THE CASE FOR PLASTIC PALLETS
RAIL CLAIMS LARGER STAKE IN SUPPLY CHAIN STRATEGY
ERP FOR FOOD AND BEVERAGE
Food Logistics
FOODSERVICE DISTRIBUTORS ADAPT CHANGING TASTES CREATE MYRIAD OPPORTUNITIES FOR LOGISTICS PROVIDERS
®
Global Supply Chain Solutions for the Food and Beverage Industry
MAJOR BOX PORTS SUPPORT
REEFER CARGO IMPROVED INFRASTRUCTURE AND HANDLING AT GATEWAYS ALONG THE EAST, WEST AND GULF COASTS ARE ENHANCING THE INTEGRATED GLOBAL COLD CHAIN
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The Houston Ship Channel, which culminates at Port Houston’s Turning Basin Terminal not far from downtown, is the busiest waterway in the United States
Issue No. 196 May 2018
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FoodLogistics.com
Photo courtesy of Port Houston
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A BUSINESS CASE FOR A MEDIUM DUTY TRUCK.
BUY A MEDIUM DUTY TRUCK WITH YOUR EARS.
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ON THE MENU
OCTOBER 2015 ISSUE NO. 171
ON THE MENU
May 2018 ISSUE NO. 196 COLUMNS FOR STARTERS
P ort Power
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The familiarity of ports holds true even with major changes underway. COOL INSIGHTS
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COVER STORY
Major Box Ports Support Reefer Cargo At gateways along the East, West and Gulf coasts, improved infrastructure and handling are enhancing the integrated global cold chain.
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C old Chain Council Gears Up for 2018 Program
The annual industry event brings together various stakeholders to discuss challenges and best practices related to the cold chain. FOOD (AND MORE) FOR THOUGHT
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FEATURE
TRANSPORTATION
THIRD-PARTY & REFRIGERATED LOGISTICS
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oodservice F Distributors Adapt to Consumer Trends
Changing tastes have created myriad opportunities for logistics providers.
SECTOR REPORTS WAREHOUSING
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T he Case for Plastic Pallets
Reusable plastic pallets are increasingly attractive in the face of a changing food and beverage market.
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R ail a Strategic Part of Intermodal
Railroads are investing billions of dollars in infrastructure to accommodate shippers using rail as part of their supply chain intermodal strategy. SOFTWARE & TECHNOLOGY
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E RP: More Than a Tactical Tool
Food and beverage companies must learn to strategically use ERP solutions to maximize business benefits. OCEAN PORTS & CARRIERS
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O cean Shippers Make Waves in Customer Service
New routes and technological advances mean more safety and efficiency for food and beverage.
B ayer Monsanto Merger Continues Agribusiness Shakeup
The deal has raised concerns for farmers struggling with increasing prices and diminishing incomes.
DEPARTMENTS
Supply Scan 12 Food on the Move 49 Ad Index 8
WEB EXCLUSIVES • High School Takes on Driver Shortage foodlogistics.com/21002001
• The Importance of Carrier Relationship Management foodlogistics.com/20999484
• Food Logistics’ Educational Webinar Series foodlogistics.com/webinars
Published and copyrighted 2018 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. Food Logistics (USPS 015-667; ISSN 1094-7450 print; ISSN 1930-7527 online) is published 10 times per year in January/February, March, April, May, June, July, August, September, October and November/December by AC Business Media Inc., 201 N. Main Street, Fort Atkinson, WI 53538. Periodicals postage paid at Fort Atkinson, WI 53538 and additional mailing offices. POSTMASTER: Send address changes to Food Logistics, P.O. Box 3605, Northbrook, IL 60065-3605. Canada Post PM40612608. Return undeliverable Canadian addresses to: Food Logistics, Station A, P. O. Box 25542, London, ON N6C 6B2. Subscriptions: U.S., one year, $45; two years, $85; Canada & Mexico, one year, $65; two years, $120; international, one year, $95; two years, $180. All subscriptions must be paid in U.S. funds, drawn from a U.S. bank. Printed in the USA.
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Cold Storage? No Sweat! At the Port of New York and New Jersey, we offer over 5,000 on-terminal reefer plugs, a large network of food-grade and cold-storage warehouses, and logistics services. Our 68,000-square-foot, on-terminal chilled warehouse can handle your food products at any temperature, with round-the-clock support to ensure delicate cargo is secure. Web-based reefermonitoring systems track and maintain the history of reefers from vessel loading and discharge to gate in and out. At the Port of New York and New Jersey, your food-product needs are covered while we help deliver the goods.
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FOR STARTERS
FROM THE EDITOR’S DESK
PORT POWER W SOWINSKI
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hen it comes to international trade, the role of ocean carries and ports cannot be overstated. Over $4 trillion in goods are shipped each year, and more than 80 percent of the goods consumers use daily are carried by the industry. There’s an obvious permanence and familiarity about ports that is also comforting for some of us logistics veterans. While the software and tech space is characterized by fast moving innovations and startups that come—and sometimes go—seemingly overnight, the ports that I grew up with are still there, of course, and so too are some of the people I’ve had the pleasure of working with over the years. But things change, even for ports. This month’s cover story on some of the leading U.S. containerized ports supporting the global food supply chain gave me an opportunity to take a closer look at a few of these exciting changes. For one, major box ports along the East, West and Gulf coasts are keenly aware of the requirements associated with handling perishable food cargoes and are focused on improving infrastructure and training, facilitating government agency inspections and assuring food safety. At the same time, the build-out of on-dock and near-dock cold storage facilities is worth noting. New facilities are helping maintain an integrated global cold chain and are adding tremendous value to ports
that are actively working to support reefer BCOs. Technology investments are also underway. For example, Port Houston is participating in the Maersk/IBM blockchain initiative to make global trade more efficient, transparent and secure. According to IBM, “the attributes of blockchain technology are ideally suited to large networks of disparate partners.” With its distributed ledger technology, “blockchain establishes a shared, immutable record of all the transactions that take place within a network and then enables permissioned parties access to trusted data in real time.” Therefore, “by applying the technology to digitize global trade processes, a new form of command and consent can be introduced into the flow of information, empowering multiple trading partners to collaborate and establishing a single shared view of a transaction without compromising details, privacy or confidentiality.” In the coming months, Food Logistics will continue its coverage of key ports in the global food supply chain, which in addition to major box ports, includes a contingency of niche ports that are offering compelling services targeting reefer BCOs. Enjoy the read.
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 John Yuva jyuva@ACBusinessMedia.com Assistant Editor Amy Wunderlin awunderlin@ACBusinessMedia.com Web & Copy Editor Mackenna Moralez mmoralez@ACBusinessMedia.com Contributing Editor Barry Hochfelder Senior Production Manager Cindy Rusch crusch@ACBusinessMedia.com Creative Director Kirsten Wiskus Audience Development Director Wendy Chady Audience Development Manager Angela Franks ADVERTISING SALES (800) 538-5544 Associate Publisher (East Coast) Judy Welp (480) 821-1093 jwelp@ACBusinessMedia.com Sales Manager (Midwest and West Coast) Carrie Konopacki (920) 542-1236 ckonopacki@ACBusinessMedia.com National Automotive Sales Tom Lutzke (630) 484-8040, tlutzke@ACBusinessMedia.com EDITORIAL ADVISORY BOARD Jaymie Forrest, Chief Supply Chain and Commercial Officer, ScanTech Sciences Inc. John Haggerty, Vice President of Business Development, Burris Logistics Robert A. Norton, Ph.D., Professor of Veterinary Microbiology, Public Health and Biosecurity, Auburn University; Coordinator of National Security Initiatives, The Futures Laboratory Jon Shaw, Director of Sustainability and Global Marketing Communications, UTC Climate, Controls & Security Smitha G. Stansbury, Partner, FDA & Life Sciences Practice, King & Spalding CIRCULATION & SUBSCRIPTIONS P.O. Box 3605, Northbrook, IL 60065-3605 (877) 201-3915, Fax: (847)-291-4816 circ.FoodLogistics@omeda.com LIST RENTAL Jeff Moriarty, InfoGroup (518) 339-4511 jeff.moriarty@infogroup.com REPRINT SERVICES Carrie Konopacki (920) 542-1236 Fax: (920) 542-1133 ckonopacki@ACBusinessMedia.com AC BUSINESS MEDIA INC. Chairman Anil Narang President and CEO Carl Wistreich CFO JoAnn Breuchel Digital Operations Manager Nick Raether Digital Sales Manager Monique Terrazas Published and copyrighted 2018 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.
LARA L. SOWINSKI, EDITORIAL DIRECTOR LSOWINSKI@ACBUSINESSMEDIA.COM
FOOD LOGISTICS | MAY 2018
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SUPPLY SCAN
NEWS FROM ACROSS THE FOOD SUPPLY CHAIN Daily Updates at FoodLogistics.com
NEW ECOPACK PINEAPPLE CRATES TACKLE FOOD SAFETY, SUSTAINABILITY CHALLENGES
EcoPack Systems has started production of the EcoPack Pineapple Crate in Costa Rica and California. The new crates feature fully customizable point of purchase branding, dramatically reduce transporation costs and are made from food grade material. “EcoPack is on the leading edge of packaging solutions and this new container will help keep them there by addressing several pain points produce growers and their retail and foodservice customers are encountering,” says Jeffrey Racoosin, vice president of sales and marketing at TNT Plastic Moldings, EcoPack’s crate production partner based in Corona, California. “These challenges include food safety and sustainability, as well as supply chain performance and efficiency.” The EcoPack system contains a plastic frame and hygienic plastic bag that creates a recyclable crate. The frame has the same dimensions as standard paperboard cartons and plastic crates and has the capability for palletizing.
ONLINE GROCERY SPENDING
AROUND THE WORLD
$334 BILLION WITHIN THE NEXT FIVE YEARS
ONLINE GLOBAL GROCERY SHOPPING TO DOUBLE
Forrester Research estimates that online grocery spending around the world will double within the next five years, reaching $334 billion. The report finds that though the market is entering the mature phase in South Korea, China, Australia and the UK, online food sales in the United States and Germany are going to gain the most critical mass. The report estimates global grocery spending accounted for $5.1 trillion last year. Online grocery sales captured less than 3 percent of total sales, however, leaving untapped potential for retailers. Home delivery is currently the most common method of online grocery spend, with click-and collect services also gaining. The United States and Germany are expected to move into a growth stage within the coming years due to online buyers and retailers’ aggressive investments in e-commerce.
LINEAGE LOGISTICS BREAKS GROUND ON AUTOMATED WAREHOUSE
Lineage Logistics recently broke ground on its first fully automated development in North America. An expansion to its Sunnyvale, Texas warehouse and distribution center, the new facility will harness the power of some of the most advanced automation and robotics warehouse technologies and double the pallet capacity of its current space while occupying less than a third of its current project. Designed to support maximum flexibility and responsiveness, the expanded facility will add 94,000 square footage to the existing 311,885-square-foot location. In addition, the expansion will have the capability to house an additional 24,000 pallet positions. At least 30 new jobs will be created from the local workforce to support operations. The facility is expected to start full operation in 2019.
GREAT DANE JOINS BLOCKCHAIN IN TRANSPORT ALLIANCE
Great Dane has become the first trailer manufacturer to join the Blockchain in Transport Alliance (BiTA), a coalition of industry leaders dedicated to the development of blockchain standards, education and solutions for the freight industry. The company will collaborate with shippers, third-party logistics providers, OEMs, vendors and more to help educate and guide the transportation industry toward implementation and adoption of blockchain technology. Being the first trailer OEM to join the alliance, Great Dane will provide insight into data security and asset management needs of fleets. “With the largest service network for trailers in the industry, our scale uniquely positions us to help fleets begin to leverage the benefits of blockchains by driving efficiencies across an array of cost buckets, including better transparency and history on an individual trailer basis into maintenance, repairs, parts and warranty terms,” says Dean Engelage, Great Dane’s president.
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SUPPLY SCAN
NEWS FROM ACROSS THE FOOD SUPPLY CHAIN Daily Updates at FoodLogistics.com
ARIZONA CHANGES EXPIRATION DATES FOR EGGS
Arizona lawmakers are considering a proposal to put a 45-day expiration date on Grade A eggs, a longer window than the current 24-day sell-by date. Currently, Arizona throws over 2 million eggs away because of expiration dates. If the proposal is passed, the state could reduce food waste by extending shelf life. The expiration date extension would also drive down egg costs by luring out-of-state egg producers who have more time to transport their product. The proposal garnered more than three-quarters support from the House of Representatives and was unanimously moved out of the Senate. It’s due for one more vote in the House before it moves to Gov. Doug Ducey. Food safety experts, who have confirmed the safety of extended expiration dates, say that most consumers won’t even notice the difference between the older eggs. If anything, the yolk will become more fragile.
HOLT LOGISTICS JOINS MAERSK AND IBM’S BLOCKCHAIN PACT
Holt Logistics has become the first independent port operator to conduct a pilot based on a blockchain-based global trade digitization solution developed by Maersk and IBM. The solution is designed to provide transparency and promote sharing of information within the global trade ecosystem. IBM’s blockchain technology will focus the development of a highly secure digital ledger system that allows users of the network to transparently share information and updates on cargo as it moves around the world. The technology is able to reduce the need for multiple records produced at each point in the shipping chain and saves up to 20 percent of the cost of shipping transactions. Holt Logistics and its affiliated company, Greenwich Terminals LLC, operate the Packer Avenue Marine Terminal in South Philadelphia.
ONLINE GROCERY ORDERS REQUIRE MORE COLD STORAGE
Online grocery orders are growing, and so is the need for cold storage space, according to a report by CBRE Group. The report estimates that demand will hit 35 million square feet of new cold storage space in the United States within the next seven years. The opportunity stems from chains like Kroger, Target and Walmart who are looking to increase their e-commerce presence by offering home delivery and pickup services. There is currently 180 million square feet of cold storage in refrigerated warehouses and 300 million square feet of cold storage in supermarkets and other grocery stores. The ratio will shift as online grocery sales are expected to go from 3 percent of sales to 13 percent by 2024.
WINE COUNTRY SHOOK BY CHINA’S RETALIATORY TARIFFS
Cabernet isn’t the most obvious pawn in a trade war between the United States and China, but its selection of wine as a target of retaliatory tariffs did not surprise Michael Honig, a winemaker in the Napa Valley, where the tariff would hit hardest. “The reason the government realizes they should penalize us is, we are branded,” Honig, the president of Honig Vineyard and Winery, tells The New York Times. “It’s hard to go after a wheat grower, because who is a wheat grower? It’s a commodity. We are not a commodity.” The 15 percent tariff, on top of existing tariffs and taxes, is a gut punch to Honig and California winemakers marketing their goods to wealthy, young Chinese consumers. China’s imports of American wine reached $82 million last year—not including bottles entering duty-free through Hong Kong—a sevenfold increase in the last decade.
YUSEN LOGISTICS ANNOUNCES CUSTOMS BONDED WAREHOUSE IN MEXICO
Yusen Logistics has gained bonded status for its Bajio Logistics Center (BLC) in Mexico. The new warehouse will enable customers to securely store cargo without immediate payment of duty and taxes. The warehouse is one of the only bonded warehouses in the Bajio region. “Our customs bonded services will enable our customers to lower their costs through duty- and tax-free storage of imported goods into Mexico,” says Jordan Dewart, president, Yusen Logistics Mexico. “With this service, we’re able to provide increased flexibility to our local customers, while allowing our foreign customers to have a larger presence in the Mexico market.” Currently, Yusen Logistics has two customers utilizing the service.
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FOOD ON THE MOVE
LOGISTICS TRENDS IN OUR INDUSTRY
CHIQUITA ORDERS MAERSK REEFERS FOR SHIPMENTS
Chiquita ordered 2,500 Star Cool Integrated containers from Maersk Container Industry to ensure its fruit retains freshness during shipping. One-thousand integrated containers will be equipped with MCI’s Star Cool Controlled Atmosphere (CA) system, which helps preserve the freshness of Chiquita’s bananas during shipment. Star Cool CA ensures an extended transportation window of up to 45 days by controlling the ripening. The arrival of produce will also be in perfect condition for a prolonged shelf life. Maersk’s reefers will transport the bananas over long distances in its airtight integrated container designed to stop the fruit from ripening. Shippers are able to monitor the balance of the atmosphere inside the container and control the amount of carbon dioxide, oxygen and nitrogen.
REEFERTEK USA LOCATES MANUFACTURING FACILITY IN SOUTH FLORIDA
ReeferTek USA aims to expand its footprint in Florida by opening a state-of-the-art conversion facility. ReeferTek utilizes a proprietary process for converting cargo vans and dry truck bodies into refrigerated vehicles. The company will also have a fleet of refrigerated vans available for rent, creating an option to limit downtime and account for seasonal spikes in refrigerated transport needs. “The home delivery industry is experiencing significant growth. As a result, businesses are transporting a variety of products which need proper refrigeration and handling,” says Michael Leibman, president of ReeferTek USA. Leibman adds, “our seamless liners are ideal for power washing and sanitizing the interior between deliveries. Moreover, our antimicrobial liners allow customers to protect products from stain- and odor-causing bacteria, mold and mildew. This results in cleaner and fresher transportation. Our R&D team is continually testing new materials and options to further enhance our products.” The ReeferTek South Florida location is scheduled to open later in 2018.
REST BILL ALLOWS DRIVERS ONE BREAK PER SHIFT
In March, U.S. Rep. Brian Babin introduced The Responsible and Effective Standards for Truckers (REST) Act, a legislation that would modernize hours of service regulations for truck drivers. The REST Act would allow drivers to take one rest break per shift, for up to three consecutive hours. A single off-duty period would not be counted toward the driver’s 14-hour on-duty allowance and would not extent the total drive limits. The act would eliminate the existing 30-minute rest break requirement.
DAT SOLUTIONS’ MONTHLY FREIGHT REPORT
Survey Says: Carriers Are Using ELDs, But at a Cost By Mark Montague Mark Montague is a senior industry pricing analyst for DAT Solutions, which operates the DAT network of load boards and RateView rate-analysis tool. He has applied his expertise to logistics, rates and routing for more than 30 years. Montague is based in Portland, Oregon.
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April 1 marked the end of the “soft enforcement” on the federal ELD mandate, meaning that operating without a legal device can now result in an out-of-service violation. There were concerns that enforcement might prompt carriers to leave the industry in droves, but a funny thing happened on the way to the deadline: the vast majority of carriers that must comply with the rule seem to be doing so. In a DAT survey of 645 carriers conducted in February, 91 percent said they either run with an ELD (81 percent) or are exempt from the mandate (10 percent). It’s worth noting that owner-operators—small businesses that are hit hardest by the cost to buy, install and use ELDs—made up 93 percent of the survey respondents. While carriers may be using ELDs, many still aren’t happy about it. Sixty-seven percent of survey respondents said they drive
FOOD LOGISTICS | MAY 2018
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fewer miles than they did before installing the devices, and 71 percent are making less money. Furthermore, drivers are having trouble finding parking when the ELD tells them it’s time to stop and rest. Nearly 87 percent said it was “harder” or “much harder” to find parking since the ELD mandate took effect in December 2017. Finally, shippers overall haven’t done enough to mitigate delays during loading and unloading. More than 77 percent of carriers reported that their drivers are being detained for more than two hours on at least one out of five loads. ELDs make these events
transparent, whereas previously they could be edited away with paper logs. In turn, many carriers are being more selective about their customers. While the grace period has ended for carriers and drivers, it’s also over for shippers who make it hard for truckers to get their work done within their allotted time.
www.foodlogistics.com
5/4/18 9:29 AM
FOOD ON THE MOVE
LOGISTICS TRENDS IN OUR INDUSTRY
GEORGIA PORTS SET NEW RECORDS
Georgia Ports continue to set records in growth, according to numbers released by the Georgia Port Authority. Container trade grew 9 percent with 255,786 additional units for a total of 3.08 million, setting a new record in Savannah. March had a 14 percent increase in container volumes, with the port moving 355,308 TEUs of containers. The ports also set a record in intermodal rail volumes, jumping 20 percent for the month and 15.4 percent for the fiscal year to date. Additionally, the month of March had a strong roll-on/roll-off of auto and machinery units at the Port of Brunswick and Ocean Terminal. Colonel’s Island handled 66,144 trucks and tractors, while Ocean Terminal had a 17.2 percent increase. In other news, the Georgia Port Authority also broke ground on its Mason Mega Rail Terminal project. The project will combine the Chatham and Mason rail yards, allowing 10,000-foot trains to be loaded on site with containers double-stacked, helping to double capacity.
TRUCK ORDERS HIT RECORD HIGH
Freight companies ordered trucks at a record pace during the first quarter, hoping to meet the ever growing demand. In the first three months of the year, almost 134,000 trucks were ordered, doubling the amount from the first quarter of 2017, according to FTR. Figures suggest that orders are lagging behind the growing U.S. freight demand, however. The gap between demand and capacity led truckers to increase prices, giving fleet owners more cash to replace older vehicles. DAT Solutions reported average rates on the spot market were up one-third in March compared to a year ago. Companies also benefited from the tax law that went into effect in January, helping invest in their company. The growth in orders pushed backlogs at truck makers to a three-year high.
UNION PACIFIC TO DEVELOP INTERMODAL TERMINAL IN WASHINGTON
A real estate deal has cleared for Union Pacific to develop a key perishables intermodal terminal in Washington state. The Port of Walla Walla made an agreement with Union Pacific to improve its property between Wallula and Burbank. Union Pacific will expand its existing cold storage facility and add truck transload capabilities to serve its Cold Connect perishable logistics services. www.foodlogistics.com
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PORT OF LOS ANGELES CONTAINER STAGING FACILITY TO BOOST PRODUCTIVITY AND CREATE JOBS
A $130 million funding project is erupting at the Port of Los Angeles. The new container staging facility is expected to boost productivity by 10 percent, reduce emissions, create jobs and ease truck congestion. The staging hub will be constructed on Terminal Island. When completed, the 110-acre facility will take about 3,500 truckloads a day to the Harbor Performance Enhancement Center staging area. The facility will enhance the efficiency of imported containers passing through the marine terminals at the San Pedro Bay complex, which takes in 42 percent of all U.S. imports. HPEC will use a hub-and-spoke distribution model that will reduce transportation costs, improve cycle times and reduce inventory while improving the distribution process. The project is going through the California Environmental Quality Act process to ensure that state and local agencies identify and offset any environmental effects that could be created from it. Within a few months, a small pilot portion of the staging center that doesn’t require CEQA approval will be up and running.
MAY 2018 | FOOD LOGISTICS
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COOL INSIGHTS
BY LARA L. SOWINSKI
COLD CHAIN COUNCIL GEARS UP FOR 2018 PROGRAM I n 2016, QProducts and Services launched the Cold Chain Council, an annual industry gathering comprised of various stakeholders—manufacturers, retailers, distributors, logistics providers, academics and others—to discuss challenges and best practices related to the cold chain, both for the pharmaceutical and chemical industries, as well as the combined food and beverage industry. Food Logistics has partnered with QProducts for the food and beverage event since its inception. This year, I worked closely with QProducts on the program and speakers, and will moderate during the event on Monday, June 25, in Chicago. The format and venue for the Cold Chain Council fits the need for an intimate, one-day event where executives can interact, share best practices “and walk away with new opportunities to improve their cold chain,” explains Kevin Lynch, QProducts’ director of food and beverage. “The Cold Chain Council provides a valuable experience for professionals who might not have time on their calendar to attend multi-day conferences, or simply don’t have room in their budget to fund another industry event.” The Cold Chain Council takes
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place over an afternoon in order to accommodate busy schedules, he adds. “Another distinction is limiting the number of attendees, which helps folks feel comfortable having a conversation and asking questions.” Aside from limiting the number of attendees, there is no registration fee, and QProducts generously hosts a fun networking reception on the Chicago River following the event. “This allows attendees to continue conversations and form new relationships,” says Lynch.
Delivering Fresh Content Last year’s Cold Chain Council boasted an all-star list of presenters, including executives from Walmart, C.H. Robinson, Minhas Craft Brewery, Reinhart Food Service and CN Rail. This year’s presenters and sessions also promise to inspire and engage attendees. Dr. Mary Holcomb, professor of supply chain management at the University of Tennessee, will kick off the program with an overview of the current cold chain sector, particularly from a food and beverage transportation angle. The next session is entitled, “Foresight is 20/20: How Technology is Being Used to Quantify Temperature Risk and Guide Accurate Transportation Decisions.”
Matt Wensing, CEO of Riskpulse, will join several other panelists to explore how new software and tech tools can determine actual temperature risk, and how “knowing what’s ahead” is changing the game for shippers and transportation providers. The third panel on distribution best practices brings together Terrence Bro, director of sales-for hire cartage at SpartanNash; John Sommavilla, CEO of Shoreline Fruit; and others as they share information on optimizing transportation strategies and tactics in the food distribution sector. The program concludes with “A Holistic Approach to Maintaining Cold Chain Integrity,” with panelists Don Durm, vice president, customer solutions, PLM Trailer Leasing; Melanie Nuce, senior vice president, corporate development, GS1 US; and Sherea Dillon, acting director of compliance with the FDA’s Office of Regulatory Affairs, Chicago District. Compliance with the Food Safety Modernization Act will be a central theme of this final session, which will also include an exciting discussion on blockchain and how this technology can take visibility and compliance to new levels throughout the global food and beverage chain. For more information, visit www.coldchaincouncil.com.
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5/3/18 10:44 PM
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Joe Morris (609) 315-6716
John Simon (816) 516-3040
John McCoy (412) 618-8069
Mike Kleespies (813) 455-1248
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COVER STORY
BY LARA L. SOWINSKI
MAJOR BOX PORTS SUPPORT
REEFER CARGO A
At gateways along the East, West and Gulf coasts, improved infrastructure and handling are enhancing the integrated global cold chain.
s leading containerized carriers continue to grow their market share of refrigerated cargo, major box ports across the United States are likewise responding by improving their offerings to support imports and exports of chilled and frozen cargoes moving via container. We asked representatives at major box ports what they believe are the primary challenges facing beneficial cargo owners (BCOs) of reefer cargo right now, and how their port is tackling those challenges.
Port of Charleston www.scspa.com
Changes throughout the trucking industry are affecting all BCO shippers, especially those in the refrigerated food sector, notes Matt Pesavento, South Carolina Ports Authority regional manager, Atlanta office. Furthermore, now that the soft enforcement of electronic logging devices (ELDs) has moved into full enforcement as of April 1, the already critical driver shortage “may pose a challenge in trucking capacity, especially for cold chain BCOs who source drivers from a smaller, specialized pool within the trucking market,” he explains.
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Meanwhile, SCPA’s new inland facility, Inland Port Dillon, is coming online just in time to play a key role in alleviating that challenge for many of its reefer customers, says Pesavento, referring to the inland facility that opened April 16, which aims to convert approximately 45,000 container moves from truck to rail in the first year of operation. “A large concentration of our pork and poultry exporters located in North Carolina will benefit from the daily rail service between Inland Port Dillon and the Port of Charleston, as it allows their drivers to handle multiple container moves per day between their plants and Inland Port Dillon, rather than just a single container move per day to
A new refrigerated cargo service area at the Port of Charleston helps expedite time- and temp-sensitive shipments.
Charleston,” he explains. “We expect the utilization of rail to become particularly useful for the optimization of cold cargo supply chains.” Pesavento adds that, “an additional challenge is more regional— the management of the tremendous volume growth of reefer cargo in the Southeast, including the increased need for port infrastructure and operational flexibility as well as private sector cold storage capacity.” Charleston has worked diligently on both fronts, he says. “Several years ago, we expanded www.foodlogistics.com
5/4/18 9:30 AM
Ongoing investments in reefer racks and other infrastructure at the Port of Charleston benefits shippers, ocean carriers and logistics providers.
our weekday gate hours and added Saturday gates, which allow our cold chain clients greater flexibility and an additional day for reefer processing. We also added reefer racks and opened a new refrigerated cargo service area in July 2017—a $14 million investment that enhances reefer processing for shippers, truckers and ocean carriers.” Complementing SCPA’s on-terminal investments are more than 660,000-square-feet of cold storage and blast freezing capacity that have been built or committed by the private sector in response to the port’s cold cargo growth, Pesavento says. Local cold storage providers include Agro Merchants Group, Lineage Logistics and New Orleans Cold Storage.
USDA, Customs and Border Patrol (CBP), cold storage operators, logistics companies, associations like the Produce Marketing Association, the Houston Fresh Fruit and Vegetable Association, the Houston Food Bank and even with growers overseas, says Moseley. The port also meets frequently with growers and other stakeholders to understand their needs. “We’ve been at plantations in Costa Rica, Guatemala and Chile, and have met with producers in places like Thailand regarding the food
supply chain to Texas, to see how the port can improve and better serve our customers,” notes Moseley. “There are many challenges in the cold chain because the product is valuable, time-sensitive and very important, because of course, it is what men, women and children put in their bodies,” he adds. “For this reason, two challenges that our food BCOs have brought to our attention are food safety and supply chain visibility.” Port Houston currently ranks as the sixth largest container port in the United States, and Moseley says it is the fastest growing of the Top 10 ports. However, a differentiator is that Port Houston is not a landlord port. For example, they operate both of their facilities: Bayport and Barbours Cut container terminals. “Port Houston is proud of its performance in those areas we consider to be at the core of what we do as a terminal operating port. We lead the country in velocity and efficiency with no congestion, no lines, the fastest truck turn times and probably the most productive ship to shore operations in North America,” Moseley adds. At the same time, the port
The Port of Houston is focused on supporting reefer BCOs and will open a new USDA lab this year to enhance food safety.
Port Houston
www.porthouston.com “Port Houston is deeply involved in the food business,” emphasizes John Moseley, senior director, trade development. “After all, we are the international port of Texas, the second most populous state in the U.S. with 28 million hard working people who have strong appetites.” The port works closely with retailers, importers, exporters, the www.foodlogistics.com
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MAY 2018 | FOOD LOGISTICS
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COVER STORY
The MV Wild Lotus on called Port Tampa Bay in April, laden with 3,900 pallets of bananas from Ecuador. The PLRS on-dock cold storage is in the background.
remains focused on addressing the service needs of reefer BCOs and is adding more reefer plugs. The port will also open a new USDA testing lab this year to further enhance food safety. On the supply chain visibility front, Moseley says that, “Port Houston has embraced technology and innovation as opportunities to further improve the customer experience and create greater value for our customers, the BCOs.” This year, Port Houston became the first port in North America to join the new IBM/Maersk Global Trade Digitization/Blockchain initiative, joining other participants in the first-of-its-kind pilot program. “This important milestone is a first step for us in what we hope to be new opportunities to respond to BCOs’ needs, particularly food safety and improved supply chain visibility,” says Moseley.
JAXPORT
www.jaxport.com
Avoiding delays and pinch points is especially important for refrigerated cargoes with a limited shelf life.” Frank Camp, director of cargo sales at JAXPORT
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Frank Camp, director of cargo sales at JAXPORT, sees “speed through the supply chain” as the leading challenge for reefer shippers. “Every link in the supply chain needs to effectively move cargo while in its care and custody onto to the next part of any cargo’s journey to market,” he points out. “Avoiding delays and pinch points is especially important for refrigerated cargoes with a limited shelf life.” Therefore, ports must provide adequate waterside infrastructure at the terminals in the form of
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available berths, sufficient channel and berth depth and cargo handling equipment to work modern vessels. They must also provide refrigerated plug infrastructure and an efficient gate complex to efficiently move trucks through the terminal complex, he says. “Strong relationships with local government officials with jurisdiction over refrigerated and agricultural commodities are also crucial to maintaining an unbroken transport supply chain for reefer cargoes,” adds Camp. Several recent investments at JAXPORT are helping to accommodate the growing volume of cargoes moving through its facilities, including an investment in container berth modernization and three super post-Panamax container cranes. In addition, the Army Corps of Engineers recently began deepening the St. John’s River to 47 feet, while the State of Florida has invested heavily in the upgrading of highway interchanges surrounding JAXPORT’s terminals. With agriculture being a key industry within Florida, Camps says JAXPORT “hopes these investments assist our local producers to reach global markets, while at the same time allowing shippers to use our port to reach the growing consumer population in the southeast.”
continued
Philip Sanfield, spokesperson for the Port of Los Angeles. “The Port of Los Angeles has 20 weekly service strings with Asia and Latin America and an additional two service strings with Hawaii,” he says, which give reefer BCOs plenty of diversity and options. “It’s important that shipping lines maintain a regular service, and the Port of Los Angeles is responsible for a reliable freight transfer throughout terminals.” Furthermore, Sanfield says “continual infrastructure improvements, process management assessments and technology upgrades provide reliability.” On the visibility front, the Port of Los Angeles and GE Transportation recently launched the Port Optimizer, a first-of-its-kind information portal designed to digitize maritime shipping data for cargo owners and supply chain stakeholders through secure, channeled access. “Port Optimizer enhances supply chain performance through real-time, data-driven insights in a single portal,” adds Sanfield. Specifically, GE’s Port Optimizer is a cloud-based solution that enables ports and the supply chain to operate more efficiently and helps cargo owners bring their goods to market in a more predictable and timely manner. By integrating data from across the port ecosystem and combining machine learning and deep domain expertise, it helps the port supply chain monitor and respond to dynamic conditions, align people and resources, and proactively communicate across functions—enabling maximum port throughput and delivery performance. The result is higher throughput, increased asset utilization and improved delivery performance.
Port of New Orleans
Port of Los Angeles
www.portno.com
For reefer shippers, in particular, freight reliability and visibility are two key challenges, according to
In May 2017, the Port of New Orleans announced that it received approval by the USDA for inclusion in the Southeast U.S. In-Transit Cold
www.portoflosangeles.org
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COVER STORY
NWSA works closely with marine terminals to
expand reefer plugs to handle increasing volumes of imported fruits from BCOs such as DelMonte Fresh.” Sue Coffey, director of business development, commercial team, NWSA
Nearly 5,000 reefer plugs are available at the Port of NY/NJ, along with ample cold storage capacity near-dock.
continued
Treatment Pilot Program. Participation in the Animal and Plant Health Inspection Services (APHIS) pilot program means select time-sensitive products can be treated to meet customs compliance in-transit rather than after it arrives to the United States. Brandy D. Christian, Port of New Orleans president and CEO, states that, “participating in this pilot is a significant gain and highlights Port NOLA’s ongoing commitment to developing new business.” In addition, “This program gives current and future port shippers additional options to transport refrigerated cargo, while reducing transit time from origin to the consumer.” Last month, Port NOLA welcomed the launch of Sealand’s new Gulf Ocean Express (GOEX) service that connects Central America, Panama and Columbia with the U.S. Gulf Coast. Frozen meat is among the U.S. export cargo targeted by the GOEX service, while U.S. imports include agricultural products such as fresh fruits. As for challenges facing the reefer sector, a Port NOLA spokesperson explains that, “like any commodity, when there are spikes [in the supply chain], sometimes equipment becomes an issue, and that includes available reefer containers and chassis. The good news, however, is increased ocean carrier options and capacity are helping with the equipment situation.”
The Port of New Orleans welcomed the launch of Sealand’s new Gulf Ocean Express service in April, which will offer more options for food importers/exporters.
Two of the port’s main chassis providers are also boosting their fleets in New Orleans throughout 2018.
Northwest Seaport Alliance
www.nwseaportalliance.com The Northwest Seaport Alliance ranks as the fourth largest container gateway for containerized cargo shipped between Asia and major distribution points in the Midwest, Ohio Valley and the East Coast. Apples, hay and frozen french fries are among the main export commodities at NWSA. Sue Coffey, director of business development, commercial team, acknowledges that, “cold storage and reefer transload capacity can be a challenge, especially with the unpredictability and uncertainty of any given salmon (fishing) season.” However, she says “NWSA remains engaged with our cold storage and transload warehouse facilities, including those near our terminals.”
Coffey adds that, “as a port we strive to provide accurate and current information for BCOs looking for capacity or specific capabilities and connect shippers with the facilities that meet their business needs.” For french fries shippers, in particular, Coffey notes that exporters of this commodity “face challenges with consistent (reefer) equipment availability.” For instance, depending on the time of year, Coffey says some ocean carriers may not reposition as many containers to the gateway. “While we rely on ocean carriers to make this decision, we try to communicate with them the demand and ascertain reasons behind supply for the shippers,” she adds. NWSA also works closely with marine terminals to expand reefer plugs to handle increasing volumes of imported fruits from BCOs such as DelMonte Fresh, she says.
Port of New York and New Jersey www.panynj.gov
The Port of New York and New Jersey wrapped up 2017 with a record 6.71 million TEU handled at the port complex, a 5.3 percent increase over the previous record 6.37 million TEU handled in 2015. Refrigerated containers are an important part of that cargo mix, confirms a port spokesperson, with 237,000 import units handled last year. The top issues facing reefer BCOs are not unique to the Port of
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www.foodlogistics.com
5/4/18 9:30 AM
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continued
GPA Photo/Stephen Morton
COVER STORY
caption
The 14,000 TEU CMA CGM Theodore Roosevelt sails up river past Historic River Street to the Port of Savannah.
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NY/NJ, explains the spokesperson, who listed the following as industry-wide challenges: • Road Weight Limits: The combined weight of the genset, along with the weight of the internal insulation (which also reduces capacity by approximately 12 percent) and the weight of the cargo itself, tends to make loaded reefer containers heavy and/or overweight. The Port Authority continually works with State DOTs and local municipalities on the designation of overweight truck routes. • Genset Availability: Ocean carriers are divesting themselves of gensets just as they did with chassis. The Port Authority is making land available for genset exchange, most often associated with chassis depots. • Government Inspections (CBP, USDA, FDA): Overall, there is a lack of sufficient federal resources and facilities. The Port Authority is always working with the federal agencies to identify the resources required and ways to streamline the inspection process. Meanwhile, the Port Authority supports the terminal operators’ initiatives to attract and grow the reefer sector, including assistance with marketing efforts and adding additional reefer plugs (the Port
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Authority currently boasts nearly 5,000 reefer plugs port-wide), adds the spokesperson.
Port of Savannah www.gaports.com
“For chilled cargo importers that aim to serve the U.S. Southeast, speed to market and the cost of overland transit have been traditional challenges,” says GPA’s Chris Logan, senior director of trade development, beneficial cargo owner sales. The introduction of the USDA’s Southeast In-Transit Cold Treatment Pilot program about five years ago started to change that, however. “The previous regulatory environment required produce from South America to enter the U.S. through one of three regions: South Florida, Philadelphia/New York, or LA/Long Beach,” notes Logan. “Since 2015, the U.S. Department of Agriculture has allowed the Port of Savannah to serve as a new entry point for cold-treated produce. Furthermore, this year, the Port of Savannah’s Garden City Terminal became the only port in the Mid-Atlantic and Southeast region to sign a compliance agreement allowing in-transit containers to complete the cold treatment on-terminal.” Previously, cargo undergoing cold treatment had to complete the
process and be certified prior to arrival in Savannah. This meant additional days of transit and reductions to shelf life. The new rule allows produce destined for southeastern markets to avoid third-country layovers, and because Savannah is hundreds of miles closer to major southeastern markets such as Atlanta, Logan says, “landing chilled cargo at Garden City Terminal cuts transportation time by five to seven days, saving fuel and reducing emissions.” He adds, “this opens the door for more customers—including large retailers and producers—to take advantage of Landing faster, more chilled cargo cost-effective at Garden City transit options Terminal cuts to serve U.S. transportation consumers time by five with fresher to seven days, produce via saving the Port of fuel and Savannah. GPA’s expandreducing ing chilled emissions.” cargo portfolio Chris Logan, GPA’s includes South senior director of trade development, beneficial American cargo owner sales blueberries, mangos, citrus, grapes, avocados, bananas, apples, pears and plums.” Besides lower costs and faster www.foodlogistics.com
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deliveries, the shorter overland transit also helps to offset challenges related to driver capacity and the need for the expedited delivery of perishable commodities, he says. For example, Brian Kastick, CEO of PortFresh Logistics, a chilled cargo distribution center, says customers who serve the southeast via Savannah could reduce transit costs by $1,700 per truck.
Port Tampa Bay www.porttb.com
In February, Port Logistics Refrigerated Services (PLRS), the port’s newest tenant and the operator of a new 135,000-squarefoot, state-of-the-art cold storage facility, received its first shipment of perishable products—over 3,900 pallets of Chiquita brand bananas from Ecuador. The PLRS cold storage was completed last fall. It features 102 reefer plugs, 6,348 racked pallet positions, on-site dedicated fumigation facilities, USDA and Customs and Border Protection (CBP) inspection areas and a lab, all on deep water. Despite important developments such as Port Tampa Bay’s PLRS to help support the global cold chain, challenges remain. Wade Elliott, vice president of marketing and business development at Port Tampa Bay, remarks, “the biggest issues we hear from BCOs relate to rising trucking costs driven by the availability of drivers, rising fuel costs and compliance with the federal hours-of-service and electronic logging device regulations.” Yet, for Port Tampa Bay Elliot says those challenges have become a benefit. “For us, it has worked to our advantage due to our proximity to the major grocery and food and beverage DCs in the Tampa Bay/Orlando I-4 corridor, versus traditional routes to serve these customers via more distant ports,” he notes. “It has also contributed to our growing refrigerated business with Mexico, as the all-water container services provided by Linea Peninsular and www.foodlogistics.com
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TransGulf Shipping continue to see strong growth.”
Port of Virginia
www.portofvirginia.com From his perspective, Port of Virginia’s spokesperson Joe Harris sees reefer equipment availability as a top issue for BCOs. “There is not enough equipment to keep up with demand,” he explains. In response, the port is taking several steps, notes Harris, includ-
ing working with the steamship lines to make them aware of reefer equipment demand in the market. “Active dialogue and awareness helps to convince steamship line equipment control to position more assets to the port,” he adds. In December, the port put into service a portable, 40-plug central power unit that can be mounted on the Richmond Express barge and a specialized, heavy-lift forklift that will be used in the cargo operation at
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COVER STORY
In short, BCOs want to
be closer to their customers and their sourcing points, with nimble options to serve.” Hans Bean, NC Ports’ vice president of trade development
The new Port of Wilmington Cold Storage (below). The Helsinki Bridge calls the port (right).
24
continued
Richmond Marine Terminal (RMT). According to John F. Reinhart, CEO and executive director of the Virginia Port Authority, there are several current and potential users of RMT that are in the food and beverage, refrigerated and discount grocery industry who have expressed interest in using the barge to move reefer (refrigerated) cargo. “The power unit enables us to provide a more comprehensive level of barge service to current and potential customers and continue to serve as a catalyst for commerce in the Richmond metro area and beyond,” he says. The port also focuses on servicing equipment to keep it in good working order. For example, it works with maintenance and repair vendors contracted by steamship lines to create special areas within marine terminals to effectively repair containers and pre-trip them prior to export dispatch. The port has also created a Reefer Service Area (RSA)— centrally located within the port complex—to facilitate high-volume reefer servicing and dispatch.
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There are other ways the port is supporting reefer BCOs as well, notes Harris. In the immediate Port of Virginia area, there are 11 private facilities that have the cold/freeze capabilities, and there are seven such facilities that are in the area of Richmond Marine Terminal. And, while fewer motor carriers are eager to haul heavy reefer equipment, particularly on chassis pool assets, Harris says that, “Our chassis pool has specifically addressed this by adding a large number of tri-axle chassis to the pool fleet, which are better suited to heavy loads.”
Port of Wilmington www.ncports.com
The new Port of Wilmington Cold Storage, which boasts roughly 3 million cubic feet, is the only
on-port cold storage in the State of North Carolina. Hans Bean, NC Ports’ vice president of trade development, says the facility “provides cold BCOs the ability to take advantage of value options on multiple fronts—proximity to a significant supply base and market without congestion (many truckers prefer Wilmington’s quick gate turns, especially given new ELD regulations) and the ability to optimize logistics spend with cold re-handling on-port (for tailored shipments and maximum load-ability over the road).” This addresses the first challenge that Bean says confronts cold BCEs, which are costs. “The unnecessary and inflated costs related to long distance inland moves to and from historical East Coast cold gateways—not to mention traditional cold gateways— are often saturated and congested,” he explains. Optimization is another challenge, he says. BCOs want to utilize best access points to and from market supply and demand, and they need ample truck power. “In short, BCOs want to be closer to their customers and their sourcing points, with nimble options to serve,” Bean adds. For that reason, he says “NC Ports’ Wilmington Gateway is well positioned to service the South Atlantic’s expanding demographic for imports, especially the fresh grocery sector, allowing BCOs to optimize how they seize and serve cold chain opportunities. On the export side, Wilmington’s cold supply base (produce, protein and more) enables cold BCOs to pack and ship extremely close to North Carolina sourcing points.” www.foodlogistics.com
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3PL/REFRIGERATED LOGISTICS
BY AMY WUNDERLIN
FOODSERVICE DISTRIBUTORS ADAPT TO
CONSUMER TRENDS Changing tastes have created myriad opportunities for logistics providers.
H
ow we buy and receive our food has changed drastically over the last few years. Not to mention the types of foods we crave are healthier, fresher and more conveniently accessible. Meal kits like those distributed by Blue Apron and Hello Fresh, as well as hundreds of food delivery startups, have created a new landscape for the foodservice industry. And while changing consumer tastes and preferences come with their own set of challenges, this new environment is an even bigger opportunity for foodservice distributors. Mike Allen, CEO of the International Foodservice Distributors Association (IFDA), Our agrees, noting today’s members consumers are a drivare always ing force for foodserlooking to vice logistics providers. “Consumer habits the future drive how our member’s to ensure they customers operate, and are providing so as consumer behavior the products changes, they adapt,” he consumers explains. “From our perwant.” spective, we just need Mike Allen, CEO, to continue doing what International Foodservice we do best: providing Distributors Association restaurants and foodservice outlets with the products and solutions they need to succeed. Our members are always looking to the future to ensure they are providing the products consumers want.”
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Grab and Go One of the biggest trends to emerge over the last year is the demand for convenient options. The ability to “grab-and-go,” Allen says, has become almost more important than the product itself. “Just look at convenience stores; increased foodservice has been a major contributor to recent c-store revenue growth. In many cases, the grab-andgo meals like hotdogs and wings represent one of the largest contributors of revenue,” he explains. Allen also cites recent research by the NPD Group, which found that despite a decline in the U.S. restaurant industry, foodservice delivery posted sizable gains in both visits and sales over the last five years. “The 20 percent increase in delivery sales and 10 percent gain in delivery foodservice visits were supported in large part by the growth of digital ordering, which
now represents over half of all delivery visits,” he adds. In a new report, Mintel, a leading market intelligence agency, announced four key trends set to impact the U.S. foodservice market over the coming year. Among those trends, Mintel predicts that automated order and delivery processes will grow in 2018 to meet the need for convenience as consumers become more comfortable with and reliant on restaurant technology. “Time-strapped diners value convenience and affordability www.foodlogistics.com
5/4/18 11:15 AM
While new consumer trends pose their challenges, they also offer significant opportunities. Foodservice distributors are taking advantage with continued investment in technology.
more than ever, and operators will respond by leveraging technology advances, all in the name of food— fast,” the report emphasizes. And while the dining out landscape is in a state of continual evolution, Amanda Topper, associate director, foodservice research at Mintel, says it remains clear that Americans want innovative and convenient dining options that are nutritious, but also enjoyable to eat and photograph. “In the year ahead, expect to see operators across segments shift to meet diners’ various needs as speed, innovation and category competition become more pressing in 2018 than ever before,” she adds.
that would otherwise be less-thantruckload deliveries for manufacturers to distributors. Supermarkets, restaurants and convenience stores are stocking more variety of product than ever before, meaning they are receiving shipments with numerous different items more often. Much of that product also is fresh or a specialty item that must be transported at different and precise temperatures.
Consumers want more choice, which by itself causes a larger offering of product. They also want more visibility, as consumers grow increasingly concerned about food safety and where their food comes from. According to Cullen Andrews, vice president of sales and marketing for Dot Foods, these trends lend themselves well to a supply chain that’s more just-in-time. “For companies like ours, whose core business model is being able to offer a large offering of products, very frequently, with no minimums, it is an opportunity to provide access for distributors and their customers to more products; otherwise, it would be very difficult for them to be able to react to all those different product trends,” he explains. Dot Foods, Andrews says, pays a lot of attention to what products are on trend that may affect what suppliers and how many suppliers they do business with. For example, just in the last couple of years, he notes, the redistributor has launched more than 100 different manufacturers that are known as natural specialty manufacturers. “Our distributor customers are demanding those types of items that are hard to source, as well as operators and retailers who are competing with companies who’ve done a good job from the get-go of offering products that are more on trend. “It’s changed product assortment quite a bit; therefore, people need just-in-time inventory a lot more
FOODSERVICE DELIVERY POSTED SIZABLE GAINS OVER THE LAST FIVE YEARS.
20% increase in delivery sales
10% increase in delivery foodservice visits site: research group
Consumers want more choice, which means distributors must store and transport an increasing variety of products.
More Variety—Faster Changing consumer preferences are especially opportunistic for logistics providers like Dot Foods, a family-owned redistributor that specializes in consolidating deliveries www.foodlogistics.com
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3PL
continued
[Food than they would have before. That safety] has certainly affects how we do business, as well,” he adds. always been Investment in Success important Today, evolving business practic-
for everyone in the supply chain, but that bar has been raised dramatically.” Cullen Andrews, vice president of sales and marketing, Dot Foods
30
es often revolve around technology. Foodservice distributors are no different as they continue to embrace technology to meet changing demands. “The foodservice distribution industry understands the need to embrace technology. Many of our members are pioneers in adapting the latest innovations across the entire business model,” says Allen. For example, he explains the establishment of new cold chain processes are enabling the widespread distribution of fresh foods by limiting the amount of transport time, decreasing overhead and offering sophisticated refrigerated transport and storage options. As new segments and channels continue to emerge and blur, Andrews adds that Dot Foods is investing in resources that allow them to capitalize on emerging initiatives, as opposed to being tied to one specific channel or one specific segment. “If that specific channel or segment is doing really well, then sure, your business may do well with it, but if it goes the other way, obviously the opposite affect occurs. If you
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can diversify your business, I think that’s really important,” he says. That can be a challenge though. As you mix what once was considered traditional foodservice sales with fast casual, mid-scale, casual, quick-serve and now delivery, Andrews says “it fractures your resources, and you have to make sure you’re able to add value in ways that are different then you would’ve in the past.” In response, Dot Foods has focused even more on e-commerce, with its Dot Expressway e-commerce platform, which enables its distributor customers to capitalize on the growing segment. “That demand of seeing something and then wanting it very quickly actually helps our business in a lot of ways,” Andrews says. “It also means that we have to make sure we continue to invest in our infrastructure. We’re asset-based, so it’s our warehouses, our trucks, our drivers, so we have to make sure that we continue to be bestin-class in that area so that it’s a competitive advantage in terms of frequency and speed to market.” Other technologies Allen sees the industry continuing to invest in include: • Evolving picking technologies will continue to drive error rates down and better serve the customer. • Better routing capabilities and load planning technologies. • Virtual reality has great poten-
tial to help in training employees on safety tasks before being placed in harmful situations (i.e. forklift training, driving, order selecting). • Data (both big and small) and IoT will be used to increase efficiency and data integrity. • Renewable technologies will be implemented to reduce waste and increase the bottom line. And though technology is vital for success, Allen stresses that “the personal relationship our members have with their customers will continue to be a differentiator for our industry.”
Challenges Too Opportunity is never without challenges. As in all trucking-backed industries the driver shortage will continue to be a problem for foodservice distributors in coming years. Allen also expects more consolidation across the industry and increased disruption for operators as competition increases. “Operators will continue to embrace flexible business models with low up-front costs such as pop-ups and food halls,” he explains. Also, Allen says the emphasis on healthy, local food will continue to increase with consumers wanting more transparency on where their food comes from and how it is prepared. Andrews agrees, noting food safety will continue to be a key focus as fresh products are quickly growing in the product portfolio. “[Food safety] has always been important for everyone in the supply chain, but that bar has been raised dramatically,” he says. “We assume the bar will continually be raised because when you have products that are fresh and becoming the quicker growing products in the portfolio, people also, of course, expect them to be food safe. “You have to make sure that you’re investing in technology that allows you to make sure that you can deliver products, not just on time, but also with integrity,” he adds. www.foodlogistics.com
5/4/18 11:16 AM
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5/4/18 11:16 AM
SECTOR REPORTS
WAREHOUSING
BY AMY WUNDERLIN
THE CASE FOR
PLASTIC PALLETS Reusable plastic pallets are increasingly attractive in the face of a changing food and beverage market.
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ecyclable, renewable, repairable and durable. Wooden pallets have long been considered the most cost-effective option. However, a recent study by the Virginia Tech Center for Packaging and Unit Load Design makes a strong case for the plastic pallet’s long shelf life. Using the center’s FasTrack life-cycle analysis to compare relative durability, researchers found ORBIS Coproration’s 40x48inch RackoCell plastic pallet has approximately 18 times the life span of a 40x48-inch whitewood stringer pallet. The FasTrack life-cycle analysis included a 10-step handling sequence, which involved routine pallet handling activities, followed by inspections of the plastic and whitewood pallets. In testing, the RackoCell plastic pallet completed the sequence up to 200 times without failure, while the wood pallet’s average failure was after 11 cycles. “We wanted to quantify the life
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The ORBIS RackoCell plastic pallet has almost 18 times the life span of a comparable whitewood stringer pallet.
and durability of plastic pallets to the supply chain, help companies understand the so does the use long-term cost savings associatof plastic pallets. ed with reusable plastic pallets,” While premium explains Ryan Roessler, product wood pallets manager at ORBIS Corporation, a have also made advancements in pallet manufacturer that specializes this area, the dimensionally consisin reusable, returnable packaging, tent design of a plastic pallet allows primarily with bulk for a smoother movement of containers, pallets and product through the supply Wood handheld containers. pallets are used chain and can be easier to While 90 percent of because they're build automation around. the market is still using “Reusable plastic pallets cheaper... but wood pallets, Roessler companies are provide value in that they're says the FasTrack turning an engineered solution, so life-cycle analysis conto plastic they're made specifically for firms an advantage plasall types of material handling pallets equipment; they're designed tic pallets may have over for a few in a way that just allows the wood—reusability. reasons.” “Wood pallets are product to be moved easier,” used because they're explains Roessler. Ryan Roessler, product manager, cheaper and they're In contrast, Roessler says ORBIS Corporation always going to be some wooden pallets can be cheaper, but companies inconsistent in how they're are turning to plastic pallets for a built and can hinder the entire few reasons,” he adds. automation process. The long-term cost benefit of “The top deck boards can be odd a reusable pallet is a big one, in sized, the stringers in the bottom addition to their dimensionally are not always the same in style and consistent design, cleanability and then those pallet boards can break environmentally-friendly characeasy too,” he says, adding, “With teristics. These factors become automation there are a lot of lasers increasingly important in the food and stuff around the plant that tell and beverage space, where issues the machinery where to go, when beyond durability come into play. to stop, etc. When those lasers are focused on something that's An Engineered on a pallet that's not a consistent Solution size or shape, it can stop the whole As automation, especially for supply chain, bringing about a lot of food and beverage manufacturers, inefficiencies that cost plants and continues to expand throughout companies money.” Jeff Liebesman, CEO of iGPS Logistics, a logistics solutions provider The use of plastic pallets continues that offers the only plastic pooling to grow in the food and beverage rental program in the United States, sector where cleanability and a agrees, noting this is especially consistent design are appealing.
www.foodlogistics.com
5/3/18 10:18 PM
Reduce Your Total Cost of Business
Driving Automation Efficiency Great news for your bottom line. There are more than 40 areas of savings with iGPS plastic pallets – the most comprehensive pallet solution for driving down your total cost of business. More lightweight, hygienic, sustainable and durable than wood alternatives, they offer remarkable efficiency and uniformity, and reduce transport costs, product damage and equipment downtime. That’s why the unique iGPS Plastic Pallet Pooling System provides cutting edge, global supply chain solutions for some of the leading companies and manufacturers in the world.
To see more green for your company call 1(800) 884-0225, or visit:
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SR: WAREHOUSING continued
important in the grocery industry where margins are tight. “Since the grocery supply chain is margin compressed, implementing automation systems in food and beverage industries is accelerating to advance cost efficiencies. Our (plastic) pallets’ consistency in size, weight and shape maximizes efficiencies and returns on the large investment in these automated systems. A wood pallet by comparison varies often and significantly in size, shape and weight, causing shutdowns and additional maintenance and compromising the efficiencies of the automated systems,” Liebesman adds. Roessler encourages companies who are investing in automation to bring in their pallet supplier or packaging experts and really build their automation around their pallet. “That can save you a lot of problems in the future,” he adds. Plastic pallets are an engineered solution designed specifically for material handling equipment.
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Safety First Due to government mandated legislation and consumer outcry, food safety is also top of mind for food and beverage companies. Because wooden pallets often are unable to
FOOD LOGISTICS | MAY 2018
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iGPS offers the only plastic pooling rental program in the United States.
comply with these industry requirements, the demand for plastic pallets continues to grow. Plastic pallets are also easy to clean and dry, as they have a smooth and closed surface that eliminates cavities and doesn't allow dirt from accumulating. As for ORBIS, Roessler says they are just starting to see the effects of sweeping regulations such as the FDA’s Food Safety Modernization Act (FSMA). “We're kind of at the point where customers are taking a more serious stance,” Roessler says. “Plastic pallets weren’t the first thing customers thought of when it came to FSMA; it's been more about their equipment, more about the actual processing of their product, but now it's trickling downward more and more. “Plastic pallets, just in general, give customers peace of mind; it's one less thing that's going to cause a potential recall,” he adds. And ultimately, the whole goal of better food safety practices is to prevent recalls from happening. The fallback of that for ORBIS, Roessler says, has been the emergence of a customer demand to convert their entire supply chain to something that's reusable. “So for example, if I'm a soup manufacturer, I want my product coming in on a plastic pallet. For my suppliers that are supplying the celery and carrots or other ingredients, I'm encouraging them upstream in the supply chain to bring the product on plastic pallets.This helps to mainstream the whole process. And then they have a better peace of mind that the proper food safety measures are in place throughout, from start to finish in the supply chain,” Roessler explains. Liebesman adds that the same
security is not offered with wooden pallets. “Wooden pallets carry a significantly higher risk of product loss and contamination, which food and beverages are more vulnerable to, and very importantly rejection by the retailer, which is costly to the manufacturer,” he notes. “It is a difficult task to remain competitive in a comparatively high-risk industry like food and beverage production, so customers are seizing on any and all cost-saving measures and employing them wherever they can.”
Long-term Cost Benefits Cost is an obvious impediment for plastic pallets, as the price of wooden pallets is relatively low in comparison. While Liebesman acknowledges that the upfront cost of plastic pallets is higher than wood, he says the correct way to evaluate costs is over the life of the asset including repair and replacement. The main point of attraction for many companies that purchase plastic pallets is the reduction in the costs associated with the repair, maintenance and storage of pallets. Rental companies like iGPS further eliminate these costs by providing regular quality checks to avoid any damage to pallets. Rental programs also give companies the flexibility to rent the exact number of pallets they need, rather than having to stock for peak seasons and keep idle pallets in storage. According to iGPS Logistics’ Liebesman, the company’s plastic pallets have made more than 100 million trips throughout the grocery supply chain, allowing iGPS to uniquely develop a platform that can withstand the robust and rigorous use as a pooled rental pallet. “While other plastic pallet options are available, none have the durability or design to withstand the rigors of a pooling service, and generally have a shorter life,” says Liebesman. “We understand clearly the greatest benefits of plastic pallets and know how to maximize them for customers.” www.foodlogistics.com
5/3/18 10:18 PM
Meet a plastic pallet more durable than wood that handles repeated use under even the harshest conditions. In fact, ORBISÂŽ reusable pallets can complete up to 200 cycles without failure, compared with an average of just 11 for wood pallets.* Make the choice today to refine your pallet with ORBIS.
LEARN MORE www.orbisrefineyourpallet.com
*In FasTrack testing completed at Virginia Tech, using the 40 x 48 RackoCellÂŽ pallet.
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5/3/18 10:18 PM
BY JOHN YUVA
RAIL
A look into the high efficiency engine that powers the state-ofthe-art CN CargoCool refrigerated containers.
Photo credit Henry Lin/Alpha Presse
SECTOR REPORTS TRANSPORTATION
A STRATEGIC PART OF INTERMODAL
Railroads are investing billions of dollars in infrastructure to accommodate shippers using rail as part of their supply chain intermodal strategy.
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ver the last couple years, intermodal freight volumes have steadily increased. The Intermodal Association of North America reports that total intermodal volumes gained 4.7 percent in 2017. With fuel rates, labor challenges and the electronic logging device rule affecting the trucking industry, more shippers are turning to rail as part of their intermodal and overall supply chain strategy. Food Logistics had an opportunity to speak with Kerwin Belle, commercial manager, cold supply chain for CN in Toronto, Ontario, as well as Todd Carter, vice president, domestic intermodal marketing for BNSF Railway in Fort Worth,
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Texas, about intermodal rail trends and shipment of temp-controlled food goods. Service is paramount for shippers of refrigerated goods given the time and temp-sensitive requirements. How are you investing from a service perspective to attract and retain refrigerated shippers to rail, especially in the current market as shippers are looking at rail solutions to mitigate tight truck capacity compounded with rising fuel rates? Kerwin: It’s two-fold. First, we have been acquiring equipment each year since 2013. Our fleet
currently stands at 720, and by the end of this year, we’ll reach 820. CN has been consistently buying a minimum of 100, 53-foot reefer containers to meet the growing demand that’s coming forth. Second, is the focus on technology to record every minute a product is in our possession. We now have historical data if there’s any temperature excursions or mechanical failures. It also allows our dedicated office team to examine real-time situations and react accordingly. All of this is part of our record $3.4 billion capital investment in infrastructure, equipment and technology. We are investing for the long haul, buying
www.foodlogistics.com
5/4/18 11:10 AM
150 MILLION HUNGRY CUSTOMERS WITHIN A DAY’S DRIVE North Carolina boasts two deep-water seaports, four international airports, the country’s largest consolidated rail system and 90,000 miles of open road. This is where an appetite for growth meets an eye for expansion.
E C O N O M I C D E V E L O P M E N T PA R T N E R S H I P O F N O R T H C A R O L I N A
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|
EDPNC .C O M
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SR: TRANSPORTATION
Of this year’s planned spend, [about]
$500 million
is slated for various capacity expansion and efficiency projects.” Todd Carter, vice president, domestic marketing, BNSF Railway
locomotives and rail cars, building new track and yard capacity and hiring hundreds of new conductors to serve our valued customers. Carter: BNSF has invested more than $60 billion in our network since 2000, and we plan to spend an additional $3.3 billion in 2018. Of this year’s planned spend, approximately $500 million is slated for various capacity expansion and efficiency projects. In recent years, we have strategically focused on investing at hubs across our network, including at facilities in key food and beverage markets. What are the advantages of using rail as part of a larger temp-controlled food intermodal strategy? Kerwin: There’s the obvious one around sustainability and green initiatives by replacing trucks on the road. We can power up to a 12,000- to 14,000-foot train with three locomotives that could carry a couple hundred containers. That could potentially remove 200 trucks from the road, per train start. Rail also allows for more cost certainty. We’re different from truck in
Photo credit Henry Lin/Alpha Presse
CN CargoCool 53-foot reefers feature proactive monitoring technology with the ability to change set point temperatures remotely.
continued
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TRUCKING REGULATIONS AN ADVANTAGE FOR RAIL Ted Prince, chief operating officer for Tiger Cool Express, a transportation provider of temperature-controlled container fleets for perishable produce, provides his insights on intermodal and where rail has an advantage. The service requirements for railroads are on a spectrum. On one end, you have long shelf-life items such as potatoes and onions that can go in a boxcar. On the other, you have very short shelf-life items that are probably going to move on a team truck. And finally, there’s product that moves on a single-driver truck or is part of intermodal content. What the railroads have done is that they’ll tell you they spend 16 percent to 18 percent of revenue on their infrastructure, which in terms of industrial companies is an incredibly high percent (equaling billions of dollars per year). Those investments include locomotives, tracks and terminal rail projects such as building and expanding intermodal terminals. I’ve been in this business for nearly 40 years, and for 39 of them, intermodal truck competition primarily centered around fuel. However, the issue today is less about energy and more about the cost for the driver. Recruiting, attracting and retaining drivers is a whole new ballgame and a sign of what the new normal means. The long-haul transportation of perishables is really the last frontier for intermodal. The focus is not on the 300- to 600-mile haul of frozen food, but more the temperature controlled 2,000- to 3,000-mile length haul. Intermodal has always had an advantage—longer length hauls are more competitive. In the perishables business in particular, it’s our belief that our competitors as a group were violating more rules than the trucking community in general. Some were running overweight and violating hours-of-service. Now with the electronic logging device (ELD) mandate, there are complaints not about the ELDs, but that the ELDs are enforcing hours-of-service. Rail has an advantage if you’re looking for a shipping option that follows regulations and guarantees the temperature of the product, while also transporting that product in an efficient manner. And rail uses 80 percent to 90 percent less fuel than the comparable truck. The railroads recognize that in Orwell’s Animal House all animals are created equal, but some are created more equal than others. If a train runs out of room, it’s not going to leave running reefer containers behind. It might leave some dry loads behind, but that reflects the commercial relationship.
www.foodlogistics.com
5/4/18 11:10 AM
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swisslog.com
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At Swisslog, our automated pallet-moving solutions and SynQ warehouse management software give you more throughput and higher efficiency. With proven reliability, modular designs and real-time condition monitoring, they deliver Industry 4.0-ready technology you can count on today.
5/4/18 11:10 AM
CN’s mainline reach spans
three coasts, 15 ports and 23 terminals.” Kerwin Belle, commercial manager, cold supply chain, CN
continued
that we don’t redeploy resources based on seasonality. If you’re a shipper that needs dedicated service, transcontinental from east to western Canada, or north to south from Canada to the United States or Mexico, we are running trains 365 days a year in that corridor. Rail also is more competitive on longer hauls. Anything less than 500 miles and rail is challenging; however, the longer haul value is when we see many 2,000- to 3,000-mile runs. Over 500 miles— that’s where the rates make sense. Carter: Adding rail to a company’s intermodal strategy gives its supply chain the broadest reach. Rail provides access to capacity, with one train capable of hauling the equivalent to hundreds of truckloads at once. BNSF’s expedited transit services compete favorably with single driver, over
Transfers loads from one pallet type to another
Photo credit Henry Lin/Alpha Presse
SR: TRANSPORTATION
What investments are you making in products and services that target temp-controlled food shipments? Kerwin: It comes back to technology investments. Shippers need to know that a chilled load needs to run at 2 degrees Celsius or 34 degrees Fahrenheit over the length of haul on our network without a variance. We’ve tested equipment that allows someone from their computer in Ontario, Canada to remotely adjust the temperature of a unit that’s in Mexico. That type of technology didn’t exist 15 to 20 years ago. Our containers are satellite equipped and GPS tracked. Thus, in this world of cellphone towers, we can tap in and send a message to the unit 5,000 miles away if the temperature needs an adjustment or to conduct a diagnostic 1-800-628-4065 if it’s failing mechanicalwww.loadtransfer.net ly. We can proactively
Category 3 safety compliant Enhance safety for warehouse personnel Helps meet FSMA, HACCP and GMP compliance Prevents contamination from entering production areas Safer, cleaner & faster than other load transfer devices
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FOOD LOGISTICS | MAY 2018
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the road trucking and offer the ability to ship anywhere in the United States. We also partner with the top refrigerated intermodal and motor carriers to provide seamless, consistent service.
CN continues to invest in its cold supply chain to meet customer demand, bringing its 53-foot reefer container fleet to 820 by the end of 2018.
notify our pre-approved vendors or CN employees prior to arrival at destination. Carter: In addition to our extensive capital investments, temperature-controlled freight moves on BNSF’s expedited intermodal network. We continue to establish new service lanes so our customers have access to new markets within their supply chain. In recent years, we introduced two new service options that benefit our temperature-controlled customers: direct service from the Pacific Northwest to Texas and have expanded our reach into Mexico. How do you ensure that shippers have access to the right equipment at the right time? Kerwin: CN’s mainline reach spans three coasts, 15 ports and 23 terminals. I spend a great deal of time on network planning and development. We ask customers for a forecast (ideally a historical one) of what they did in March the previous three years. This enables us to reposition equipment in the key areas where customers are sourcing their product. As we solicit customers and they approach us, we may not have service in specific regions. In these cases, we may have to partner with www.foodlogistics.com
5/4/18 11:10 AM
another railroad. Those are things we have to identify before we can make a commitment in terms of a long-term customer solution. What processes have you implemented to support food safety and remain in compliance with the FDA’s FSMA? Kerwin: Anyone at the managerial level is required to complete FSMA training. Our drivers are constantly being updated on safe practices for loading. We have what’s called a Pre-Trip Inspection (PTI) program. Prior to a driver leaving with a piece of equipment from any of our yards, they go through a pre-check and a checklist. Our 53-foot reefer containers must be washed, sanitized and debris-free. We follow FDA or USDA food guidelines on safe handling and storage of food product prior to arrival at the customer for loading. There are also more senior managers who oversee the drivers to ensure this process and checklist in the yard has been completed. When a driver receives the green light to disengage from the terminal, there’s someone to go through the checklist and inspect the unit. Describe your focus on the cold chain and how that impacts the global supply chain. Kerwin: We set up a program so that you receive a clean, food-grade piece of equipment at origin. Once the paperwork is stamped and the seal is applied, we’re not going to touch that equipment (or break the original seals). We simply will load and unload it from a train and perform first and last mile services if requested. CN extends our temperature-controlled service to our steamship line partners. We prowww.foodlogistics.com
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vide railcar gensets (CN owns 69 in total) to power non-CN-owned, 40-foot containers while on the train. These two large generators can power up to 17, 40-foot reefer containers. We call this service Intelligen, as it allows us to record real-time plug performance, monitor temperatures and amperage, and retain historical data to understand any exceptions that may have occurred in transit. We service 15 ports and 23 in-
THE
land terminals. To prevent breaking the cold chain, reefer containers are picked up at the port and loaded directly onto our trains. Sixty-foot cables are used to connect those containers to our genset power supply. Thus, the unit is not reliant on its own fuel. This really allows CN to connect the global supply chain and provide produce and other temp-sensitive products to our customers 365 days per year regardless of seasonality.
CRUNCH ON REFRIGERATED CAPACITY
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5/4/18 11:10 AM
SECTOR REPORTS
SOFTWARE & TECHNOLOGY
BY KEVIN BEASLEY
ERP: MORE THAN A TACTICAL TOOL
Food and beverage companies must learn to strategically use ERP solutions to maximize business benefits.
T
he food industry is unique and complex, having to operate and coordinate with diverse companies throughout the supply chain, all while ensuring that strict regulations are met. All business processes including inventory management and tracking must be performed under tight time constraints, and unlike other businesses, many have to deal with catch-weight. Enterprise resource planning (ERP) is the core business application that is best deployed as one shared database that supports all business functions used by the different business units. So what does that mean for those companies involved in the food industry? A proper food industry ERP solution should streamline business processes from manufacturing to distribution to retail point-of-sale, which helps companies comply with food safety regulations and manage enterprise resources more efficiently. In the food industry, ERP is a necessary strategic business application and not merely a tacti-
cal tool. In the past, ERP functioned as a basic business management system that controlled manufacturing flow and scheduling inside the facility. Over time, these functions became automated within the system. Today and going forward, ERP is doing much more than that.
Mobility Today, almost everyone has a mobile device, and the integration of mobility into the workplace is dramatically impacting enterprise technology. This is true for ERP systems, where modern, up-to-date solutions now have applications that can turn ordinary smartphones into powerful business tools that communicate directly with the ERP system. One of the greatest advantages of mobility for food manufacturers and distributors is that it enables ERP functions and data to be extended outside of the manufacturing facility, supporting transportation, distribution and retail out in the field. In the past, ERP systems were
Kevin Beasley is chief information officer at VAI, a leading cloud-based ERP software developer. He oversees both the corporation’s technology strategy in conjunction with product development and the internal information technology initiatives that support the goals of the company. Beasley has more than 20 years ERP, SCM and WMS consulting experience and over 30 years IT experience.
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limited to within the four walls of the enterprise it supported. Now, modern IT systems and mobile applications are able to extend outside the confines of a facility so that other critical processes can be streamlined through the ERP system. The logistics side of business is one that greatly benefits from mobility. By having access to an ERP system anywhere, anytime, distribution can be more transparent, accurate, auditable and traceable. In the past, when a delivery arrived to its final destination, the carrier would only be able to alert the customer and manufacturer once the entire delivery route was completed, at which point the carrier was able to access the system via a computer. Now, mobile applications connected to ERP systems allow carriers to scan deliveries when they are dropped off, send real-time alerts to the customer and manufacturer and even take a picture to confirm proof-of-delivery. Another ERP mobility strategy is to automate on-the-go route sales. Production demand and fast delivery expectations put a lot of pressure on manufacturers and distributors. By automating route sales, the distribution process from sales order processing to truck www.foodlogistics.com
5/4/18 9:31 AM
loading to delivery is updated in real-time. Food companies can confirm truck loading, track status via GPS, process orders, confirm delivery, collect payments, print or email delivery receipt and invoice and perform truck settlement anytime, anywhere. Having access to this real-time information on-the-go allows manufacturers to easily trace product from the shop floor to the customer’s hands, making it easier to remain transparent and accurate in order processing and delivery. This is especially important in the food industry, where food safety is required. If there is a suspected contamination or questionable product, being able to easily track and trace products is crucial to minimizing any safety hazards.
Analytics ERP systems can generate an extensive amount of data. And because they are often linked through
many different departments in a company, the data coming from these systems is not only extensive, but incredibly valuable. By using analytics, companies can gain insight on trends, plant efficiency, quality control, point of sale and more. This data can be used for both low-level monitoring that focuses on departmental metrics, such as inventory turns, customer fill rates, forecasted demand versus actual demand and vendor performance, and high-level monitoring such as overall performance of the enterprise. With analytics, ERP applications can go above and beyond inventory forecasting and suggested purchasing by utilizing predictive analytics, a crucial part of budget planning. Analytics tools pull data from past sales and are able to intelligently predict future performance, which can then be used to assess demand levels and purchase inventory as necessary. Predictions are impeccably accurate, thanks to the data
algorithms and formulas built into the ERP application. Suggested purchasing applications ensure that businesses reduce inventory and increase sales by forecasting inventory and automating the buying process based on tracked supply and demand for an item. To get the most out of an ERP solution, it’s beneficial to deploy a system that has embedded analytics. In the past, companies would send ERP data to a third party to be analyzed, which is both costly and inefficient because data would have to be replicated continuously in order for analytic insights to be kept up to date. An ERP system with embedded analytics enables companies to instantaneously create powerful reports and dashboards that allow them to easily identify and analyze opportunities and trends and monitor performance against targets. Because the tools are at the disposal of the company, reports can
Having access to this real-time information on-the-go allows manufacturers to easily trace product from
the shop floor to the customer’s hand.”
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SR: SOFTWARE & TECHNOLOGY continued
be created daily to closely monitor goals and performance.
Visibility and Agility In the food industry, companies must act in a timely manner regarding FDA regulations and food safety. If a system doesn’t quickly react to changes in regulations—or easily track vendor information, food quality, safety, refrigeration, etc.—they can find themselves falling behind competitors, losing customer confidence and potentially have compliance issues with the government. Product recalls are unfortunate, but not uncommon in the food industry. It’s crucial that companies are able to track not only the final product they produce, but also all the ingredients that go into making it. To do this, data from every touch point in the supply chain has to be noted and recorded accurately. ERP systems make it easy to record and store all of this data, as well as access it any time should an issue arise, minimizing response time. Being quick to notify customers, partners and the FDA of any issues is key to maintaining respect and trust. Visibility is so important for companies in the food industry, especially in an increasingly globalized food supply chain, that some businesses seek ERP solutions solely for its end-to-end food safety capability. Despite complicated supply chains, it’s surprising that many food manufacturers still rely on paper records, spreadsheets or a mix of automated systems to monitor food production.
Improvements in Implementation As ERP tools have evolved, so has its implementation. In the past, when ERP was used more tactically, implementation was casual and less planned out. Companies assumed that implementation would be easy, and therefore not a lot of strategy went into deployment. Today, there are more interfaces and applications to consider. It’s crucial that ERP is implemented more strategically than in the past and with a strong project plan and project management team. These tactics improve overall functionality and ensure implementation is smooth. While it may seem daunting, most modern, up-to-date ERP providers have their portion of an implementation project plan well documented and regimented and will work with specific needs of the company. When a company invests in a new ERP sys-
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tem, implementation is generally kicked off by a series of meetings to build on the vendor’s project plan, personalize the system to the specific needs of the business and to assign project tasks to different people within the company. Next comes software training, followed by reviewing different deployment models and finally choosing the deployment method that works best for the company. This streamlined process that nearly every company follows ensures that all needs
are met and the right amount of support is supplied, making for a smooth implementation despite a more robust ERP system. Another consideration is that forward thinking companies, or those with modernized systems, are better suited to adapt to digital transformation, making ERP implementation smoother. Companies that prioritize digital transformation as part of the project plan also gain the benefit of a modern IT. For the modern ERP
system, much of the implementation can be automated, for example prepackaged virtualized machines that are able to transform from the ERP solution provider to the company’s system, which makes integration fast and easy. ERP solutions can provide many overall business benefits specific to the food industry. Aside from making it possible to manage operations from anywhere at any time, an integrated ERP solution can also make processes more efficient and accurate by forecasting and planning inventory, production and logistics. Having total visibility into the supply chain is a necessity in the food industry, and its benefits can be invaluable. With digital transformation top of mind for many businesses, now is the perfect time to re-evaluate how to strategically use or invest in an ERP solution to make the most of its business benefits.
Forward thinking companies are better suited to adapt to digital transformation, making ERP implementation smoother.”
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SECTOR REPORTS OCEAN PORTS & CARRIERS
BY BARRY HOCHFELDER
OCEAN SHIPPERS
MAKE WAVES IN CUSTOMER SERVICE New routes and technological advances mean more safety and efficiency for food and beverage.
C We knew we didn’t have a strong presence in the gulf, so
we started planning through last year.” Alfredo Di Palma, commercial manager, Sealand Central America
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ustomer service. Everyone talks about it, but what is it? It’s really all the things that make an efficient supply chain—speed, transparency, safety, reliability. Buzz words? Of course, but they’re true. Shipping companies are striving to attain all of those to benefit their customers by adding routes, improving technology, or both. Sealand, for example, in April launched Gulf Ocean Express (GOEX), a new direct, all-water service that connects the U.S. Gulf (Houston and New Orleans) with Central America, Panama and Colombia. Sealand, a division of Maersk, added the U.S. Gulf capacity to address the needs of customers for increased volumes by connecting to major U.S. markets and Canada via 14,500 miles of waterways, six Class I railroads and the interstate highway system.
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The northbound route for GOEX begins in Cartagena, Colombia, then calls Manzanillo, Panama; Puerto Cortes, Honduras; Santo Tomas de Castilla, Guatemala; Houston and New Orleans. The southbound voyage calls the same ports, beginning in Houston; and ending in Manzanillo. “We knew we didn’t have a strong presence in the gulf, so we started planning through last year,”
says Alfredo Di Palma, commercial manager for Sealand Central America. “The three-vessel weekly rotation includes 2,500 TEU nominal capacity per vessel, each with 600 reefer plugs.” The new routes are important because of the large amount of fresh food moving back and forth between the regions. The cargo includes high-quality beef from Nicaragua, bananas and plantains www.foodlogistics.com
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tainer’s current location, temperature and atmospheric conditions, as well as the power status, at all times and locations. “We have a platform that customers can interface with,” Di Palma says. “It’s quicker, confidential access to the service—routes, maps, transit times. It’s immediate. And, we have dedicated reefer people in each country with local expertise. They’re dedicated to the customers. “The technology is based on GPS, but with more data,” he adds. “All the refrigerated equipment keeps track of temperature and variations. It gives our customers control and flexibility. Our equipment transmits that data. It’s a game-changer we launched last year. And, we have a control system on the vessel. It carries spare parts and mechanics, so now the customer gets access for their peace of mind, and we can track [cargo] better and act on these variations.”
reefer fleet is now equipped with the StarGuard system. The fleet also uses Orbcomm’s new GMS-based VesselConnect M2M application, which securely provides critical real-time data from reefers. The technology allows TOTE Maritime Puerto Rico to monitor set points, conduct pre-trip inspections on-board and expedite cargo distribution on land. VesselConnect also provides the precise monitoring and recordkeeping needed for compliance with the new requirements under the FDA’s Food Safety Modernization Act. TOTE Maritime Puerto Rico also updated its web portal in March, allowing easier management of shipments for its Alaska and Puerto Rico customers. Features include improved navigation to reduce time spent on the portal, while streamlining access to cargo data and information, as well as a bookmarking feature to allow
We have dedicated reefer people in each country with local expertise.
They’re dedicated to the customers.” Alfredo Di Palma, commercial manager, Sealand Central America
High-tech Containers
all moving north, while non-frozen fruits like grapes and apples head south from the gulf. Although the melon season is coming to an end, this service makes its transport more efficient. Taking advantage of its Maersk affiliation, Sealand uses its parent’s Remote Container Management (RCM) tracking and monitoring system. With RCM, customers have complete access to the reefer conwww.foodlogistics.com
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TOTE Maritime Puerto Rico last year purchased 350 new, high-tech smart refrigerated containers to service its Puerto Rico trade route. The containers use machine-to-machine (M2M) telematics technology to remotely monitor and control conditions of refrigerated perishables during transport. The Jacksonville, Florida-based company has deployed Orbcomm’s StarGuard system to monitor and control its refrigerated containers, or reefers, from point of origin to destination since 2011, providing customers with real-time, end-toend visibility of the cold chain. With the new purchases, TOTE Maritime Puerto Rico’s entire
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Global Supply Chain Solutions for the Food and Beverage Industry
Each year, Food Logistics recognizes individual and corporate leaders in the food and beverage industry. Plan now to enter your company — or a cutting-edge client or vendor — in one of these industry-leading recognition programs:
2018
TOP GREEN PROVIDERS In recognition of companies demonstrating leadership in sustainability in the food and beverage supply chain Nominations Closed Winners announced in June 2018 issue
TOP 3PL & COLD STORAGE PROVIDERS
FL100+ TOP SOFTWARE & TECHNOLOGY PROVIDERS
Honoring the leading 3PL and Cold Storage Providers that support the food and beverage supply chain
Recognizing top software and technology providers supporting the global food and beverage supply chain
Nomination deadline: May 25, 2018
Nomination deadline: Sept. 21, 2018
Winners announced in August 2018 issue
Winners announced in Nov/Dec 2018 issue
Online nominations open approximately eight weeks before the deadlines listed above. Award results, information and nominations posted on:
FoodLogistics.com/Awards Nomination dates and issues may change. Consult the call-for-entries email and nomination survey for confirmation Nomination dates and issues may change. Consult the call-for-entries email and nomination survey for confirmation
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SR: OCEAN PORTS & CARRIERS continued
monitoring of priority cargo. The company is preparing to roll out a mobile application that has the same look and feel as the online portal and includes features like watch list capabilities, equipment status information and a voyage calendar.
available to help customers with customs clearance). Importers are not subject to duties, quota charges, state inventory tax, ad valorem or personal property taxes until the product is withdrawn from the FTZ. Additionally, cargo can now remain in Crowley’s FTZ facility for an unlimited amount of In the Warehouse time, which is a significant change from the Once a reefer shipment reaches port, it previous 14-day deadline associated with needs to be handled properly and timely. In bonded cargo. April, Crowley Logistics opened its newly During the expansion and remodel, all expanded Medley , Florida pallet racking was upgraded warehouse in Miami to enhance to the newest available from CROWLEY LOGISTICS’ Rack Avengers. The system supply chain services in the NEWLY EXPANDED uses high-grade structural steel South Florida market. Now MEDLEY, FLORIDA at 180,000 square feet, the to reinforce the base of each WAREHOUSE warehouse has double the rack, allowing it to withstand a FEATURES previous number of receiving forklift impact of up to 14,000 doors, and features more than pounds at 14 mph, preventing 5,000 pallet rack positions and what could be a catastrophic SQUARE FEET 95 container parking spots, as racking collapse. MORE THAN well as single-direction truck In addition, to meet the flow to prevent cross traffic and demands of the rapidly increase safety. expanding e-commerce PALLET RACK A section of the warehouse market, a devoted receiving POSITIONS has also been activated as a area has been constructed to Foreign Trade Zone (FTZ). This ensure same day, expedited allows the facility to receive, processing of approximately CONTAINER store and process cargo without 1,000 small packages received PARKING SPOTS it being subject to formal U.S. from online shopping. The IT Customs entry procedures and infrastructure, lighting and payment of duties until the cargo other safety points across the is made available for domestic use and confacility have also been upgraded to keep sumption. (Customized Brokers, Crowley’s warehouse staff and visitors safe in the in-house customs brokerage subsidiary, is fast-moving work environment.
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ADVERTISER INDEX ADVERTISER...........................................PAGE CN North American Railroad.............................................19 Columbia Machine Inc............................................................40 Economic Development Partnership of North Carolina......................................................................37 Ford Motor Co.........................................................................2-3
Barry Hochfelder is a freelance journalist who has covered a variety of industries in his career, including supply chain. He also served as the former editor of Supply and Demand Chain Executive. Hochfelder is based in Arlington Heights, Illinois
Great Dane Trailers Inc..........................................................52 IFDA................................................................................................44 iGPS Logistics LLC....................................................................33 Jindal Films..................................................................................43 Kenworth .....................................................................................15 Landoll Corporation................................................................45 North Carolina Ports .............................................................21 Old Dominion Freight Line Inc............................................. 7 ORBIS Menasha Corp............................................................35 Penske Truck Leasing......................................................26-27 The Port Authority of NY & NJ............................................ 5 QProducts & Services............................................................41 South Carolina State Ports...................................................25 SWISSLOG...................................................................................39 TOTE Maritime..........................................................................23 TranSolutions Inc......................................................................49 Uline................................................................................................47 Utility Trailers.............................................................................11 Verizon Connect......................................................................... 9 Viking Cold Storage.................................................................31
www.foodlogistics.com
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FOOD (AND MORE) FOR THOUGHT
BY POOJA SUDARSHAN
Bayer Monsanto Merger Continues Agribusiness Shakeup L SUDARSHAN
ast year saw robust mergers and acquisitions activity that may start to reshape the agribusiness, ag tech and farming industries. The Dow DuPont merger, ChemChina Sygenta acquisition and the Bayer Monsanto merger are some of the deals marked to change the face of these industries through largescale consolidations, along with cooperative mergers focused on increasing efficiencies.
Bayer Monsanto Merger Gets Green Light
Pooja Sudarshan is a corporate lawyer at Royse Law Firm. She focuses her practice on representing companies in mergers and acquisitions and corporate finance transactions, primarily in the healthcare and technology industry sectors.
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The Bayer Monsanto deal received the green light from the U.S. Justice Department on April 9, after the companies struck a deal to sell more assets in order to win the antitrust approval. Bayer AG, a German pharmaceutical, chemical and pesticide giant, announced its proposal to buy Monsanto, a St. Louis seeds and crop genes leader, for $62 billion in September 2016. As per the agreement and plan of the merger filed with the SEC, KWA Investment Co., an indirect wholly-owned subsidiary of Bayer, will merge with and into Monsanto, leaving it as the surviving entity and Bayer’s wholly-owned subsidiary. Merger consideration is set to be $128 cash per share, valuing Monsanto at an extraordinary $62 billion.
Reverse Triangular Merger This deal uses a reverse triangular merger structure, which is a type of merger in which the acquiring company creates a subsidiary, often called a “merger sub” (in
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this case KWA Investment Co.), to effectuate the merger. The merger sub purchases the target company, following which, the target company absorbs the merger sub, leaving the target company as the surviving entity and a wholly-owned subsidiary of the acquiring company. The reverse triangular merger is thought to be a quicker and simpler structure than a direct or forward triangular merger, as it only involves the shareholders of the target entity. Typically, and in the case of the Bayer Monsanto merger, the merger sub would only need the approval of the acquiring company, its sole shareholder. Shareholder approval of the target entity is required. However, this still eliminates the need for approval by the acquiring company’s shareholders, making the process one step simpler. The reverse triangular merger also allows the assets and contracts of the target company to remain with the them. When the target company becomes a wholly-owned subsidiary of the acquiring company, it is easier for the acquiring company to gain control over assets and contracts. Contract clauses that restrict “assignment” of rights under the contract often are not triggered since the contracts remain with the target company, the original party to the contract. This characteristic of the reverse triangular merger will prove beneficial in the Bayer Monsanto merger.
Antitrust Approval The antitrust approval seems to have given some cause for concern in the merger, however.
Under the Hart-Scott Rodino Act, the Federal Trade Commission and the Justice Department review proposed transactions that affect commerce in the United States to ensure that they are not anticompetitive. Per the FTC, companies are required to report deals of value over $84.4 million for review. Upon preliminary review, transactions requiring further review are assigned to either the FTC or the Justice Department. In the Bayer Monsanto deal, the process was announced to be concluded on April 9. The Justice Department provided approval after the companies entered into an agreement, under which Bayer is to sell off (additional) assets related to its seed and seed-treatment businesses, and make concessions related to its digital agriculture business—a deviation from the usual practice of companies providing promises on post-merger business practices. BASF SE, a direct competitor of Monsanto, is set to acquire the assets sold by Bayer under this agreement. This approval follows a conditional approval from the European Union in which the antitrust authorities required Bayer to sell some of its assets to BASF SE.
Future Concerns While the Justice Department seems to have been satisfied with the future landscape of the seed, crop gene and pesticide market, the Bayer Monsanto deal has raised concerns for farmers struggling with increasing prices and diminishing incomes. Will they survive? Only time will tell. www.foodlogistics.com
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