival Foods, one of Wisconsin’s largest privately-held grocers, has selected SmartSense for task management and continuous temperature monitoring across all its locations. The implementations are being made to help improve food quality and safety, increase employee efficiency and reduce inventory loss. SmartSense food safety solutions were selected for implementation across Festival Foods’ 32 locations after a 30-day pilot that included real-time, product-level monitoring in all refrigeration units, food temperature monitoring in deli sections and automated task management. The combination of continuous, accurate temperature readings and automated record keeping saves thousands of dollars and employee hours per year by reducing lost inventory and manual tasks. “So often in the food safety conversation we only hear about foodborne illness and potential contaminations, and while preventing those scenarios is paramount, there are also tremendous business benefits behind food safety solutions,” says Kevin C. Riley, president of IoT Solutions at Digi International. “Festival Foods recognized that in addition to helping guarantee compliance, they had an opportunity to reduce product loss and divert valuable man hours from tedious manual record keeping to tasks that more directly impact customer experience. The results of the pilot are now being shared across the Festival footprint.”
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SUPPLY SCAN
NEWS FROM ACROSS THE FOOD SUPPLY CHAIN Daily Updates at FoodLogistics.com
Maersk Container Industry (MCI) has decided to focus on growing its cold chain business. Currently, one out of three refrigerated containers used in global perishable transportation uses Star Cool container technology manufactured by MCI. With the recent launch of Sekstant Global Guidance solutions, the company is entering the IoT space, transforming reefer operations through the use of operational data. “MCI’s strategy is to grow in cold chain where our Star Cool technology is a clear leader. This growth requires focused investment in the best products and services,” explains Sean Fitzgerald, chief executive officer for MCI. “By putting all of MCI’s resources on the cold chain business ensures sustainable growth and continued investment in the best products and services for our customers.” The decision was made to exit the dry container business and cease operations at the company’s production facility in Dongguan, China. However, the decision will not impact any of MCI’s other facilities.
patty_c, iStock Unreleased, Getty Images:
MAERSK CONTAINER INDUSTRY TO FOCUS ON REEFER TECHNOLOGY
White Castle will become the first fast-food chain to debut Impossible Food’s updated plant-based hamburger recipe. According to Impossible Foods, its new Impossible Burger handles, cooks and tastes like ground beef from cows but is made entirely from plants. The burger’s crucial ingredient is leghemoglobin, or “heme,” which gives the Impossible Burger its bleeding attribute and creates the flavor in raw and cooked product. The burger will first be available at White Castle restaurants in the Las Vegas area. Over the next few months, the slider recipe will roll out at all remaining 377 White Castle locations. “White Castle is Impossible Foods’ largest customer so far, and the partnership has been a total sensation—acclaimed by food critics and a social media phenomenon with a trending hashtag,” says David Lee, Impossible Foods’ chief operating officer and chief financial officer.
VanderWolf-Images, iStock Editorial / Getty Images Plus
WHITE CASTLE TO USE PLANT-BASED RECIPE IN STORES
SMITHFIELD FOODS ADDS 250 JOBS IN NORTH CAROLINA WITH NEW DISTRIBUTION CENTER
Smithfield Foods celebrated in December the grand opening of its new distribution center in Tar Heel, North Carolina, which will create approximately 250 jobs in the state. The company invested more than $100 million into the 500,000-square-foot facility, including blast cell cold storage capabilities at its processing facility, in an effort to strengthen its supply chain to better serve customers globally. “We are experiencing an exciting time of growth, and this new distribution center will help us continue to optimize our footprint,” says Kenneth M. Sullivan, president and chief executive officer for Smithfield Foods. “More than 10,000 Smithfield family members already call North Carolina home, and we’re proud that our investment in this project will create even more jobs. We look forward to welcoming new employees into our family.” The new facility features nearly 50,000 pallet positions and has an annual capacity of more than 1 billion pounds. The company can also optimize its transportation and distribution network to lower fuel usage, cut transportation costs and improve delivery times. It is located adjacent to one of the company’s meat processing facilities.
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FOOD ON THE MOVE
LOGISTICS TRENDS IN OUR INDUSTRY
LARGEST CRANES IN US ORDERED BY PORT OF VIRGINIA TO HANDLE FUTURE CAPACITY CONSTRAINTS
The Port of Virginia has signed a contract allowing for the purchase of four new ship-to-shore cranes that are part of the $320 million expansion of Virginia International Gateway (VIG). The Virginia Port Authority Board of Commissioners in its July meeting approved a spending package of $44.8 million that covers the cost of the cranes, parts, their delivery to Virginia from China and installation at VIG. “These cranes are the biggest of the big—the largest ZPMC has ever delivered to the U.S.,” says Virginia Port Authority Board Chairman John G. Milliken. “What is unique about these cranes is their outreach. They will be able to reach across a vessel that is 26 containers wide, which is 3 to 4 containers wider than most cranes. We anticipated needing this capacity (of the cranes) for the ships that will be coming to Virginia 10 years from now. When that day comes, the port of Virginia will be ready.” The new cranes are set for delivery in April 2019.
DAT SOLUTIONS’ MONTHLY FREIGHT REPORT
Lower Prices are Fuel for Thought Mark Montague is senior industry pricing analyst for DAT Solutions, which operates the DAT® network of load boards and RateView rate-analysis tool. He has applied his expertise to logistics, rates and routing for more than 30 years. Montague is based in Portland, Oregon.
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The consumer economy continues to grow, and the industrial economy is stable, so demand for freight transportation remains steady. But with diesel falling from $3.35 per gallon at the end of October to just under $3 now, shippers are reevaluating their modal options. The cost of fuel is the biggest factor in the gap between the cost of rail miles and the cost of over-the-road (OTR) miles. Domestic intermodal is only cheaper than trucking if the rail miles are inexpensive enough to offset the added costs of drayage and handling. When fuel costs drop, it drives the breakeven point higher. “The breakeven for OTR versus intermodal has gone from less than 650 miles to more than 700 miles,” says financial analyst Donald Broughton of Broughton Capital. Broughton says for every 5-cent change in the price of a gallon of diesel, the
FOOD LOGISTICS | JANUARY/FEBRUARY 2019
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By Mark Montague
breakeven in length of haul changes by 8 miles. For example, at $1.25 per gallon, you might as well move your freight by truck on lengths of haul up to 1,000 miles in most lanes. By the time diesel reaches $3.75, that tradeoff makes sense at 600 miles. Another thing to consider: The declining price of fuel means lower surcharges, and therefore lower overall reefer and van truckload rates on the spot market. With truck capacity on the rise, produce season yet to kick in, and fuel prices
trending lower, look for the spot market to heat up as shippers explore their options for transportation.
www.foodlogistics.com
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Leave it to the experts at ID Label. Our smart warehouse solutions are manufactured to match your specific environment, temperature and inventory management system. From durable rack and bin labels to custom warehouse signs and preprinted pallet labels, we’ve got this for you. We’ll even install everything with turnkey project management from the industry’s premier installation team. Contact us today to learn more and request samples.
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FOOD ON THE MOVE
LOGISTICS TRENDS IN OUR INDUSTRY
MAERSK SETS NET ZERO CO2 EMISSION TARGET BY 2050
Aimed at accelerating the transition to carbon neutral shipping, Maersk set a goal to reach carbon neutrality by 2050. To achieve this goal, carbon neutral vessels must be commercially viable by 2030, and an acceleration in new innovations and adaptation of new technology is required. “The only possible way to achieve the so-muchneeded decarbonization in our industry is by fully transforming to new carbon neutral fuels and supply chains,” says Søren Toft, chief operating officer at A.P. Maersk. The company is putting its efforts toward solving problems specific to maritime transport, calling for different solutions than automotive, rail and aviation. In 2019, Maersk is planning to initiate open and collaborative dialogue with all possible parties to tackle together one of the most important issues in the world—climate change.
CMA CGM EXPANDS LNG FLEET
WALMART EXPANDS GROCERY DELIVERY SERVICE PROVIDERS
Walmart has added four delivery companies to its team to help expand its online grocery delivery options. Point Pickup, Skipcart, AxleHire and Roadie will help deliver groceries in metro areas across four states. “Customers love our grocery delivery service. As they are busy managing jobs, soccer practice, dance lessons and social schedules we are on a mission to do more than keep a little extra money in their pockets,” says Tom Ward, senior vice president of digital operations at Walmart U.S. “With the help of these new delivery partners, we’re making grocery shopping even easier by bringing the everyday low prices of Walmart right to the front door of customers.”
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CMA CGM has received the first of its four liquefied natural gas (LNG) powered container ships. The shipping lines says the move will help protect the environment by transitioning from petroleum to more clean-burning energy sources. Marseilles, France-based CMA CGM received the ship in December and plans to receive three more in the first half of 2019. The Containerships Nordwill will join CMA CGM’s “New Dunkrus” service between Morocco and Northern Europe before making its first LNG bunkering in Rotterdam. Afterward, it will join CMA CGM’s French-Baltic Line before entering service on Containerships’ Baltic loop upon delivery of the next two vessels. LNG engines allow for 99-percent less Sulphur and fine particles emissions and 25-percent less CO2 emissions.
REEFERTEK USA INTRODUCES LIGHTER VAN TO REDUCE FUEL CONSUMPTION ReeferTek USA has introduced a manufacturing process that minimizes total vehicle weight, thus reducing the consumtion of fuel and increasing the bottom line. Using innovative technology, lighter materials and a proprietary production process, ReeferTek is able to reduce the conversion weight by 23.6 percent. “This is a major milestone in the refrigerated van industry,” says Michael Leibman, president of ReeferTek USA. “A lighter weight van allows customers to increase their load capacity and deliver more products. It’s all about efficiency and cost savings.” Liebman adds that not only are the vans lighter, they are also stronger and more durable than competitive vehicles on the market. “A lot of research and development went into this product,” he says. “We’ve listened to feedback from customers and integrated their requests into these eco-friendly refrigerated vans.”
www.foodlogistics.com
2/1/19 10:22 AM
FOOD ON THE MOVE
LOGISTICS TRENDS IN OUR INDUSTRY
NEW JERSEY PORT TO TEST ELECTRIC CONTAINER CARRIER The Port Authority of New York and New Jersey will test the first use of an electric vehicle to move cargo containers in hopes of eventually replacing gas-powered fleets with something more eco-friendly. The pilot program is part of a broader effort to reduce greenhouse gases at ports. The vehicles will be used to lift 30ton cargo containers and load them onto trucks for transport. The electric carriers will be tested later this year at the Maher Terminals and will be assessed for lifting capacity, down time for maintenance and environmental benefits. If the pilot is successful, up to 30 older gas-powered vehicles could be replaced annually by the electric vehicles.
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COOL INSIGHTS
BY LARA L. SOWINSKI
2019 P
SOWINSKI
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hil Kafarakis, president of the Specialty Food Association and a food industry analyst, expects to see a number of areas in the industry gain substantial steam this year. Here are some trends he’s recommending we keep our eyes on… Financial reengineering will be even more important than driving brand loyalty. Venture capitalists and activist investors will drive more complexity into core business processes looking for faster earnings per share (EPS) and quicker exits. What happened at Heinz-Kraft and Campbell’s is only the beginning. Leadership, talent and “business as usual” are not going to cut it. More big food brands will retire long-tenured leaders and look for innovative, new approaches to business transformation. For example, heavy promotional discounting and retailer incentives to move inventory is no longer acceptable in hitting quarterly EPS targets. Analysts are catching on to the many ways of shuffling inventory and attempting to hit aggressive revenue targets. At the same time, consumers have been conditioned to buy when items are on sale, and “cherry picking” is going to continue to erode margins for food brands. Traditional retailing is all-in with technology, while pop-ups are gaining momentum. Online ordering and in-store pickup will only get more intense, as December’s
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A BIG YEAR AHEAD FOR THE FOOD INDUSTRY
exceptional holiday sales demonstrated. Meanwhile, modernizing supply chains for just-in-time inventories will only get more attention and funding from the corporate office. Finally, taking the “physical store” to the consumer via a pop-up strategy will be a new approach that the food retail community will be piloting extensively. If you’re in the food business and do not understand the Farm Bill, you’re in trouble. Big farming operations are only going to get stronger (pricing power), and commodity raw materials pricing is going to be a serious concern given the subsidies and guaranties they will receive from the U.S. federal government (Farm Bill). Moreover, managing raw material suppliers and leveraging tools that enable more accurate forecasting of raw materials will be a real concern. On the other hand, investments in areas like sustainable farming, animal welfare, hemp (as an agricultural commodity), and non-GMO-related foods provide opportunities for innovation and competitive advantage. The legislative environment is only going to get more complicated. For one, labeling will continue to be a factor as product definitions are being finalized. For instance, the recent ruling on non-GMO foods and the ongoing battle over the definition of “milk” can provide opportunities for food brands that are looking to expand market share and accelerate growth in new product segments, particularly within the plant-based food segment. Consumer behavior will continue to be fickle. The real truth can be
found in understanding consumers’ “values and ethos” by demographic segment. Furthermore, “local food, local charities, local causes” will carry the day, and social media marketing is the most effective method in driving loyalty. The biggest gains and most impactful areas to watch for consumer acceptance across all food channels are focused on health and wellness, particularly as we better understand low fat, high protein diets, allergies and digestive health. Four categories to watch closely include: • Lab meat is gaining acceptance, particularly poultry parts (breast meat), hamburger and beef parts. • Plant-based foods will grow even more exponentially, from meat by-products to dairy and beverage. Vegan will become a much more featured lifestyle across all food channels, including algae in multiple forms; more seeds, roots and herbs; and beans of every size, shape and flavor. • Alternative protein products, especially insects of multiple varieties, will begin to expand distribution within traditional U.S. grocery channels and away from supplements, with much more acceleration globally (Africa, Asia, South America). • Fermented functional beverages are gaining popularity as digestive issues become a better-understood health disorder. Drinking beverages with ingredients like chaga mushroom, apple cider vinegar and Kvas, a fermented grain drink, are some examples. www.foodlogistics.com
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COVER STORY
BY AMY WUNDERLIN, JOHN R. YUVA
AUTOMATION ALLEVIATES LABOR PAIN The pressure is on warehouse operators to adopt automation not only for greater efficiencies but to simply survive in the market.
A
s evidenced over the last few years, consumer behaviors and e-commerce are driving significant change in warehouse operations. Two-day and same-day shipping exist in many industries, including food and beverage, and are transforming how operators invest in their workforce and technology. What’s occurring is greater integration of warehouse automation to meet order fulfillment objectives at higher accuracy rates, while using labor in a more strategic capacity to complement evolving technologies. Food Logistics takes a look at how food and beverage is using various forms of warehouse automation to meet growing demand and fulfillment objectives. From increasing use of robotics, conveyors, wearables, and pick to light/voice, to autonomous vehicles, the focus is on less labor and more automation.
Automated Storage and Retrieval Systems Automated storage and retrieval systems (AS/RS) are a staple in bestin-class warehouses. Moreover, with a healthy economy coupled with aggressive order fulfillment demands, there is more reason to invest in this segment of warehouse automation. When real estate is sparse and your warehouse operations rely on dense, interim storage, an AS/RS is an ideal solution. Chris Capshaw, executive director of automation sales for SSI SCHAEFER, says e-commerce is revolutionizing the last mile where having regional and local distribution centers help create an ecosystem that enables same-day shipping
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and receiving in most areas. The shift toward e-commerce has led more food manufacturers, grocers and wholesalers to incorporate newly automated warehouses with AS/RS into their growth plan. When relying on AS/RS in food and beverage distribution, several factors come into play. “Many distribution fulfillment centers house a mix of both pallets with case products and individual picking for omnichannel fulfillment. Thus, an AS/RS system must “Because manufacturing processes account for both piece and case seldom keep pace with over demand, picking—this is omnichannel at its AS/RS alleviates the concern about core,” says Capshaw. adjusting time and type delivery of “Food and beverage warehouse goods,” says Williams. “Often, the operations also need a cold storage shortest lag is a 24-hour turnaround. environment. We see growth in Product comes into the AS/RS, turns case picking from cold and freezer around and heads back out. Then storage using AS/RS where harsher you have products that sit idle for environments exist,” he says. “With three to six months. Regardless of the more local and regional brands scenario, AS/RS is beneficial. driving sustainability, the “It’s no longer viewed as Because need to store cold items a longer-term storage solumanufacturing in a more regional or local tion. In food environments processes area is becoming common such as a bread facility, the seldom keep as well.” turnaround is extremely pace with over Dave Williams, vice short and the turns are demand, president of software denumerous,” says Williams. AS/RS velopment for Westfalia, is “We have a customer also witnessing an increase alleviates that makes and stores the the in regionalization. Between product on day one, it’s the manufacturer and the concern loaded on day two, and on final distribution process, about adjusting a pallet and out the door there’s more regionalized time and type on day three.” distribution centers. We’re Williams adds that while delivery of even seeing a step beyond little has changed in the goods.” this where the distribution design of the technical Dave Williams, vice center is attached to the president of software equipment, the greatest development, manufacturing facility to growth in AS/RS is softWestfalia provide a buffer in real ware. The equipment has time. AS/RS relieves the inventory the same basic design and does its burden on the manufacturing envijob well, but process control is the ronment within these facilities. leading innovation. www.foodlogistics.com
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Westfalia’s AS/ RS solution at the Sargento Foods facility in Plymouth, Wisconsin.
“Much of our focus and effort is in the development of the software processes. Our Savanna.NET® product is a warehouse execution system that controls the entire process, whether it’s an AS/RS that we install or one that is integrated with other pieces of equipment and automation within a customer’s facility.”
When asked about the use of pick-to-light technology in food and beverage, both Keith Phillips, president and CEO of Voxware and Krishna Venkatasamy, chief technology officer for Lucas Systems, agreed that it’s used sparingly. Pick to light is most valuable in settings where workers are stationary during the picking process. “Pick-to-light technology is valuable in environments where there’s little travel required at the pick phase. A person may have 100 bins and 100 items in front of them to pick from and only one or two steps in any direction,” says Phillips. “Because it’s a rapid pick, as soon as you introduce travel time the value of pick to light is immediately lost.” “Compare pick to light to voice www.foodlogistics.com
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Photo Credit: Voxware
Pick to Light and Voice Recognition
technology where it’s used throughout the warehouse in fresh, frozen and ambient areas,” says Phillips. “Voice has also evolved over the last few years to include scanning, because if you’re unable to scan barcodes then you can’t succeed in food service.” According to a survey by Honeywell and YouGov, DCs are losing on average more than $400,000 every year on picking errors. To mitigate this risk, 87 percent of DC operators anticipate shifting to voice technology in the next five years. “Consumers want their purchases
delivered as quickly as possible, which puts extreme pressure on distribution center operators to deliver the right products to the right place at the right time,” says Bruce Stubbs, director of industry marketing, Honeywell Sensing and Productivity Solutions. Voice technology is growing steady in its application to warehouse operations and the fulfillment space. Improvements in efficiency and productivity can vary based on an operation’s process prior to implementation. However, Venkatasamy says when customers deploy a voice
Voice technology is growing steady in its application to warehouse operations and the fulfillment space.
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COVER STORY
continued
Photo Credit: Swisslog
solution, he’s seeing gains as high as 30 percent to 50 percent. While the current growth rate of voice is in single digits, Most of our new Venkatasamy says two customers are technologies are reaching an automating inflection point that could every function boost the adoption rate of within the distribution voice technology. center, from receiving “Many warehouses are and put-away to moving away from traditionreplenishment, packing al Windows-based devices and loading.” to Android. Thus, operators are examining other techKeith Phillips, president and nologies and software that CEO, Voxware can increase productivity,” says Venkatasamy. “Coupled with Android, the application of machine learning and artificial intelligence is causing warehouse operators to rethink how they want to apply technology within facilities. Combining voice with those technologies provides a much higher return on investment. Anticipate more voice implementations over the next five years.” Phillips also sees the inclusion of other technologies with voice recognition to improve efficiencies. Few companies are using strictly voice technology as their solution. At minimum, Voxware customers are integrating voice and scanning. However, more customers are exAs package types panding that focus and embracing evolve, robotics the concept of augmented reality. provides the “With augmented reality you’re flexibility to adjust to future able to involve all the different package varieties. modes of data collection, such as
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voice, scanning, visual imaging and image capture video,” says Phillips. “All of those technologies coming together to support the various tasks occurring in the warehouse. “Most of our new customers are automating every function within the distribution center, from receiving and put-away to replenishment, packing and loading,” Phillips adds. “The result is a higher level of productivity and a much higher level of accuracy. If you receive it and put it away and replenish it correctly, then you have a higher likelihood the selection will be accurate.”
Robotics and Automated Guided Vehicles Of all the forms of warehouse automation, robots and automated guided vehicles (AGVs) are one of the fastest-growing segments. Robotics is defined as robotic arms that perform picking and palletizing tasks, while AGVs are rover-type machines transporting racking and bins throughout the facility. As reported in a market research report by Markets and Markets, “The warehouse robotics market is expected to be valued at $4.44 billion by 2022, growing at a CAGR of 11.8 percent between 2017 and 2022. “The warehouse robotics market for the food and beverages industry is expected to grow at a significant rate between 2017 and 2022. The growing trend of processed food and packaged eatables, requirement of clean room storage, and need for automated and hygienic
handling of food items are expected to drive the growth of warehouse robotics in the food and beverages industry,” says the report. TJ Fanning, vice president of Consumer Goods for Swisslog, says articulated arm robotics are replacing traditional palletizing equipment. As package types evolve, robotics provides the flexibility to adjust to future package varieties that are unknown at the time of implementing a production line. “As more retailers and consumers push less corrugate and increase the variety of packaging sizes, the complexity of stacking increases,” says Fanning. “Thus, retailers are moving toward articulated arm robots for potential palletization challenges in the future.” Laura A. Studwell, industry marketing manager for Omron, agrees, and says because robots are more versatile, the applications they can address are expanding. Where previously robots were used for standard end-of-line production, such as case picking and palletizing operations, they’re now found upstream in sanitary wash-down environments. “Because robots don’t carry pathogens, you find them used in food processing touching raw food and handling delicate products such as peaches or tomatoes,” says Studwell. “With the use of suction grippers, robots can thrive in food applications and not tear or compromise the product.” Shifting to AGVs in the warehouse, according to IBIS World’s industry market research report, Automated Guided Vehicle Manufacturing Industry in the U.S., “The industry has grown by 45.9 percent to reach revenue of $957 million in 2018. And growing industrial activity and freight volumes are anticipated to increase demand for AGVs.” AGVs are ideal when it comes to the transport of products across continuous distances in the warehouse. Fanning says using AGVs to transport racks of product to pickers provides additional density as well as increased throughput www.foodlogistics.com
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COVER STORY
continued
capabilities of individual pickers, while improving warehouse safety and operator effectiveness. “In a food environment where it’s potentially temperature controlled, employees are under high levels of stress trying to store a 3,000-pound pallet up to 40-feet in the air and at a temperature of -20 degrees Fahrenheit,” says Fanning. “Often, rack structures are damaged during the process. Automated vehicles can replace that task, reducing rack damage as well as saving labor costs.” At Omron, AGVs are referred to as autonomous intelligent vehicles (AIVs), and are appearing in more food and beverage warehouse operations from processing to packaging. From a processing perspective, Studwell says companies are using modular production lines where shared equipment reduces a facility’s footprint and improves cost savings. On the packaging side, AIVs help ensure product freshness and on-time delivery. “We have a customer in the baking industry where its goods have an expiration date. Thus, it relies on the first in, first out distribution method,” says Studwell. “In a warehouse that’s completely automated, mobile robots are equipped with a collaborative robot mounted on top to retrieve and unload product. Mobile robots take packaged goods to various warehouse locations, unloading those goods into cases on a pallet before being shipped out to regional distribution centers and finally individual retail stores.” If there’s consistency to the process and product, robotics and AGVs are the ideal automated solution. “If a product is coming off a piece of packaging equipment at
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the same rate and box structure for palletizing, then automate the solution and remove the human element,” says Fanning. “However, if variability exists where validation of the shipment or inspection of the product is required, humans are there for that process before placing product on a robotic or AGV solution for delayering or put away.”
Sortation and Conveyor Systems Conveyors and sortation systems allow for more efficient retail, wholesale and manufacturing distribution, according to MHI, the nation’s largest material handling, logistics and supply chain association. By allowing large volumes of material and/or product to move and be sorted rapidly, conveyor and sortation systems allow companies to ship or receive higher volumes with smaller storage space and lower labor costs—two of the modern warehouse’s greatest challenges. While historically the bottom uct, order sizes are also decreasing, line has been the No. 1 focus for but there are more of them. most food and beverage companies, “Instead of sending things out Ahmed Arif, regional manin full pallet like they had ager at Bastian Solutions, If a product in the past, they have to says he is increasingly move now to layers to is coming off seeing companies thaw to cases and even in some a piece of the idea of a capital investinstances down to the packaging ment on automation. piece level,” explains equipment “They are realizing the Tom Steininger, market at the same model has changed, and development director at rate and box they can’t just keep throwDematic North America. structure for ing labor at the problem,” palletizing, then Which in turn, he adds, he notes. automate the means “they have more Further complicating work to do to get their orsolution and the warehouse’s labor out but less people to remove ders issues is a proliferation of do it. The two don’t work the SKUs and inventory levels, well together.” human as big box food and beverThus, many companies age companies continue to element.” are turning to automation combat stagnant sales by in an effort to alleviate the TJ Fanning, vice president of acquiring small but thrivtwo pain points. Consumer Goods, Swisslog ing boutique-type brands. “There are a lot more With more choices in prodoptions for the consumer, www.foodlogistics.com
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Photo Credit: Omron
Autonomous intelligent vehicles are appearing in more food and beverage warehouse operations from processing to packaging.
so as a result that’s putting a lot more demand on the manufacturer to figure out how to deliver different flavors and different packaging sizes,” Arif says. “You just can’t scale that with traditional methods... you have to have the equipment that can rapidly alter what you’re delivering to market.” Because sortation is the keystone for any distribution center, automated storage, sortation and conveyer technology is a good place to start. For those food and beverage companies that are investing in automation, Arif says Bastian typically sees initial investment in storage, such as a pallet rack or advanced buffer. It also sees a lot of investment in picking conveyers, which are belted or roller conveyers that simply take away product, and zero pressure conveyers, which allow product to be separated. “Those picking lines are usually merged into a line that are scanned and directed to the correct area for palletizing. From there either a human or robot palletizes the product, or it is loaded into the back of the truck if it does not need to go on a pallet,” explains Arif. This type of operation means that instead of a worker walking www.foodlogistics.com
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around the entire warehouse, they can pick to a conveyer, which sorts to an operator who then stacks the orders. In higher-speed applications, pallets can be built automatically from mixed cases without human intervention. Beyond addressing the obvious efficiency and labor challenges, Arif adds that quality is also often in the top three concerns for many food and beverage companies considering automated solutions. “It seems more than ever that reputation for some of our customers is a bigger and bigger piece,” he says. “Cost is important, but a lot of our customers are putting an emphasis on quality and reputation as leading reasons why they’re exploring automation. “With social media and how quickly things spread, it’s critical that manufacturers and distributors are utilizing tried-and-true practices to get their products to consumers, and that is playing out with automation. Utilizing technology that they feel is going to help them stay on top of that is going to be absolutely critical,”Arif adds.
integrator account manager at FANUC. In addition, he adds, “FSMA regulations call for strict procedures to be followed in order to comply, and automation inherently takes care of these needs.” Because automation, he says, “allows for robust track and trace capabilities along with eliminating poor ergonomic workplace conditions.” Today’s food supply chain has also been greatly affected by changing consumer demands. Consumers want to know everything about the food they eat, from the quality of the products to the way they are delivered, says Mike Wagner, global OEM business manager at Rockwell Automation. “Today’s consumers want products delivered how, when and where they want them. These new consumer demands coupled with fluctuating labor rates and a lack of available workforce is creating new opportunities for automated solutions,” Wagner adds. And those opportunities, specifically in consideration of modern picking and packing, will include a lot more robots, analytics and a globally connected enterprise. “Packaging machine manufactures have traditionally designed and utilized a lot of conventional
Cost is important, but a lot of our customers are putting an emphasis on quality and reputation as leading reasons why they’re exploring automation.” Ahmed Arif, regional manager, Bastian Solutions
Pallet conveyor systems are used for infeed and outfeed to automated storage and retrieval systems. Manually operated fork truck interface stations are included in the conveyor system configuration.
Packaging Automation The manufacturing of our food has become a highly automated process—from harvest to processing to packaging. According to a survey from the Association for Packaging and Processing Technologies, 94 percent of food packaging operations are using robotics already. While labor challenges are of course contributing to this trend, the implementation of the Food Safety Modernization Act (FSMA) also had an impact. “Picking and packing applications require high-rate repetitious motion, and it has become very difficult for most manufactures to find and retain a labor force to keep pace with production demands,” says Wes Garrett, authorized system
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When you’re talking about being diagrams, instruction manuals and models and able to go and pick and more—at the same time. customer behaviors produce, are changing, there “Voice picking technology is a greater need for motion mechanisms such as you are on has been around for decades, gantries and cam-driven machines. the workforce to be the clock and everybody feels really Packaging machine builders are properly equipped the second the comfortable with that now, replacing conventional motion de- with digital technolo- product leaves even though in the beginning vices with robots to gain reliability gy,” explains Jay Kim, the refrigerated people were really worried and minimize machine design/build chief strategy officer environment.” about that, too. The next time,” says Garrett. at Upskill. phase of that is having some Jay Kim, chief strategy Many OEMs are even building For example, type of augmented toolset officer, Upskill their own robots, which are much Upskill is currently that is not intrusive or a secumore integrated, Wagner adds. participating in a sizeable pilot with rity risk,” explains Marco Nielsen, “The wide variety of product a retailer that is working to equip vice president, managed mobility shapes, sizes and branding require their grocer pickers (in the aisle and services at Stratix. flexible machine designs,” he in the warehouse) with immersive Kim agrees, noting the potential explains. “The challenge is to meet technologies that enhance their benefits for a more flexible and customer demand without driving ability to complete curbside delivagile workforce, as well as a logical manufacturing costs up. Unsched- ery of groceries that are pre-picked progression for use in conjunculed downtime and product and packaged or even delivery all tion with other highly-automated changeovers can be reduced or the way to the consumer’s home. technologies, acting as the “human eliminated using automation.” “Without these types of technolinterface” that ties together the ogies to drive higher throughput digital enterprise. Augmented Reality of picks with accuracy, grocery “Wearable tech, AR and immerand Virtual Reality delivery is something that probably sive tech on the whole are fundaImmersive technologies such isn’t easily enabled,” Kim says. mentally changing how work is beas augmented reality (AR), mixed In addition to growing delivery ing done in factories, in warehouses, reality (MR) and virtual reality (VR) models, the timeliness of delivery, and out in the field maintaining and came in at No. 9 on Gartner’s top 10 especially in regard to fresh produce serving equipment,” Kim says. “This list of strategic technology trends and other perishable goods, is also technology today is going to have for 2019. Gartner predicts that by being made possible with the aid of an impact by bringing real-time con2022, 70 percent of enterprises will immersive technologies. nectivity and access to computing be experimenting with immersive “When you’re talking about being materials that the hands-on worker technologies for consumer and able to go and pick produce, you are has not had in the past.” enterprise use, and 25 percent will on the clock the second the product A few challenges still prevent have deployed them in production. leaves the refrigerated environlarge-scale deployments from leavThe potential for such technolo- ment,” notes Kim, adding that “time ing the pilot stage, however. Nielsen gies is becoming clearer in the food and accuracy is directly tied into recently worked with a large and beverage warehouse as the these businesses’ ability to generate Arkansas-based retailer that was way businesses operate continues a profit, and the need to make a interested in immersive technoloto change. profitable business out of [these gies but unsure if they had the right “Because the business needs new models] is also driving this.” support around it. Currently, many “They didn’t really feel that was warehouses and available yet,” he says. “They wantdistribution centers ed to figure out what to do when use voice pick techthey have hundreds of devices nology to boost break, not just one or two, and how efficiency and acdo we get them fixed. curacy. It’s thought “Some of the software and techthat AR, VR or a nology is there, but I think some of mix of the three the support mechanisms also have is the next logical to be there,” he adds, also noting step for wearable that the battery power on consumtechnology, allower devices is still not up to par for ing users to access enterprise-wide use, and the overall multiple sources understanding of how and if these of material—such technologies make sense for your as videos, photos, business remains low.
COVER STORY
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*Source: 2018 Mastio & Co. National LTL Carrier Report
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BY LARA L. SOWINSKI
WHAT CAN FLEET MANAGERS EXPECT IN
phaisarn2517, iStock / Getty Images Plus
THIRD-PARTY & REFRIGERATED LOGISTICS
2019?
Industry experts weigh in on what to watch and how it will impact the food supply chain, especially the refrigerated transportation sector.
T
he start of the new year ushers in an abundance of forecasting from economists, analysts and experts of all stripes. For fleet managers, the perennial question remains—how will it all impact my operations? Food Logistics checked in with three experts from the transportation sector to get that answer, looking at specific areas that play a key role in shaping the current environment: capacity and regulations, labor, rates, technology and equipment, and alternative fuels and autonomous vehicles.
Capacity and Regulations Avery Vise, vice president, trucking, at FTR, says that capacity will remain cyclical in 2019, “though the spread between the peaks and troughs might become tighter.” In addition, “While actual surpluses of drivers are very rare—we haven’t had one since the Great Depression—the shortage does shrink frequently. Indeed, we are likely entering such a period now,
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although it is starting from the as the supply chain learns to adjust most severe driver shortage ever through modified practices. This is recorded.” especially true when the impact is However, eliminating the driver more about productivity than drivshortage entirely is not necessary er supply as is the case with HOS to achieve market stability, he says. and ELDs, for example. “FTR’s analysis “Only a couple of is that once driver significant regulations— It is unlikely shortages fall below the drug and alcohol that the U.S. 100,000 drivers, the clearinghouse and economy will market no longer the entry-level driver continue to experiences signifitraining standards—are see the current cant upward pressure set for implementation degree of labor on rates,” Vice says. in the next couple of tightness “Owing to demographyears, and FTR does not beyond ic changes, such as the expect these regulations midongoing retirement to have a market-moving of Baby Boomers—it impact. Otherwise, at 2019.” will be increasingly least until after the next Avery Vice, vice president, trucking, difficult to attract new presidential election, we FTR truck drivers, all other will see a deregulatory things being equal. Yet, agenda—principally it is unlikely that the U.S. economy an effort to add more driver and will continue to see the current carrier flexibility to certain HOS degree of labor tightness beyond provisions,” Vice adds. mid-2019, thus freeing up potential Wilbur Deck, manager of new truck drivers.” customer strategy for Trimble As for the impact of regulations Visibility, sees tight capacity in the on the trucking industry, Vise says transportation sector as the “new they “tend to lose steam over time normal” going forward. www.foodlogistics.com
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3PL continued
“The freight market is impacted by so many different variables that no one can truly predict where it is going to go aside from normal seasonal variations,” he says. “The driver shortage is the largest factor overall, and that is not likely to change with any new regulation or legislation.” In order to manage market volatility, Deck advises shippers to “pay close attention to freight market trends and information while continuously looking internally at ways to become a ‘shipper of choice’ to retain existing capacity at market competitive rates.” On the topic of ELDs, Mark Montague, DAT’s industry pricing analyst, says the The impact of impact of the ELD mandate is the ELD mandate subsiding, while the learning is subsiding, while the learning curve associated with ELDs has plateaued. curve has However, hair follicle plateaued.” testing, which has support Mark Montague, DAT’s from the American Trucking industry pricing analyst Associations and the Trucking Alliance, is expected to eventually be written into legislation, which would further restrict the driver pool, suggests Montague. “Of course, [hair follicle testing] is positive in terms of safety, but the negative aspect is that it’s already hard to find a qualified truck driver and this will continue to be the case in 2019.”
Labor “Pay is clearly the principal tool to attract drivers,” acknowledges FTR’s Vise, but equipment also plays a role, he says, noting that companies placed record-high truck orders in 2018, spurred in part by tax reforms enacted in 2017 that made it more appealing to invest in new capital equipment. Many carriers had been operating older units, including equipment that had been purchased before the recession, he notes. Meanwhile, carriers that are making technology investments,
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New equipment and the latest technology is helping attract and retain drivers.
such as those that match load options with driver preferences, are finding this is also a way to increase driver satisfaction, adds Vise. Trimble’s Deck says driver retention is the number one concern for most carriers right now. “Carriers are offering all kinds of incentives to attract drivers with things like training, newer equipment, signing bonuses, benefits packages, and on-board bonuses like tablets or Xboxes,” he says. “Carriers are also re-engineering their networks to offer different routes to get drivers home more often,” offering that, “When the market is in the carrier’s favor, it will prioritize lanes that are more efficient and driver-friendly in order to retain these employees.” DAT’s Montague agrees that new equipment is an incentive for drivers. “Putting drivers in a new truck with the latest in technology and comfort is certainly a way to help retain drivers.” He cautions, though, that while the oil and gas sector has been soft, increased investment in that sector in 2019 could pull some workers away from trucking, adding further strain to the already tight driver pool.
Rates For 2019, FTR’s Vise expects rates to be “significantly softer than the extraordinary environment we saw in late 2017 and through most of 2018.” When Food Logistics spoke with him in December, he said that excluding fuel surcharges, total truckload rates would likely post a 12 percent increase for 2018. Though spot rates for 2018 were already negative year over year, this situation would likely continue for some time. Meanwhile, “The growth rate in contract rates has likely peaked, he says, but because many bid packages were finalized later than usual, the year-over-year comparisons in contract rates should remain between 5 percent and 10 percent higher year over year through the first quarter or so of 2019. However, the trend clearly is lower, and we could see essentially flat year-over-year rates by the fourth quarter (of 2019).” Vise further notes that “with softer contract rates and spot rates in negative territory year over year through most of 2019, total truckload rates excluding fuel will be weak, and we could see some months where overall rates are www.foodlogistics.com
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kali9, E+, GETTY IMAGES
negative year over year. “Our latest forecast for 2019 is for total rates, excluding fuel, to be up less than 2 percent over 2018, and the risk to that forecast is on the downside,” he adds. Vice also emphasizes that FTR focuses on rates excluding fuel surcharges “because we want to isolate fundamental rate pressures. However, if diesel and crude oil prices were to remain at current levels or decline further, shippers probably would see considerably lower total transportation costs in 2019 than in 2018.” According to Trimble’s Deck, “While 2019 capacity may be somewhat looser than 2018, shippers should not anticipate much relief on freight rates.” For that reason, he says “the best way to manage While 2019 rate volatility capacity may would be to be somewhat limit exposure looser than as much as pos2018, shippers sible to the spot should not market. Building anticipate much a robust routing relief on guide and backup freight strategy are key components to rates.” minimizing risks Wilbur Deck, manager of customer from a rates strategy, Trimble perspective.” Visibility While van and reefer rates experienced considerable pressure in 2018, DAT’s Montague expects that pressure to ease a little in 2019. In particular, “The first quarter could be a little softer than normal,” he says, in part due to the typically slower economic growth in the first www.foodlogistics.com
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three months of the year, compounded by the seasonal lull in both construction and fresh produce. Montague says the market is unlikely to see the rate peaks that materialized at the end of 2017 or 2018, but that rates in 2019 “could still pose some challenges.” Furthermore, fuel price volatility can make forecasting tricky, he says. “That’s the danger of trying to predict the future—it’s something that can change pretty quickly.”
In addition to fuel prices, Montague also says changes in trade pacts and other variables could significantly affect pricing in 2019.
Technology and Equipment The trend that has the greatest near-term potential FTR’s Vice describes broadly as “intelligent freight systems,” which are enabled by artificial intelligence. “This technology is akin to what
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3PL continued
The highly fragmented and antiquated nature of the transportation industry makes it an especially attractive target for technology disruption.
Uber and Lyft use today to identify and manage their passenger transportation workforce,” he explains. “Startups and traditional broker and carrier players are beginning to use such systems to identify available capacity and use it more efficiently.” Ironically, the trend, he adds, was boosted by a government mandate that served to constrain productivity,” noting that, “ELDs forced technology adoption among small carriers Investments and owner-operators, in supply thereby opening chain and the door to greater transportation visibility.” technology As for equipment, increased in while costs for new 2018 and equipment keep rising, should the current surge in continue fleet purchasing is in 2019.” boosting the supply of Wilbur Deck, used trucks, says Vise. manager of customer “With the strong strategy, Trimble Visibility rate environment in 2018, we saw a significant increase in the number of newly formed trucking companies. Although this impetus for carrier formation will subside as rates soften, the availability of affordable used equipment should continue to foster new carriers,” he notes. Trimble’s Deck points out that, “Investments in supply chain and
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transportation technology have increased dramatically in 2018 and should continue into 2019,” adding that, “The highly fragmented and antiquated business nature of the transportation industry make it an especially attractive target for technology disruption.” He advises fleet managers to find a technology vendor or partner that can help navigate this market considering that “things are changing so rapidly.” At the same time, “Shippers can leverage these technology platforms to automate manual processes, save money and become more proactive with exception management.” Simply put, “Shippers are going to be exposed to more data than ever before, and the ones that can mine that information effectively will be able to generate significant competitive advantages in their industry,” he says. It’s worth underscoring that it costs substantially more to acquire and operate reefer equipment compared to dry vans, notes DAT’s Montague, which has bearing on the topic of equipment. “Whereas a van trailer costs roughly $25,000, a reefer can cost north of $50,000. Not to mention, if you’ve got a preloaded reefer trailer sitting in the yard burning diesel
fuel, you’ve got to monitor that to make sure it doesn’t run out of fuel. Thus, it’s a lot more difficult in the refrigerated sector to operate corresponding equipment. It’s not impossible; it’s just not as easy as in the van world.”
Alternative Fuels and Autonomous Vehicles Due to equipment and maintenance costs and limitations on fuel distribution, natural gas has gained traction only in a few situations, FTR’s Vice says. “One is when diesel prices have surged to record or near-record levels, but we have not seen market-moving diesel prices in quite some time. Another is in local and regional applications where fuel availability is not as much of an issue and where local regulations discourage diesel trucks,” he says. “Meanwhile, many of the tax incentives that once offset some of the disincentives to natural gas have expired.” Vise says, however, that there’s greater interest in electric vehicles “principally because of the potential operating cost advantage over diesel and some potential performance benefits.” On the other hand, “Autonomous vehicles continue to get more buzz among the media and vehicle www.foodlogistics.com
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Comstock, Stockbyte, GETTY IMAGES
DELIVERING FOOD AND BEVERAGES FROM POINT A TO PROFIT
suppliers than fleet operators,” Vise notes. “We expect to see automation implemented and proven in highly controlled environments over the next few years, but it probably will be upwards of a couple of decades before we see driverless trucks as part of routine over-theroad operations.” For his part, Trimble’s Deck says that while the hype around CNG/ LNG has subsided a bit, it is still certainly viable and a key component to overall fleet management. Furthermore, “Electric vehicles have taken most of the headlines recently, but the technology is still in development and yet to be largely adopted,” he says, adding that autonomous vehicles are on the “distant horizon,” but “not a real factor for fleet managers to have to consider for several more years.” DAT’s Montague says interest in alternative fuels is still there, but it’s more consistent in private lease, short haul and regional operations. “We’re likely to see more testing of autonomous vehicles in 2019 and 2020,” but he doesn’t see any dramatic impacts in the near term. Meanwhile, developments in the electrical vehicle sector are “interesting and could have a more immediate impact on fleets,” he says. www.foodlogistics.com
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SECTOR REPORTS WAREHOUSING
BY AMY WUNDERLIN
Crown Equipment’s QuickPick remote order picking technology allows an operator to move the lift truck forward via a remote control while they pick and pack the pallet. Crown Equipment Corp.
LABOR’S IMPACT ON LIFT TRUCK INNOVATION A
How the warehousing sector’s labor challenges are driving trends and innovation in the lift truck.
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fter speaking to executives at several leading lift truck manufacturers, it became increasingly clear what has been behind a wave of innovation in materials handling equipment—the access to labor. According to Yale Materials Handling’s Director of Industry Sales Will Brinson, technology is being used by many of today’s businesses to reduce the pain point or risk of an ongoing labor shortage. In order to maximize the use of labor (and because the need for lift truck operators isn’t going anywhere), Brinson says companies are now focusing on how technology can make their operators as efficient as possible, so labor can be repurposed for other applications inside a customer’s facility.
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“The food and beverage industry is pretty seasoned in what they do and how they do it. What we’re seeing is, ‘How do we continue to be as efficient as possible in those applications with the changes that they’re dealing with?’” says Brinson. The following article explores a few of the technological advancements aiding companies in adapting to industry changes—from self-driving and telematics enhanced lift trucks to virtual reality-based training modules.
Automated Lift Trucks Many lift truck manufacturers have introduced semi- or fully-autonomous lift trucks over the last few years, driven by the labor shortage and a need for efficiency and safety.
Crown Equipment Corp., like many forklift manufacturers, has taken a dual-mode approach to self-driving forklifts, which means offering a vehicle that can operate by itself but can also be operated manually if needed. “What you’re starting to see more and more is a need for autonomous vehicles and people to work together,” says Jim Gaskell, director of global technology business development for Crown Equipment Corp. “There are parts in the process where the vehicle arrives in a certain area and you might want an operator to drive it deeper into the aisle or a line-side delivery, and then send it back on the long-distance travel by itself.” In fact, the biggest opportunity www.foodlogistics.com
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for automated materials handling for a number of reasons. According more product, move a lot different equipment, he adds, will be eliminat- to John Rosenberger, Raymond’s di- product. It’s not just moving whole ing man-powered horizontal travel. rector of iWAREHOUSE Gateway & pallets of things anymore; many “Customers would like to do that Global Telematics, a push for safety warehousing applications now without having a person on it, and is a big one, as well as the potential move cartons or even items. Thus, then use the people to do the more for increased efficiency, especially you try to optimize those types of complicated tasks like loading the in the food and beverage industry things,” he explains. vehicle,” Gaskell explains. where they are consistently looking But you can’t optimize unless Crown offers a semi-autonoto optimize the processes of the you measure. mous truck that allows an operator warehouse. “You don’t know what’s going to stay off the vehicle and operate “You want to get efficiency down on unless you measure something. it via a remote control that they because margins are always getting The telematics systems that you’re wear on their hand. The operator thinner. We have to move a lot seeing proliferate throughout the can keep the vehicle ahead of them, while they de-pick and build the pallet. “We’ve eliminated some of the steps that it takes for them to control the truck and build the pallet. He can just push a button, and the vehicle will self-navigate itself down the aisle to get to the next slot,” explains Gaskell. “What that’s doing for the customer is improving their productivity by many times, double digits.” Automating repeatable tasks is another big benefit to automated lift trucks. Robotic lift trucks can not only move product horizontally, Minimize food degradation inside storage freezers. but they can move material up and down an application, such as putting away pallets or taking pallets out of racking. These lifting abilities ALL FROZEN FOOD HAS SOME Thermal Energy Storage absorbs • PROTECT FOOD QUALITY UNFROZEN WATER EVEN AT up to 85% of heat infiltration, eliminate some of the • INCREASE TEMPERATURE STABILITY -40° C. EVERY TEMPERATURE slows temperature increases, CHANGE CAUSES WATER TO • EXTEND THERMAL BACKUP: 3X more mundane tasks, improves temperature stability, THAW OR FREEZE CREATING What you’re and saves up to 35% or more on • REDUCE ENERGY COSTS LARGER CRYSTAL STRUCTURES leaving human operenergy costs. UP TO 35% seeing more and THAT REDUCE FOOD QUALITY. ators free for more more is a need complex tasks. for autonomous “The robotic lift vehicles and truck can maintain people this over a longer to work period of time, meantogether.” ing you don’t have to worry about an eightJim Gaskell, director of global technology hour work day; you business development, Crown Equipment Corp. don’t have to worry about coffee breaks or restroom breaks. You’ve got a lift truck that will do a continuous cycle until you tell it not to. And then you can take an operator that was doing that and put them in an application that requires human intervention,” explains Yale’s Brinson.
PROTECTING FOOD QUALITY.
Telematics There has been a proliferation of low-cost telematics on lift trucks vikingcold.com/fl www.foodlogistics.com
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Virtual reality simulators appeal to a younger workforce and have the potential to reduce turnover by providing a more engaging training method. The Raymond Corp.
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continued
warehousing equipment are for that purpose,” Rosenberger says. Telematics systems aid in this by broadcasting and recording information that a lift truck is naturally keeping as a part of its day-to-day routine—whether that’s hour meters, particular checklists or movement inside a facility—so that an individual customer can keep track of their own KPIs. In general, Yale’s Brinson says what telematics are really tracking “is what lift trucks and material handling equipment is doing in its environment.” “The telematics device allows that information to be read, so that we’re no longer looking at just data. We’re transitioning that data into information that can provide solutions or recommendations for ongoing best practices,” he adds. Those best practices include better maintenance management, driver best practices and training, and more. “When you monitor how the person is using the truck…you can start instilling best driving practices…that can lead to improvements in my bottom line as a warehouse manager or owner of the corporation,” explains Rosenberger. “By being able to capture that type of data from the vehicles in real time, over the course of days or weeks or months, compa-
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DON’T FORGET ABOUT THE DATA
Whatever the warehouse technology, it all collects data. And today, they are all independent systems, creating silos of data that is not easily manageable. In the next few years, the biggest technological innovation may not be another advanced system, but the acceptance of a professional service to manage these systems and the data they collect. We will also begin to see the integration of these technologies into one platform. “We do see a proliferation of what we call consulting services, data aggregation services, and system integration services to combine these new technologies that are advancing our warehousing industry,” says John Rosenberger, Raymond’s director of iWAREHOUSE Gateway & Global Telematics. “If you have these silos, you’re not really getting the full picture. That type of service could start aggregating that data and give you a fuller, more robust, complete picture of what’s going on.” This integration will further be driven by an aging millennial workforce. While we like to think of millennials as college or sometimes even high school students, a 2018 report from Pew Research Center defines millennials as being born from 1981 to 1996, meaning the youngest of this generation are 22 years old. It won’t be long before the majority of this generation is maintaining managerial positions. “You’d be surprised how many large companies are still running on spreadsheets with somebody walking around taking physical inventory and physical collection of data—but that too will change,” says Rosenberger. “Millennials in the workforce are going to drive that because they’ve come from that type of technology. They’re used to getting all that data; it is ingrained in our culture now. So as those people move into positions of authority and influence, they too will become more easily adaptive to this type of technology.”
nies can analyze that data to make more informed decisions.”
Lift Truck Simulators While finding good labor is an obvious struggle in almost every warehouse across America, retain-
ing that labor after they’re hired can be even more challenging. This trend has led to a slew of creativity in training modules, including the use of virtual reality technologies to attract and train lift truck operators. “If we look at the generation coming in to fill those workforce gaps, it is millennials, and they’re really intrigued by technology; they’re tech savvy,” says Stacey Patch, business manager, Raymond Virtual Reality Simulator. “[Virtual reality is] interesting to them, but it’s also helping to enhance their confidence; it’s engaging them. “We can use this tool to help that learner become comfortable and confident on that lift truck, so that they can go into the warehouse and operate and hopefully maximize their efficiencies as they’re picking. Using these types of technologies is really helpful for engagement and enhancing the overall learning www.foodlogistics.com
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Raymond’s virtual reality simulator allows the operator to learn on the vehicle they will use on the job. The Raymond Corp.
experience,” Patch adds. Raymond offers a simulator that utilizes the actual lift truck and controls the operator would be using on the job. New hires undergo a series of lessons based on the customer’s unique operation. For example, one lesson could teach operators the step-by-step process of engaging a pallet within a narrow aisle—basics such as: what steps are required to do it properly and avoid incidents within the scenario? “It’s teaching best practices from the perspective of somebody brand
new to operating…and allowing them to grow their skills in a really immersive environment,” says Patch. Raymond has also found that utilizing a VR simulator in an environment with reduced distraction can help enhance the retention of
information. Traditionally, a significant part of the warehouse had to be carved out when training on equipment to ensure a safe and secure environment. “The safety quotient of the VR simulation is that you don’t have to use that real estate,” says Raymond’s Rosenberger. While Crown doesn’t currently offer a VR simulator, Gaskell says they continue to talk to customers about its potential. “They’re trying to figure out where it fits in the training plan—either because of the high turnover of training operators or they’re trying to supplement training with simulation—and it does have some benefits. It’s not a replacement for [traditional methods], but it certainly could help enhance training.”
Virtual reality is not a replacement for [traditional methods], but it certainly
could help enhance training.” Jim Gaskell, director of global technology business development, Crown Equipment Corp.
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SECTOR REPORTS TRANSPORTATION
BY BARRY HOCHFELDER
AUTONOMOUS VEHICLES
THE NEXT WAVE OF LAST-MILE TECHNOLOGY
Fully driverless trucks are still a way down the road, but they have the potential to solve the driver shortage, save money, improve efficiency and help the environment.
Barry Hochfelder is a freelance journalist who has covered a variety of industries in his career, including supply chain. He also served as the former editor of Supply and Demand Chain Executive. Hochfelder is based in Arlington Heights, Illinois.
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A
merica’s economy relies on trucking. The American Trucking Associations (ATA) says that trucks move about 71 percent of the nation’s freight by weight with $738.9 billion in gross freight revenue (of primary shipments), representing 81.5 percent of the U.S. freight bill in 2016. We all know about the driver shortage and the electronic logging device (ELD) mandate that’s adding pressure to the industry. The ATA estimates that there are 3.5 million truck drivers in the United States with 33.8 million trucks registered for business purposes. And, the association says, the next decade will require another 90,000 truck drivers each year to keep up with demand. Even driver health is a major concern. Irregular schedules, long hours (somewhat abated by the ELD), poor nutrition and stress make for an unhealthy lifestyle. In a 2010 report, the Centers for Disease Control and Prevention (CDC) said that the life expectancy for truck drivers was 61, 16 years below the national average. Fifty percent of commercial drivers were overweight or obese (compared to 33 percent of the general population). Fifty-four percent of them smoked, and only 8 percent exercised regularly. Couple all of that with the pressures of e-commerce and consumer expectations of immediate delivery, and the situation gets worse. The
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timing, however, is right for the growth of autonomous vehicles for last-mile delivery.
Who’s Delivering? One of the most active players in the autonomous vehicle delivery arena, despite being just two years old, is Udelv. Focusing on last- and middle-mile delivery on public roads, the California-based compaprovide an outstanding customer ny has completed more than 1,200 shopping experience, they need deliveries (with a safety driver) to stay ahead of the curve and for multiple merchants in the San lead the market with the adoption Francisco Bay area. Last fall, Udelv of new technology,” says Daniel also agreed to supply Laury, Udelv CEO. “The several Oklahoma City rapid deployment of The rapid supermarkets with a autonomous delivery vans deployment of fleet of autonomous enables retailers to make autonomous vehicles. The first will cost-effective deliveries delivery vans be delivered in this and improve customer enables retailers to quarter, with a 10-van experience.” make cost-effective deployment to follow The Udelv vehicles deliveries and by the end of next year. will be able to travel up improve the to 60 mph and include an The vehicles will ferry customer food from a number adaptable cargo system experience.” with shelving space that of grocery stores to customers in “undercan accommodate various Daniel Laury, chief executive officer, Udelv served markets.” types of packages of At January’s Condifferent dimensions and sumer Electronics Show (CES) in weights. The system, which can Las Vegas, Udelv announced that it carry up to 32 orders per delivery had signed a deal with Walmart for cycle, will allow merchants to load a trial of self-driving delivery vans quickly and consumers to retrieve in Surprise, Arizona. The trial will their goods individually. begin in February and will operate From a 3,000-square-foot warewith safety drivers until the two house in San Francisco’s Mission companies and regulators approve District, a two-year-old company removal of the driver. called Farmstead, is also partnering “America’s leading retailers know with Udelv to deliver groceries to to stay competitive and continue to customers in an hour. In September, www.foodlogistics.com
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Starting in early 2019, DoorDash and General Motors’ Cruise Automation will test the first food deliveries using autonomous vehicles in San Francisco. DoorDash
Farmstead began a pilot program with Udelv on select routes in the Bay Area. “We envision a future where autonomous delivery is the norm in our space, rather than the exception,” says Farmstead CEO Pradeep Elankumaran. “This technology will help us be more efficient, enabling us to get fresh groceries into our customers’ homes even faster and cheaper than before.” The vehicles will have a safety driver in the beginning. Customers who opt-in to autonomous delivery are notified when the vehicle arrives. They tap in a code and the compartment opens and the customer takes out the groceries. When empty, the compartment closes, and the vehicle is routed to its next stop. In early January, PepsiCo put its Hello Goodness line on wheels. Already established in vending machines, the company is using Snackbot, an outdoor self-driving robot developed by Robby Technologies, to deliver healthier snack choices to students at the University of the Pacific in Stockton, California. www.foodlogistics.com
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Students can order snack items from 9 a.m. to 5 p.m. via the Snackbot app and meet the robot at one of around 50 designated areas. San Francisco almost seems to be ground zero in the development of autonomous vehicles. Another test in the area began early this year when DoorDash and Cruise Automation announced a food and grocery pilot program. DoorDash, which is in 3,000 cities in North America, will use Cruise autonomous vehicles to test and improve the efficiency of getting products from its merchants to the customers. “We see autonomous vehicles playing a major role in the future of delivery as consumer behaviors continue to shift online,” DoorDash CEO Tony Xu says.
What’s Next? A new report from McKinsey says fully autonomous trucks will roll out on the roads in four waves. The first two waves, from 2018-20 and 2022-25, will feature platooning, a technique to connect a convoy of trucks wirelessly. “The first wave will require a driver in each truck, but over the next three to five years, networks of these connected convoys will delve, utilizing algorithms to link up,” McKinsey says. In the second wave, driverless platooning will begin on interstate highways, featuring a driver in the lead truck and unmanned trucks following behind. Once leaving the highway, drivers will resume control of each vehicle. McKinsey estimates that the first two stages will cut total cost of ownership (TCO) of a truck by 11 percent, primarily in labor and fuel costs.
In the third wave, 2025-27, which McKinsey calls constrained autonomy, “unmanned trucks will operate through the interstate highway system and other ‘geofenced’ areas without a platoon, subject to weather and visibility conditions, and developments in infrastructure such as the ability to communicate with traffic lights.” Drivers will meet the trucks at the interstate exit and drive them to the destination, navigating city streets, local and pedestrian traffic, parking lots and loading docks. This will produce savings of about 20 percent, the study says. Finally, in 2027 or sometime thereafter, McKinsey expects the first fully autonomous trucks operating without drivers performing tasks from loading to delivery. These vehicles will reduce today’s TCO about 45 percent. Fleet replacement, however, will take many years to complete. PepsiCo’s snackbots have a range of more than 20 miles on a single charge and are equipped with camera and headlights that allow it to navigate carefully in full darkness or rain, as well as all-wheel drive capabilities for handling curbs and steep hills. PepsiCo
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SECTOR REPORTS SOFTWARE & TECHNOLOGY
BY MARY SHACKLETT
WMS AND I THE DIGITAL TRANSFORMATION OF THE WAREHOUSE Industry pressures have forced many warehouse managers to reassess their operations—beginning with their WMS.
f anything can be said about warehouse management systems (WMS) in 2018, it was a year when warehouse managers took stock of new market pressures and demands, looked at how they were executing on the floor, and determined that new approaches were needed. While there are many warehouses across the country that still operate on a largely manual basis, the impacts of labor shortages, the need to track and trace products from origin to final destination, requests for 24/7 operations in a variety of geographic locales that are both foreign and domestic, and the need to meet product demands but not carry excess inventory formed a formidable list of pressures that warehouse managers had to address. “In 2018, we saw more distributors move beyond the warehouse and also start running their own trucks,” says Fran Rifkin, WMS product manager for AFS Technologies, which provides systems for consumer goods and food and beverage companies. “We’ve added yard operations to the WMS system to expand visibility of the truck loading process. This enables managers to plan the loads of trailers, which they can do with drag and drop load-planning tools. Pickers and loaders also know the sequence of how each trailer load should be done. This really helps the driver, and it also makes pallet traceability easier. The bottom line for warehouse managers is that they have more control over a larger part of the process. In the past, the warehouse’s role might have been just loading the pallets at the door for pickup.” Of course, scaling out the warehouse also means scaling out operations and how you perform them. In 2018, Rifkin says her firm saw customers requesting more voice-based applications so they could operate hands-free in freezers and other areas of the warehouse. “They wanted to avoid taking off gloves,” she adds. “As a result, more customers were moving to voice for order selection. They have found the hands free operation very efficient and are also employing it in other areas of the warehouse…We’re additionally seeing voice-based technology being extended to loading and cycle-count operations.”
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Key WMS Breakthroughs For WMS vendors and their customers, the good news was that WMS was already a mature system, so there was firm bedrock to expand from. What we saw, then, in 2018 was a steady stream of enhancements that extended WMS capability. One major enhancement area was moving more WMS functional-
gorodenkoff, iStock / Getty Images Plus
More voice-based order packing and warehouse operations weren’t the only thing customers were looking at in 2018. Additional WMS customer areas of interest were: • Mobile technology and wearables • Cloud-based systems • Robots and other forms of automated equipment • Better ability to track and trace goods inside and outside of the warehouse • Smart barcodes • Artificial intelligence and analytics • The ability to run 24/7 operations in multiple geographies.
ity into browser-style screens and pushing out more functions to mobile devices that could be operated from anywhere. “With mobile enablement, many WMS operations can be done from a desktop computer, but also from an RFID reader or a scanner,” explains Rifkin. “Warehouse employees can look up information such as the real-time status on a load and if the load can be closed out so the driver can get under way. You
no longer have to walk back to the office to do this. You can also take pictures of merchandise as proof of no damage to the vendor when each shipment leaves.” Equally important was a steady migration from in-house server-based systems to the cloud, driven by a need for many warehouse operations to be online 24/7. With the cloud, warehouse managers no longer have to worry about a server crash and how to get
In 2018, the industry saw significant capability enhancements to an already mature WMS technology.
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• Workflow • Audit Trails/History • Compliance • Product Demand
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800.655.5465 JANUARY/FEBRUARY 2019 | FOOD LOGISTICS
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SR: SOFTWARE & TECHNOLOGY
Now that WMS processes are in place...the goal today is to transform these processes
into more efficient workflows.” Fran Rifkin, WMS product manager, AFS Technologies
continued
operations back online. A cloud provider can do this for you. Also with the cloud, there are built-in failover systems and an ability to run a chain of warehouses that could be located around the world. Closely related to this was a need to localize WMS systems in a variety of different languages. Responding to this need, Oracle announced in 2018 that its WMS was localized in 10 different languages. Finally, barcode technology, along with much needed best practices, continued to make progress and be integrated into WMS systems. Warehouse operators are now using both 1D and 2D barcodes with their WMS systems. The linear 1D barcodes make up UPC labels and are handy because they can easily be changed as the price on a given item changes. An alternate option is the 2D barcode, which carries more information, including photos, instructions, website addresses and voice-based data. However, this denser data mass can’t be as readily changed as 1D barcodes. Where 2D barcodes excel are in complex supply chains and on products like medical equipment.
Looking Ahead Over the next two or three years, more automation, Internet of Things (IoT) technology and artificial intelligence (AI) will make its way into warehouses. Here are a few examples of how: Mary Shacklett is the president of Transworld Data, a technology analytics, market research and consulting firm. Prior to founding the company, she was vice president of product research and software development at Summit Information Systems. She may be reached at mshacklett@ twdtransworld.com.
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USE OF ROBOTS, DRONES AND AUTOMATED CONVEYOR SYSTEMS Robotic forklifts are already taking over some of the heavy lifting and warehouse traffic that humans used to do. And while drones have stalled as a means of delivering shipments in the United States, they are being used inside of large warehouses to check stock levels and patrol the premises. Additionally, automated conveyor systems are being used to move goods from Point A to Point B. The automated
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conveyor systems combine with robots that are trained by humans to perform goods packaging. IOT SOLUTIONS FOR TRACK AND TRACE Product quality, operational efficiencies and regulatory requirements will continue to drive IoT adoption and smart labels for product tracking and traceability. The ability to track and trace becomes more important as companies with warehouses decide to also enter into outbound and inbound logistics. The tracking and tracing functionality will be able to integrate with WMS systems so that managers have an interrupted picture of product movement to the warehouse, within the warehouse, and back out of the warehouse to end destinations. BETTER INTEGRATION IN THE CLOUD Cloud WMS vendors will continue to make it easier for companies to add new functionality such as inbound and outbound logistics, whether it is through tacking on new logistics modules or expanding WMS. ANALYTICS AND ARTIFICIAL INTELLIGENCE Far and away the biggest player in WMS evolution over the next couple of years will be automated decision-making and analysis of data. Large payloads of data will continue to stream into WMS systems from traditional system transactions and from the IoT world in the form of sensor input, RFID input, barcode input and more. As these massive amounts of data accumulate, the ability of computers to rapidly process them and serve up actionable insights will become a critical element in warehouse operations and strategy setting. “With the expansion of artificial intelligence and analytics in warehouse operations, it’s important for customers to be able to access and summarize data,” says Rifkin. “For this to happen effectively, information has to be presented in meaningful ways.”
An example is the slotting of warehouse activities, where seasonality and velocity of product consumption play key roles. If your AI can give you predictions and recommendations on when to ramp up and when to ramp down, the warehouse can be operated more efficiently.
An Evolutionary Process In the future, warehouse management systems will become more flexible and “pluggable” than ever before. These systems will be able to interface with different ERP systems—and they will also be capable of running in a standalone mode for companies that don’t use ERP. WMS systems will also continue to move to the cloud, where vendors will update them more frequently so companies can more rapidly use new innovations. Future versions of WMS will interact more readily with IoT, automation and robotics and will continue to transform warehouses. The AI offered through WMS what-if scenario modeling and a plethora of other analytics options will assist in warehouse management. “This is an evolutionary process,” says Rifkin. “Before WMS, companies didn’t have defined and repeatable processes in the warehouse. What WMS did was force them to come up with processes and tame the ways they used to work. It helped them understand that they had to have processes. “Now that the WMS processes are in place, there is a new level of engagement. The goal today is to transform these processes into more efficient workflows through the use of voice-based technology, smart labels, sensors, AI and mobile technology,” she adds. “Rapidly, WMS enhancements are moving warehouse operations away from warehouse workers having to memorize item locations, where they can potentially pick an item from a wrong location. Now, the system can tell them in real time what the correct item location is.” www.foodlogistics.com
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BE HONORED FOR YOUR ACHIEVEMENTS! Each year, Food Logistics showcases individual and corporate leaders in the food and beverage industry. Plan now to enter your company — or a cutting-edge client or vendor — in one of these industry-leading recognition programs:
CHAMPIONS AWARD:
ROCK STARS OF THE SUPPLY CHAIN Honoring individuals whose visions are shaping the future of the global food supply chain. Nominations Closed Winners announced in March 2019 issue
TOP GREEN PROVIDERS Are you a leader in sustainable practices? Share your achievements. Nomination deadline: March 29, 2019 Winners announced in June 2019 issue
TOP 3PL & COLD STORAGE PROVIDERS
FL100+ TOP SOFTWARE & TECHNOLOGY PROVIDERS
Are you a leading third-party logistics and cold storage provider? Be honored for your achievements.
Showcasing top software and technology providers supporting the global food and beverage supply chain.
Nomination deadline: May 24, 2019 Winners announced in August 2019 issue
Nomination deadline: September 20, 2019 Winners announced in November/December 2019 issue
ONLINE NOMINATIONS OPEN APPROXIMATELY TWELVE WEEKS BEFORE THE DEADLINES LISTED ABOVE. AWARD RESULTS, INFORMATION AND NOMINATIONS POSTED ON:
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Nomination dates and issues may change. Consult the call-for-entries email and nomination survey for confirmation JANUARY/FEBRUARY 2019 | FOOD LOGISTICS
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SECTOR REPORTS
OCEAN PORTS & CARRIERS
BY AMY WUNDERLIN
THE RISE OF SMART CONTAINERS M ajor opportunities are on the horizon for ocean shipping as the rapid pace of technological change will continue unabated through 2019 and beyond, according to industry research conducted by Navis, a part of Cargotec Corporation. To round out 2018, the company offered its predictions on the biggest trends driving the industry over the next year—most of which included increased use of technology. Most notable among the trends was a rise in the use of smart containers as the lack of real-time, end-to-end visibility still remains a major issue in today’s global supply chains, especially for products carried across the oceans. Navis’ research indicates that 2019 could be the year that we start to see expanded use of smart containers in the market as shipping begins to run trials of the technology. Use of this technology has the potential to provide Customers can a new understanding of plan and optimize the conditions of both the their suppy chain containers and the product based on inside as it travels from the visibility Point A to Point B. they have at The industry is already hand.” seeing progress with Maersk Line announcing Anne-Sophie Zerlang Karlsen, head of investments in inexpensive, refrigerated cargo for A.P. Moller-Maersk disposable tracking devices, along with earlier initiatives to put sensors into its entire fleet of refrigerated containers. In September 2018, Maersk introduced its monitoring system, known as Remote Container Management (RCM), to all its refrigerated cargo customers. The technology combines location tracking with temperature and humidity monitoring from inside each of the shipping
The use of connected shipping containers is growing as the industry continues to fill the visibility gap in the global supply chain.
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line’s 350,000 reefer containers to give customers a complete overview of their reefer shipments. “RCM gives visibility into the whereabouts and state of the goods in the container as it moves across the entire supply chain. Customers can interact with us to change or correct settings underway, and they can plan and optimize their supply chain based on the visibility they have at hand,” explains Anne-Sophie Zerlang Karlsen, head of refrigerated cargo for A.P. Moller-Maersk. RCM also enables its customers to make better decisions about their supply chains, Karlsen notes. “In the past, if a shipment of bananas was transported with incorrect reefer settings, the shipper wouldn’t know until the container was opened—often to discover a load of spoiled bananas. RCM will give you an alarm if something goes wrong, and the shipper can then work with Maersk to mitigate the situation—for example by having Maersk remotely correct the settings,” she says. Maersk has also seen many cases where RCM enables shippers to
help manage correct loading practices by their vendors. “Many companies require the suppliers to pre-cool the produce before loading. With RCM, they are able to detect the temperature of the cargo when it is loaded into the container. This is valuable information for better management of their supply chains,” Karlsen says. The value of that information is clear when you look at the growth Maersk is seeing in use of this product. According to Karlsen, Maersk has seen significantly higher reefer volume growth with RCM customers (+10 percent) than with non-RCM customers (5 percent), meaning “we are successfully growing our ‘share of the wallet’ in this segment, where many shippers use multiple carriers.” In addition, RCM customers now represent more than 70 percent of Maersk Line’s reefer volumes. While Maersk has seen strong results since the commercial introduction of RCM, it is still learning from the technology and its customers about the best ways to utilize it and making continuous improvements to the product and www.foodlogistics.com
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MSC Group
user experience. In fact, RCM 2.0 will be introduced in the first half of 2019. “The Remote Container Management (RCM) product is a strong fit to the A.P. MollerMaersk strategy to transform from a shipping and energy conglomerate into an integrated container MSC Group logistics provider that leverages digital opportunities to create seamless customer experience across the supply chain,” adds Karlsen. Big data and fleet management specialist TRAXENS is also making waves in the smart container space, with plans to deploy 100,000 IoT-enabled containers by the end of 2019, including equipping 50,000 MSC dry cargo containers with smart container technology. In a news release, MSC Group says the partnership with TRAXENS “will enhance supply chain management for shippers through unprecedented visibility of dry cargo flow from door-to-door, adding efficiency, safety and predictability.” TRAXENS provides shippers with an Internet-connected device to permanently affix on dry cargo containers. This transforms the container into a smart, connected object that collects and communicates real-time data on its position and movements throughout its journey. The device can also help monitor temperature, humidity level, shocks and vibrations, and doors opening and closing. “The use of digital technologies www.foodlogistics.com
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like smart containers will bring substantial gains in efficiency, service, security and safety along the entire supply chain. It will also help manage delays and other problems along the supply chain where historically chasing information has been time-consuming and expensive,” MSC says. “MSC believes that the real-time tracking of containers is the future of the shipping industry,” says Diego Aponte, president and CEO of MSC Group. “While shipping lines should of course compete on service, we will achieve better results for our customers by working in a more harmonized way on technology and innovation. Smart containers are a perfect example of where we can cooperate according to industry standards to make our services truly comprehensive, and TRAXENS is the top innovator in this area.” In the near future, TRAXENS solutions are also expected to facilitate easier and quicker pre-customs clearance for shippers. In addition, CargoSmart, a provider of shipment management software, is connected to over 40 ocean carriers to advance supply chain visibility. In October, CargoSmart partnered with Solace to use its PubSub+ event broker technology and IoT connectivity to help top ocean shippers, including OOCL, improve the productivity and efficiency of their shipping management and vessel operations. “CargoSmart aggregates and analyzes real-time vessel voyage data, port activity information and scheduling data from 40-leading ocean carriers, providing deep insights that help them improve the service and visibility
they give customers while reducing costs,” says Lionel Louie, chief commercial officer for CargoSmart. “Solace PubSub+ intelligently routes customized, filtered streams of IoT data from tens of thousands of vessels, sensors and control systems to applications, The use of digital analytics engines and ustechnologies like ers that can use them to smart containers will make smarter decisions bring substantial gains that optimize operations.” in efficiency, Solace also lets shippers create a realistic security and real-time model of their safety along entire operation through the entire the creation of a “digital supply chain.” twin,” a virtual represenMSC Group tation of physical assets and sensors that are updated by their real-world counterparts in an event-driven manner. These digital twins let shippers use sophisticated simulation techniques to develop responses that effectively address scenarios that might otherwise impact their customers.
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FL100+ VENDOR SHOWCASE
2018
FOOD LOGISTICS HONORS TOP SOFTWARE & TECH PROVIDERS OF 2018 The 2018 FL100+ marks the 15th consecutive year that editors of Food Logistics have profiled leading software and technology providers whose products and services support the global food and beverage supply chain, from helping to reduce food waste and extending the shelf life of perishables, to facilitating the safe and sanitary transportation of product while assuring regulatory compliance. With innovation in the software and technology sector progressing at such a fast rate, the providers profiled in the 2018 FL100+ have truly risen to the top against the competition. On the following pages, you’ll learn about a few of the companies who earned a spot on the 2018 FL100+ list. Take a few minutes to learn about these providers and how they are helping to create efficiencies, improve accuracy and enhance visibility for their customers’ supply chains.
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www.foodlogistics.com
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DEFINING & AUTOMATING MODERN DISTRIBUTION Velociti Alliance North America has been perfecting the art of advanced distribution for more than 20 years. With innovative clients in the top echelons of their respective industries, Velociti continues to push forward in the specific areas of inventory control, order fulfillment, and supply chain visibility.
www.velocitialliance.com
2017
2018
sales@velocitialliance.com www.facebook.com/VelocitiAlliance
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FOOD (AND MORE) FOR THOUGHT
BY RYAN KOORY
Overcoming the Organic Food Market Challenges T KOORY
he U.S. organic industry is at the intersection of opportunities for growth and obstacles to overcome. U.S. organic food sales grew 40 percent since 2013, reaching $45.2 billion over 2017, according to the Organic Trade Association. In contrast, overall U.S. food sales grew by less than half that rate—16 percent over that same time period, according to U.S. Department of Agriculture (USDA) estimates. Organic grain farmers have seen the benefits of booming consumer demand translate into profitability. Mercaris estimates organic price premiums for corn, wheat and soybeans averaged 194 percent, 122 percent and 109 percent, respectively, over the 2017-18 marketing year. These premiums have permitted some farmers to switch from producing crops with genetically modified seeds and synthetic chemicals, toward sustainable soil health practices, resulting in more farm profitability and stability. Mercaris estimates U.S. producers planted a combined 1.3 million acres of organic corn, wheat and soybeans in 2018—nearly doubling acreage planted since 2014. In contrast, conventional acreage has stalled with USDA reporting a 2 percent decline of planted corn, wheat and soybean acres over the same period.
Even with these achievements, there are many obstacles to overcome. For organic producers, the basic task of moving products from field to market is a considerable challenge. Organic commodities must be sold to a certified organic handler or processor to maintain certification. And while there are currently no regulations on transporting organic grain, the industry lacks a robust network of trucks and rail cars as well as on-farm storage, certified elevators and grain terminals to get grain to market. Additionally, organic producers have fewer tools for marketing crops and protecting them from volatility. Conventional producers have access to many highly liquid marketing and hedging strategies, like those provided by Chicago Mercantile Exchange, as well as a robust set of regional cash prices which provide transparency. These tools enable buyers and sellers to maximize revenues, manage cash flow and protect from volatility. In stark contrast, buyers and sellers of organic grain lack these tools; meaning organic transactions can carry a large amount of risk for buyers and sellers. To manage risk, buyers often lock in long-term supply contracts with growers, some lasting for years. Although these contracts can protect both sides from market volatility, they dampen liquidity and profitability of organic commodities, slowing the growth of the industry. Finally, support from government and academia has been slow to develop, resulting in lagging industry resources and tools. The USDA National Organic Program (NOP) has endeavored to protect the Certified
Organic label and support producers and buyers. However, with NOP’s historically limited budget, set at $15 million annually in the 2014 Farm Bill, it has struggled to keep pace with the industry. Over time, the growth in organic production and organic premiums have led to some cases of fraud, domestically and internationally. There is widespread agreement that fraud prevention and organic integrity are key issues, therefore additional government resources are now addressing potentially fraudulent organic commodities. Beyond this support, the passage of the 2018 Farm Bill was a much-needed boost to the U.S. organic sector. The Bill expands NOP funding to $24 million per year by 2023 and increases USDA funding for organic research and extension from $20 million to $50 million per year by 2023. With growth in markets for organic goods being matched with support from regulators and research, the industry has plenty of room for expansion that can last for the next decade or more. However, for the organic market to reach its potential, producers and buyers must remain focused on the challenges ahead and pursue the opportunities that exist in overcoming these obstacles. Ryan Koory is a senior economist with Mercaris. In his role, he provides custom market analytics and strategic pricing forecasts to stakeholders in the agricultural supply chain. Koory was previously with IHS Markit where he developed econometric models forecasting U.S. and global agricultural markets for top global agriculture businesses.
UrosPoteko, iStock / Getty Images Plus
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2019 Educational Webinar Series STAY ON TOP OF THE LATEST TRENDS AND BEST PRACTICES IN THE GLOBAL FOOD AND BEVERAGE SUPPLY CHAIN. Hosted by Food Logistics editorial staff and led by industry thought leaders, the 2019 Educational Webinar Series offers the information you need to streamline your operations and increase profits. REGISTER FOR ONE OR ALL OF THE SESSIONS AT NO CHARGE THANKS TO OUR SPONSORS.
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Blockchain & IoT
May 22
The impact of transformational technologies such as blockchain and IoT on the global food supply chain is beginning to reveal itself in a variety of areas, including tracking and tracing of products and assets as well as verifying the integrity of data and streamlining the flow of information. What are the immediate and affordable ways these technologies can be applied today? Join an expert panel as they discuss the merits of blockchain and IoT as they apply to the global food supply chain.
A truly integrated cold chain facilitates the seamless movement of product and data among all stakeholders in the food supply chain— from food growers and manufacturers, to transportation partners, ports, cold storage providers and others who collectively ensure food safety and freshness. What investments and innovations are making the most impact across the global cold chain? A panel of industry executives examines this topic from several angles.
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Cold Chain I
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June 12
August 21
Warehouse Automation
Software & Technology I
September 18
The e-commerce explosion is a main driver for the food and beverage industries’ embrace of warehouse automation and the benefits that come with it, such as gains in productivity and accuracy, safety, and improved shelf life and inventory control. What types of warehouse automation are making the most impact? How can organizations determine the right investments for their needs? These are some of the topics that will be explored by a panel of industry experts.
From farm to fork, software and technology touches virtually every aspect of the global food supply chain, helping to assure compliance with multiple regulations, manage the proliferation of SKUs, and enhance overall supply chain visibility. Join industry executives as they discuss how software and technology is impacting the global food supply chain and what investments your organization should consider and why.
Improving energy efficiency. Reducing Food Waste. Assuring compliance with the FSMA. These are some of the requirements that retailers, restaurants, manufacturers and growers of perishable food are demanding of their logistics partners when it comes to maintaining the cold chain. In response, innovations related to equipment, temperature monitoring devices, refrigeration systems and other new products and services are helping meet these demands.
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Cold Chain II
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October 16
Software & Technology II
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Join an expert industry panel to discuss how the fast moving software and technology sector is adapting to the changes—and pressures—underway in the global food supply chain. Specifically, new and affordable tools are needed to improve performance, mitigate risk, boost food safety, facilitate visibility and collaboration, and lessen the ongoing impact of a tight labor market.
The Role of 3PLs in the Global Food Supply Chain
December 11
The role of third-party logistics providers in today’s global food supply chain is expanding to meet growing demands from their customers, which range from compliance, to improved cold chain capabilities, access to software and technology, and more. At the same time, customers expect their logistics providers to maintain tight control over costs. How are 3PLs navigating this evolving market while remaining competitive? Join a panel of logistics executives in a discussion of these topics.
Our annual “Hottest Food Logistics Trends” educational webinar is one of the most popular each year, bringing together various food logistics executives to weigh in on the hottest trends shaping up for the coming year and what they portend for the industry at large.
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