Food Logistics May 2016

ERP TAKES ON A BIGGER ROLE IN MANAGING SUPPLY CHAINS

PALLET SOLUTION CONCERNS EXPAND

PRODUCE INDUSTRY UPDATES MEASURES

Food Logistics

RAIL INVESTMENTS PAYING OFF INFRASTRUCTURE INVESTMENTS AND EFFICIENCY IMPROVEMENTS POSITION RAIL AS A KEY TRANSPORTATION PARTNER

®

Global Supply Chain Solutions for the Food and Beverage Industry

PORTS & CARRIERS

FLEX THEIR MUSCLE SEAPORTS AND CARRIERS PLAYING A MORE PROMINENT ROLE IN THE EXPANDING GLOBAL FOOD SUPPLY CHAIN

• The Port of Oakland welcomes the megaship CMA CGM Benjamin Franklin. Photo courtesy of Port of Oakland

Issue No. 176 MAY 2016

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FoodLogistics.com

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Three heights. Three lengths. Three engine choices.

Transit has the most vehicle configurations in its class.* Not to mention best-in-class cargo height in the high-roof Transit.** No wonder it’s America’s best-selling full-size commercial van.†

THE 2016 FORD TRANSIT FORD.COM ///

Medium roof shown. Available features and aftermarket equipment shown. *Class is Full-Size Vans based on Ford segmentation. (Based on body type, body length, wheelbase and roof height.) **Class is Full-Size Van based on Ford segmentation. † Based on total U.S.reported sales (2015 CY).

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ON THE MENU

OCTOBER 2015 ISSUE NO. 171

ON THE MENU

MAY 2016 ISSUE NO. 176

14

SOFTWARE & TECHNOLOGY

ERP Takes On A Bigger Role In Helping To Manage Supply Chains 36

As players have to manage more information for more uses, ERP enhances visibility.

By Elliot Maras

COLUMNS FOR STARTERS

A Deeper Dive Into Ports & Carriers 6

By Lara L. Sowinski

COOL INSIGHTS

COVER STORY

U.S. Box Ports Flex Their Muscle

Key gateways are playing a more prominent role in the expanding global food supply chain. By Lara L. Sowinski

FEATURE THIRD-PARTY & REFRIGERATED LOGISTICS

Produce Industry Updates Measures To Improve Transportation Practices

12 Cold Storage Operators Gear Up For Summer

What are refrigerated warehouse operators doing to use energy wisely during the summer?

By Daniel Cooke

FOOD (AND MORE) FOR THOUGHT

42 What’s Driving Deforestation?

By Doug Boucher

20

Trade organizations establish voluntary best practices for all industry stakeholders.

By Elliot Maras

WAREHOUSING

Pallet Solution Concerns Expand Beyond Sanitation And Sustainability 26

The food supply chain requires more customized pallet solutions.

By Elliot Maras

TRANSPORTATION

32

Rail Investments Paying Off

DEPARTMENTS

Supply Scan 10 Food on the Move 40 Ad Index 8

WEB EXCLUSIVES • Opinion: Food Labels Have Been A Big Failure • Global Ocean Shipping Alliances Press Forward

Infrastructure investments and efficiency improvements are positioning rail as a key transportation partner in the food supply chain.

• FL’s Educational Webinar Series

By Mindy Long

www.FoodLogistics.com

Published and copyrighted 2016 by AC Business Media Inc. 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.

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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 U.S. bank.

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The secret sauce of the food and beverage industry.

Every great recipe has a secret ingredient. For all of the top ten Fortune® 500 Food and Beverage companies, that secret ingredient is Ryder. With our proven safety culture, industry-leading resources, and years of expertise delivering success in this highly competitive category, it’s no wonder people are always whispering about us. Be Ever Better. Discover how outsourcing with Ryder can improve your fleet management and supply chain performance at Ryder.com.

Ryder and the Ryder logo are registered trademarks of Ryder System, Inc. Copyright ©2016 Ryder System, Inc. Ever better is a trademark of Ryder System, Inc. FORTUNE 500 is a registered trademark of Time Inc.

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FOR STARTERS

FROM THE EDITOR’S DESK

A DEEPER DIVE INTO

PORTS & CARRIERS

S

SOWINSKI

6

ince joining Food Logistics five years ago, I have made a concerted effort to expand the magazine’s coverage of the food supply chain. Undoubtedly, the biggest change is how we view the food supply chain, which is to say—globally. That perspective opens up new topic areas for us, including ocean ports and carriers.

One of my first jobs in the supply chain industry was working in the ocean import department for Fritz Cos. in downtown Los Angeles during the mid-1980s. At that time, international trade and customs brokerage was a paper intensive and mostly manual process. Documents arrived by courier from overseas and were delivered to the office for assembly into their respective packets. Some for clearing the freight through U.S. Customs, others with the bill of lading and ocean freight check for the steamship lines, or delivery orders for the draymen and truckers. Motorcycle couriers made pick-ups from the office throughout the day, shuttling the various document to U.S. Customs at Terminal Island or other offices in the Long Beach area.

Watching the parade of paperwork in and out of the office each day, talking with U.S. Customs officials and transportation providers on the phone, seeing paper and freight move from one stop to the next really helped me understand how international trade worked. I was

FOOD LOGISTICS | MAY 2016

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a part of it, and it was tangible, not abstract. I could touch it, and it made an indelible imprint on me.

Commerce and international trade both changed dramatically over the years. So, too, has business for the ports and ocean carriers. The largest containerships, like CMA CGM’s Benjamin Franklin featured on this month’s cover, are massive beasts as wide as a 12-lane highway and capable of carrying 18,000 TEUs. Today’s reefer containers are so sophisticated that commodities once the exclusive domain of air cargo now move by ocean, thanks to controlled atmosphere technology and real-time monitoring that continue to open up new opportunities for shippers. Ports are equally efficient and automated, and perform a vital role in supporting and facilitating trade across the globe.

Our cover story this month is a collection of comments from some of these ports that are particularly important to the global food supply chain. Indeed, this topic is so important that starting in June; Food Logistics will devote a sector report each month to ocean ports and carriers.

I’m returning to a very familiar place and I couldn’t be happier.

Enjoy the read.

LARA L. SOWINSKI, EDITORIAL DIRECTOR LSOWINSKI@ACBUSINESSMEDIA.COM

DETAILS

Published by AC BUSINESS MEDIA INC. 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 Ronnie Garrett rgarrett@ACBusinessMedia.com Managing Editor Elliot Maras emaras@ACBusinessMedia.com Associate Editor Carrie Mantey cmantey@ACBusinessMedia.com Web Editor Eric Sacharski esacharski@ACBusinessMedia.com Ad Production Manager Cindy Rusch crusch@ACBusinessMedia.com Creative Director Kirsten Crock Senior Audience Development Mgr Wendy Chady Audience Development Mgr Angela Kelty ADVERTISING SALES (800) 538-5544 East Coast Sales Manager Judy Welp (480) 821-1093 jwelp@ACBusinessMedia.com Midwest/West Sales Manager Carrie Konopacki (920) 542-1236; Fax: (920) 542-1133 ckonopacki@ACBusinessMedia.com National Automotive Sales Tom Lutzke (630) 484-8040; tlutzke@ACBusinessMedia.com EDITORIAL ADVISORY BOARD Smitha G. Stansbury, partner, FDA & Life Sciences Practice, King & Spalding Raymond J. Segat, director, cargo & business development, Vancouver Airport Authority Dr. Barbara Rasco, professor and interim director, School of Food Science, Washington State University Adriano Melluzo, vice president, national sales, Ryder CIRCULATION & SUBSCRIPTIONS PO Box 3605, Northbrook, IL 60065-3605 (877) 201-3915, Fax: (800) 543-5055 Email: circ.FoodLogistics@omeda.com LIST RENTAL Elizabeth Jackson, Merit Direct LLC (847) 492-1350, ext. 18, Fax: (847) 492-0085 Email: ejackson@meritdirect.com REPRINT SERVICES Carrie Konopacki (920) 542-1236; Fax: (920) 542-1133 ckonopacki@ACBusinessMedia.com AC BUSINESS MEDIA INC. Chairman Anil Narang President and CEO Carl Wistreich Executive Vice President Kris Flitcroft CFO JoAnn Breuchel VP Content Greg Udelhofen VP Marketing Debbie George Digital Operations Manager Nick Raether Digital Sales Manager Monique Terrazas

Published and copyrighted 2016 by AC Business Media Inc. 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.

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MAY 2016 | FOOD LOGISTICS

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SUPPLY SCAN

NEWS FROM ACROSS THE FOOD SUPPLY CHAIN Daily Updates at FoodLogistics.com

Judge Dismisses Claims Against Nestle And Hershey Over Child Labor Disclosure

Avian Pathologists Rap Excessive Moves Against Antibiotics In Poultry

A federal judge ruled that the nation’s largest chocolate companies have no duty to disclose that their cocoa suppliers use child slave labor, according to Courthouse News Service.

“There are countless issues that may be legitimately important to many customers, and the courts are not suited to determine which should occupy the limited surface area of a chocolate wrapper,” U.S. District Judge Joseph Spero wrote in a pair of identical rulings related to class actions against Nestle and Hershey. Elaine McCoy sued Nestle and Laura Dana sued Hershey in September 2015, claiming the companies violated California’s Consumer Legal Remedies Act and the state’s unfair competition and false advertising laws by failing to disclose labor abuses in the supply chain.

Environmentalists Sue FDA Over Genetically Engineered Food Animal A coalition of environmental, consumer, and commercial and recreational fishing organizations has sued the U.S. Food and Drug Administration (FDA) for approving the first-ever genetically engineered (GE) food animal, an Atlantic salmon engineered to grow quickly. The man-made salmon was created by AquaBounty Technologies Inc. with DNA from three fish: Atlantic salmon, Pacific king salmon and Arctic Ocean eelpout.

This marks the first time any government has approved a GE animal for commercial sale and consumption.

The plaintiff coalition, jointly represented by legal counsel from the Center for Food Safety and Earthjustice, includes the Pacific Coast Federation of Fishermen’s Associations, Institute for Fisheries Resources, Golden Gate Salmon Association, Kennebec Reborn, Friends of Merrymeeting Bay, Ecology Action Centre, Food & Water Watch, Center for Biological Diversity, Friends of the Earth and Cascadia Wildlands.

Antibiotic use in poultry should be minimized through carefully planned and well-executed preventive practices, according to a position statement released by the American Association of Avian Pathologists (AAAP). However, the AAAP added, antibiotics should remain “a viable option when appropriate and necessary for the health and well-being of the animal, even when marketing and consumer preference dictate otherwise.”

The new document, “AAAP White Paper on Poultry Welfare and Careful Use of Antibiotics,” expressed concerns over the growing trend for some food retailers and restaurants to only offer poultry products from flocks raised with no antibiotics.

United Natural Foods Inc. Acquires Nor-Cal Produce Inc. United Natural Foods Inc. has acquired all the outstanding stock of Nor-Cal Produce Inc. and an affiliated entity as well as certain real estate, in a cash transaction for approximately $68.6 million, subject to certain customary post-closing adjustments. Nor-Cal is a family owned and operated distributor of conventional and organic produce and other fresh products in Northern California, with primary operations located in West Sacramento, Calif.

Datamyne Trade Report

Six Ways Climate Change Affects Global Trade Datamyne’s infographic shows six cases of climate change impacts on trade. Working from the Union of Concerned Scientists Climate Hot Map, Datamyne’s trade data indicates the products of ecosystems that are being altered by rising temperatures. Among the shifts in import-export values and volumes resulting from climate change are: • With rising sea levels, the Gulf Coast wetlands are slipping away—and with them the habitats that support shellfish and other seafood. The United States has been turning to imports to meet growing consumer demand for shrimp. (One commentator suggests that the availability of imports has inured people “to the fact that the principal rearing ground of Gulf shrimp, the Mississippi River Delta, is slipping into the sea at a rate of a football field an hour.”)

• As the oceans absorb more carbon dioxide from the atmosphere, the waters are becoming more acid ... and lethal for oysters.

Rising United States imports of oysters are one result.

• Rising temperatures are upsetting the delicately balanced climate of the global coffee belt. Coffee plants thrive near the equator in the coolness of mountain altitudes. Warming temperatures are bad for the beans—and good for plant-killing fungus and beetle infestations. The shape of things to come include a disappointing crop that has depressed Costa Rican coffee exports while the price of the coffee has risen.

• There are plant species that grow in South Africa and no place else. One is rooibos (or red bush) tea. Drought has decimated the 2015 crop and South African export shipments. Expect rooibos tea to be hard to find and much more expensive this year.

• A shift to a dryer climate will also have an impact on the way beer tastes: the European harvest of hop—including the Hallertau hops of Germany—was disappointing last year, so

INCREASE IN US SHRIMP IMPORTS

$4.3 Bil $3.3 Bil $2.9 Bil

Rising sea levels = Gulf Coast habitat lost = US shrimp imports increase

2009

2012

2015

CIF Total US Import Value of Shrimp (HS 0306.13 - USD)

Greater acidity in oceans = Shellfish destroyed = US oyster imports up

brewers are paying more or (the trade data indicates) finding alternatives.

• The warming temperatures are creating a more hospitable climate for vintners in the United Kingdom … and the United States is importing more British wine. (French champagne growers are considering buying British “terroir” as a hedge against climate change.)

Source: Datamyne.com

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FOOD ON THE MOVE

LOGISTICS TRENDS IN OUR INDUSTRY

INDEPENDENT TRUCKERS CHALLENGE ELD MANDATE IN FEDERAL COURT

FDA FINALIZES FSMA SANITARY TRANSPORT RULE

The U.S. Food and Drug Administration’s Food Safety Modernization Act (FSMA) rule on Sanitary Transportation of Human and Animal Food is now final, advancing FDA’s efforts to protect foods from farm to table by keeping them safe from contamination during transportation. The earliest compliance dates for some firms begin one year after publication of the final rule in the Federal Register.

The rule establishes requirements for shippers, loaders, carriers by motor or rail vehicle, and receivers involved in transporting human and animal food to use sanitary practices to ensure the safety of that food. The requirements do not apply to transportation by ship or air because of limitations in the law. Specifically, the FSMA rule establishes requirements for vehicles and transportation equipment, transportation operations, records, training and waivers.

To read the final rule, go to the Federal Register website at: www.federalregister.gov

A national association representing small business truckers said in its appeal of a government mandate that requiring electronic monitoring devices (ELD) on commercial vehicles does not advance safety, is arbitrary and capricious, and violates Fourth Amendment rights against unreasonable searches and seizures. The Owner-Operator Independent Drivers Association (OOIDA) stated these and other arguments in a legal brief filed with the U.S. Court of Appeals for the 7th Circuit.

AGRICULTURE SHIPPERS ASK CONGRESS TO RECONSIDER CONTAINER WEIGHT RULE The Agriculture Transportation Coalition (AgTC), representing agriculture and forest product shippers, has asked Congress to consider the U.S. Coast Guard’s guidance on the Safety

of Life at Sea (SOLAS) verified gross mass (VGM) rule for submitting container weights, including the method by which the shipper provides cargo weight and the carrier provides

container weight. On July 1, 2016 an amendment to the International Maritime Organization’s (IMO) SOLAS convention will go into effect, requiring shippers to certify and submit the VGM. AgTC says this will impose unnecessary costs.

DAT SOLUTIONS’ MONTHLY FREIGHT REPORT

A Southeastern Shift In Top Load Posts Mark Montague is industry rate 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. He is based in Portland, Ore. For information, visit www.dat.com.

10

For much of the spring, imported produce from Mexico dominated demand for refrigerated truckload capacity on the spot freight market. But spot rates and load volume out of ports likes Nogales, Ariz. and McAllen, Texas, fell markedly during April, one of several indicators that produce activity is shifting north to areas like central California and the Southeast.

Indeed, to close the month, the top three markets for reefer load posts on DAT load boards were Miami, Fla.; Atlanta, Ga. and Lakeland, Fla. There were sharp increases on a handful of key lanes: Miami, Fla. to Elizabeth, N.J. paid an average of $1.76 a mile, Miami, Fla. to Boston, Mass. was $1.97 a mile, and Lakeland, Fla. to Baltimore, Md. was $1.81 a mile.

Elsewhere, however, the refrigerated truckload market remains soft.

The national average reefer rate was $1.78 per mile and dropped 4 cents during April. The reefer load-to-truck ratio hovered around 2.6, meaning there were 2.6 available refrigerated loads for every available

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By Mark Montague

Reefer Spot vs. Contract Rates: The Gap Widens DAT refrigerated truckload freight rates, January-March 2016

$2.25 $2.00 $1.75 $1.50 $1.25 $1.00 $0.75 $0.50 $0.25

Spot

Mar

Apr

May

Jun

Jul

Aug

truck posted on the DAT network of load boards.

Typically, early harvests give a boost to spot rates, but in fact the gap between contract rates and spot rates is expanding.

In the van market, for instance, the average spread between contract and spot rates was 36 cents during April.

One reason the gap is growing is the relatively low price of fuel. Spot rates are “all-in”

Sep

Oct

Contract

Nov

Dec

Jan

Fuel

Feb

Mar

rates; they theoretically combine a line haul portion and a fuel surcharge. This rolled up rate has fallen much more sharply than the fuel surcharge has dropped for carriers hauling freight under contract.

Another reason is that shippers have less exception freight to move. In other words, they’re just not producing or harvesting more than they planned for—and truckers will have to look elsewhere for better rates.

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COOL INSIGHTS

BY DANIEL COOKE

COLD STORAGE OPERATORS GEAR UP FOR SUMMER I

Maintaining cold chain integrity from A to Z Companies should support the cold chain using a multi-faceted approach. Here are some examples: • Energy-efficient operations. Up to 15 percent of a refrigerated facility’s power consumption can be attributed to lighting vast cold rooms. Replacing typical metal halide bulbs with LED equivalents can result in up to 80 percent in efCO2 EQUIVALENTS VS. 2010 LEVELS Americold lbs C02e Savings vs. 2010 200,000,000 180,000,000 160,000,000 140,000,000 120,000,000 100,000,000 80,000,000 60,000,000 40,000,000 20,000,000

Savings vs. 2010

20 15

20 14

20 13

20 12

20 11

20 10

Cumulative C02e Savings

ficiency gains. Adding motion-sensing technology to activate the lighting only where associates are operating further enhances energy efficiency. Dozens of Americold’s facilities already retrofitted motion-sensing LED lighting systems, and the technology is incorporated into all new expansion, modernization and new build plans.

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ENERGY SAVINGS VS. 2010 LEVELS Americold kWh Savings vs. 2010

250,000,000

Savings vs. 2010

200,000,000

Cumulative Savings since 2010

150,000,000 100,000,000

15

14

20

13

20

12

20

11

20

10

50,000,000

20

Daniel Cooke is the marketing director at Americold (www.americold.com).

• Natural gas fuel cell and solar solutions. Americold’s Salinas, Calif. facility generates more than 600,000 kWh per year from a natural gas fuel cell that converts natural gas into clean energy. This alone reduces its CO2 footprint by more than 1 million pounds per year. Americold’s Gloucester, Mass. sites were retrofitted with roof-mounted solar units that generate up to 500,000 kWh of clean energy per year. These pilot programs help the company evaluate the cost-effectiveness of alternative energy options for other facilities.

• Real-time metering.

The ability to monitor facilitylevel energy consumption from a desktop application is a huge advantage. After implementing energy utilization standards indicating exactly how much energy a facility should be using based on a given occupancy level and season at each of Americold’s sites, rare out-of-tolerance readings now trigger alerts to local Americold management and its corporate energy management team so that issues can be resolved quickly and efficient operations can be maintained.

• SmartWay partnerships. Americold partners with transportation service providers that are SmartWay participants and uses SmartWay guidelines on its own truck fleet, too. SmartWay is a U.S. Environmental Protection Agency program that aims to accelerate the availability, adoption and market penetration of advanced fuel-efficient technologies and operational practices in the freight supply chain, while helping companies

20

COOKE

n the United States, the Memorial Day holiday marks the unofficial beginning of summer. It also means Americans will be consuming more seasonal fare like burgers, hot dogs and—of course—ice cream.

Maintaining cold warehouses in the hot summer months requires massive amounts of energy. So what are refrigerated warehouse operators doing to use that energy responsibly?

save fuel, lower costs and reduce adverse environmental impacts.

• Demand response programs.

Some utility companies operate demand response programs in partnership with their commercial customers. During periods of anticipated high demand, a hot summer’s day for example, the utility company predicts increased demand from schools, hospitals, some businesses and residential customers, and looks to some of its commercial customers to reduce power draw. Americold participates in every available demand response program offered by U.S. utility companies, with no adverse effects on facility temperature stability for the short periods of time the load-shedding request is in play. This commitment to supporting local utility companies avoids power blackouts during demand spikes and the overall need to generate power.

The result of these efforts and others are impressive. Since 2010, Americold cumulatively saved more than 220,000,000 kWh of electricity—that’s enough to power more than 22,000 homes for a year.

Convert that to CO2 equivalents and it equates to over 180,000,000 pounds that are not being released into the atmosphere. www.foodlogistics.com

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COVER STORY Ports & Carriers

BY LARA L. SOWINSKI

U.S. BOX PORTS

FLEX

THEIR

MUSCLE

Key gateways are playing a more prominent role in the expanding global food supply chain.

14

A

s the food supply chain continues to diversify and expand across the globe, the supporting and integral role of U.S. ports is likewise becoming more prominent. While containerized carriers are investing in their reefer (refrigerated) business to handle temperature-controlled fruits and vegetables, protein and dairy cargoes, not to mention wine, beer and spirits, major box ports are doing their part with infrastructure upgrades and other investments.

Food Logistics queried key players to find out how they are responding to overall growth in temperature-controlled food shipments, the potential impact of the expanded

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Panama Canal and new opportunities with the USDA’s cold treatment pilot program.

Georgia Ports Authority (www.gaports.com)

Poultry exports account for most of the Georgia Ports Authority’s (GPA) frozen cargo, according to Edward Fulford, manager of communications, Georgia Ports Authority. Yet, “refrigerated imports are growing as producers choose the Port of Savannah to reach markets such as Atlanta, Charlotte and Memphis. In fact, refrigerated imports via Savannah grew by 24 percent between 2011 and 2015,” he says.

“Savannah features 104 refriger-

ated container racks plus 738 chassis plug-ins—for 3,234 container slots.

The GPA is adding 20 rubber-tired gantries (total 146), and four ship-toshore cranes (total 26) to keep cargo moving faster,” says Fulford. The port also boasts 1 million square feet of private, off-terminal cold storage.

As for the impact of the Panama Canal expansion, Fulford says the resulting cargo growth at Savannah “is likely to be incremental, but steady as shipping lines tap into cost savings from an all-water route to serve the Southeast.”

The expansion of the USDA’s cold treatment pilot program is creating a more immediate impact, however. “Imported fruit destined to the www.foodlogistics.com

5/5/16 8:36 AM

Southeast was traditionally shipped to northern U.S. ports. Delivery to Savannah saves a day of transit, allowing fresher offerings and longer shelf lifes. The USDA program also cuts emissions by reducing truck miles,” says Fulford.

North Carolina State Ports Authority (www.ncports.com)

At the North Carolina State Ports Authority, the big news is the pending completion of the Port of Wilmington cold storage facility.

According to a spokesperson, “Port of Wilmington Cold Storage (PWCS) is constructing a new cold storage warehouse facility containing roughly 3 million cubic feet, located directly on terminal at the Port of Wilmington in North Carolina. This is the only cold storage facility located on a port in North Carolina and one of the only of its kind on the U.S. East Coast. PWCS’s strategic location on the Port of Wilmington provides the region’s import and export customers with logistical benefits.”

The full-service, public refrigerated warehouse operation will have roughly 11,000 pallet positions. It is located near prime distribution channels, including water, interstate and rail.

“PWCS has the resources and experience to store, ship and stage products at competitive rates in all the markets we serve,” emphasizes the spokesperson. “Its modern temperature-controlled and fully racked facility has the latest technologies incorporated with its ammonia refrigeration systems. It provides warehouse storage in a full range of cooler and freezer temperatures from -10 to 40 degrees Fahrenheit.

In addition, the warehouse management system (WMS) is customdesigned to manage inventory control requirements, as well as day-today flow in a real-time environment.”

The Northwest Seaport Alliance

(www.nwseaportalliance.com)

The Northwest Seaport Alliance (NWSA), a marine cargo operating partnership formed nearly a year ago between the Port of Seattle and Port www.foodlogistics.com

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of Tacoma, sees plenty of growth opportunity in the cold chain.

Sue Coffey, the NWSA’s director of business development, explains, “Free trade agreements are opening import food markets, bolstering the export market in the Pacific Northwest. The NWSA is focused on working with stakeholders to meet the increasing demand for handling temperature-controlled cargoes.”

She says that shipping lines, terminal operators, ports, distribution centers and railroads are all investing heavily in the cold supply chain. The NWSA, meanwhile, added reefer plugs at Terminal 18 in the North Harbor and Washington United Terminals and in the South Harbor.

“Seven privately owned cold storage facilities operate at NWSA harbors, offering ample capacity for frozen, chilled and temperaturesensitive commodities. In all, more than 20 facilities operate in the Puget Sound region, providing more than 1 million square feet of space for storage and handling of this type of cargo,” says Coffey.

She adds, “The Pacific Northwest is rich with agricultural products, such as apples and potatoes, that other countries desire. And we provide an efficient gateway for frozen meat and poultry products coming from the U.S. Midwest and South.

While the strong U.S. dollar resulted recently in a dip in exports, the strong import market helps position equipment for the outbound market.”

Port Everglades

(www.porteverglades.net)

Florida’s Port Everglades is a leading seaport for perishables, “moving nearly half of the state’s refrigerated ocean-going containers—117,677 TEUs—in fiscal year 2015,” says Glenn Wiltshire, deputy port director. “Several terminal operators at Port Everglades are making facility improvements to handle anticipated volume increases as Florida’s consumer population continues to climb.

Florida recently surpassed New York as the third most populous state in the United States and also enjoys an influx of 105,000 visitors annually. At the same time,

more than 6 million residents live in Broward, Miami-Dade and Palm Beach counties where Port Everglades is located,” he says.

Wiltshire lists a number of improvements recently implemented at the port or on the horizon. They include new reefer racks and a USDA inspection dock at the Port Everglades Terminal; new refrigerated rail cars acquired by Florida East Coast Railway, which operates an intermodal container transfer facility at the port; a new 5-acre terminal yard for Ayco Farms to handle its own produce shipments; and a new USDA inspection dock at Crowley Liner and Logistics Services’ terminal.

Wiltshire says, “One of Port Everglades’ most fruitful initiatives was a perishables pilot program with the USDA and the Florida Perishables Trade Coalition that resulted in direct shipments of fruit to Florida, rather than first being shipped through the Northeast per federal regulations and then trucked into the state. The program was expanded to include several other countries and fruits.”

Post-Panamax container cranes are destined for Port Tampa Bay (left page).

Port Manatee

(www.portmanatee.com)

Located “Where Tampa Bay Meets the Gulf of Mexico,” Port Manatee is the closest U.S. deep-water seaport to the expanding Panama Canal, with 10 40-foot draft berths serving container, bulk, breakbulk, heavylift, project and general cargo customers.

A spokesperson explains, “Port Manatee is pursuing both modernization of existing refrigerated facilities, as well as planning for future refrigerated warehouse capacity.” At the same time, “Port Manatee is ideally positioned to migrate from breakbulk imports to containerized boxes by adding additional reefer plugs to the port inventory.”

Recently, the port announced a 36 percent year-over-year increase in containerized cargo handled in the first half of its fiscal year. “With World Direct Shipping increasing imports of refrigerated produce in its weekly service from Mexico, as well as consistent inbound shipments by longtime tenant Fresh Del Monte Produce Inc., Port Manatee is extending a

“

The Pacific Northwest is rich with agricultural products, such as apples and potatoes, that other countries desire.”

Sue Coffey, director of business development, The Northwest Seaport Alliance

MAY 2016 | FOOD LOGISTICS

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COVER STORY continued

“

One of Port Everglades’ most fruitful initiatives was a perishables pilot program with the USDA and the Florida Perishables Trade Coalition ...”

Glenn Wiltshire, deputy port director, Port Everglades

positive trend in the container sector,” says Carlos Buqueras, Port Manatee’s executive director.

Port of Houston Authority

(www.portofhouston.com)

In February, the Port of Houston Authority announced the first phase of a 300,000-square-foot temperature-controlled cargo facility that will be built at the Bayport Container Terminal by AGRO Merchants Group. The expansion project will include inspection and handling facilities for the USDA, blast-freezing cells, and deep truck docks with ample doors for shipping and receiving.

Expanding the port’s capacity for handling refrigerated cargo “makes sense given the population growth in Houston and Texas, with numerous people being attracted to the area because of jobs. Houston’s central location in the Gulf of Mexico allows for fast transit times to the major produce markets in Central and South America,” states the Port Authority.

Jacksonville Port Authority (www.jaxport.com)

The Port of Jacksonville offers “a highly competitive option to shippers looking to import fresh and frozen food products into the growing Florida and greater southeastern markets,” says Frank Camp, director of non-containerized sales. Furthermore, “Jacksonville recently received inclusion into the USDA’s cold treatment pilot in late 2015.

Shippers now have the opportunity to bring certain varieties of South American produce into Jacksonville and take advantage of geography to realize shorter and faster inland transport options to major markets in the Southeast.”

The cold treatment pilot is a boon for JAXPORT and other major box ports in the Southeast, which point out the newfound advantages of more direct shipping options that came along under the pilot program.

For instance, “The traditional routings

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of certain produce items destined for the South across ports farther north adds time and expense to the supply chain, resulting in shorter shelf lifes and a higher, final cost to the end customer,” notes Camp.

Port of Long Beach (www.polb.com)

While ocean-borne food imports/ exports generally perform well in the United States, the strong U.S. dollar is creating headwinds. A spokesperson for the Port of Long Beach (POLB) confirms that, “Food exports via the POLB since 2013 are not growing—mostly due to a strong dollar and uneven global economies.”

TEUs trended downward in recent years, according to Port Import Export Reporting Service (PIERS) data. The POLB handled 203,051 TEUs in 2013; 194,930 TEUs in 2014; and 179,084 TEUs last year.

Nonetheless, the POLB is continuing its infrastructure upgrades to support temperature-controlled shipments.

Currently, there are 5,098 reefer slots port-wide, while another 1,125 will be added at the new Middle Harbor Terminal, which saw the first phase open this spring.

As for refrigerated warehouse capacity, “There is over 1 million square feet of cold storage warehouse space within 10 miles of the port,” says the spokesperson.

On the topic of the Panama Canal expansion, “it is not likely to have a significant impact on trade at the POLB. Our carriers are introducing bigger and bigger container ships—too big for even the expanded Panama Canal.”

Another relatively minor issue for the POLB is the ongoing migration of temperature-controlled food cargoes from specialized carriers to box carriers. “For the most part, this migration already occurred. Chiquita moved its bulk banana terminal from the POLB in 2005. Now, CMA CGM owns 213,000 reefer containers (TEUs) globally with 36,000 reefer plugs available each week. The POLB is ready with cold storage infrastructure,” the spokesperson remarks.

By contrast, the regulatory changes ushered in by the FDA’s Food

Safety Modernization Act (FSMA) will likely be more pronounced.

“According to a large cold facility operator near the port, this could be a costly program for all involved.

More regulations equal more costs.

Most of this law will involve shippers and receivers, but reefer carriers will have to keep detailed temperature data. There will be layers of extra costs—additional driver requirements and training, container cleaning and sanitizing, and data reporting.”

Port of Los Angeles

(www.portoflosangeles.org)

Similar to the neighboring POLB, the Port of Los Angeles also experienced a decline in food imports/ exports. “Imports went from 1.1 million metric tons in 2014 to 855,000 metric tons in 2015 (a 25 percent decrease), and imports went from 1.2 million metric tons in 2014 to 876,785 tons in 2015 (a 26 percent decrease),” says a spokesperson. “The congestion situation at West Coast ports in the first quarter of 2015 forced the perishable industry to find other gateways/ports for their commodities. We expect that much of that share will return in 2016.

“The Port of Los Angeles has a total of 4,000 reefer plugs at our eight container terminals. This is sufficient to handle the current volume of reefer containers and future expansion.

In close vicinity of the port, Lineage is building a 25,000-pallet cold storage facility that will service the Port of L.A. and the POLB. This facility, and four other companies within 2 to 6 miles of the port, will provide space for a total of 116,000 pallets in cold storage capacity.”

As for the steady shift in temperature-controlled cargoes from specialized to box carriers, according to the spokesperson, “The Port of L.A. is a diversified port that handles both reefer container, as well as traditional [specialized] reefer ships. We receive traditional reefer ships with fruit from Chile in our winter season. On this trade lane, shippers have the choice to ship either with containers or reefer ships. The Chilean shippers use about 90 percent reefer ships because the volume of fruit during the peak of the www.foodlogistics.com

5/5/16 8:36 AM

TAKE ANOTHER LOOK AT Charleston

We have added more than 400,000 sq. ft. of cold storage capacity, greater reefer capability at our terminals, and new reefer infrastructure.

This is how we keep reefer moving. And it’s why you owe it to yourself to give Charleston another look. SCReeferReady.com

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of the containerized goods that move through northern California, he says, adding, “Our primary food exports include fruits, nuts, meat and season cannot be handled with reefer vegetables, and our primary import The containers,” says the spokesperson, is beverages.” congestion because there are not enough reefer The impact of an expanded slots on container ships between Chile situation at Panama Canal doesn’t appear to and the United States.

West Coast worry the maritime director. “At the “The advantage of sending [these ports in the Port of Oakland, we will continue cargoes] with traditional reefer ships first quarter of to attract a lot of export cargo, in is the transit time. From Chile to L.A., 2015 forced particular time-sensitive goods such it takes 12 days; with a container the perishable as agricultural and refrigerated service, it takes 20” due to the industry to find cargo,” says Driscoll. “The Port of container ships stopping along many other gateways/ Oakland remains a strong, viable ports in South and Central America, ports for their port of choice because of its proximwhile the reefer ships offer direct commodities.” ity to Asia, big-ship infrastructure, service from Valparaiso, Chile to the Spokesperson, two Class I railroad connections Port of L.A. Port of Los Angeles (Union Pacific and BNSF), and the Port of Oakland major northern California domestic (www.portofoakland.com) market. Certainly, some shippers Port of Oakland Maritime may choose to take the slower route Director John Driscoll is quick to though the Panama Canal, and on point out, “Our proximity to the to the Gulf Coast or East Coast if California Central Valley and Napa they can find a way that works for Valley makes the Port of Oakland them financially and operationally. a primary gateway for leaders in However, import cargo favors inland agriculture and wine.” Indeed, the connections, so the West Coast port handles more than 98 percent will continue to attract imports.

Additionally, there are already container ships in service larger than what the planned expansion of the Panama Canal can accommodate.”

As for cold chain infrastructure, the Port of Oakland “already has 150,000 square feet of existing refrigerated capacity to keep products fresh for trade to and from the U.S. interior. Currently, there is more than 1 million square feet of refrigerated facilities on and near port property,” says Driscoll.

Furthermore, he says the port is “working with Lineage Logistics-Dreisbach Enterprises [developer] on plans for a state-of-the-art infrastructure project called SERVICES INCLUDE: Cool Port Oakland.” The plans • POOL DISTRIBUTION call for the development • INBOUND / OUTBOUND SERVICES of a 364,000-square-foot, • OPERATIONAL SUPPORT temperature-controlled warehouse and distribution facility CONTACT US: equipped with rooms capable www.americanlumperservices.com of providing cooling or freezing 866-786-8899 | info@americanlumper.com conditions, including storage

COVER STORY continued

“

RELIABLE AND SCALABLE

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capacity for up to 20,000 pallets of perishable food products.

Port Tampa Bay (www.tampaport.com)

“The Tampa Bay/Orlando I-4 Corridor is Florida’s largest and fastest growing market, and has the largest concentration of distribution centers in the state,” says Wade Elliott, vice president of marketing and business development for Port Tampa Bay. Moreover, “the region is located at the heart of Florida’s agriculture sector, and is home to the state’s largest cluster for the food and beverage sector,” he says, with leading brands ranging from Publix to United Natural Foods Inc. and a host of others that established a presence in the area.

Elliott says, “Together with container terminal operator partner Ports America, Port Tampa Bay is investing to be well-positioned to serve the continued growth in the Florida/ southeastern U.S. market and handle the larger container vessels that are expected, including those resulting from the Panama Canal expansion.”

The port received two new post-Panamax cranes in April, which marked “an important milestone in expanding the port’s capability,” says Elliott, adding that the port also plans to quadruple the size of its container terminal from 40 to over 160 acres.

Port Tampa Bay is also developing new cold storage facilities, “and together with CSX, is working on plans for a new express refrigerated train service to the U.S. Midwest to serve both import/export and domestic business,” he says.

Furthermore, “in October 2015, Port Tampa Bay received approval by the USDA to participate in the cold treatment program to import select types of refrigerated produce from South America,” says Elliott, joining other ports in the Southeast that are now able to offer a very attractive advantage to fresh produce shippers.

PortMiami

(www.miamidade.gov/portmiami/)

PortMiami is among those ports that are making ambitious investments to capture a bigger share of perishable food cargoes. www.foodlogistics.com

5/5/16 8:36 AM

According to Eric Olafson, manager of intergovernmental affairs and cargo development, “In response to growing volumes of fruit, vegetables and fish coming in from our services to and from Latin America and the Caribbean, PortMiami invested over $5 million in upgrades—including additional reefer plugs and a new, state-of-the-art USDA lab on port—showing our commitment to providing our customers with additional infrastructure and expedited processing of perishables.

“As the perishables gateway of the Americas, we also initiated a Fastest Is Fresher campaign to inform clients of our close geographic proximity to the growing regions to our South, and our close working relationship with the USDA, and Customs and Border Protection (CBP), which allows for the expedited processing of perishables,” says Olafson.

In addition, PortMiami offers more USDA staff than any other port of entry in the United States, which is a plus for food shippers, and it is also the only port designated as a U.S. Customs Center of Excellence and Expertise for Agriculture and Prepared Products.

storage cargo volumes increased 55 percent from 2011 to 2015.”

The spokesperson emphasizes, “From an operational perspective for ports, the addition and expansion of on-terminal refrigerated cargo service areas to increase capacity are necessary, as is the adoption of modern approaches to handling containers, such as the installation of reefer racks. Ports must ensure containers are quickly repaired and inspected pre-trip, while terminal

productivity is key to delivering low gate turn times for truckers.”

The spokesperson continues, “In a broader sense, refrigerated containers represent an important part of the heavy export cargo mix in the Southeast that requires deep water to accommodate big container ships.

Complementary to depth is expanded terminal capacity, modern technology and bigger equipment capable of handling post-Panamax vessels for growing cargo volumes.”

South Carolina Ports Authority (www.scspa.com)

“Southeastern ports have a unique opportunity to grow refrigerated cargo volumes in order to serve the fastest growing population in the country, but they must stay ahead of the curve both in recruitment of private-sector capacity and expansion of on-terminal capabilities in order to attract and serve this growing market,” remarks a spokesperson for the South Carolina Ports Authority (SCPA).

“Ports play a key role in working with private-sector transload facilities to ensure they provide adequate capacity, with plans for additional space as needed. Charleston’s privatesector cold storage capacity increased by 400,000 square feet in the last year with the expansion of New Orleans Cold Storage and newcomers to the region—AGRO Merchants Group and Lineage Logistics. Thanks in part to this increase, SCPA’s cold www.foodlogistics.com

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Direct Keep it simple. Long Beach is the fastest, most direct way to move goods between the Far East and most of the U.S. That’s all you need to remember: Port of Long Beach. polb.com/trade

www.POLB.com

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| FOOD LOGISTICS

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Refrigerated Logistics FRESH PRODUCE

BY ELLIOT MARAS

PRODUCE INDUSTRY UPDATES MEASURES TO IMPROVE

• A tractor trailer rig

hauls produce to a food plant for processing.

TRANSPORTATION PRACTICES

Trade organizations establish voluntary best practices for all industry stakeholders.

W

ith fresh produce sales increasing, and the dual challenges of limited carrier capacity and new regulations on the horizon, the produce industry isn’t sitting still.

The majority of growers, shippers and carriers say they are confident in the industry’s ability to manage expanding produce capacity. But a coalition of industry trade groups called the North American Produce Transportation Working Group (NAPTWG) put in place some best practices to make sure all parties can continue to work together effectively.

Demand for produce packaging in the United States is forecast to increase 3.2 percent annually to $6 billion in 2019, according to Cleveland, Ohio-based Freedonia Group, a research company.

While shippers and carriers recognize produce as one of the most sensitive product segments due to the temperature requirements and limited shelf life, the transportation of fresh produce was not strictly regulated for safety by federal agencies. This is expected to change under the Food Safety Modernization Act (FSMA). The FSMA specifies the growing, harvesting, packing and holding of produce on farms.

In the meantime, the produce transportation industry is taking several steps to strengthen its safety practices. In an effort to provide guidance to growers, shippers, carriers and brokers, more than 25 national and regional

•

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FOR MORE INFORMATION: Ag 1 Source, ag1source.com | Allen Lund Company, allenlund.com | American Trucking Associations, trucking.org | Blue Book Services Inc., bluebookservices.com | The Fruit and Vegetable Dispute Resolution Corporation, fvdrc.com | Freedonia Group, freedoniagroup.com | FreshOne LLC, fresh-one.com | Loadsmart, loadsmart.com | L&M Transportation Services Inc., lmts.com | North American Produce Transportation Working Group, naptwg.org | Penske Logistics, penskelogistics.com | Produce Marketing Association, pma.com | QLM Consulting Inc., qlmconsulting.com | Sonoco ThermoSafe, thermosafe.com | Transportation Intermediaries Association, tianet.org | United Fresh Produce Association, unitedfresh.org | U.S. Department of Agriculture, usda.gov | U.S. Food and Drug Administration, fda.gov

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www.foodlogistics.com

5/4/16 11:48 AM

produce industry groups formed the NAPTWG, representing produce transportation stakeholders from associations and industry groups across North America. The NAPTWG provides guidance for seamless product movement and to ensure that the produce industry continues to have sufficient access to carriers to meet the needs of the North American produce industry.

The best practices are one indication of the degree to which the produce industry is working to sustain good business and safety practices.

areas of appointments, terms of sale, loading, transporting and receiving.

It notes, for instance, that a shipper should advise a transportation provider if a trailer does not meet the U.S. Department of Agriculture’s Good Handling Practices. Areas of concern include damaged or missing chutes, holes in walls or foul smells.

The receiver document contains a checklist of what the receiver is expected to do at the receiving dock.

For instance, temperature recorders are to be retrieved and read before unloading. In the event of product problems caused by carriers, the receiver must immediately notify the shipper and carrier, or the transportation broker.

The carrier document consists of a checklist for what must be done at the shipping dock. This includes ensuring the driver takes responsibility for a clean, pre-cooled trailer

Guidelines take shape The NAPTWG released its first guidelines in 2012. These guidelines were agreed upon by various stakeholders in the produce supply chain, and were endorsed by Blue Book Services and The Fruit and Vegetable Dispute Resolution Corporation (DRC) to ensure compliance with industry trading guidelines for North America. Blue Book Services, based in Carol Stream, Ill. provides credit and marketing information for the fresh fruit and vegetable industry. The DRC is based in Ottawa, Ontario, and provides dispute resolution services for fruit and vegetable companies.

In August 2015, the Washington, D.C.-based United Fresh Produce Association (UFPA) released its broker/shipper transportation agreement template in partnership with the Alexandria, Va.-based Transportation Intermediaries Association (TIA) for brokers to use when entering into agreements with shippers and 3PLs. The best practices released in 2012 consist of one-page documents for shippers, receivers and carriers while the recent broker/ shipper agreement is a longer document that is intended to serve as a model agreement.

The best practices, which are posted on the Internet for download, may strike some produce veterans as a bit general since the intent was to provide an overview. Growers often have more detailed instructions for specific products.

The shipper document lists practices for shippers to follow in the www.foodlogistics.com

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3PL PRODUCE continued in good repair. If the driver cannot count and pulp, the receiver or the contracting third party must be told about this either by the dispatcher or the transportation broker.

A comprehensive effort

“

This was an attempt to

bring the players together in as many areas as possible.”

Ken Lund, vice president of operations, Allen Lund Company

22

“This was an attempt to bring the players together in as many areas as possible,” says Ken Lund, vice president of operations at Allen Lund Company, a La Cañada, Calif.-based transportation broker. “There is a lot of opportunity for gray-area issues.

We wanted to harmonize this so we could go back to the growers and receivers, and say here are some transportation guidelines. This was to try to get it all into one document.”

The documents are intended to prevent problems as opposed to resolving disputes.

Lund says he uses the documents in his own company, and sends them to customers and other companies.

“It lets us point to a place [and say]: Here’s some common ground to speak to.”

The best practices don’t replace the need for loss prevention programs and effective business contracts, Lund says.

Like many of his industry colleagues, Lund gives the produce industry high marks for cooperation. “[Players] generally tend to work it out themselves,” he says regarding the disputes that sometimes materialize. “There’s a great understanding of ‘hey, let’s work this out.’ The industry really polices itself very well.”

While the industry does a good job policing itself, the best practices

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INSULATED CONTAINERS

ENSURE PRODUCE FRESHNESS IN TRANSIT National and regional foodservice contractors transport produce safely and efficiently using durable insulated containers from Sonoco ThermoSafe, an Arlington Heights, Ill.-based provider of temperature assurance packaging for the transport of temperaturesensitive products.

Two models, the HR28PDC and HR54P (28-cubic-foot and 54-cubic-foot capacity, respectively), hold product at 34 to 40 degrees Fahrenheit, the optimal temperature to ensure freshness and quality. This performance was tested to hold over 24 hours when the units are transported on a nontemperature-controlled truck.

Sonoco ThermoSafe’s proprietary gel bottles, designed with ergonomics and ease of handling in mind, provide the coolant that supports the noted performance.

Many of the company’s upright models include molded-in drains for the purpose of cleaning and sanitization ease. Units can feature either casters or feet, and are available in a number of sizes, which can be customized to meet unique supply chain needs.

are still needed, he says, since there are always new players coming into the industry, and small companies play a big role in the transportation of produce.

Lund was among the industry players who provided input to the U.S. Food and Drug Administration (FDA) on the FSMA’s temperature control rules for produce. He says he and his NAPTWG colleagues made the FDA aware that it was important to have shared responsibilities in produce transportation.

Fred Webber, president and CEO of the DRC,

says some regulations address the safety aspects of produce handling, but they do not address the financial aspects. Fresh fruits and vegetables are among the commodities that were always exempt from economic regulation. Here is where he sees the best practices playing an important role. In this respect, the guidelines complement the efforts of his organization.

The DRC is a nonprofit organization created under the North American Free Trade Agreement and • The HR54P currently has memholds prodbers worldwide. uct at 34 to The DRC works 40 degrees to help companies Fahrenheit, resolve disputes. the optimal temperature to Its members are ensure quality bound to the DRC and freshness. trading standards and agree to binding arbitration when mediation efforts fail.

The NAPTWG best practices, in contrast, are more intended to prevent disputes.

Focus: human aspect Dan Vaché, UFPA vice president of supply chain, says the best practices address the human interaction aspect of the supply chain. He says much of the supply chain’s focus today is on technology and this is important since technology is bringing benefits. But the human aspect is always important. The need to focus on best practices is also critical given the worsening driver shortage, Vaché says. He says the industry recognized for some time the importance the drivers play in the supply chain, but the focus needs to be stronger to recruit and retain professional drivers.

Ed Treacy, the vice president of supply chain efficiencies at the Newark, Del.-based Produce Marketing Association (PMA), says the best

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practices can help drivers and carriers do their jobs better. He thinks they could even help alleviate the driver shortage since they can give prospective drivers a better idea of what their responsibilities are when working with produce. Treacy sees the best practices as a tool to treat drivers better.

Treacy is pleased with the amount of activity on the website, www. naptwg.org, where the documents are available for download. While there is a perception that the need is greater for smaller companies, companies of all sizes are using the best practices, according to Treacy.

the last two uses for both the trailer and the refrigeration units. “[The documents] are the gold standard by which the client performance is measured,” says McCartney, who says he uses the documents in his consulting practice. In his prior role as the chief operating officer at Sun World International LLC in Bakersfield, Calif., McCartney says the best practices helped reduce insurance claims. Another important consideration is that the company

did not have to increase the staff’s workload to follow the best practices.

During his tenure at Sun World International, vehicle insurance rates declined, McCartney says. He doesn’t know if there was a direct relationship between the best practices and the insurance rates, but he believes there was some relationship.

The Oppenheimer Group sent the best practices to all of its

Improved cooperation Doug Stoiber, who served on the NAPTWG when he was vice president of produce transportation operations at L&M Transportation Services Inc., a non-asset-based 3PL in Raleigh, N.C., says the best practices improve cooperation among supply chain players. He says disputes among parties are not common, but in the event a load gets rejected, the best practices provide guidance to both parties on their respective responsibilities.

“We made a specific effort to include all parties in the supply chain,” says Stoiber, who now works as a recruiting consultant at Ag 1 Source, based in Hesston, Kan. He thinks the best practices can be especially helpful for people new to the produce logistics industry.

One thing the documents do is identify best practices as opposed to just good practices, says Michael McCartney, founder and principal at QLM Consulting Inc. in Sausalito, Calif., who also served on the NAPTWG. McCartney works on the grower side, in addition to the transporter side, of the business. He says a good practice includes inspecting all the trailers to be loaded for any visible defects, interior cleanliness and checking the refrigeration settings. A best practice would be taking a metal detector and walking around the trailer to ensure there are no hidden leaks or punctures, ensure the vehicle was sanitized, and review the records for

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3PL PRODUCE continued

There is the “potential

to have a problem with each and every load.”

James Lee, vice president of brokerage systems and legal affairs, Choptank Transport

customers and suppliers, says Brad Lukesh, who served as the West Coast transportation manager for the Vancouver, Canada-based produce logistics provider. Lukesh, who now serves as the transportation manager at Sun Pacific, a Pasadena, Calif.-based grower, says the documents are important since the supply chain extended to include more parties. “You have so many entities with consolidation, ports, 3PLs and brokers,” he says.

Lukesh says the documents removed a lot of the guesswork from business agreements and helps resolve conflicts. “It pretty much spells it out,” he says. “It’s a complete document.”

Broker/shipper pact The broker/shipper agreement is a 10-page agreement, unlike the best practices. The UFPA provides it as a template to be modified as needed for the specific business relationship between shipping companies and 3PLs. It includes areas such as freight carriage, receipts and bills of lading, payments, claims, insurance, surety bonding, hazardous materials, dispute resolution and arbitration.

James Lee, vice president of brokerage systems and legal affairs at Choptank Transport, the Preston, Md.-based 3PL, says there was a need for a broker/shipper agreement since the brokers and 3PLs can find themselves in the middle of a dispute between a grower/ customer and a carrier. “Things happen every once in a while,” he says, referring to vehicle breakdowns, traffic delays and other mishaps.

“There is the potential to have a

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problem with each and every load.”

The need for an agreement could become more important since there are new transportation regulations, such as hours of service, and new safety rules under the FSMA, Lee says.

Whether or not the new safety and transportation rules make growers and shippers more concerned about best practices remains to be seen. All players recognize the challenges associated with limited shelf life, but most think the industry has things under control.

FreshOne LLC, a Dallas-based logistics provider, welcomes initiatives to promote safety and quality, says Don Janacek, president.

“Food quality and safety is not just something our vendors talk about and check off. If there is a misstep, our employees, as well as theirs, are quick to respond. Everyone does a good job because we all understand the importance of food safety and good product quality. We understand that one mistake is quite costly and could kill your business.”

Stemilt Growers LLC, a Wenatchee, Wash.-based tree fruit grower, packer and shipper, has long-standing relationships with 3PLs that carry produce from three packing facilities. Brianna Shales, communications manager, says Stemilt Growers provides 3PLs with handling instructions. The company’s sales force manages the transportation contracts and there is not much turnover among the 3PLs. “Part of our job is to work closely with shippers and ask the right questions to be sure we fully understand any special requirements for their shipments, especially in the case of perishable fruits or vegetables,” says Tom Scollard, vice president of dedicated contract carriage at Penske Logistics, based in Reading, Pa. “The best way to avoid disputes is clear communication up front and setting key performance indicators (KPIs).

A significant portion of our business is frequent—up to daily—replenishment of fresh products, so we have the experience to guide customers and prospects,” he says.

THREE FEDERAL AGENCIES OVERSEE THE PRODUCE INDUSTRY While many industry observers consider the FSMA sanitary transportation rule to contain the most specific requirements covering the transportation of any type of food, interstate carriers are already subject to economic regulation by the U.S. Department of Transportation and the U.S. Department of Agriculture (USDA).

Under the Perishable Agricultural Commodities Act (PACA), the USDA regulates buyers, sellers, merchants and brokers in the produce industry. All interstate traders of fresh and frozen fruits and vegetables must be licensed by the USDA. PACA has a code of good business practices.

In the past three years, the USDA resolved nearly 3,700 PACA claims involving more than $66 million.

Carriers hauling food are also required to have carrier authority from the U.S. DOT, according to James Lee, Choptank Transport’s vice president of brokerage services and legal affairs. One exception is the transport of produce and certain other agricultural commodities, which are exempt.

However, the transportation of agricultural products that were processed (such as potatoes into french fries or dehydrated potatoes, or lettuce into salad mixes, etc.) require a carrier to have motor carrier authority, Lee says.

Bananas are one agricultural commodity that is not exempt from the necessity of having motor carrier authority as listed by the DOT. The DOT exempts commercial carriers from hours of service rules if they are carrying any agricultural commodity less than 150 air miles from the first point of production to the next, according to Jon Samson, executive director of the Agricultural and Food Transporters Conference at the American Trucking Associations, based in Arlington, Va. Farms and ranches are also exempt from commercial driver’s license requirements, Samson says.

Food and transportation industry stakeholders raised questions about the overlap of regulatory activity in comments to the U.S. Food and Drug Administration (FDA) about the FSMA. Several stakeholders noted that the FDA is duplicating areas handled by the USDA’s Food Safety and Inspection Service, as well as the DOT.

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If it’s not fresh, you need to know.

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SECTOR REPORTS WAREHOUSE: PALLETS, PACKAGING, TOTES

BY ELLIOT MARAS

PALLET SOLUTION CONCERNS EXPAND BEYOND SANITATION AND SUSTAINABILITY The food supply chain requires more customized pallet solutions.

•

26

W

hile the Food Safety Modernization Act (FSMA) focuses much attention on sanitation and traceability in the food supply chain, when it comes to pallets, these are only some of the concerns facing today’s food supply chain decision-makers.

The FSMA requires that transportation equipment be adequately cleanable for intended use to prevent food from becoming contaminated. The law’s record-keeping requirements are also expected to encourage pallet users to ask suppliers to provide more information about their manufacturing and delivery processes.

Beyond legal requirements, food and beverage (f&b) companies are looking to validate safety and quality assurance programs in their supply chains. Hence, companies are requiring pallet suppliers to verify that they have safety and quality control systems in place.

The SKU explosion is also having an impact on pallets since f&b manu-

Quality control requirements

• Axios Mobile Assets is expanding its pooling operations into the Northeast and Southeast.

facturers are introducing a larger variety of products that have different packaging and handling needs. Pallet suppliers say f&b products sometimes require customized pallets.

The growth of automation in food manufacturing and distribution also impacts pallet configurations in some situations.

For pallets made of wood, the dominant material, food processors are increasingly concerned that incoming lumber be stored in a covered storage environment and that finished pallets are covered when not in use, says Rick LeBlanc, a pallet industry consultant based in Vancouver, British Columbia, Canada.

“For direct food contact, there will be sanitation and swabbing protocols to assure safety and the monitoring history,” LeBlanc says.

“For secondary or tertiary usage, pallets should still undergo ongoing visual inspection to confirm pallets are clean and dry, [with] no protruding nails or slivers, etc. This should be a documented part of employee training and supervisory oversight.”

Ralph Rupert, manager of unit load technology at Millwood Inc., a Vienna, Ohio-based provider of pallets, unit load and material handling systems, says customization of pallets is growing in the food

FOR MORE INFORMATION: Axios Mobile Assets Corporation, axiosma.com | Center for Packaging and Unit Load Design, unitload.vt.edu | CHEP USA, solutions.chep.com | IFCO Systems US LLC, ifco.com | iGPS Logistics, igps.net | Millwood Inc., millwoodinc.com | National Wooden Pallet & Container Association, palletcentral.com | ORBIS Corporation, orbiscorporation. com | PECO Pallet, pecopallet.com | Polymer Logistics, polymerlogistics.com | Polymer Solutions International Inc., prostack.com | Rehrig Pacific Company, rehrigpacific.com | Safe Quality Food Institute, sqfi.com | White & Company, whiteandcompany.net

FOOD LOGISTICS | MAY 2016

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www.foodlogistics.com

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industry as product manufacturers handle a wider array of ingredients. Rupert, who served on the faculty at the Center for Packaging and Unit Load Design at Virginia Tech in Blacksburg, Va., says standard 48- by 40-inch pallets are common among retailers, but manufacturers are increasingly opting for customized solutions.

A large sack of powdered material can be better supported by a 36-square-inch pallet, for example.

Rupert says one food manufacturer used different pallet designs in eight separate manufacturing facilities. “Each plant developed their own pallet construction for that same product,” he says.

Customization is especially needed in food ingredient manufacturing facilities.

Automation drives customization Another factor driving customization is automation, which is increasing in food manufacturing facilities. Rupert says manufacturing environments often have tighter tolerances on account of automation.

Dr. Marshall White, who operates the White & Company consultancy based in Blacksburg, Va., agrees with Rupert, saying that automation and robotics in the food industry will have as much impact on pallet design as sanitation. Pallet design will have to accommodate automated processes in manufacturing and distribution. Exactly how pallet design will change is not clear. “Automation is going to require a change of pallets and packaging,” he says.

Rupert agrees with LeBlanc that food safety rules are causing pallet users to ask for more documentation about pallet suppliers. “The pallet industry is starting to come around to that documentation,” he says.

Safety concerns weigh heavily Safety is also high on everyone’s agenda.

Irvington, N.Y.-based PECO Pallet, a provider of wood pallet pooling services, became the first pallet company in North America to be certified by the Arlington, Va.-based Safe Quality Food Institute (SQFI) for Level 2 Hazard Analysis and Critical Control Point (HACCP)-based food safety plans. The SQF certification is recognized by the Global Food Safety Initiative (GFSI). To qualify for the SQF certification for Level 2 food safety, PECO Pallet had to demonstrate that it meets certification requirements to identify hazards, and minimizes food safety risks in its environment and products. PECO Pallet was evaluated using 17 different supporting programs and procedures, ranging from sanitation and chemical controls to personnel training and transportation programs.

The audit found HACCP quality systems and controls met or exceeded FDA food safety requirements.

The plastic vs. wood debate continues with regard to both sanitation and sustainability.

“The research is all over the map,” says LeBlanc in reference to the wood vs. plastic sanitation debate.

Most observers recognize that food products are designed so that the pallet—regardless of its material—does not www.foodlogistics.com

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FOOD LOGISTICS | MAY 2016

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er/shipper that generates more than 1.5 million hundred-weight potato shipments to retailers throughout have direct contact with the food North America, recently converted or interior packaging. from wooden pallets to plastic pallets On the question of sustainfrom iGPS Logistics based in Orlanability, plastic and wood are both do, Fla. iGPS uses RFID technology recyclable. to read barcodes on each pallet.

“As a company, we are committed Wood is sustainable to promoting health, sustainability, When wooden pallets reach family and our collective future—and the end of their service life, they by transitioning to iGPS plastic are ground into other products pallets, we can ensure that we like mulch, animal bedding or not only have the sturdier plastic biofuel, says Brad Gething, Ph.D., pallet to handle distribution of our director of science and technolColorado potatoes, but also a safer ogy integration at the National and more environmentally friendly Wooden Pallet & Container means of transporting them to our Association in clients,” says Erin Cooper, Alexandria, Va. “Virgrower relations and food tually no material safety manager, Worley & Pallets can be that remains within designed to move McCullough. the industry loop “Materials included through the supply reaches a landfill,” in the manufacture of chain effectively, he says. without failure, which non-wooden pallets, and Efficiency is also ensures worker their potential impact on optimized from safety and maximizes food safety, are well una material usage derstood,” says Kaley Paroperational standpoint, as pallet kinson, senior director of efficiency.” designers can use Brad Gething, Ph.D., Director of Science total packaging solutions and Technology Integration, National the Pallet Design sales at Los Angeles-based Wooden Pallet & Container Association System (PDS), an Rehrig Pacific Company. engineering design “And, generally speaking, software program by the Nation- by their very nature, [they] stay al Wooden Pallet & Container consistent from pallet to pallet. Now Association that analyzes pallet that we are truly seeing food fall into performance, including strength, this category, we expect to see an stiffness and durability. The PDS increase in the demand for a more can design a pallet specifically for consistent transportation option.” its intended use, so no material Silveira Farms, a grower in is wasted.

Orland, Calif., that has a packing “Consequently, a pallet and shipping operation—Classic supplier or user can determine Yam Inc.—to serve supermarkets, the predicted safe maximum continues to use wooden pallets. working load of a pallet, as well Owner Robert Silveira recognizes as an estimation of the pallet that plastic pallets are easier to clean service life,” Gething says. “With and do not hold moisture. But so far, this information, pallets can be the company is only using plastic for designed to move through the containers. supply chain effectively, without Ryan Overcash, director of sales failure, which ensures worker and marketing at Polymer Solutions safety and maximizes operationInternational Inc. based in Newton al efficiency.”

Square, Pa., observes companies finding the best uses for both woodPros of plastic en and plastic pallets in their supply Plastic pallets, nonetheless, do chains. Companies rely on pooled have their supporters. and one-way pallets for outbound Worley & McCullough Inc., shipment since they cannot get the a Monte Vista, Colo.-based grow-

SR: WAREHOUSE continued

“

www.foodlogistics.com

5/4/16 11:26 AM

pallet back. For receiving raw materials, the same company may choose to switch from wooden to plastic pallets upon entry to the plant due to the strict safety and cleanliness guidelines when product is entering production areas.

Some companies find the investment in plastic pallets makes more sense in a system in which the pallets are reused, Overcash says. There are pallet inverters specifically designed to replace wooden pallets with plastic pallets for use in an environment where sanitation is a paramount concern.

Overcash has noticed more companies are taking the extra measure of washing plastic pallets. “We’re seeing customers being a little more hands on with it,” he says.

WALMART INTRODUCES WOOD-GRAIN RPCS TO ITS PRODUCE SUPPLY CHAIN Walmart recently began introducing wood-grain reusable plastic containers (RPCs) for its wet and dry produce, initially including apples, potatoes, onions and citrus items. The company is switching from black RPCs, says Tony Mosco, North American vice president of sales at Polymer Logistics, based in Riverside, Calif., one of Walmart’s RPC suppliers.

“Wood-grain RPCs are one of many changes we’re making to improve our overall fresh produce customer experience,” says Dorn Wenninger, vice president of produce and floral for Walmart.

Furthermore, Grimmway Farms of Bakersfield, Calif.; Pure Hot House Foods Inc. of Leamington, Ontario, Canada; and Calavo Growers Inc. of Santa Paula, Calif. recently shipped their first truckloads of product in wood-grain RPCs. Classic Yam Inc. of Atwater, Calif. is the first sweet potato grower to ship in wood-grain • At upper left, an containers.

IFCO Systems RPC “With the arrival of the new RPCs at container holds Walmart stores, we expect a significant peaches. At right, sales lift as shoppers feel like they are at Robert Silveira a country produce stand and buy more,” (left) and David says Mosco.

Silveira of Classic Mosco says Walmart has an exclusive on Yam Inc. ship sweet the wood-grain RPCs for the time being, potatoes in woodbut other retailers are expressing interest. grain containers.

IFCO Systems US LLC, based in Tampa, Fla., an RPC service provider, says Walmart likes merchandising with wood-grain RPCs. Dan Walsh, president of IFCO North America, says IFCO tracks the shipments by load as opposed to individual units. “It’s a one-touch solution that ensures the customers get a better quality product,” he says.

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SR: WAREHOUSE continued

Smaller footprint venues rise Beyond the questions of sanitation and sustainability, retailers are moving to smaller footprint stores and looking to make better use of their space—factors that could drive some new pallet designs, says White. White and other observers note that the United States is following Europe’s lead in moving to smaller stores.

CHEP USA, global provider

of container and pallet pooling services based in Atlanta, recently introduced its 40 by 24-inch half pallet to the United States market, says Jason Adlam, vice president of national sales, CHEP USA. The half pallet, made of wood with metal brackets, offers merchandising opportunities to retailers and their product manufacturer suppliers. The half pallet makes sense in any heavily trafficked area.

The half pallet not only promotes brand visibility, but it is also easier to move so it reduces the amount of

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“Reduction in labor is a key benefit • CHEP USA now offers its to a retail environ- wooden and metal ment,” Adlam says. half pallet for the The product is United States already used in Eu- market. rope and Canada.

ORBIS Corporation, the Oconomowoc, Wis.-based plastic pallet manufacturer, recently introduced Pally, a wheeled pallet, to the United States market for smaller retail formats, says Andrea Nottestad, a market manager for the retail supply chain at ORBIS. The Pally offers the mobility of a dolly with the functionality of a static pallet. It can be wheeled through a front entrance. It can also move to different locations within a store.

The easy-to-move pallet makes sense in a store that is doing double duty as an omnichannel fulfillment center, Nottestad notes. It is also stackable.

The Pally addresses sanitation by being able to move easily so workers can clean work spaces and retail floors. It minimizes the dust and debris associated with alternative packaging.

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FOOD LOGISTICS | MAY 2016

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Technology solutions for managing pallets are also growing.

Pallets and logistics services from Mississauga, Ontario-based Axios Mobile Assets Corporation support food shipments to more than 20 national chain DCs in the Midwest.

The company is expanding its pooling operations into northeastern and southeastern states. Axios pallets will soon have a sensor to measure temperature, shock and vibration. The company manages its pallet pooling service using proprietary software.

The Axios solution reduces the risk of transmitting avian influenza and other serious contamination threats by sanitizing pallets after each use, says Richard MacDonald, president and CEO of Axios. www.foodlogistics.com

5/4/16 11:26 AM

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5/4/16 11:26 AM

BY MINDY LONG Photo Credit: BNSF Railway

SECTOR REPORTS TRANSPORTATION: RAIL

RAIL

INVESTMENTS PAYING OFF F

Infrastructure investments and efficiency improvements are positioning rail as a key transportation partner in the food supply chain.

Mindy Long is a writer specializing in transportation and logistics. She has been writing professionally for more than 15 years.

• 32

ood and beverage shippers are finding that North America’s Class I railroads continue to offer an attractive and costeffective method of transportation, while rail and intermodal providers are doing their part to support shipper demands with faster deliveries, infrastructure improvements and improved tracking capabilities.

Charles Penrow III, manager of U.S. logistics and U.S. DOT compliance at McCain Foods USA Inc., says the railroads have been focusing on ways to speed transit times. For example, Union Pacific has created a direct food train that originates in either California or Idaho and heads east, shaving days off transit times.

“I think the rails are getting smarter in looking at those opportunities,” he says.

Meanwhile, BNSF Railway’s Expedited Intermodal Service averages a transit speed of approximately 800 miles per day.

“Our speed and consistency is especially critical to our fresh food customers who rely on us to help

them extend the shelf life of their products,” says Elizabeth Hill, general director for temperature controlled Intermodal for BNSF. BNSF, based in Fort Worth, Texas, offers the only expedited service to and from Seattle and also offers expedited service to and from Chicago and St. Paul, Minn. to the Pacific Northwest, Hill says. What’s more, to help speed the movement of perishable products, BNSF launched RailPASS, a mobile app designed to create an efficient and expedited gate experience for truck drivers moving loads in and out of BNSF hubs.

Railroads are also continuing to make sizable investments in infrastructure. During 2014-15 BNSF made an $11 billion network investment, adding more than 200 miles of double-track, 875 miles of Centralized Traffic Control to help manage rail traffic, 18 new sidings and 25 extended sidings. BNSF also made a $3.5 billion investment on its Northern Corridor route.

In addition, the rail carrier is completing a new bridge and

secondary track in New Mexico, which means that all but 4 miles of the approximately 2,200-mile Southern Transcon route connecting the West Coast to major intermodal markets such as Chicago, Dallas/ Fort Worth and Kansas City will be double tracked this year.

Florida East Coast Railway (FECR), a Class II railroad based in Jacksonville, Fla., has worked closely with PortMiami to reintroduce ondock rail service. PortMiami has partnered with the railroad, the U.S. Department of Transportation and the state of Florida to invest nearly $50 million to connect the port with the railroad’s Hialeah intermodal yard and the national rail system.

Establishing on-dock intermodal rail service has opened new opportunities for the port and FECR, allowing containers at PortMiami to load directly onto awaiting trains, with FECR delivering truck-like service in certain markets.

“FECR currently moves around 45,000 containers annually at PortMiami and has the available capacity

FOR MORE INFORMATION: McCain Foods www.mccainusa.com | BNSF Railway www.bnsf.com | Union Pacific www.up.com | Florida East Coast Railway www.fecrwy.com | Cryo-Trans Inc. www.mhwgroup.com | Railex www.railex.com | CN www.cn.ca

FOOD LOGISTICS | MAY 2016

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to handle up to 225,000 boxes yearly,” notes Jim Hertwig, FECR CEO. FECR provides refrigerated boxcar service for perishable products and has a 351-mile network from Jacksonville to Miami, Fla. The railroad offers delivery within the Southeast U.S. in two days.

“Beyond Florida, we connect to 70 percent of the U.S. population within four days via steel wheel interchange with two Class I railroads in Jacksonville,” says Adam Bridges, senior vice president of strategic planning and marketing for FECR. The mix of equipment currently on the market can also speed deliveries.

“By using their own cars, as well as railroad owned equipment, bulk rail service offers cold chain customers added capacity and speed to market affording a longer shelf life of goods,” adds Bridges.

Railex, a refrigerated third-party logistics provider based in Rotterdam, N.Y., uses a mix of boxcars from Union Pacific as well as its own fleet of boxcars from Cryo-Trans Inc. According to Paul Esposito, executive vice president of corporate affairs, shipments going on the Railex platform, which controls the lane of transit, take just one day longer than long-haul truck. “They can put basically anything they want to via rail, so long as it allows the inventory to be handled in a boxcar manner,” he says.

McCain Foods maintains a fleet of 269, 72-foot refrigerated boxcars that move, on average, one shipment per month, explains Penrow.

“In the shorter regions we could do more trips, but you get the most bang for your buck on the return of the asset when you go over those longer distances,” he says.

One rail car can hold 3.5 truckloads, Penrow says. “Typically we’re in a good range when it comes to rail being much more competitive for us,” he says, adding that rail allows shippers to avoid hours-of-service regulations that the trucking industry faces. “The downside is you can’t ship rail to every place.”

www.foodlogistics.com

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The benefits of technology McCain Foods uses GPS positioning technology and pings cars several times daily so the company always knows the location of a shipment.

At the same time, the reefers report back their temperatures so the company can monitor the temperature of the air entering and exiting the unit and the ambient temperature within the vehicle.

“We can set it, restart it or change it remotely if needed,” Penrow says.

Railex uses a variety of tracking methods. “There are 50 alarm points in each and every unit and we can manage that unit every 15 minutes if need be,” Esposito says, adding that Railex posts the location of its train two times a day. However, “some of our customers demand four times a day,” he says.

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SR: TRANSPORTATION continued tracking by putting two physical trackers in the boxcar, which can be read once the railcar is back in its possession. The company monitors the location of the train as well as the temperature of each boxcar and can run a diagnostic on the refrigeration unit and take action if temperatures go out of range.

“We can act remotely, but it is critical that the train keep moving,” Esposito says, adding that if a car stays sealed, it will only lose half a degree of temperature every 24 hours.

Herman Haksteen, CEO of Cryo-Trans Inc., North America’s largest private lessor of rail temperature-controlled transportation equipment, says the company uses a two-way refrigeration technology.

“We can do a full diagnostics through this two-way technology and then we can set up a service call to have the car fixed at the next service station or send signals to the car that will shut down a unit if it is running hot,” he says. Cryo-Trans’ rail cars also feature 5-inch insulation. “The reason we did that is because we can be down for 48 hours without losing temperature on that boxcar,” he explains.

Cryo-Trans also tracks door alarms, and anytime a door is opened in transit, railroad police and someone from the company receive a call informing them a car has been broached.

“From a food safety perspective, that is a huge win,” Haksteen notes.

BNSF’s Hill says, “Like all supply chains, temperature-controlled operators must continually upgrade technology to ensure efficiency, integrity and safety. This includes both back-end IT infrastructure and frontend devices to gather and report key shipment data in real time.”

The truck-to-rail conversion Rail and intermodal providers say they have seen an increase in demand driven by increased regulations within the trucking industry.

The challenges facing the trucking www.foodlogistics.com

FLOG0516_32-35_SECTORReport LS RG.indd 35

industry are driving more and more discussions around rail solutions in the temperature-controlled sector,” observes BNSF’s Hill.

She adds that the pressures facing the trucking industry as a result of regulatory activity, such as the mandate requiring electronic logging devices, will continue to grow, creating more opportunities for the rails. As a result, BNSF continues to see an increase in temperature-controlled products moving via intermodal and is making capital contributions to help facilitate growth.

Railex’s Esposito also remarks that rail is gaining market share from truck. “The influx of intermodal and intermodal containers is making the conversion from truck to rail happen easier,” he says, adding that low diesel prices have slowed the move to rail, but he expects it to come back when fuel rates equalize.

Challenges remain BNSF believes there are significant over-the-road conversion opportunities for temperature-controlled products in the railroad’s existing service lanes, but challenges remain, says Hill.

“While the temperature controlled marketplace is large, it is also very fragmented, which will continue to pose a challenge for the movement of these goods,” she says.

McCain Foods’ Penrow says there are some complexities that occur when shipping via rail. “There are seven Class I railroads, so if you have stuff moving across different regions, you’re going to hit one if not more,” he says, adding that the shipper can either negotiate rates with each railroad independently or pay one railroad to get rates from another railroad.

On-time performance can also be an issue. Penrow says the speed and on-time performance of the railroads has increased over the past year as coal and oil shipments have decreased.

“It is not necessarily that they’re performing better.

It is that they have less

congestion,” he explains.

On the topic of regulatory compliance, Cryo-Trans’ Haksteen says the U.S. FDA’s Food Safety Modernization Act could be a challenge for the rail industry.

“The shipper is responsible to know what was on the rail car for the last three trips. The railroads will have to provide that information back and they don’t have that ability today,” he says.

Customers will also need to know if a rail car has been sanitized. The railroad only has cleaning tracks in major stations in the United States.

“That is going to add a level of inefficiency to the railroad industry the rail industry isn’t used to doing yet,” Haksteen says.

For shippers using a private car and a dedicated fleet, it won’t be an issue. “Those cars stay in their service, so there is knowledge ahead of time as to what lanes those cars are going to be assigned to and what product they’re going to be hauling, so the cross-contamination issue goes away,” he notes.

“

While the temperaturecontrolled market place is large, it is also very fragmented, which will continue to pose a challenge for the movement of these goods.”

Elizabeth Hill, general director for temperature controlled intermodal, BNSF Railway

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SECTOR REPORTS SOFTWARE/TECHNOLOGY: ERP

BY ELLIOT MARAS

ERP TAKES ON A BIGGER ROLE IN MANAGING SUPPLY CHAINS As players have to manage more information for more uses, ERP enhances visibility.

“B

all of confusion—that’s what the world is today.” The Temptations were singing about the turbulence of the late 1960s. Little did they know how well these lyrics describe the record-keeping requirements facing food logistics decision-makers in 2016.

All players in the food supply chain—growers, processors, packers, distributors, transporters, retailers and foodservice operators—have to collect more product information than ever and organize it for more uses. Software systems help companies manage these tasks.

But as companies grow and the tasks become more complex, they are turning to enterprise resource planning (ERP) software, which allows them to manage data for multiple business activities, such as product planning, cost analysis, manufacturing, service delivery, marketing, sales and more.

ERP brings an accounting context to all types of operational software.

Hence, it can provide a powerful management tool.

What ERP can offer

READ THE FULL STORY ONLINE AT:

foodlogistics.com/ 12196388

•

36

Data management and analysis needs vary based on a company’s focus within the supply chain—i.e., supplier, distributor or retailer. The requirements also vary within these segments as procedures and product lines run the gamut.

Nevertheless, most food supply chain players find themselves facing

the need to organize more data on account of several contemporary factors, including stricter regulations, more extensive customer requirements, more business partnerships, investor information requests, SKU growth, more product attributes and a growing omnichannel.

One ERP platform may not address the needs of every food company. There is a big difference between the processes of a fresh bakery and a frozen bakery. The latter’s supply chain is much simpler than the former’s. The sales, purchasing and finance functions are similar, but not the manufacturing and distribution functions. The metrics used in tracking labor in the manufacturing and distribution operations differ depending on the equipment involved.

While all players in the food supply chain have to manage more data for more uses, the complexities are most acute in the manufacturing segment due to the volume of ingredients

used. And while the complexities are less extensive for the distribution, retail and transportation sectors, these players rely on data supplied by the manufacturing sector for many of their own data needs.

Manufacturer experiences vary For Berner Food & Beverage Inc., a Dakota, Ill.-based manufacturer that supplies retailers nationwide, its ERP became especially important after the company was acquired by a private equity firm.

The new owner provided a capital infusion that enabled the company to add products and customers at a faster rate than it was previously used to, says Troy Grove, Berner chief information officer.

Berner Food & Beverage uses Ross ERP from Aptean, an Alpharetta, Ga.-based ERP provider, which Grove describes as a more vertical ERP provider than some of the larg-

FOR MORE INFORMATION: AFS Technologies, afsi.com | Aptean, aptean.com | Epicor Software Corporation, epicor.com | GS1, gs1.org | IndustryBuilt, industrybuilt.com | International Business Systems, ibs.net | IQity Solutions, iqitysolutions.com | NECS Inc., necs.com | NCR Corporation, ncr.com | NetSuite Inc., netsuite.com | Produce Pro Inc., producepro.com | SAP North America, sap.com | Sage Software Inc., sage.com | SPS Commerce Inc., spscommerce.com | U.S. Department of Agriculture, usda.gov | VAI, vai.net FOOD LOGISTICS | MAY 2016

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SR: SOFTWARE/TECHNOLOGY continued er companies that target multiple industries.

When configuring a new product, the company has to organize processes for managing ingredients, palletization, packaging and distribution.

Depending on the variables of a particular product, there can be up to 32 processes to manage. ERP allows the company to interface data to the systems that use that particular data.

“This detailed documentation of market information prevents arbitrary prices and handling fees,

ensuring that farmers get a fair price.”

Karen Lynch, vice president of the global wholesale distribution industry business unit, SAP North America

38

bution operations; real-time data to provide alerts when problems occur and to make smart decisions using up-to-the-minute information; and easier access by employees, partners and customers to processes and data, whether it is to place an

Better space utilization

ERP supports growth

• Sage X3 provides material require-

In 2013, Navitas Naturals, a Novato, Calif.-based manufacturer and distributor of organic superfoods, realized it needed an ERP system capable of handling the growing volume of its sourcing, sales and distribution, as well as monitoring its compliance with requirements throughout the supply chain. Navitas Naturals chose to move its financials, supply chain, order management and inventory management to NetSuite Inc.’s cloud-based, integrated ERP platform. The ERP provides the flexibility to scale activity and activate new functions as needed. Being in the cloud also meant no in-house IT costs.

The lot-tracking capabilities of San Mateo, Calif.-based NetSuite enabled Navitas Naturals to track about 250 SKUs of raw materials and finished goods, while using the system’s manufacturing management capabilities for assembling raw materials sourced directly from farmers into its production facility.

Navitas Naturals eliminated the speed and scalability limitations of QuickBooks, while gaining an integrated, real-time solution for greater efficiency and visibility. The company now has end-to-end visibility into supply chain, product and distri-

order, check an account, run a report or analyze data.

Until recently, Reinhart Foods Ltd., a Toronto, Ontario-based vinegar producer, relied on a legacy accounting system and spreadsheets. But without an integrated solution, access to actionable data was difficult. The company needed to improve access to data in its manufacturing/distribution operation.

Management believed real-time data would ensure the company stocks the right product mix in the correct quantities.

Reinhart installed computer workstations on its production floor to facilitate the collection of batch and lot information. “Previously, the data entry happened days later in the front office,” says Tim Quinlan, Reinhart’s vice president of production. “Now we’re collecting that data when and where it’s happening.”

The company integrated its entire manufacturing process, from order entry and shipping through demand forecasting. Sage X3 ERP from Atlanta-based Sage Software Inc. provides material requirements planning capabilities, access to accu-

FOOD LOGISTICS | MAY 2016

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rate, up-to-date information, and tight lot control.

With complete forward/backward lot traceability built into the functionality of the ERP, Reinhart Foods knows that, in the event of a recall, it can respond quickly. Comprehensive lot tracking ensures safety, quality and compliance.

ments planning capabilities and access to up-to-date information.

Packom Sweets LLC, a candy maker with production facilities in Wayne, N.J. and Belgrade, Republic of Serbia, was able to utilize its production space more efficiently as a result of deploying JustFoodERP from Mississouga, Toronto-based IndustryBuilt. Packom Sweets produces a sugar-free, vitamin-enriched breath freshener in seven flavors globally.

Peter Dobric, Packom Sweets CFO and co-owner, says he was concerned that, as the company grew, there would be a duplication of data, which would hamstring efficiencies.

Another concern was managing data in different languages.

The ERP integrates inventory management with the production operation, Dobric says. It forecasts raw material needs based on inventory needs. It also tracks lots in real time, which Dobric sees as critical in meeting food safety record-keeping rules.

Dobric says space utilization was important since the company has to shift production around in its factories, a condition that smaller manufacturers are more likely to have to deal with.

“All lines point to finance in the end,” says Dan Rowe, product manager at IndustryBuilt. An ERP system allows a company to better understand all costs going into a business activity. A manager can factor freight, raw materials, labor and equipment maintenance to determine the real cost of serving

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the customer.

Rowe was one of several observers who cited the influence of customer information requirements in driving more manufacturers to ERP systems.

Focus—lot traceability One area that retailers are focusing suppliers’ and distributors’ attention on is lot traceability.

Lot traceability was a key reason that Freedom Fresh LLC, a Miami, Fla.-based produce and dairy distributor, deployed an ERP system a few years ago, says Jimmy Perez, vice president of operations, Freedom Fresh. Another reason was the fact that one solution included both ERP and warehouse management system (WMS) software. The company needed a system that could manage the warehouse, track product attributes for 2,000 SKUs, provide more analysis and support 24/7 delivery.

Perez is currently integrating ERP software from Woodridge, Ill.-based Produce Pro Inc. with routing software. He sees the integration

of different software systems as the company’s main challenge as it expands its customer base.

Lot labels are used for raw materials so that a processor can scan them for use in production batches, then track the finished products those batches produced, says Joe Scioscia, vice president of sales at VAI, a Ronkonkoma, N.Y.-based ERP software provider. “By doing this, if an ingredient in the chain is suspect, the processor can quickly determine which specific batches contain the tainted ingredient and which finished products were produced that may have been shipped to customers.”

ERP makes managing shelf life easier. “By tracking lots, users can also better control shelf life dates of the product,” Scioscia says.

New data needs emerge Connecting small, local suppliers to the supply chain is becoming more important as food brands move to embrace local, organic, small-batch and sustainable growers, says Karen Lynch, vice president of the global

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wholesale distribution industry business unit at SAP North America, located in Newton, Pa. “In countries like Africa, smallholders are a critical source for raw goods such as cocoa and coffee beans,” she says. “This detailed documentation of market information prevents arbitrary prices and handling fees, ensuring that farmers get a fair price.”

NetSuite Inc.’s recent acquisition of Wexford, Pa.-based IQity Solutions creates a single-cloud software system to meet the needs of both discrete (production of distinct items) and batch process manufacturers. The system covers manufacturing-specific needs, such as shop floor and project control, multi-site and multi-division operations and warehousing, demand planning, production engineering, lot and serial control, standard costing, bills of materials and assembly builds.

Visibility is important in managing co-manufacturing relationships, a growing trend in the food industry, says Dave Gustovich, area vice

All lines point “ to finance in the end.”

Dan Rowe, product manager, IndustryBuilt

MAY 2016 | FOOD LOGISTICS

39

5/4/16 11:32 AM

SR: SOFTWARE/TECHNOLOGY continued

• S2K Analytics from

VAI allows users to identify trends that can be benefits or threats, and take action across every department.

president at NetSuite. Food manufacturers often find co-manufacturing partnerships make sense when expanding product lines to niche areas like non-GMO products.

Jill Smith, senior director of the Ross ERP product Line at Aptean, agrees that some of the product attributes that manufacturers are pursuing are leading to more manufacturing outsourcing. A manufacturer that wants to produce a gluten-free product may not be able to use its existing facility to produce that product.

Foodservice grows The growth of the foodservice channel, a trend that has been gaining momentum for years, brings even more demand for real-time data management to food manufacturers. Foodservice customers don’t order as much volume or variety, notes Jean Huy, Sage’s vice president of global product marketing, but these customers have stricter waste control requirements.

And while foodservice volume is less than that of a typical retail customer, the orders are less predictable, making demand forecasting more critical. Predictive analysis is especially important serving foodservice customers.

Saladino’s Foodservice, based in Fresno, Calif., switched ERP systems several years ago when it landed a foodservice customer that required online ordering, says Craig Urrizola, the company’s chief information officer. Serving restaurants in California, Arizona, Nevada and Oregon, Saladino’s Foodservice switched to ERP from Duluth, Ga.based NCR Corporation, which not only provides online ordering, but is also more scalable, supporting the company’s growth.

Foodservice customers in particular are asking for more product attributes, says Sean Buchanan, president of Black River Produce and Black River Meats, a North Springfield, Vt.-based distributor.

These include organic, non-GMO, antibiotic-free, animal welfare and more. The company recently switched to an ERP from VAI. “We track everything: lost sales opportunities, shrink, credits, gross profit, cases per drop, customer sales, spiffs, vendor analysis, customer ranking,” Buchanan says. “If there is data to run, analytics can do it.”

“Without the benefits of an ERP solution, the distributor does not typically have insight into the key performance indicators (KPIs) that drive a well-managed business,” says Jenna Beck, vice president of global marketing for Phoenix-based AFS Technologies. As such, size (revenue, SKU count or square footage) doesn’t drive the need; rather, it is the desire to be able to capture, interpret and react to the information gathered in an ERP that is typically the driving force behind adopting ERP solutions.

Managing manufacturer rebates is becoming a bigger requirement for foodservice distributors, notes Mike O’Brien, vice president of Americas sales at Solna, Sweden-based

International Business Systems, as manufacturers found this pricing strategy to be more competitive.

The processes involved in managing chargebacks and rebates is highly technical.

Traceability requirements continue to expand, requiring foodservice distributors to track more information, notes Chris Anatra, president of Branford, Conn.-based NECS Inc., provider of the entrée ERP solution for foodservice distribution. Starting June 20, ground beef processors are required to track and maintain specific information about their grinding activities under new U.S. Department of Agriculture regulations managed by its Food Safety and Inspection Service (FSIS).

As warehouse technology advances, ERP systems allow a company to integrate with data generated by new technologies. Passive RFID labels (called smart labels) can prevent the need for manual cycle counting, manual barcode scanning, inventory accountability and even theft prevention, Anatra notes.

Niche software systems, such as processing with full traceability, rebate tracking, advanced routing, smart-glass warehouse picking and even cycle-counting drones promise even more efficiencies, but a company needs an ERP system to make use of these capabilities.

Anatra points to the GS1 barcode as a major warehouse advancement.

“The GS1 standards are so helpful to the industry,” he says.

Growth is a driving factor for all supply chain segments in the United States, given the current state of the economy, says Tom Muth, senior product marketing manager at Austin, Texas-based Epicor Software Corporation. This is forcing companies to expand into new markets, geographically and product-wise.

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FOOD (AND MORE) FOR THOUGHT

BY DOUG BOUCHER

What’s Driving Deforestation?

T BOUCHER

• New research has

some surprising information concerning the impact of the beef cattle industry on deforestation.

42

he Union of Concerned Scientists (UCS) just created a new set of web pages summarizing the latest scientific information on the drivers of tropical deforestation. Even though we published a 120-page book about this issue, The Root of the Problem, just five years ago, what we wrote then is rapidly becoming out of date. And some of these new studies are changing scientists’ minds about the problem in important ways.

So, what is driving tropical deforestation today—not five or 15 or 50 years ago? Where is the forest being cleared, who is doing it and why? What economic forces have the greatest responsibility for the landuse change that causes 10 percent of global-warming pollution?

I encourage you to look at all the new web pages, which go into lots of detail about many different drivers.

But in brief, what they show is that, while many forces, regions and agricultural commodities have a role in tropical deforestation, some of them are much more important than all the others. Latin America, the Brazilian Amazon, the beef cattle industry, and enormous farms and ranches— these are what are dominantly contributing to deforestation today.

Let’s start with a global view, and then narrow our focus step by step to a continent, a country and a state. At the global level, an important new study by Sabine Henders, Martin Persson and Thomas Kastner, published last December, made it clear which commodity is by far the world’s leading driver of deforestation: beef. Comparing the four top drivers (beef, soy, palm oil and wood products), the study found that beef’s share alone was two-

FOOD LOGISTICS | MAY 2016

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thirds of the total. Soy, in second place, added another 15 percent.

These numbers suggest that we should focus on Latin America, the source of the large majority of tropical beef and soy. Indeed, a recent study

by Alexandra Tyukavina and colleagues that estimated the rates of loss of natural forests on a global scale found that fully 54 percent—44 out of 77.5 million hectares—was in Latin America. So, let’s look at a detailed examination of the drivers of deforestation in South America (which is not all of Latin America, but most of it). Research by Veronica DeSy and colleagues found that, from 1990 to 2005, fully 71 percent of the forest clearing was to create cattle pasture vs. just 12 percent to plant commercial crops (which include soybeans).

Smallholder crops were responsible for just 2 percent of the deforestation.

Brazil, even with its success over the past decade in reducing deforestation, is still the country where the majority of Latin America’s deforestation occurs, so let’s focus on it. David Lapola, et al., in addition to providing data that confirms the overwhelming role of pasture for beef cattle in Brazil’s deforestation, also shows the great importance of inequality in the ownership of cropland. Large-scale commodity agriculture increased its share of cropland from 53 percent in 1990 to 70 percent in 2011, but it produces very little of the rice, beans and cassava that are the staples of the Brazilian diet. That comes overwhelmingly from small farmers, even though they have only 24 percent of the country’s farmland.

What does this inequality mean for Brazilian deforestation? Recently, published research by Peter Richards and Leah VanWey on the state of Mato Grosso—the leader in deforestation when the rate was at its highest, in the early 2000s—

showed clearly how deforestation is concentrated on the largest farms and ranches. Properties under 250 hectares in size had only 14 percent of the total deforestation, while those larger in size were where 49 percent of deforestation took place. (Property size could not be identified for 33 percent of the deforestation.) Note also that the 250-hectare cutoff for small farms is actually quite large. For example, the traditional U.S.160-acre farm translates into just 65 hectares.

Richards and VanWey show that this was not only the situation for deforestation in the recent past, but is also the case for the threat of deforestation in the future. This is simply because only 3 percent of the remaining forest is on small properties, while more than 10 times as much is on the larger farms and ranches (greater than 250 hectares). So, stopping deforestation by the big landholders is of overwhelming importance—not just to Brazil, but to the global climate as well.

Before these recent studies, researchers tended to talk about the locations and causes of tropical deforestation—Latin America, Africa and southeastern Asia; beef, palm oil, soy and timber; small subsistence farmers and large-scale commodity agriculture—as if they were all more or less equally important parts of the problem. The new data show that they’re not. Land ownership and economic power are extremely unequal, and so is the responsibility for deforestation.

We need to focus our efforts on the drivers that are most important—not just for reasons of justice, but also because it’s going to be the only effective way to end deforestation.

Doug Boucher is a scientific advisor for the Tropical Forest and Climate Initiative. His expertise is in the preservation of tropical forests to curtail global-warming emissions. www.foodlogistics.com

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