Food Logistics Oct 2015 by Supply+Demand Chain/Food Logistics

Food Logistics

INVENTORY COSTS

Drive Need For Greater Storage Density Pg. 34 ®

Issue No. 171 October 2015

Global Supply Chain Solutions for the Food and Beverage Industry

A DIVERSIFYING FOOD SUPPLY CHAIN Drives New TMS Features Pg. 44

COLD STORAGE CAPACITY RISES To Meet Growing Global Food Demand Pg. 28

HOW AGILE

IS YOUR FOODSERVICE SUPPLY CHAIN?

• Scott Carter of NDCP, the supply chain management organization for Dunkin’ Donuts franchisees, sees product sourcing as playing an important role in managing the supply chain.

The consumer demands immediacy, variety and freshness, requiring an integrated, collaborative foodservice supply chain. Pg. 18

▼

Get The Latest Updates On Food Product Recalls

▼

Archived Webinars, including FL’s Educational Webinar Series

▼

WEB EXCLUSIVES

Daily News On 3PLs, Transportation, Warehousing, Sustainability, Cold Chain, Food Safety And Security WWW.FOODLOGISTICS.COM

FLOG1015_1_cover LS_ES_EM.indd 1

10/5/15 2:08 PM

INTRODUCING THE NEW FORD TRANSIT

THE MOST VEHICLE CONFIGURATIONS IIN N IITS T S CLASS. C L A S S*.

OPEN FOR 6'5" TALL BUSINESS OVER

A WIDE VARIETY

With an available cargo ceiling taller than some basketball players, the Transit van has loads of room for boxes, tools 6'5" and you. That comes in handy if you want a mobile workshop that lets you stand up straight. And the advantages just keep piling up.

OF DIMENSIONS The Transit van and wagon are available in 2 different wheelbases, 3 different lengths and 3 different heights. That makes it easy to choose one that will fit you and your business exactly. And if that’s not enough, it’s also available as a chassis cab and cutaway.

THE NEW

2015 TRANSIT •

The Transit van is available with the best-in-class maximum rear cargo door opening height. The doors open a full 237° and the floor is as low as 28 inches.** It’s all about making loading and unloading easier. No matter what your business is.

THE NUMBERS DON’T LIE

•

* sed *B *Ba s on bodyy typ y e, e bod bodyy length, l , an and whee e lba lb se s and roof hei eiight ht. Clas asss is Full ull-Si -Size ze Van Vans. s. **W When h pr p ope o rly eq equip uipped p . ped † Claass is Fulll-S -Size -S ize ze Vaans, wh when en proope perly per lyy equ eq ipp ip ed. Ex Excluudes di d eseel comp comp ompeti etitititiv tivee mode tiv dels. ls. s s.

FLOG1015_2-5_TOC_ES_EM.indd 2

10/5/15 3:59 PM

The 2015 Transit can offer a best-in-class gas-powered maximum CARGO CAPACITY OF 487.3 CUBIC FEET.†

FLOG1015_2-5_TOC_ES_EM.indd 3

10/5/15 3:59 PM

ON THE MENU OCTOB ER 2015 • ISSU E N O . 171

COVER STORY

18 How Agile Is Your Foodservice Supply Chain?

Today’s consumer demands immediacy, variety and freshness, requiring an integrated, collaborative foodservice supply chain. By Elliot Maras

FEATURES

24 Cargo Safety & Security

Industry executives highlight internal and external risks in the food supply chain. By Lara L. Sowinski

& REFRIGERATED LOGISTICS 28 THIRD-PARTY Cold Storage Capacity Rises

To Meet Growing Global Food Demand

Improving incomes in developing countries is driving demand for protein while the overall increase in fresh and frozen food in the market challenges cold chain providers. By Elliot Maras

18 SECTOR REPORTS

34 WAREHOUSING Inventory Costs Drive Need 28

While Rome Burned

DEVELOPMENT 37 ECONOMIC Primed For A Post-Panamax

INSIGHTS 16 COOL How The Cold Chain

Considerations for controlling inventory costs: storage density, safety and sanitation. By Elliot Maras

Ports along the Gulf Coast will be ready to compete for the increase in containerized cargo an expanded Panama Canal will bring their way. By Eric Sacharski

40 TRANSPORTATION New And Improved Flexitanks

Transform Bulk Liquid Transportation Wine, oil and juice shippers realize additional cost benefits and transportation options. By Lara L. Sowinski

& TECHNOLOGY 44 SOFTWARE A Diversifying Food Supply Chain

STARTERS 6 FOR Nero Fiddled

For Greater Storage Density

Sized Opportunity

COLUMNS

Drives New TMS Features

Companies take on more tasks managing freight, creating a need to integrate more software silos. By Elliot Maras

Congress remains in stuck mode while U.S. infrastructure continues to crumble. By Lara L. Sowinski

Impacts The Economy

The American Frozen Food Institute quantifies our industry’s impact on the U.S. economy. By Elliot Maras

(AND MORE) FOR THOUGHT 50 FOOD FDA Overreaches With New

Food Safety Regulations

The California Farm Bureau Federation is critical of the FSMA’s approach to food safety. By Josh Rolph

DEPARTMENTS

8 Supply Scan 12 Food on the Move 49 Ad Index

Published and copyrighted 2015 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 ten times per year in Jan/Feb, March, April, May, June, July, August, September, October and Nov/Dec 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, PO 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: US, 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 on U.S. bank. Printed in the USA.

OCTOBER 2015

FLOG1015_2-5_TOC_ES_EM.indd 4

• FOOD LOGISTICS

www.foodlogistics.com

10/5/15 3:59 PM

WHAT IF YOUR FROZEN SHIPMENTS WERE

PROTECTED BY RELIABLE TEMPERATURE CONTROLLED CAPACITY?

ACCELERATE YOUR ADVANTAGE

Find out more at accelerateyouradvantage.com 800.323.7587 | solutions@chrobinson.com

FLOG1015_2-5_TOC_ES_EM.indd 5

10/5/15 3:59 PM

FOR STARTERS FROM THE EDITOR’S DESK

WWW.FOODLOGISTICS.COM

Nero Fiddled While Rome Burned

Published by AC Business Media Inc.

SOWINSKI

n late September, more than 800 towboats and barges backed up on the Ohio River after the U.S. Army Corps of Engineers partially closed a lock for repairs. Tons of corn, soybeans and other grains rely on the Ohio River to transport commodities to domestic and overseas buyers. The shut down wasn’t a first. Over the past three years interruptions due to maintenance and repair of aging infrastructure has cost shippers and transportation providers dearly. One towboat and barge operator estimates that since 2013, delays caused by lock repairs have cost his company $46.5 million in extra wages and fuel as well as missed incentives for on-time delivery. At the same time, corn shippers are right in the middle of harvest, so the economic impact is yet to be determined. Meanwhile, the Highway Trust Fund is set to expire Oct. 29. Congress has not passed an infrastructure measure that lasts longer than two years since 2005, and ongoing squabbling over whether to raise the federal gas tax means the prospects for passing a six-year extension are bleak. House Majority Leader Kevin McCarthy (R-Calif.), the likely successor to outgoing Speaker John Boehner (R-Ohio), is vowing to pass a six-year extension of the highway bill. He wants to include tax reform—specifically, using revenue from corporate overseas taxes—to pay for it. This solution seems to be a long shot compared to simply raising the 18.4 cents per gallon federal gas tax (unchanged since 1993), which funded the Highway Trust Fund for years before less driving by Americans coupled with more fuel-efficient cars widened the Fund’s shortfall. Ironically, there is strong bipartisan support for raising the federal gas tax, but a handful of powerful opponents stand in the way. A recent op-ed in The Hill lent support for raising the federal gas tax. It stated that: “A user-fee system is the most logical way to ensure permanent revenue for our highways. As conservatives, we believe the government generates plenty of revenue, but spends too much. Citizens are rightly skeptical when they pay their taxes, but cannot account for where the money goes in the vast federal bureaucracy. The beauty of the gas tax is that the revenue goes directly into the Highway Trust Fund, which is spent on roads and bridges.” A proposal introduced by Rep. Tom Rice (R-S.C.) and former Transportation Secretary Ray LaHood would moderately increase the gas tax and index it to inflation, while offsetting that cost with an income tax credit to cover what an average driver will spend in additional gas taxes. According to The Hill, this proposed bill “will cost the consumers nothing.” Yet, I’m skeptical that Congress will do much more than put forth another temporary fix for the Highway Trust Fund while infrastructure across the U.S. continues to crumble. We’ve all heard that tune before. Enjoy the read.

LARA L. SOWINSKI, EDITOR-IN-CHIEF LSOWINSKI@ACBUSINESSMEDIA.COM

OCTOBER 2015

• FOOD LOGISTICS

FLOG1015_6-7_ForStarters LS_ES_EM.indd 6

201 N. Main Street, Fort Atkinson, WI 53538 (800) 538-5544 • www.ACBusinessMedia.com PRINT AND DIGITAL STAFF Publisher Jolene Gulley Editor-in-Chief Lara L. Sowinski lsowinski@ACBusinessMedia.com Managing Editor Elliot Maras emaras@ACBusinessMedia.com Assistant Editor Eric Sacharski esacharski@ACBusinessMedia.com Ad Production Manager Cindy Rusch crusch@ACBusinessMedia.com Creative Director Kirsten Crock Senior Audience Development Manager Wendy Chady Audience Development Manager Tammy Steller ADVERTISING SALES (800) 538-5544 East Coast Sales Manager Judy Welp (480) 821-1093 jwelp@ACBusinessMedia.com Midwest/West Sales Manager Carrie Konopacki (920) 542-1236; Fax: (920) 542-1133 201 N. Main Street, Fort Atkinson, WI 53538 ckonopacki@ACBusinessMedia.com National Automotive Sales Tom Lutzke (630) 484-8040; tlutzke@ACBusinessMedia.com EDITORIAL ADVISORY BOARD Smitha G. Stansbury, partner, FDA & Life Sciences Practice, King & Spalding Raymond J. Segat, director, cargo & business development, Vancouver Airport Authority Dr. Barbara Rasco, professor and interim director, School of Food Science, Washington State University Adriano Melluzo, vice president, national sales, Ryder CIRCULATION & SUBSCRIPTIONS PO Box 3605, Northbrook, IL 60065-3605 (877) 201-3915, Fax: (800) 543-5055 Email: circ.FoodLogistics@omeda.com LIST RENTAL Elizabeth Jackson, Merit Direct LLC (847) 492-1350, ext. 18, Fax: (847) 492-0085 Email: ejackson@meritdirect.com REPRINT SERVICES Carrie Konopacki (920) 542-1236; Fax: (920) 542-1133 ckonopacki@ACBusinessMedia.com AC BUSINESS MEDIA INC. Chairman Anil Narang President and CEO Carl Wistreich Executive Vice President Kris Flitcroft CFO JoAnn Breuchel VP Content Greg Udelhofen VP Marketing Debbie George Digital Operations Manager Nick Raether Digital Sales Manager Monique Terrazas Published and copyrighted 2015 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.

10/5/15 11:47 AM

Port News. Your Inbox. Thereâ&#x20AC;&#x2122;s a lot going on in and around the Port. So much that you need to know. Get the latest happenings by signing up for our electronic newsletters. Just visit polb.com/subscribe and sign up for alerts on Port news, cargo statistics and our award-winning Tie Lines monthly newsletter.

www.POLB.com/subscribe

FLOG1015_6-7_ForStarters LS_ES_EM.indd 7

10/5/15 11:47 AM

SUPPLY SCAN

D A I LY U P D AT E S AT WWW.FOODLOGISTICS.COM

NE WS FROM ACROSS THE F O O D SU PPLY C H AIN

FDA Finalizea The FSMA Preventive Controls Rules The U.S. Food and Drug Administration (FDA) has finalized the first two of seven major rules under the FDA’s Food Safety Modernization Act (FSMA). The two rules are the preventive controls rules, which focus on implementing modern food manufacturing processes for both human and animal foods. The preventive controls rules require human and animal food facilities to develop and implement written food safety plans that indicate safety risks and outline steps to prevent those problems.

New York City Will Require Restaurants To Label High-Sodium Food New York City will require chain restaurants to add a warning label to menu items that contain more than the daily recommended amount of sodium, making it the first city in the U.S. to do so, according

to Reuters. The rule requires restaurants to add a salt-shaker symbol next to food items that contain more than 2,300 milligrams of sodium, the maximum daily amount recommended by health officials. The rule will go into effect on Dec. 1. Venezuelans clash with police over food shortages.

Mars Inc. Opens Global Food Safety Center Mars, Inc. announced the opening of its Global Food Safety Center, a first-of-its-kind facility for pre-competitive research and training that aims to raise global food safety standards through collaboration. Convening governments, academics, regulators and industry peers, the center is intended to drive global focus on addressing the challenge of food safety,

leading to better access, availability and nutrition, as well as reduced food waste and an increase in overall quality of life. With an emphasis on precompetitive research and collaborative solutions, the center will leverage insights and expertise from over 60 Mars partnerships dedicated to innovative, sustainable and responsible food safety practices.

Mars Inc. workers cut the ribbon for the global food safety center.

Mars Inc.

Venezuelan Food Shortage Brings Looting Ater looting and setting fire to a National Guard command post in La Sibucara, Venezuela in August, a mob infuriated by worsening food shortages rammed trucks into the smoldering edifice, reducing it mostly to rubble, according to The Wall Street Journal. The incident was just one of numerous clashes that have flared in pockets around the country as Venezuelans wait in long lines for basics like milk and rice.

U.S. COCONUT OIL AND PALM OIL IMPORTS

U.S. Palm and Coconut Oil Imports $450 $400 $350 Millions

U.S. imports of coconut oil have gradually increased over a few years, which is no surprise since it’ almost at every grocer nowadays. Year-to-date (January-July) coconut oil imports are up 8 percent with the majority coming from the Philippines. Imports of palm oil are actually down 15 percent YTD. Over 56 percent of U.S. palm oil imports come from Malaysia, but are down 29 percent YTD from the country this year. All data provided by Zepol. Visit zepol.com for a Free Trial

$300 Palm Oil

$250 $200 $150 $100 $50 $0 2012 Q3

Coconut Oil 2012 Q4

2013 Q1

2013 Q2

2013 Q3

2013 Q4

2014 Q1

2014 Q2

2014 Q3

2014 Q4

2015 Q1

2015 Q2

Source: Zepol, www.zepol.com

OCTOBER 2015

• FOOD LOGISTICS

FLOG1015_8-11_SupplyScanEditorial_EM_LS_ES.indd 8

www.foodlogistics.com

10/5/15 1:52 PM

Logistics for the fresh and frozen food industry! Brown Line provides reliable temperature-controlled transportation of less than truckload and full truckload freight. From fresh vegetables to frozen fish, we move temperature-sensitive commodities while maintaining the product in top quality condition. We offer scheduled service from the Pacific Northwest and Alaska to Boston, British Colombia, Chicago, Denver, Minneapolis, Phoenix, Salt Lake City, Spokane, and Northern and Southern California. In addition, Brown Line offers charter service to most locations in the US and Western Canada. Since Brown Line is part of the Lynden family of transportation providers, we can work with customers to solve their transportation challenges by offering solutions and expertise in handling even the most complex logistics challenges.

www.lynden.com 1-800-426-2050 FLOG1015_8-11_SupplyScanEditorial_EM_LS_ES.indd 9

10/5/15 1:52 PM

Order Fulfillment Across Multiple Channels Can Be Complex. The Solution Doesn’t Need to Be. Handling direct-to-consumer and retail orders in one distribution center has never been easier. With a 3D-MATRIX Solution® from SSI SCHAEFER, every SKU inside your distribution center can be retrieved from its storage location and sent to any picking, packing or palletizing station without a decrease in performance, reaching efficiencies never before imagined. The cutting edge concept provided by the 3D-MATRIX Solution® eliminates the need to ABC classify your inventory and opens up your warehouse from all sides utilizing the XYZ axes, allowing for highly-dynamic sequencing without bottlenecks in a single system. The patented solution offers maximum flexibility and future-oriented scalability. Contact SSI SCHAEFER and find out just how easy we make it.

Multi-Channel Order Fulfillment Made Simple

www.ssi-schaefer.us / matrix

FLOG1015_8-11_SupplyScanEditorial_EM_LS_ES.indd 10

10/5/15 1:52 PM

SUPPLY SCAN

D A I LY U P D AT E S AT WWW.FOODLOGISTICS.COM

NE WS FROM ACROSS THE FO O D SU PPLY C H AIN

Are Barcodes Headed For Extinction? Growing demand for more information about products could mean the end of the simple barcode — the blocks of black and white stripes that adorn most objects for sale and are scanned 5 billion times a day, according to Reuters. Shoppers are now demanding greater transparency about products, and store owners need more information to help with stock taking, product recalls and to fight fakes. That could mean a costly upheaval for retailers and brands to change packaging and invest in new systems and scanners. But it should also bring benefits as more data helps them manage the flow of goods better.

les, depicts gruesome cruelty toward the birds at what the group said was T&S Farm in Dukedom, Tenn., which was under contract to Tyson Foods.

Woman Sues Chipotle Over GMO-Free Menu Claims A California woman has filed a lawsuit charging Chipotle Mexican Grill Inc. with making false and misleading claims by saying its menu is free of genetically modified organisms, or GMOs, according to Nation’s Restaurant News. In a complaint filed in the U.S. District Court, Northern District of California, Colleen Gallagher filed on behalf of all California consumers who bought food from Chipotle. She is represented by law firm Kaplan Fox & Kilsheimer LLP in San Francisco, Calif., which is seeking class-action status for the case.

KitKat First Chocolate Brand Using All Sustainably Sourced Cocoa McDonald’s And Tyson Drop Poultry Farm Over Chicken-Killing Video McDonald’s Corp. and Tyson Foods Inc. severed ties with a Tennessee poultry farm after an animal-rights group released video footage from the facility that showed chickens being stabbed, clubbed and crushed to death, according to NBC News. The videotape, which was unveiled by Mercy For Animals at a news conference in Los Angewww.foodlogistics.com

Nestle SA said KitKat will become the first global chocolate brand to make all its products with sustainably sourced cocoa as the chocolate industry faces allegations of child labor in the supply of raw materials, according to Bloomberg. All KitKat bars will be made with cocoa accredited by independent third parties by the first quarter of 2016, the company said. That includes those made in the U.S., which are produced by license holder Hershey Co.

FLOG1015_8-11_SupplyScanEditorial_EM_LS_ES.indd 11

McDonald’s Commits To Cage-Free Eggs To meet consumers’ changing expectations and preferences, McDonald’s announced that it will fully transition to cage-free eggs for its nearly 16,000 restaurants in the U.S. and Canada over the next 10 years. The news follows other actions announced this year to source only chicken raised without antibiotics important to human medicine by 2017 and to offer milk jugs of lowfat white milk and fat-free chocolate milk from cows not been treated with rbST, an artificial growth hormone.

fee, and nutritional beverages for consumer markets, has entered into an agreement to acquire the Splenda low-calorie sweetener brand from McNeil Nutritionals, LLC, a subsidiary of Johnson & Johnson Consumer Inc. Splenda is the leading low-calorie sweetener.

Target Applies For Liquor Licenses For New Chicago Store Opening In October Target Corp. has applied for two liquor licenses for a store it plans to open in October in Chicago’s Streeterville neighborhood, according to USA Today. The company would not provide further details. While many Target stores already sell alcohol to take home, Target applied for both a package goods license and a consumption on-premises liquor license for its new store.

B&G Foods Inc. To Acquire Green Giant And Le Sueur Brands From General Mills Inc. Heartland Food Products Group To Acquire Splenda From McNeil Nutritionals Heartland Food Products Group, a global producer and marketer of low-calorie sweeteners, drink mixes, cof-

B&G Foods, Inc. will acquire the Green Giant and Le Sueur brands, leaders in frozen and canned vegetables, from General Mills, Inc., for approximately $765 million in cash, subject to an inventory adjustment at closing.

FOOD LOGISTICS

• OCTOBER 2015

10/5/15 1:52 PM

FOOD ON THE MOVE LOGISTICS TRENDS IN OUR INDUSTRY

(TEU), a standard measure for container cargo, in August—a 31 percent improvement over the prior-year period’s loaded imports. Oakland saw loaded import container volume jump 15 percent over last August to 82,492 TEUs. Major Atlantic and Gulf Coast ports of Charleston, S.C., Norfolk, Va., and Houston, Texas also saw improved import performance in August—a sign that this year’s peak shipping season could be one for the books.

West Coast Ports Report Surge In Import Trade The West Coast ports of Seattle-Tacoma, Wash. and Oakland, Calif. saw August import volumes rise in double digits over last year, according to The Wall Street Journal. The Northwest Seaport Alliance, which includes the ports of Seattle and Tacoma, received 113,972 loaded 20-foot equivalent units

lotte and Fayetteville, N.C.; Salt Lake City and Ogden, Utah; Nashville, Tenn.; Tucson, Ariz.; and Colorado Springs. Colo. Walmart said tests of online shopping in several cities currently underway — including Bentonville, Ark.; San Jose, Calif.; Denver, Colo.; and Huntsville, Ala. — indicated customers are demanding the convenience of online shopping, and Walmart’s huge store base provides the infrastructure to accommodate them.

Walmart Expands Click And Collect To Eight Cities Walmart is expanding its “click-andcollect” Internet grocery shopping model to eight new cities, with additional markets to be announced in coming weeks, according to Supermarket News. Walmart said service was launching this month in Atlanta, Ga.; Char-

DAT SOLUTIONS’ MONTHLY FREIGHT REPORT

Three-Legged Racers

ith harvest season winding down and the holidays still weeks away, profitable backhauls are harder to find. Instead of settling for a straight round trip between Points A and B, you may be able to improve loaded miles by adding Point C—a third leg that forms a higher-paying triangular route. Say you’re hauling a weekly van load from Chicago to Denver. You need a backhaul to Chicago but that Denver-Chicago lane doesn’t pay much. Ordinarily, you want to construct a triangle that adds at least 250 miles, compared to the straight roundtrip, because it boosts your total number of paid miles even when the rate is not substantially better than the original backhaul. On your load board, choose “Denver” as the origin and look up loads from Denver to markets that are 250 to 1,000 miles from Chicago. A big geographic radius will yield a lot of results. Sort and analyze them to find the best “Point C” back to Chicago. Ultimately, the route you choose must allow you to comply with HOS limits, your daily mileage goals, and any contractual obligations you have. For example, Rapid City, S.D., is hot right now for vans, with a load-to-truck ratio of 6.7 (during the week of Sept. 13 to 19). If you can fit it into your schedule, find a load from Denver to Rapid City and another one from Rapid City back to Chicago. You’ll add more than $1,000 to your total trip revenue, with an increase of 30 cents per mile to an average of $1.84 for all loaded miles. Markets with a lot of outbound freight and a relatively high load-to-truck ratio are likely to have higher rates. If your load board has rate and demand indicators, look for the actual rates

OCTOBER 2015

• FOOD LOGISTICS

FLOG1015_12-15_FOM_EM_LS_ES.indd 12

Sept. 13-19, 2015 Trihaul Route: Van

Point-to-Point Lane

Miles

Rate/Mile

Total Pay

Outbound

A to B

Chicago to Denver

1,014

$2.07

$2,099

Return Leg

B to A

Denver to Chicago

1,014

$1.01

$1,024

Round Trip Overview

2,028

$1.54

$3,123 $2,099

Trihaul Route

A to B

Chicago to Denver

1,014

$2.07

B to C

Denver to Rapid City

410

$1.60

$656

C to A

Rapid City to Chicago

912

$1.68

$1,532

Trihaul Overview

2,336

$1.84

$4,287

Trihaul vs Round Trip

+ 308

+ 30 cents

+ $1,164

being paid by brokers in those lanes for the week, plus historical rate trends (they should go back at least one year plus a month for proper perspective). This information will help you to identify a handful of cities that are top candidates for the third point of your new triangle route. Now look at outbound loads from your top two “Point C” options, and evaluate the market conditions that determine rates—or the rates themselves, if your load board has this feature—on the second leg of your return trip. List your revenues and costs for the two or three triangle routes and compare them to a straight round trip. You can use the example in the sidebar or design a spreadsheet tailored to your specific operation. Once you have it set up, you can re-use the spreadsheet to analyze other routes quickly and efficiently. Mark Montague is industry rate analyst for DAT Solutions, which operates the DAT network of load boards and RateView rate-analysis tool. He has applied his expertise to logistics, rates, and routing for more than 30 years. He is based in Portland, Ore. For information, visit www.dat.com. www.foodlogistics.com

10/5/15 1:05 PM

www.foodlogistics.com

FLOG1015_12-15_FOM_EM_LS_ES.indd 13

FOOD LOGISTICS

• OCTOBER 2015

10/5/15 1:05 PM

FOOD ON THE MOVE LOGISTICS TRENDS IN OUR INDUSTRY

Transplace Acquires M3 Integrated Transplace, a provider of transportation management services and logistics technology, has acquired M3 Integrated, a 3PL with strength in the packaging, chemical and advanced materials sectors. This acquisition expands Transplace’s vertical expertise and geographical reach, and further supports the company’s commitment to strategic growth in order to meet the supply chain needs of its growing customer base. Terms of the transaction were not disclosed.

XPO Logistics, Inc. will acquire Con-way Inc. The transaction will enhance XPO’s range of supply chain solutions by making XPO the second largest less-than-truckload (LTL) provider in North America, and will expand the company’s global contract logistics platform. XPO will also capitalize on synergies from the combination with Con-way’s managed transportation, truckload and freight brokerage businesses. All of the acquired operations—Con-way Freight, Menlo Logistics, Con-way Truckload and Con-way Multimodal—will be rebranded as XPO Logistics.

7-Eleven Partners With DoorDash On Home Delivery 7-Eleven, Inc. and DoorDash announced a partnership to provide on-demand delivery from participating 7-Eleven stores in five major metropolitan markets across the U.S. Customers in New York, LosAngeles and Chicago can order products from their local 7-Eleven stores with delivery service following in Washington, D.C., and Boston in the coming months. This marks DoorDash’s first partnership outside of restaurant delivery, bringing DoorDash one step closer toward reaching its goal of providing on-demand delivery across all types of local businesses.

FMC Delays Port Of Oakland Proposal To Assess Fees The Federal Maritime Commission (FMC) has requested additional information to a proposed agreement to authorize off-peak hours at the Port of Oakland. The 14

OCTOBER 2015

• FOOD LOGISTICS

FLOG1015_12-15_FOM_EM_LS_ES.indd 14

Image courtesy of SC Line.

XPO Logistics To Acquire Con-Way In $3 Billion Deal

SC Line has launched a new shipping service between Port Everglades, Fla. and Cuba.

SC Line Launches Shipping Service Between U.S. And Cuba

C Line has launched a new shipping service between Port Everglades, Fla. and Cuba, according to Seatrade, a maritime news source. The move follows a relaxing of sanctions that means cargo and cruise vessels no longer require a special license to ply between U.S. and Cuba. On Sept. 20, the SC Line vessel Caroline Russ berthed at Mariel in Cuba. It was the first call on a new service every 14 days linking Port Everglades, Fla. with Mariel and Santiago de Cuba.

request will delay the proposed amendment. The plan, dubbed OakPass, would assess fees to pay for terminals to operate an additional shift on Saturdays. FMC requested the information from the parties of the Oakland MTO Agreement, an agreement among five container terminals at the Port of Oakland.

announcement came during a recent media summit at Dunkin’ Donuts headquarters in Canton, Mass., where the company says delivery will be part of its forthcoming mobile app update. The new version of the “DD Perks” app is slated to launch next year, and will be available exclusively to current “DD Perks” members in one single, yet-to-be-named market to test at first.

Google Express Jumps Into Food Delivery Service

Dunkin’ Donuts To Offer Delivery And Curbside Pickup With Mobile App Dunkin’ Donuts plans to offer delivery and curbside and in-store pickup, according to delish.com, a food news service. This

Google is preparing to launch a produce and grocery delivery service in two cities, one of them in San Francisco, Calif., according to Fortune. The service will be powered by Google Express, which already delivers dry foods and other merchandise to customers, and it will partner with Whole Foods and Costco. The Google Express service will compete with Amazon Fresh, FreshDirect and Instacart. www.foodlogistics.com

10/5/15 1:05 PM

T270 Class 6 / T370 Class 7 18,000 and 20,000 lbs. front axle options now available for the T370

NEW K270 Class 6 / K370 Class 7

Build your reputation with The World’s Best. For Beverage Delivery Business » Quality: Premium Kenworth quality built into every custom Medium Duty truck » Reliability: PACCAR PX-7 or PX-9 engines with ratings to meet all of your powertrain requirements » Efficiency: Built to maximize beverage delivery » Durability: A robust chassis built to withstand the challenges of beverage service conditions » Low Lifecycle Cost: Lower operating cost, maximized uptime and proven performance » Superior Maneuverability: Up to 55 degree turning radius for tight spaces

Learn more and find a dealer near you at www.kenworth.com

New cabover features including: Fresh new front end styling and interiorFOOD plusLOGISTICS front air• disc brakes. OCTOBER 2015

www.foodlogistics.com

FLOG1015_12-15_FOM_EM_LS_ES.indd 15

10/5/15 1:05 PM

COOL INSIGHTS

S T AT E - B Y- S T AT E E C O N O M I C I M P A C T

How The Cold Chain Impacts The Economy

ost of us who make our living in the cold chain recognize the important role we play in society at large. Thanks to advances in food preparation, warehousing and delivery, more and better food is accessible to more people than ever before. Sometimes we have a tendency to assume that the millions of people who depend on us also realize the importance of the work we do. But does the public really understand just how important our role is? Do public officials who write the rules we must follow understand all of the things we do? AFFI steps forward The American Frozen Food Institute (AFFI) recently released a study designed to quantify the frozen food and beverage industry’s impact on the U.S. economy as well as its contribution to the economies of individual states and congressional districts. (See the chart at right.) The study found that our industry contributed $56 billion to the U.S. gross domestic product and accounted for 670,000 jobs in 49 states in 2012. Each job in our industry supports 3.35 jobs elsewhere in the economy. Counting direct, indirect and induced economic effects, our industry’s total 16

OCTOBER 2015

impact on U.S. labor income was $35 billion. The study is important because it supports efforts to promote and improve our industry, especially in the area of government relations. The food and beverage industry is one of the country’s most strictly regulated industries. Government at all levels scrutinizes the production, storage and transportation of perishable products. Why the study matters The industry today faces serious challenges in the areas of food safety, transportation and education funding. A cooperative relationship with government has never been more important. Due to the capital-intensive nature of frozen food production, firms in our industry buy many goods and services from many sectors of the economy. Growers provide fruit, vegetables and other fresh foods. Frozen food companies then use refrigerated transportation, refrigeration and other machinery to create frozen foods. Producers of goods and services must secure labor, raw materials and other services to produce their product. The resources transferred to the owners of that labor or those raw materials and services are then spent to secure additional goods and services or inputs to the products they sell.

• FOOD LOGISTICS

FLOG1015_16-17_CoolInsights_EM_ES.indd 16

Employment

State

BY ELLIOT MARAS

MARAS

Labor Value Income Added ($ millions) ($ millions)

Contribution to U.S. Economy Outside of State

Alabama

3,420

107

161

100

Alaska

12,900

680

950

590

Arizona

1,640

114

Arkansas

9,000

410

630

390

California

49,000

2950

4200

2600

Colorado

5,500

285

410

250

Connecticut

1,460

123

Delaware

640

District of Columbia

Florida

17,500

890

1390

860

Georgia

8,700

439

690

430

Hawaii

604

32.5

Idaho

13,100

650

930

580

Illinois

26,000

1570

2350

1500

Indiana

5,900

267

396

250

Iowa

5,900

304

470

290

Kansas

5,000

238

362

220

Kentucky

8,000

325

580

360

Louisiana

3,540

155

248

150 220

Maine

6,000

229

355

Maryland

2,390

127

197

120

8,400

490

660

410 400

All of these secMassachusetts Michigan tors – from the Minnesota growers to the Mississippi electric utilities – Missouri benefit from U.S. Montana frozen food proNebraska duction. Nevada New Hampshire The AFFI study New Jersey quantifies all this New Mexico economic activity. New York And it details the North Carolina economic relationNorth Dakota Ohio ships between govOklahoma ernment, industry, Oregon household sectors Pennsylvania and taxes. Rhode Island The informaSouth Carolina tion is helpful for South Dakota Tennessee state and regional Texas planning agenUtah cies that design Vermont and develop Virginia transportation Washington West Virginia* infrastructure Wisconsin improvements, Wyoming which is crucial to the industry’s longterm success. The state and regional information is also helpful to economic development organizations. It can help them better understand how important the food and beverage industry is

8,500

417

640

11,500

610

910

560

5,260

165

266

160

6,700

345

500

310

0.25

0.4

0.24

1,950

105

152

1,140

790

35.5

6,500

368

540

330

770

11,600

650

930

580 360

6,300

297

580

1,690

157

25,400

1450

2260

1400

3,830

174

251

160

21,600

930

1390

860

15,900

840

1220

750

780

37.4

5,400

214

324

200

480

13,800

710

1180

730

29,200

1270

2000

1200

7,500

345

520

320

218

8.3

11.6

7.2

4,960

223

440

270

33,400

1760

2580

1600

0.96

1.32

20,300

1010

1450

900

Source American Frozen Food Institute

to their geographic market, and it can help them attract more companies to their market. The study also affirms the important role industry associations such as AFFI play in our collective well being. ◆ www.foodlogistics.com

10/5/15 2:04 PM

DELAYS CAN CHANGE EVERYTHING. That’s why Penske Logistics has customized supply chain solutions to help ensure deliveries arrive on time and in good condition. So you can keep your business moving forward. Visit gopenske.com or call 844-868-0818 to learn more.

FLOG1015_16-17_CoolInsights_EM_ES.indd 17

10/5/15 2:04 PM

C O V E R

S T O R Y

FOODSERVICE SUPPLY CHAIN CHALLENGES FOR THE PAST 3 YEARS

How Agile Is Your Foodservice Supply Chain? Today’s consumer demands immediacy, variety and freshness, requiring an integrated, collaborative foodservice supply chain.

Increasing volatility of commodity prices

95% 100% 91% 68%

Increasing customer price sensitivity

Increasing cost/pressure in logistics/ transportation

70% 73%

But assuring continued growth calls for a supply chain that can meet consumer demand for more diverse products without compromising foodservice providers’ ability to meet stricter safety rules. And in the face of rising commodity costs, higher transportation expenses, increasing labor costs and the need for more sophisticated management tools, this is not a small order. In an effort to understand how well the foodservice supply chain is equipped to handle these challenges, Downers Grove, Ill.-based HAVI Global Solutions (HGS) and Chicagobased Technomic Inc. partnered on a survey to assess the state of the U.S. foodservice supply chain. From the results of

this survey, researchers assessed the supply chains’ capabilities and developed metrics to allow individual supply chain companies – operators, distributors and manufacturers – to improve their performance in today’s rapidly changing industry. The survey did not address the supply chain in a vacuum; researchers questioned foodservice companies on all business concerns. The top three business concerns were cost-related; commodity cost pressure, commodity price volatility and customer price sensitivity. Logistics ranked number four. Logistics, however, is the first of these areas where foodservice companies can exert any control. More than three-quarters of all chains said “increasing cost/

• FOOD LOGISTICS

FLOG1015_18-23_CoverStory_EM_ES_LS.indd 18

84%

68%

Growing exposure to regulatory requirements

50%

73%

37% 50%

82%

26%

Increasing volatility of customer demand

40%

64% 58%

Increasing complexity in supplier landscape Leader

90%

73%

(e.g. inflation, interest rates, markets)

he U.S. foodservice industry has a promising future. Americans are increasingly opting for immediate consumption food, which is why traditional food retailers have introduced prepared meals, blurring the lines between retail and foodservice. The National Restaurant Association estimates 2015 foodservice sales are on track to post a 3.8 percent YOY gain.

OCTOBER 2015

100% 100% 100%

Increasing financial volatility

BY ELLIOT MARAS

Increasing commodity cost pressures

40% 45% Average

pressure in logistics and transportation” has been a significant challenge for the last three years. The study noted that fuel price declines will help in at least the short term. But there are other logistics costs to consider. These include wage inflation caused by driver shortages, shortfalls in rail capacity, and degrading infrastructure.

The supply chain as a competitive tool When asked to list their major business challenges, supply chain executives cited the ability to predict the impact of new menu introductions, price changes and limited time offers (LTOs). The companies with less mature supply chains found these challenges more difficult.

Source: Technomic

Laggard

One of the survey’s key findings is that foodservice companies with more mature supply chains tend to have greater topline performance. And while this finding won’t surprise anyone, it comes with a caveat. Companies active in the fast food segment – even those with “mature” supply chains – were unable to deliver high performance. This is due to the challenges of heightened competition, changing customer preferences, geographical saturation and demographic changes. Younger chains, many of them in the fast-casual sector, are among the fastest growing despite having lesser supply chain capabilities. This is because consumer demand for their offerings is so strong. www.foodlogistics.com

10/5/15 1:16 PM

–collaborative, co-creation model – it will present a sub-optimal value proposition to consumers of the foodservice occasion as the preferred choice.”

Supply chain partners respond

Dot Foods readies products in a distribution center for full truck load delivery. Dot Foods

Therefore, while having a mature supply chain is important to achieve top-line results, it does not guarantee top-line results. Changing market conditions also have a bearing on performance. Another key finding is that collaboration among the supply chain, culinary and marketing departments is becoming more critical to improving performance. Key elements are: collaboration culture and frameworks; forecasting sophistication; and near-real-time visibility into changing conditions. The HAVI study identified five levels of supply chain maturity. As companies move through the five stages, their processes integrate more. And as collaboration increases— www.foodlogistics.com

FLOG1015_18-23_CoverStory_EM_ES_LS.indd 19

with internal functions like marketing and finance and with external partners such as suppliers and distributors—the supply chain evolves to encompass more capabilities. The largest and most mature supply chains have greater buying power and tend to have more capable supply chain organizations, the study notes, “but it is not at all certain that these chains are agile enough to meet the demands of the next decade. While the big chains’ supply-chain managers can check off an impressive list of capabilities, we’re seeing a paradigm shift in the definition of supply chain maturity; the drive to success is no longer focused on cost, but on collaboration, agility and adaptability.”

The Hale Group, a Danvers, Mass.-based foodservice consultancy, honed in on the importance of collaboration within the foodservice supply chain in a recent report to the International Foodservice Manufacturers Association. “While the operator has the primary responsibility for creation of value and demand, the successful foodservice operators recognize they do not and cannot have all the insights, innovation, knowledge and know– how to operate successfully without strong, knowledgeable supply chain partners,” the report notes. “So the foodservice industry recognizes the best practice is a more collaborative, co-creation model. Unless foodservice adopts this best practice

Food Logistics uncovered several recent examples of collaboration among food supply chain partners. Butterball, a Garner, N.C.based turkey producer, has been preparing pallets in its own warehouses so foodservice customers can cross dock. “We’re doing more and more DSD preparation for the foodservice carrier,” says Daniel DiGrazio, senior director of logistics. This includes placing completed barcodes on the pallets before they leave Butterball’s facilities. Nicholas & Co., the Salt Lake City, Utah-based broadline foodservice distributor, has been stacking raw chicken in dedicated pallets rather than mixed pallets for some customers as an added safety measure, says Angel Garcia, director of operations and building facilities. This exceeds the required HACCP protocol. “You’re basically isolating that product,” Garcia says. “The best in class collaborate with all supply chain partners,” says Cullen Andrews, vice president of national accounts at Dot Foods, Inc., the Mt. Sterling, Ill.-based food redistributor, which consolidates less-than-truckload (LTL) quantities for distributors. “This includes manufacturers, redistributors, and distributors. When they take a collaborative approach, there tends to be more information shared among business partners, which leads to a reduction in waste (cost) and better service when the product is at the right place at the right time at the right cost. In general, it is a more

FOOD LOGISTICS

• OCTOBER 2015

10/5/15 1:16 PM

quality supply chain.” A better integrated supply chain can also help operators respond to the long-standing challenge of new product introductions. “We are involved all the time with LTOs (limited time offers),” says Cullen. “We collaborate with the national account operator, distributors, and suppliers to make sure everyone is on the same page on supply chain execution of the launch based on the forecast.”

Centralized buying continues to grow Bill Hale, CEO of the Hale Group, points to centralization of operator purchasing power as one of the biggest factors facing today’s supply chain. Centralized buying power can favor the supply chains with greater resources, he says, but only if those supply chains utilize their resources. Both Hale and HGS agree the level of supply chain maturity does not depend on an organization’s size. Within the total foodservice industry, Hale’s research indicates purchasing has been less centralized in commercial foodservice than in other segments such as lodging, institutional, government, health care and business and industry. However, centralized purchasing continues to grow for all segments, and by 2020, Hale claims it will account for 79 percent of all foodservice buying, a 10-point gain over where it stands today. Centralized buying entities include chain operator buying organizations, large independent operators, institutions, government, and group purchasing organizations (GPOs). Among these, chain organizations represent half of the volume with GPOs accounting for slightly less than half. As operator consolidation con20

OCTOBER 2015

tinues, purchasing decisions move further away from the point of service delivery. This raises the bar for supply chain efficiency. “The distributor has less

Dunkin’ Donuts’ Buying Group Ties Product Sourcing To Supply Chain

uluth, Ga.-based National DCP, LLC (NDCP), a nationwide supply chain management organization for Dunkin’ Donuts franchisees, provides an example of how an established operator sourcing group for a mature brand can enact organizational changes to improve efficiencies and become more profitable. The organizational changes allowed the company to invest in technology to improve its supply chain. NDCP formed in 2012 following the merger of five different operating companies to support Dunkin’ Donuts’ expansion plans. By incorporating product sourcing into the mix, NDCP has been able to deploy a “farm to fork” supply chain that has saved members more than $200 million in product costs since the company formed, according to CEO Scott Carter. By integrating product sourcing, NDCP has improved profitability and invested in technology that has provided more value Scott Carter says sourcto customers. For a mature brand, this has ing makes a difference. been especially important, Carter says. Without the sourcing function, a distribution company is limited in its ability to improve its efficiencies and provide value-added services, Carter says. Distribution companies typically are not involved in product sourcing and can constantly struggle to take cost out of their operations. “There’s only so far you can go before you run into the investment barrier,” he says. “Distribution becomes a secondary thought, so you end up with food costs that are elevated,” Carter says. “I don’t see how the system can remain healthy without attaching sourcing to it. When brands have sourcing and the distributor doesn’t participate, the brand sees the distributor as a commodity.” NDCP has improved the company’s food costs by 40 percent in some cases and is delivering the same improvement in profit margin, Carter says. “We create a little bit of healthy tension between marketing and supply,” he says. “Marketing calls the shots and supply has to go fulfill the request.” A more efficient supply chain has also played an important role in the company’s improved performance. “Project Freshstart” is a technology and business process transformation initiative that has involved changing all of NDCP’s systems, technology infrastructure and business processes in a short time frame. Using a new online ordering system and back-end functions, the project has improved website functionality, invoice accessibility, product availability and inventory management. One noticeable result was improved on-time deliveries. ◆

• FOOD LOGISTICS

FLOG1015_18-23_CoverStory_EM_ES_LS.indd 20

influence on what is to be purchased,” says Hale. “This decision is made by an entity outside the local market. ‘I as a distributor’ am becoming more

of a logistics provider than a wholesaler.” But Hale is quick to note that this does not lessen the distributor’s role in the supply chain. As distribution costs rise, he says, the need to deliver this function efficiently becomes more important.

GPOs continue to play a role GPOs – buying groups that represent operators but are independent entities – have been a topic of debate since they began making a foray into the commercial foodservice channel two decades ago. “They (the GPOs) are an agent for change in the channel, and they are growing,” Hale says. Food companies interviewed by Food Logistics gave mixed views on the level of GPO activity in the commercial foodservice segment. To the extent that they are involved in the segment, GPOs bring another player to the supply chain. Hence, they increase the importance of collaboration within the supply chain. While some supply chain executives believe fewer players make for a more efficient supply chain, others caution against generalizations. Redistributors that consolidate LTL shipments into full truckloads – an additional supply chain player – have grown over the years because of the efficiencies they bring to the supply chain. Any centralized buying group, be it a GPO or chainoperated buying organization, exerts a certain amount of control over the distributor and can influence their margin www.foodlogistics.com

10/5/15 1:16 PM

Is your business exactly the same as your competitor’s business? Do you have exactly the same processes and procedures in place? Of course not! Your business is unique to your organizational style and the team that runs it. Developing a food safety program that allows you the flexibility you need within your daily routine, yet meets the criteria of your customers, FSMA, GFSI, and your internal culture is probably very important to you. Choosing a standard that provides practical and flexible, yet strong methods of meeting safety requirements is as important as meeting the requirements themselves. With the right standard, you get to choose how the standard operates within your walls, how your team culture is influenced to provide more efficient and safer processes.

The implementation of the right standard, a flexible standard, provides value to your organization. If you are not a food processor, why would you put food processing criteria to work in an environment meant for storing and distributing or transporting food? Building a strong food safety program for your warehouse, distribution, or transportation organization is critical to your customer’s needs, and to your ability to ensure the delivery of a safe product. Why not build a program that suits you – as you are today, and not how someone else wants you to be! When you select a standard, select one that works for you. But consider the proven, published benefits of each standard before you choose. And choose a standard designed for your business!

Global Food Safety and Quality Standards IFS Family of GFSI Benchmarked Certification Standards for the food supply chain

IFS Food

IFS Logistics

IFS PACsecure

IFS Broker

IFS safety and quality standards are global leading standards accepted anywhere GFSI is requested. »Certification to the IFS standards go above the low bar of regulatory compliance to improve product quality and safety and promote brand protection.« The Acheson Group – from a comparison of IFS standards to Existing and Proposed FSMA Regulations

Learn more by visiting our website and downloading our free standards. Join our group on LinkedIn at IFS Food.

FLOG1015_18-23_CoverStory_EM_ES_LS.indd 21

www.ifs-certification.com

10/5/15 1:16 PM

on the business. But at inventory, Varga says. For more information: the same time, Hale says Lineage Logistics, CONSOLIDATED DISTRIBUTION CORP., cdcsupply.com the centralized buying the Irvine, Calif.THE HALE GROUP, halegroup.com organization brings more based 3PL, has a food HAVI GLOBAL SOLUTIONS, havigs.com predictability to the disredistribution operaINTERNATIONAL FOODSERVICE DISTRIBUTORS ASSOCIATION, ifdaonline.org tributor. tion with dedicated INTERNATIONAL FOODSERVICE MANUFACTURERS ASSOCIATION, ifmaworld.com By working together, all DCs. The service saves LINEAGE LOGISTICS, lineagelogistics.com parties can improve a supfoodservice operators NATIONAL RESTAURANT ASSOCIATION, restaurant.org ply chain’s efficiency, to and retailers the inefTECHNOMIC, technomic.com everyone’s benefit. Scott ficiencies of using LTL Saunders, HGS senior shipments, reduces vice president of supply chain chasing Group in Cherry Hill, tor still plays a role in the GPO administrative work, cuts waste integration, points to instances N.J. But for gaining high volmodel. Foodservice operator and lessens dock congestion. where either a distributor or ume contracts, he finds selling members of the Delaware Val“We can consolidate that a GPO identified redundant to distributors is more effective. ley Purchasing Group send product at our redistribution SKUs and removed cost from Jonathan Del Re, owner of their orders to Sysco Corp., facilities and send it to multiple the supply chain. Lacas Coffee Co., says he has the GPO’s foodservice distribudestinations,” says Tim Smith, Lacas Coffee Co., a more control over his relations tor member, for delivery. They executive vice president of sales Pennsauken, N.J.-based roaster with customers when he sells can also buy Sysco products and business development. specializing in specialty cofto them through GPOs. But not under contract with the “We can move smaller quantity fee for restaurants and offices distributors bring him more volGPO at Sysco’s regular price. items more efficiently because nationwide, finds GPOs helpume and more customers. He they’re consolidated with faster ful for his “direct” sales says it is difficult to say which Redistributors continue moving items.” accounts. The company works arrangement is more profitable. to play a role The traditional foodservice with the Delaware Valley PurTo Hale’s point, the distribuRedistributors, meanwhile, and retail distributors also continue to play an important benefit from the redistributor role in the supply chain. since like the operator, they’re The growth of ethnic, organnot warehousing slow-moving ic, non-GMO, gluten-free and SKUs, Smith says. other specialty SKUs makes A key difference between the redistribution an important redistribution service and the he quality of a supply chain’s data is crucial to its ability to operresource for all supply chain consolidated deliveries Lineage ate efficiently. Quality includes accuracy, timeliness and uniforstakeholders. does for retail customers is that mity across the supply chain. These factors improve the speed “It is important for operaunder redistribution, it actually and accuracy in traceability of information throughout the supply tors and distributors to stay on takes ownership of the product. chain. Many foodservice supply chains are focusing on uniform data trend, and as consumers are networks, says Eric Pfeiffer, HGS senior director of North American asking for healthier foods and Investment needed in supply chain integration. There are subscription data systems such ethnic foods, as an example, tools and training as GS1 as well as independent systems companies are using. those categories can be difficult One of the challenges supDot Foods, the Mt. Sterling, Ill.-based redistributor, has taken a leadership role with its Dot Expressway, which uses the GS1 Global to source, which creates supply ply chains face is prioritizData Synchronization Network (GDSN). Suppliers provide item attrichain challenges to make them ing investment in new tools, butes including case dimensions and weight, marketing details and available in the market,” says human resources and training. nutritional information to the Expressway through the GDSN, giving Dot Foods’ Andews. Mark Allen, executive direcdistributors access to that information. Core item data is currently Lemont, Ill.-based Consolitor of the International Foodavailable for 70 percent of Dot’s product inventory. Seventy percent dated Distribution Corp. conservice Distributors Associaof the items with published core item attributes also have marketing solidates LTL shipments into tion, says the driver shortage and nutritional data accessible. full truckloads from warehouses remains one of the biggest chal“Time is so valuable in the foodservice industry, and this (Dot in Chicago, Dallas, Texas and lenges the industry faces, along Expressway) resource allows us to get immediate answers for our Atlanta, Ga. Focusing on slow with the need for executive customers,” says Dana Krajacic, sales training manager at Dupo, moving products, the comtraining and the need for skills Ill.-based Kuna Foodservice. “Having this data available at any time without having to rely on someone else to provide the information is pany handles ambient and to enable companies to utilize extremely conducive to a sales representative’s lifestyle.” frozen item that have longer new tools. Increasing government regulations also bring the need for more shelf lives, says Thomas Geza New training and skills efficient data management. Varga, director of supply chain are certainly necessary as the Because new food safety rules will require end-to-end product logistics. foodservice supply chain faces traceability throughout the supply chain, companies will need to One of the greatest benefits the need to adopt more collabdeploy warehouse management systems (WMS), says Scott Saundistributors gain from redisorative processes to meet new ders, HGS senior vice president of supply chain integration. tributors is not tying up excess market realities. ◆

Uniform Data Improves End-To-End Supply Chain Visibility

OCTOBER 2015

• FOOD LOGISTICS

FLOG1015_18-23_CoverStory_EM_ES_LS.indd 22

www.foodlogistics.com

10/5/15 1:16 PM

Pallet Flow

Push Back

Wide Span

Selective Rack

Cantilever

Warehouse Racking

SolutionS 8 7 7. 6 3 2 . 2 5 8 9

FLOG1015_18-23_CoverStory_EM_ES_LS.indd 23

www.interlakemecalux.com 10/5/15 1:16 PM

F E A T U R E

Cargo Safety & Security

Industry executives highlight internal and external risks in the food supply chain.

BY RICHARD KOLBUSZ, DON HSIEH AND WES MAYS s a sector, food and beverages are particularly vulnerable to theft. Indeed, the sector ranks as the number one target for thieves according to companies that monitor such activity. For consumers that unknowingly buy goods from retailers who procure food or beverage products from the gray market, the risks are compounded when safe handling, including temperature monitoring, are neglected. Following are three perspectives from industry executives that shed light on current trends and developments relating to cargo theft and how best to combat the risks — Lara L. Sowinski

Taming the appetite for food theft in the supply chain BY RICHARD KOLBUSZ

According to FreightWatch International’s U.S. Cargo Theft Intelligence Report Q2-2015, food and drink has been the most frequently stolen type of freight since 2008. Given that food and drink products are difficult to recover because of how quickly they can go to market, they are “hot commodities.” Despite their propensity for theft, however, they can be safely transported, warehoused or protected from contaminants if proper safety protocols are in place and red flags identified in the supply chain. Not only does food and beverage cargo theft affect the bottom line for the growers and manufacturers of these products, but also the consequences 24

OCTOBER 2015

can be deadly for the general public. KOLBUSZ Imagine that a truck carrying cases of baby formula is intercepted and a number of boxes are stolen, tampered with and repackaged with a different substance. The potential for disaster for a number of babies and their families can be unimaginable if this formula is somehow placed back in the legitimate supply chain. For freight forwarders, security should be paramount at all times, en route to long distances, during local shipments, at the warehouse and in containers.

Securely going the distance For companies importing or

• FOOD LOGISTICS

FLOG1015_24-27_CargoTheft LS_EM_ES.indd 24

exporting any type of prepackaged food item or perishable, it is necessary to partner with a logistics company that has technology in place, such as Global Positioning System (GPS) and electronic security seals, monitoring the movement of the goods at point of origin, en route and at final destination. Freight forwarders should be able to monitor the movement of all of its trucks, in addition to having checkpoints during long distance trips to ensure no tampering of the cargo has taken place. Pre-alerts before arrival at final destination are also a best practice that helps ensure safe arrival. High-tech monitoring systems should also be in place for both cargo traveling in ocean containers or via air freight.

Considerations for perishables For perishable food items, temperature control is necessary and is one of the most basic services a logistics provider should offer. A full range of services, including the proper conditions and compliance of perishables across the supply chain, prioritized space allocation, handling at origin and destination, sanitary inspections and quality checks, should be part of any reputable logistics company’s service offerings. Additionally, control of temperature, quantity and any type of damages throughout the transport should be alerted to the

customer. Some logistics companies may offer temperature control monitoring while the merchandise is in their possession, but often some companies use third parties to finish the final leg of the cargo’s journey and may not have the same temperature control processes or systems in place to alert if cargo has been delayed, and the cold chain has been compromised. It is necessary to work with a partner that has full visibility of its third parties or the vendors it works with to ensure they are also complying with critical established processes.

Warehousing: where risks may lie A warehouse can be a place of several security risks, particularly when storing consumer items, such as food. Given its high propensity for theft, sometimes these products are at risk of “systematic robbery,” wherein warehouse employees steal the items from the cargo housed in the warehouse in small quantities. To avoid this type of theft, it is of the utmost importance that the designated logistics company has a merchandise auditor in place to validate the quantity of the merchandise upon receiving it and when it leaves the warehouse. All logistics companies should have rigorous, detailed inspections of all cargo received. It is also important to have protocols in place for when any of the warehoused www.foodlogistics.com

10/5/15 2:24 PM

products expire or are damaged, so that the food company is alerted and provides authorization for its proper disposal. There are times when a warehouse disposes of food, and thieves ransack garbage dispensers located outside of the facilities to salvage the products and sell them on the black market or introduce them into stores. Other risk factors can include theft of products for the use of their packaging to store false or impostor products. The careful and rigorous hiring of warehouse personnel and supervisory processes are necessary to maintain the integrity of the brands being shipped.

Contamination Food contamination is when a harmful chemical or microorganism, such as a bacteria or toxic substance, become present in the food and can go on to cause consumer illness. The

contamination can occur in a number of ways: at the food processing plant, during shipment or at the warehouse. It is extremely important logistics companies understand the specific storage requirements of the food products, as well as which can be stored together or separately. In the case of asparagus that is warehoused in a cold room, it is important for a logistics company to know it cannot house this vegetable in close vicinity to flowers. Asparagus is one of the most sensitive vegetables to ethylene gas which is generated naturally by all vegetation, in particular that which is cut or decaying. If not properly stored, cross contamination can occur and ultimately cause premature decay of the asparagus. Other contaminants can include pests, including rats or ants that can reside in a

warehouse, container or truck environment. Other pests such as weevils, which are found in fields or gardens, can be transported in a shipment with grains or seeds, and quickly spread to other cargo if not properly inspected or if the facility does not conduct proper sterilization. Also, transport vehicles, such as trucks and containers, need to be thoroughly inspected before loading of all cargo.

Distribution of food in high risk areas The journey for food can at times be a dangerous one if the cargo has to move through an area of high crime or political instability. In some parts of the world, cargo is often accompanied 100 percent of the time with armed guards or in convoys to ensure safety in numbers. Through in-depth field studies, freight forwarders can obtain

information on high-risk areas of high extortion and crime, as well as routes where upcoming protests are to take place. The job of the freight forwarder is to establish emergency protocols and ensure their staff and drivers are fully aware of the protocols and informed of any upcoming route deviations and changes. The risks of food theft and contamination can be great in the supply chain, making it necessary for companies to thoroughly inquire about their potential logistics provider’s safety protocols and warehousing options. End-to-end visibility, safety guidelines, certifications and expertise are key to choosing the right logistics company that can get your food and perishables safely to consumers’ table. Richard Kolbusz is the head of security and operational resilience for DHL Global Forwarding, Americas region.

DO MORE WITH YOUR free TIME

MAKE your DISTRIBUTION MORE EFFicient

PURKEYS.NET/EBOOK www.foodlogistics.com

FLOG1015_24-27_CargoTheft LS_EM_ES.indd 25

FOOD LOGISTICS

• OCTOBER 2015

10/5/15 2:24 PM

As cargo theft rises, a proactive food defense strategy is more important than ever BY DON HSIEH In 2014, FreightWatch International recorded 794 cargo thefts throughout the U.S., with an average value per theft of $232,924, a 36 percent increase in value over 2013. For the fifth year in a row, food and beverages was the most common type of product stolen, accounting for 19 percent of the total. Food and beverages HSIEH are easy targets for criminals because they lack serialization used for identification purposes on products like electronics. Without any form of identification but with well recognized brands, they’re easier to resell through legitimate channels, making them much more profitable. Thieves

make as much as 70 cents per dollar when selling stolen food or beverages as compared with just 30 cents for electronics. Since these are the most lucrative products for thieves, food and beverage companies should ensure they have a proactive and comprehensive food defense strategy in place to monitor and protect their products beyond the four walls of their facilities. Attacks can happen anywhere, instigated by anyone in the chain—including employees, so companies must control access and maintain visibility throughout the supply chain. The highest value thefts are within inventory-rich facili-

π SHIPPING SUPPLY SPECIALISTS

COLOR CODE IT REDUCE THE RISK OF CROSS-CONTAMINATION

COMPLETE CATALOG

1-800-295-5510 uline.com

ORDER BY 6 PM FOR SAME DAY SHIPPING 26

OCTOBER 2015

• FOOD LOGISTICS

FLOG1015_24-27_CargoTheft LS_EM_ES.indd 26

ties and are the most prone to inside jobs. Once a shipment leaves the facility there are many risks and vulnerabilities along the journey to its destination. Some thieves pose as legitimate parties hired to pick up cargo at a dock so identification of who makes pickups and deliveries must be authenticated. Others exploit idling unattended trucks and simply

hijack the vehicle so truck movement must be monitored and controlled. If theft occurs and a product is compromised due to improper refrigeration or sanitization, for example, consumers may suffer health repercussions and your organization will face costs associated with recalls and litigation that can impact future revenue and market value. The best way

Cybersecurity Risk for Fleets BY WES MAYS

veryone seems to be most concerned about terrorism...and while that is obviously a concern, I think the biggest and most widespread threat is going to be true cyber security—the silent type that is difficult to detect. The theft of corporate information such as routing plans, manifests, logistic information, customer lists, costing information, fuel costs, and other competitive information can be used to “win” business using that stolen information for competitive advantage. The victims probably won’t even realize it. There are multiple layers of network, telematics and vehicle security in place. For obvious reasons we are not going to disclose what that is and how it works. Fortunately, for fleets and commercial vehicles, the biggest safeguard is that the driver is still in control of the truck. It is also worth pointing out that most telematics systems allow for remote programming of the telematics system, so any security breaches can be remedied over the air, quickly preventing further exploits of the same attack. Clearly, the opportunity to hack into a truck depends on what type of equipment is installed. For example, the more control by wire systems there are, the more likely it is that a system can be compromised, thus more care must be taken to ensure safety and security. Consider the old emergency brake design that uses a physical cable. This is purely a mechanical system. There are no electronic components, and so there is no electronic way to engage the brake. Does that alone make the system secure? Not necessarily; you could conceivably crawl under the vehicle, find the cable and cut it to disable the function, or add tension to it to force engagement of the brake. So even non-electronic systems are hackable, albeit by different methods. Modern electronic vehicle technology just makes the factors more complex. The sub systems themselves on a vehicle may take action based on inputs from another subsystem on the vehicle. For example, a collision avoidance system may have the need to engage the braking system. Once the braking system is designed to take electronic input from another subsystem on the vehicle, that exposes M AY S an attack point. Now consider the complexities of a vehicle network and telematics devices that essentially connect the vehicle to the Internet and you start to see the potential safety and security threats to a vehicle. Ultimately, security and safety have to be designed into the vehicle and the telematics systems need to be included up front in cooperation between OEMs, tier 1 suppliers, telematics providers, and the owners/drivers that add other aftermarket equipment. The responsibility for fleet cyber security is going to be everyone’s.

Wes Mays is director of OEM product innovation for Omnitracs. ◆ www.foodlogistics.com

10/5/15 2:24 PM

to avoid these safety, financial and brand reputation threats is to stop cargo theft before it happens by building a proactive food defense program—and that starts with the Four A’s of actionable food defense: assess, access, alert and audit. First, assess the risks throughout the whole supply chain. Start by conducting a vulnerability assessment of critical control points. Think about points where someone could attempt adulterating a product—both inside and outside your walls. Second, organizations should consider who has access to

critical control points. Utilize physical identity and access management solutions to restrict access to particularly vulnerable areas within a facility to only authorized personnel. Securing of cargo in transportation should be a critical focus of a food defense program, as product could be stolen, diluted, or otherwise adulterated, and then sold, again causing risk. Next, continuously monitor critical control points to alert appropriate individuals of any instance of potential food adulteration. There are multiple ways for cargo thieves to access

products from the warehouse to deceptive pickups through in-transit cargo theft. By implementing a strict, multi-layered security process and advanced technologies such as integrated video, access control and radio-frequency identification (RFID) tags, many of these thefts are preventable. Lastly, organizations should audit operational and regulatory compliance to ensure and maintain best food defense practices and provide documentation of compliance to regulators. Several of the FDA’s Food Safety Modernization Act (FSMA) rules have started to be enforced and businesses will be required to document that they are following these types of

practices. The FSMA promotes the safety of the U.S. food supply by focusing on prevention, rather than reactive response. However, prevention is only as effective as the actual compliance processes put in place. Regular and random auditing using remote video technology can go a long way in confirming that appropriate preventative measures are in place and working. Implementing preventative controls built on actionable intelligence to protect the food supply chain is much more effective than reacting to an event after it happens. Don Hsieh is director of commercial industrial marketing for Tyco Integrated Security.

For more information: DHL GLOBAL FORWARDING, dhl-usa.com FREIGHT WATCH INTERNATIONAL, freightwatchinternational.com OMNITRACS, omnitracs.com TYCO INTEGRATED SECURITY, tycois.com

bIGGER IS BETTER

except when it comes to your fuel costs

PURKEYS.NET/EBOOK www.foodlogistics.com

FLOG1015_24-27_CargoTheft LS_EM_ES.indd 27

FOOD LOGISTICS

• OCTOBER 2015

10/5/15 2:24 PM

3 P L / R e f r i g e r a t e d

L o g i s t i c s

Cold Storage Capacity Rises To Meet Growing Global Food Demand Improving incomes in developing countries is driving demand for protein while the overall increase of fresh and frozen food in the market challenges cold chain providers. BY ELLIOT MARAS

he growing consumer demand for chilled and frozen food continues to challenge the cold chain as living standards rise worldwide and developing countries acquire a taste for protein. Setbacks, including port labor strikes, food recalls, etc., don’t even register on the global cold chain’s growth curve. The Global Cold Chain Alliance’s Global Cold Storage Capacity Report by the International Association of Refrigerated Warehouses (IARW) confirms the cold chain has been on a consistent growth curve, even during the recent recession, and the growth is expected to continue despite economic stagnation in some parts of the globe. (See chart below.) The challenges require management of a larger variety of temperature zones throughout the food supply chain. Consumer tastes continue to diversify as the world’s population becomes increasingly mobile and e-commerce gives people faster access to more food choices. In particular, the rising market for fresh, organic, antibiotic-free, non-GMO and gluten-free foods demand a more versatile cold chain. The need for food shippers to manage more types of food has unleashed new opportunities for cold storage and transportation providers. Most of the people at the starting point of the food supply chain – farmers and pro28

OCTOBER 2015

• Intermodal transport combines the economies of rail and ocean with the flexibility of trucks. Oddysey Logistics & Technology Corp. provides supply chain network and design.

90,000,000 80,000,000

WAREHOUSE SPACE IN GROSS CUBIC METERS

70,000,000 60,000,000

Public

50,000,000

Private

40,000,000 30,000,000 20,000,000 10,000,000

'55

Source: Global Cold Chain Alliance

'60

'65

'70

'75

cessors – lack the expertise and resources to manage the delivery of products to their destination points. For 3PLs and cold storage specialists, today’s “world is your oyster.”

Natural and fresh food expands “There is a growing consumer

• FOOD LOGISTICS

FLOG1015_28-33_ColdChain EM_ES_LS.indd 28

U.S. REFRIGERATED WAREHOUSES, 1955 TO 2013

'80

'85

'90

'95

'00

'05

'10 '13

demand for natural, fresher foods as opposed to shelf-stable or frozen foods,” says Eric Pfeiffer, senior director, North American supply chain integration at HAVI Global Solutions, the Downers Grove, Ill.-based supply chain consultancy. “In an effort to meet this demand, retailers and grocers have started

to offer fresher products and ingredients as options to consumers. This has led to new distribution requirements. “No longer is a three-zone temperature-controlled trailer sufficient to deliver products to restaurants and stores,” Pfeiffer continues. “Beyond the standard frozen, refrigerated and ambient temperature zone, there is an increased need to move and deliver products requiring temperatures warmer than refrigerated, yet cooler than ambient. Many fruits and vegetables fall into this category.” Cold storage and transportation providers concur the demand is in their favor. “We’re seeing more of that (new demand) being for chilled space,” says Daniel Cooke, www.foodlogistics.com

10/5/15 1:42 PM

director of marketing at Americold, the temperature-controlled storage and 3PL provider. With more diverse temperature requirements, storage facilities and trailers will need to start to encompass abilities to accommodate more temperature ranges if they want to take advantage of these trends. They are also looking to add more value-added services to help streamline the supply chain. Americold, for its part, has been providing wholesale customers aisle-ready pallets to make deliveries more efficient, and has further enhanced its supply chain control system to enable customers to trade inventory for information with significant cost savings for customers.. The Atlanta, Ga.-based company also recently enhanced its supply chain capabilities by integrating its WMS with Germanybased Software AG’s integration server. This gives customers access to their orders at every stage of the order lifecycle, from the time of customer creation to final delivery.

Turkey producer cites changing consumer demands “How are we going to address the demand variability of Millennial purchas-

• Super-insulated and refrigerated ISO tank containers move bulk food

ing profiles?” asks Daniel DiGrazio, senior director of logistics at Butterball, a Garner, N.C.-based turkey producer doing business in 45 countries. Millennials want to receive orders in 48 hours. “Distribution networks of the future will have to be more agile,” he says. The demand for antibiotic-free meat challenges the supply chain nowadays, DiGrazio says. “We have to be on the shelf quicker and more frequently. There is a trending in the market for those type of products.” Butterball continues to post rapid growth in both the retail and foodservice sectors, according to DiGrazio. Voorhees, N.J.-based United States Cold Storage (USCS) has become an important Butterball partner. DiGrazio thinks USCS’s consolidated shipments have improved efficiencies and delivered higher levels of customer satisfaction. He also gives USCS high marks for providing training to his employees when needed.

One of Butterball’s main goals is to provide visibility to customers throughout the supply chain. DiGrazio credits his 3PL partners for staying on the cutting edge of technology. He estimates that 70 percent of Butterball’s 3PL partners provide real-time temperature tracking. With technology creating more tools, DiGrazio is concerned about the ongoing need to invest in equipment. “I think it is going to be a very expensive market,” he says. The carriers Butterball uses have a variety of temperature recorders. In the future, he expects customers will want to be able to review these records over longer time periods throughout the supply chain. “We have all sorts of monitoring activities in our supply chain,” he says. “How do we harness this information and how do we turn it into a format that customers want to see?” Thanks to the professionalism of Butterball’s 3PL partners, food safety regulations are not his top of mind concern. He is

You can’t avoid bills

but you can AVOID DISRUPTIVE DOWNTIME

PURKEYS.NET/EBOOK www.foodlogistics.com

FLOG1015_28-33_ColdChain EM_ES_LS.indd 29

FOOD LOGISTICS

• OCTOBER 2015

10/5/15 1:42 PM

provider and 3PL, is also investing in third-party safety audits to assure customers of quality and safety. Murphy Warehouse has had two facilities certified by Safe Quality Food (SQF) Level 2 in its Minneapolis and Kansas City hoEi Foods USA, an Olivehurst, Calif.-based walnut processor, markets. The SQF certifioverhauled its energy managecation marks an upgrade ment system and has saved thousands over the American Sanitaof dollars. The business requires energy tion Institute (ASI) certiintensive refrigerated warehouses that fication that the company operate 24/7. has used in the past, says ShoEi reviewed its energy use after Richard Murphy, owner. installing a new refrigeration system Murphy became when it expanded its cold storage interested in SQF after space to 30,000 square feet, says a long-time customer Dwight Davis, director of plant operathat supplies ingredients tions. “We needed more cold storage because we are now handling a differto confection processors ent commodity in walnuts,” he says. made the suggestion. They installed an 80-hp compressor The growth of chilled refrigeration system. food has also fueled ShoEi originally engaged Cenergy demand for intermoPower, a Carlsbad, Calif.-based solar dal transport, notes Tom energy provider, after a competitive Finkbiner, CEO of Oversolicitation. When Cenergy Power saw land, Park, Kan.-based ShoEi’s energy profile, they suggested a Tiger Cool Express, combined solar-storage solution. which launched in FebruCenergy then partnered with Stem, a ary of 2014. “It (food) is Milbrae, Calif.-based solutions provider, to develop a combined solar-storage one of the faster growing intermodal commodities,” energy management system for ShoEi. In order to move to the preferable he says. Finkbiner sees energy rate class, ShoEi needed to stay 3PLs taking on a bigger below the qualifying maximum demand share of the nation’s food level of 500kW for one full year. shipments, a development Stem’s system also includes its Powthat recognizes food deliv- erScope software that monitors ShoEi’s ery as a highly specialized energy use in real time. The software service. But while 3PLs enabled ShoEi to understand the energy bring critical expertise impacts of specific equipment, identify to the supply chain, patterns, and make adjustments to smooth usage peaks throughout the day. Finkbiner also sees some Stem then installed a batterychallenges for shippers to based storage system. The software keep in mind. and battery work in concert to lower “We (carriers in genShoEi’s maximum demand: when the eral) are not talking software detects a spike in energy use directly to the owner of that would cause ShoEi to exceed the the goods,” he says. “You 500kW demand threshold, it automatialways risk missing a piece cally notifies ShoEi facility managers, of information that’s criti- who can then choose to reconfigure cal to the transit.” This operations and reduce demand. ◆ could include weight, temperature, delivery time or whether or not there are lumper fees involved in a delivery. “The more partners you get involved in handling shipments, the more potential for mistakes,” Finkbiner says. The movement of bulk food products is almost 100 percent outsourced to specialists, says Mark Casiano, senior vice president

Fruit Processor Reaps Savings In Refrigeration Costs With Solar Power

• The growth of chilled food has fueled demand for Tiger Gool Express’s intermodal transport service.

more concerned about motor carrier regulations and labor availability. USCS, for its part, uses a TMS system from Cary, N.C.-based MercuryGate International for its 3PL operation, says Keith Mowery, senior director of transportation and logistics at USCS.

Cold storage specialists invest in safety audits USCS is also one of several cold storage and 3PL providers that is investing in third party safety audits to assure customers that facilities are safe. USCS has BRC certification to ensure the quality and safety of products during storage and transport. Murphy Warehouse, the Twin Cities, Minn.-based cooler storage

OCTOBER 2015

• FOOD LOGISTICS

FLOG1015_28-33_ColdChain EM_ES_LS.indd 30

www.foodlogistics.com

10/5/15 1:42 PM

FLOG1015_28-33_ColdChain EM_ES_LS.indd 31

10/5/15 1:42 PM

port combines the economies of rail and/ or ocean with the flexibility of truck. This is especially important during these times of tight driver capacity. It is also a way for shippers to reduce their carbon footprint and green their supply chains,” he says. Lineage Logistics, the • Lineage Logistics uses high pressure processing Irvine, Calif.(HPP) to kill potentially harmful microorganisms in based 3PL, bottled coconut water at its Allentown, Pa. plant. recently began installing high of global sales and marketing at Danbury, pressure proConn.-based Odyssey Logistics & Techcessing (HPP) nology Corp. The company operates a machines and fleet of super-insulated and refrigerated, packaging equip6,340-gallon, ISO tank containers. Most ment at its Allen• Port Jersey customers are beverage companies needtown, Pa., and Logistics created ing the tight temperature control of their Mira Loma, Calif., locaa temperatureproduct(s) during transport. This fleet of tions. The capacity expancontrolled room ISO tanks delivers just that – temperaturesion follows an increase in for olive oil. controlled, logistics solutions for road, rail consumer preference for and ocean transport. clean labels and demand from companies “People are looking for alternatives to wanting to protect their brands, preserve OTR,” Casiano says. “This (intermodal serproduct condition and extend product vice) surely delivers that. Intermodal transshelf life. HPP is a postpackaging, nonthermal pasteurization method of killing potentially harmful pathogens using isostatic presNEW TRANSPORTATION & DISTRIBUTION sures of up to 87,000 psi. The flavors and REGULATIONS START SOON! other characteristics of products remain unaltered because HPP doesn’t use heat. The outlook for refrigerated and frozen food remains positive as global demand for protein and other perishable food grows. But the demand for fresh, natural and organic food calls on the cold chain to manage more temperature zones. Hence, the Call for a consultation with the experts at PLM cold chain must Trailer Leasing, the only company with nationwide locations dedicated exclusively to the leasing, invest in temperature rental, maintenance and fleet management of WWW.PLMTRAILER.COM management tools in 1- 877- RENT - PLM (736 - 8756) refrigerated trailers in the Cold Supply Chain. addition to increased storage capacity. ◆ 32

OCTOBER 2015

• FOOD LOGISTICS

FLOG1015_28-33_ColdChain EM_ES_LS.indd 32

New Jersey 3PL Creates TemperatureControlled Room For Olive Oil

ort Jersey Logistics, A Cranbury, N.J.-based 3PL, found a way to store olive oil in a temperature-controlled room without constructing permanent walls at its 700,000-square-foot, food-grade, public warehousing space. Olive oil, due to the temperature fluctuations during transit, changes color after it arrives from Italy. In order to regain its natural color, it must warm to 80 degrees F for a period of 24 to 48 hours. Typically, adding a temperaturecontrolled room requires installing permanent walls. “We were initially using an industrial vinyl wall to partition the space,” says Galo Panchi, facilities manager for Port Jersey Logistics. “Our heating expenses were through the roof.” Instead of permanent walls, Port Jersey used InsulWall from Elmhurst, Ill.-based Randall Manufacturing to create a heated room for olive oil, as well as additional cooler rooms. InsulWall’s interior insulation sandwiched between exterior vinyl forms a flexible, insulated wall, creating temperature- and humidity-controlled rooms. ◆

For more information: AMERICOLD, Americold.com CENERGY POWER, cenergypower.com HAVI GLOBAL SOLUTIONS, havigs.com ★INTERNATIONAL ASSOCIATION OF REFRIGERATED WAREHOUSES, gcca.org LINEAGE LOGISTICS, lineagelogistics.com ★MERCURYGATE INTERNATIONAL, mercurygate.com MURPHY WAREHOUSE, murphywarehouse.com ODYSSEY LOGISTICS & TECHNOLOGY CORP., odysseylogistics.com PORT JERSEY LOGISTICS, portjersey.com RANDALL MANUFACTURING, randallmfg.com SOFTWARE AG, softwareag.com STEM, stem.software TIGER COOL EXPRESS, tigercoolexpress.com

www.foodlogistics.com

10/5/15 1:42 PM

FLOG1015_28-33_ColdChain EM_ES_LS.indd 33

10/5/15 1:42 PM

SECTOR REPORTS

WARE HOUS E : RA CK ING S Y S TE MS

Inventory Costs Drive Need For Greater Storage Density

Considerations for controlling inventory costs: storage density, safety and sanitation. BY ELLIOT MARAS

ecause inventory represents one of the biggest costs in the food and beverage supply chain, material handling system providers continue to find ways to manage inventory more efficiently. As SKU proliferation, globalization, safety and sanitation requirements add costs to managing inventory, supply chain managers have to consider all options for improving this critical function. Food and beverage supply chain managers look at several factors when choosing inventory storage tools. A key consideration is improving storage density, along with minimizing product damage, protecting worker safety and ensuring product sanitation. “Historically, food and beverage customers have chosen structural steel systems over roll-formed steel systems due to the ease of cleaning structural steel systems,” says Mike Adducci, Midwest region area market manager at Chicago-based Interlake Mecalux. “That trend currently continues. However, that comes at a cost as well, as structural steel systems tend to cost quite a bit more per pallet position versus rollformed steel systems.”

Pallet flow and other options Pallet flow racking – in which pallets are loaded at the top end of a slightly inclined rack and glide safely at a controlled pace to the other side -- is ideal for products with expiration dates, Adducci says. Since it is a first-in, first-out system that allows for pre34

OCTOBER 2015

• FOOD LOGISTICS

FLOG1015_34-36_SecRptRacking_EM_ES_LS.indd 34

 Storax Ranger, a high-density storage solution, automatically circulates pallets on a shuttle system.  Orbis StackR pallets are designed for racking, improving storage density.

cise product turnover, the system particularly makes sense for freezer warehouses, food distribution centers and most any type of high-volume consumer goods. Push-back racking – which uses nesting carriages to store pallets up to five deep, providing multiple pick facings with high throughput – allows for efficient use of space without sacrificing product accessibility, says Adducci. There is no wasted space with push-back. Because of the increased depth of the system, push-back minimizes the number of aisles needed to access prod-

uct, creating a high-density, high-efficiency storage solution. Selective pallet racking – which provides direct access to every pallet in storage – offers versatility for warehouses that have wide varieties of product types, Adducci says. High volumes of a limited number of products will more likely require a double-deep system that has enough capacity to store two pallets deep by reducing the number of forklift access points. The double racking or back-to-back racking of the single-deep system allows forklifts easier access to a larger number of SKUs stored at half the pallet depth.

Mobile storage systems arrive High-density mobile storage systems are an option gaining traction in North America since they optimize space utilization and decrease energy demands. “Today’s cold storage warehouses need flexible, high-density storage solutions www.foodlogistics.com

10/5/15 1:45 PM

that unite efficient space utilization, direct inventory access, increased productivity, and reduced labor demands,” says Todd Jessup, principal at Charleston, S.C.-based Storax America/Flexspace. “Cold storage environments are energy dependent and cost-intensive environments to operate and build; facility owners and managers are seeking storage methods that maximize their ‘cube’ while trying to maintain immediate, unobstructed access to their products.” The Storax Ranger automatically circulates pallets on a shuttle system. The system circulates pallets by hand-held remote control or WiFi PDA. Utilizing photocell technology, the Ranger detects and positions itself beneath a pallet to lift and move pallets within a deep lane tunnel rack system. The mobilized storage system from Fort Atkinson, Wis.-based Spacesaver Corp. can make operations more efficient in cold chain environments as low as -4 degrees F, with optional stainless steel for performance at the lowest temperatures. By mounting new or existing racking onto mobile carriages and eliminating static aisles, a warehouse can double storage capacity. The mobile racking holds up to 30,000 pounds. The Spacesaver ActivRAC powered mobile system allowed a beverage distributor to more efficiently utilize their cooler space and expand their number of offerings without sacrificing accessibility.

Pallet versatility plays a role ORBIS Corp., based in Oconomowoc, Wis., has expanded its offerings to allow companies more pallet versatility, thereby improving storage space density. One option is the 40 x 48 StackR pallet line, now expanded to include three pallets to meet a variety of application requirements. The 40 x 48 StackR LD Pallet is made of 100 percent recycled content and can stack up to 30,000 pounds. And, the 40 x 48 StackR MD and HD pallets are designed for racking and will rack up to 2,100 pounds and 3,000 pounds, respectively. In addition to improving storage density, the pallets are non-porous and do not absorb moisture or odor. Customers can choose pallets with an open deck that creates a hygienic solution for customers who do not have pallet washers. “There are also new pallet material options for different food applications,” says www.foodlogistics.com

FLOG1015_34-36_SecRptRacking_EM_ES_LS.indd 35

Curt Most, ORBIS Corp. senior product manager for pallets. “Specifically, metal detectable and X-ray detectable pallets are being considered to streamline the inspection process, while FDA-approved materials are important for direct contact applications. Companies also need to take into consideration the temperature of their facilities and develop a cold storage pallet solution accordingly. Hygienic pallets continue to be important as food processors strive to keep their plants and equipment clean.”

Consider sanitation Facilities with strict sanitation requirements cannot have painted carbon steel mezzanines, says Shannan Salchert, marketing director at Cubic Designs, the New Berlin, Wis.-based manufacturer of mezzanines. Instead, the mezzanines use stainless steel, which is ideal for areas that require frequent washdowns since it is highly resistant to corrosion. Cubic Designs’ mezzanines also have a closed-shape design which minimizes catch-points in which debris or

SUPER-SIZE

YOUR WAREHOUSE...

…WITHOUT MOVING A WALL. Double your storage capacity with Storax Poweracks and Storax Ranger. Poweracks replaces conventional, static aisles with one moving access aisle – increasing inventory capacity and selectivity. Ranger enables high-density storage and accessibility by circulating pallets on a shuttle system.

WW W.FLEXS PACE360.COM L E T ’ S G E T M OV I N G INFO@FLEXS PACE360. C OM

FOOD LOGISTICS

• OCTOBER 2015

10/5/15 1:45 PM

Cubic Designs

 One Cubic Designs customer wanted mezzanine platforms in a beverage operation to be constructed with closed shapes, aluminum decking, and to incorporate clean surfaces with minimal crevices and catch points in the structure.

bacteria can gather. Not all companies handling food and beverages have to adhere to the strictest sanitation constraints, which require allstainless steel construction. One beverage manufacturer wanted all platforms to be constructed with closed shapes, aluminum decking, and to incorporate clean surfaces with minimal crevices and catch points in the structure. Another beverage manufacturer needed a system that would prevent beverages from

seeping through and collecting in crevices in the event of a spill. The solution was to use high-density wood with seal coating, along with an FDA-approved sealant to fill all joints. Automated systems, meanwhile, offer more options to improve storage efficiency in the supply chain. Automation, however, requires a major investment that not all companies can afford. “Always, at the top of the list of concerns for customers is price,” says Adducci of

Pre-Manufactured Food Grade Platforms

Interlake Mecalux. “That said, educated customers and distributors are concerned about steel pricing and volatility and how that plays into pricing of finished product for material handling systems. The next concern is technical systems and automation along with density of storage versus selectivity of warehouse SKUs.” As cold storage space increases, food and beverage companies must reconsider storage density along with a host of other factors. Fortunately, their racking options continue to expand as well. ◆

For more information: ★CUBIC DESIGNS, cubicdesigns.com ★INTERLAKE MECALUX, interlakemecalux.com ORBIS CORP., orbiscorporation.com SPACESAVER CORP., spacesaver.com STORAX AMERICA, storaxsolutions.com

the perfect fit

Cubic Designs delivers custom-designed, pre-manufactured platform systems to your plant ready to install in your facility. Minimize plant disruption because all of our manufacturing is done off site. No welding. No cutting. No drilling. • Quick, easy installation with little plant disruption • Stainless and carbon steel designs • Bead blast and powder coat finishes • Can meet USDA/FDA requirements • Closed shapes, bolted connections, enclosed steel tube Want a mezzanine without the fuss, mess and problems? Call Cubic Designs.

OCTOBER 2015

• FOOD LOGISTICS

FLOG1015_34-36_SecRptRacking_EM_ES_LS.indd 36

No Mess. No Fuss.

NO PROBLEM www.foodlogistics.com

10/5/15 1:45 PM

SECTOR REPORTS

ECONOMIC DE V E LOP ME NT: US GULF COA S T

Primed For A Post-Panamax Sized Opportunity Ports along the Gulf Coast will be ready to compete for the increase in containerized cargo an expanded Panama Canal will bring their way. BY ERIC SACHARSKI

hen the first ship passes through the expanded locks at the Panama Canal some time in the spring of 2016, analysts say it could usher in a 12 percent boost in container traffic for ports along the U.S. Gulf of Mexico. This is good news for the entire Gulf Coast region, but especially uplifting for box ports along the Gulf Coast that are already experiencing record-breaking traffic. Import volumes are up nearly 26 percent at the Port of Houston compared to last year, and other ports in the Gulf region are witnessing volume increases of up to 6 percent spurred in part by cargo diversions that resulted from labor issues at U.S. West Coast ports. The big question is whether the ports and infrastructure are ready to handle the potential increase in cargo. With four main box ports along the Gulf Coast all set to compete for the new business, all of them have spent millions in infrastructure upgrades to prepare for the Post-Panamax era. www.foodlogistics.com

FLOG1015_37-39_SectRptGulf_ES_EM_LS.indd 37

The ‘Big Easy’ prepares for big increases The Port of New Orleans (Port Nola) is well-positioned to accommodate the more than doubling of volumes through 2028. Currently, Port Nola has 45 feet of draft in the Mississippi River and a capability of 50 feet, the second largest container volumes in the Gulf and modern facilities with a footprint for more expansion. More than $500 million was invested in the port in the last decade, including terminal expansions, completely renovated transit sheds and upgraded infrastructure. The state of Louisiana is also working with the U.S. Army Corps of Engineers on an updated study for the deepening of the Mississippi River to 50 feet. “We are continuing to invest in the port to stay ahead of the curve,” says Gary LaGrange, CEO of the Port Nola. “Nearly $40 million in new investments to increase efficiencies and expand container handling capabilities are under construction and nearing completion at the Port of New Orleans’ Napoleon Avenue Container Terminal.” Included among the

projects is a $7.9 million refrigerated container racking system, which is jointly financed by New Orleans Terminal LLC and the Port Nola board of commissioners. A state-ofthe-art racking system will have the ability to store more than 600 refrigerated containers at one time. The project, which is already ahead of schedule and due to be completed by the fall, was needed due to surging demand for refrigerated cargo – primarily imported bananas from Chiquita and exported poultry from refrigerated logistics provider New Orleans Cold Storage. Port Nola recently welcomed the return of Chiquita after a 40-year hiatus.

Port Nola seeks to improve intermodal terminals New Orleans Terminal is also assembling two rubber-tire gantry cranes (RTGs) to add to their container marshalling yard in an effort to increase container handling and turn times. The project has more than $4.5 million in private investment. Complementing these projects is the new Mississippi River Intermodal Terminal

The last of the four Super PostPanamax Cranes were off-loaded in September at the Port of Houston Authority’s Barbours Cut Container Terminal. Image courtesy of the Port of Houston.

currently under construction. The $25.1 million project will deliver a modern and efficient intermodal container transfer terminal to facilitate the movement of marine and rail cargo, while enhancing safety and reducing the carbon footprint of the regional and national transportation systems. The 12-acre terminal is partially funded by a $16.7 million federal Transportation Investment Generating Economic Recovery (TIGER) grant. The project is due for completion in February of 2016. “All of these projects enhance efficiencies, expand capacity and create new, high-paying maritime jobs in the region,” says LaGrange. “New shipping services, such as CMA CGM’s weekly European service, the MSC/Great White Fleet (Chiquita) Central American service, G6 and 2M shipping alliances regularly call-

FOOD LOGISTICS

• OCTOBER 2015

10/5/15 1:56 PM

The Port of New Orleans recently welcomed the return of Chiquita after a 40-year hiatus. Image courtesy of Port Nola.

ing the port have led to record volumes.” Port Nola recently launched a $25 million project to rebuild the freight railyard immediately adjacent to the Napoleon Avenue Container Terminal. The project will transform the existing 12-acre railyard into a modern intermodal rail facility and create a 4-acre cargo marshalling yard. The railyard improvements are expected to be ready in the first quarter of 2016. In addition, Port Nola installed two custom-designed, 100-foot-guage gantry cranes that can reach across 19 rows of containers on wider ships transiting the Panama Canal and additional acres of marshalling yard where loaded containers can stack up to five containers high. Port Nola is the only U.S. deepwater port with six Class I railroads, including 132,000 miles of connecting rail tracks.

Houston hopes to maintain momentum The Port of Houston currently handles almost 67 percent of all of the containerized cargo shipped into the Gulf Coast region, and according to estimates from the Texas Department of Transportation, the port will see a 15 percent increase in incoming cargo by 2020, and a 150 percent increase, roughly 4.5 million 38

OCTOBER 2015

units, by 2030. Considering the port is already operating at record pace with almost 20 million tons of cargo crossing the docks through June, the Houston area is in a good position to win even more business in 2016. Capital improvement projects at the Port of Houston have included spending $50 million on four new cranes that arrived in May. Almost $184 million is allocated to improve and modernize the container terminals at Bayport and Barbours Cut, and another $35 million towards improvements at the general cargo and bulk terminals in the Turning Basin area. “International trade, primarily containerized cargo, continues to expand rapidly at our facilities,” says Janiece Longoria, Port of Houston Commission chairwoman. Some in the Houston area are worried that an increase in the use of rail to transport freight could impact mobility at major intersections, but ongoing highway transportation projects at the Grand Parkway and improvements on Hwy. 290 should also help minimize any increase in ground traffic the canal may bring.

Florida’s other coast The August issue of Food

• FOOD LOGISTICS

FLOG1015_37-39_SectRptGulf_ES_EM_LS.indd 38

Logistics explored the infrastructure improvements being constructed along the Atlantic Ocean side of Florida, but the ports along the Gulf of Mexico side are also well on their way to sharing the post-expansion traffic. Early in 2016, Port Tampa Bay will receive and install two new, state-of-the-art, postPanamax cranes to add to its three existing cranes to enable the port to handle vessels up to 9,000 TEU capacity. Once completed, Port Tampa Bay will quadruple the size of its capacity from 40 acres to 160 acres and expand its berth length from 3,000 feet to 4,000 feet. At the end of August the port also announced plans to construct a 130,000-squarefoot refrigerated warehouse on 13.7 acres on Hookers Point in downtown Tampa. Once complete, the facility will receive, label, package and distribute temperature-controlled food around the clock, including perishable goods, fruits and vegetables. The port used to be considered the hub for imported fruit until most of that business went away in the early 2000s. Most of the imported fruit business went to Port Manatee, which is why Port Tampa Bay is excited about the new refrigerated facility. “In our first year of opera-

tion, we expect to accommodate 100 vessels with 400,000 pallets, along with 70 to 80 trucks per day entering and leaving the facility,” says George Livingston, a principal at Orlando, Fla.-based Port Logistics Tampa Bay Inc., who signed a 27-year lease to operate the facility. Both Port Tampa Bay and Port Manatee recently received federal approval to participate in the USDA’s cold treatment pilot program for imported produce. Starting Oct. 1, both ports will participate in the Florida Perishables Trade Coalition that allows grapes, blueberries, apples, pears and citrus from Peru, Uruguay and Argentina to come directly to Florida to be cold-treated for pest control instead of having to go to northern climates. While nobody can be certain that the expansion of the Panama Canal will bring large increases of container traffic to the Eastern areas of the U.S., one thing that is certain is that ports and cities along the Gulf Coast will be prepared for it when and if it does come their way. ◆ To read this entire article please visit www.foodlogistics.com/12118400

For more information: NEW ORLEANS COLD STORAGE, www.nocs.com PORT OF HOUSTON, www.portofhouston.com PORT MANATEE, www.portmanatee.com PORT OF NEW ORLEANS, www.portno.com PORT TAMPA BAY, www.tampaport.com

www.foodlogistics.com

10/5/15 1:56 PM

you see your supply chain asset.

As experts in logistics optimization, and partner to many of the world’s leading brands, Rehrig Pacific moves beyond the status quo and delivers sustainable results to improve productivity, lower costs, reduce shrink, and build brand awareness. If you are looking to change “What ifs” into reality, we have the answers.

Phone: (800) 421-6244 or (323) 262-5145 Email: info @rehrigpacific.com Web: www.rehrigpacific.com

FLOG1015_37-39_SectRptGulf_ES_EM_LS.indd 39

10/5/15 1:56 PM

SECTOR REPORTS

TRA NS P ORTATION: BULK & LIQUID BULK

New And Improved Flexitanks Transform Bulk Liquid Transportation Wine, oil and juice shippers realize additional cost benefits and transportation options. BY JEFFREY C. PLUMLEY AND PATRICE VAUCHER

or a small, familyowned winery in the Chilean countryside, not only is perfect temperature, soil and timing of vast importance to get their award winning wine to market, but also the careful transport of that wine that will travel thousands of miles to its ultimate destination. The wine’s ocean voyage often begins inside a Flexitank.

Also referred to as a “Flexibag” or “Flexitanque,” a Flexitank is a flexible tank bag designated to fit into a 20-foot standard ocean container. The Flexitank size is based on the gravity of the product shipped, and weight restrictions at origin and destination. The Flexitank turns into the equivalent of an ISO tank container for bulk non-hazardous liquids. With Flexitanks, loading and unloading times are reduced up to 90 percent, and up to 31 percent more cargo can be shipped compared with IBC totes and drums. Manhours are also significantly reduced. For a 20,000-liter Flexitank, only 7.5 man-hours 40

OCTOBER 2015

are required compared to a 1,000-liter IBC tank that requires 18 man-hours, and a 55-gallon drum requires 76 man-hours. With the advent of the Flexitank more than 20 years ago, the liquid transportation industry has been revolutionized.

A more efficient transport A more cost efficient solution than drums, totes or ISO tanks, Flexitanks have become “the” only alternative for companies looking to save on the transport of any types of liquids including: soft drinks, wines, juice concentrates, agricultural oils, liquid latex, bio-fuels, glycerin and non-hazardous chemicals. They provide lower labor and loading costs and no repositioning costs – the best option for bulk liquids with remote destinations. For the small Chilean vintner with a burgeoning business, the Flexitank can fit from 16,000 to 24,000 liters. It also represents a safe mode of transportation for the wine and the environment with virtually no possibility of contamination.

• FOOD LOGISTICS

FLOG1015_40-43_TranspSecRpt LS_EM_ES.indd 40

The BIG Red Flexitank is made in the U.S. to ISO 9001:2008 manufacturing and quality control standards.

According to the Network for Transport and the Environment, maritime shipping is the world’s most carbon-efficient form of transporting goods – far more efficient than road and air. Despite this fact, many companies are still looking for other innovative ways to

reduce their carbon footprint – Flexitanks are that solution. A safe environmental alternative, Flexitanks do not have to be washed out and can be discarded or recycled. The Flexitank has now entered a new era with a new configuration. This innovative www.foodlogistics.com

10/6/15 9:52 AM

Deliver responsibly.

According to Fortune,® the nation’s top beverage companies trust us to do just that. Ryder has industry-leading fleet management services, a proven safety culture, unmatched warehousing and transportation capabilities, and a fleet of 210,000 vehicles. Which means we have the resources and expertise it takes to deliver success in a highly competitive category. Be Ever Better. Discover how outsourcing with us can improve your fleet management and supply chain performance at Ryder.com.

Ryder and the Ryder logo are registered trademarks of Ryder System, Inc. Copyright ©2015 Ryder System, Inc. Ever better is a trademark of Ryder System, Inc. FORTUNE 500 is a registered trademark of Time Inc. www.foodlogistics.com

FLOG1015_40-43_TranspSecRpt LS_EM_ES.indd 41

FOOD LOGISTICS

• OCTOBER 2015

10/6/15 9:52 AM

configuration now fits two to three smaller Flexitanks in a 40-foot ocean container. With standard and barrier films, these newlyconfigured Flexitanks are independently welded and suitable for food-grade,

chemical and pharmaceutical products and offer an optimal amount of oxygen permeation. They can be transported via rail or road for smaller quantities to ship with multiple commodities loaded on the

same trailer. The newly-configured Flexitanks are self-restraining with a non-slip mat that does not allow for movement and is elevated off the floor with vents for air circulation. Prior to the

New Transportation and Packaging Options Equate To Fewer Wine Bottles by Lara L. Sowinski

n executive with South Africa’s Accolade Wines once said, “We don’t ship glass around the world, we ship wine.” He was referring to the use of Flexitanks to ship wine in bulk rather than bottles. The practice is gaining favor with wine shippers who aim to maximize transportation cost efficiencies while reducing their carbon footprint. The cost advantages are substantial. It’s estimated that shipping wine by bulk compared to bottles saves $2.25 for a standard 9-liter case of wine. Ocean transport charges are typically based on volume; therefore it’s in a shipper’s best interest to use the maximum amount of space available. One-third of an ocean container’s space is “lost” when filled with bottled wine. For example, while a 20-foot container accommodates about 9,000 liters of bottled wine, a bladder holds 24,000 liters. The mass also helps keep wine cooler during the voyage and oftentimes reduces the need for refrigeration, which also reduces shipping costs. During the London International Wine Fair 2010, Environmental Packag- EPT’s Wine-Pac Flexitank is constructed with a high strength multi-layer tubing that features a very effective ing Technologies, Ltd. (EPT) unveiled gas barrier to protect against oxygen sensitive products, its Wine-Pac Flexitank. The Wine-Pac such as wine, or for added resistance to the migration of is constructed with an outer woven oil and solvents. layer of polypropylene that includes “strength bands” running the length of the Flexitank that helps stiffen it while also providing stability during shipping. A five-layer Barrier Wear Sleeve protects the bottom and sides of the Flexitank and reduces oxygen transmission to zero. In addition, all of the component materials used in EPT’s Americanmade Wine-Pacs comply with FDA and EU regulations and directives. While wine shipped in bulk is typically bottled post-voyage, the glass bottle itself is losing market share to a growing array of alternative packaging formats, reports The Freedonia Group. “In addition to bag-in-box packaging, other containers that have established a presence include plastic bottles, plastic cups and goblets, aseptic cartons, pouches, and cans. These alternatives are growing in popularity due to performance features, product differentiation capability, and appeal to younger consumers, who are less attached to wine traditions than are older consumers,” states the research firm. According to Freedonia’s industry study, “Wine Packaging,” released in August, “Bagin-box packaging will register solid increases due to expanded 1.5- and 3-liter premium offerings. The recent adoption of bag-in-box by premium wine brands, particularly in 3-liter sizes, is helping to mitigate the stigma of “boxed wine” as inferior in quality to bottled wine. Bag-in-box wines offer a variety of benefits for consumers, including lower cost per unit of volume, extended freshness, and easier dispensing and storage. An additional advantage of bag-in-box containers is their large surface area, which offers significantly more space for colorful graphics and text than do bottle labels.” ◆ 42

OCTOBER 2015

• FOOD LOGISTICS

FLOG1015_40-43_TranspSecRpt LS_EM_ES.indd 42

www.foodlogistics.com

10/6/15 9:52 AM

www.foodlogistics.com

FLOG1015_40-43_TranspSecRpt LS_EM_ES.indd 43

disposal or periodic pickup is readily available, usually for an additional charge. The world of liquid transportation is a complex one, which necessitates collaboration with a logistics partner that offers a strong global network, along with robust product and customs knowledge.

Jeffrey C. Plumley is director, ocean freight business development for DHL Global Forward-

ing, and Patrice Vaucher is director of multinational customers for DHL Global Forwarding. ◆

For more information: DHL GLOBAL FORWARDING, dhl-usa.com ENVIRONMENTAL PACKAGING TECHNOLOGIES, eptpac.com FREEDONIA GROUP, freedoniagroup.com INTERNATIONAL ORGANISATION OF VINE AND WINE, oiv.int NETWORK FOR TRANSPORT AND THE ENVIRONMENT, transportenvironment.org

Always Supplying Advanced Flexible Excellence

new configuration, Flexitanks covered the whole floor of the containers. The new design allows for refrigeration and temperature-control for shipment of liquids that need to remain cold. Some containers can reach more than 130°F (54°C) while travelling thousands of miles. Wine is generally to be stored at 55° to 59°F (13° to 15° C) and any temperature fluctuations can reduce the aroma, color and flavor. For wine, milk and juice that require temperature control, companies are now offering reefer containers for a more cost-effective option to refrigerated tanker trucks. For the Chilean, Argentine, American, French, Spanish, Italian or Australian wine maker, transporting wine throughout the world signifies leaving the integrity of their wine in the hands of the logistics company handling its transport. According to the International Organisation of Vine and Wine (OIV), 40 percent of all wine is consumed in countries other than where the wine was produced. In other words, imports comprise 40 percent of wine consumption around the world. This is a significant increase over 2000 when only 25 percent of wine consumption was made up of imports. With global wine trade on the rise, what should wine producers in large and emerging wine markets, such as Brazil, China, Croatia, Morocco, among others, as well as other liquid producers keep in mind? The traditional and newly-configured Flexitanks are a cost-effective option, but they do require training for loading and unloading of initial tanks. Although it is a simple process, with no real level of complexity, it does require a logistics company with experts on the ground ready and available to demonstrate its use and disposal. A pre-established method of

A force to be reckoned with… Workplaces are dangerous environments, with your average forklift truck carrying the same weight as your average rhinoceros. That’s why you need to protect your facility in the best possible way. A-SAFE barriers offer unbeatable strength, flexibility and impact absorption, protecting your workplace, structures and personnel from impact forces. Contact A-SAFE now – and tame the mechanical beasts inside your workplace.

• 100% Hygienic and Food Safe • Easy to clean and No Painting • Cooler and Freezer grade options available

A-SAFE is the inventor and manufacturer of an award-winning system of impact-absorbent and cost saving protective barriers used in warehouses, car parks, factories, airports and other workplaces across the world. USA

Call A-SAFE +1 866-858-0895, email sales@asafe.us, or visit asafe.com for more information. FOOD LOGISTICS

• OCTOBER 2015

10/6/15 9:52 AM

SECTOR REPORTS

SOFTWARE/TECHNOLOGY: TRANSPORTATION MANAGEMENT SYSTEMS

A Diversifying Food Supply Chain Drives New TMS Features

Companies take on more tasks managing freight, creating a need to integrate more software silos. BY ELLIOT MARAS

n the last couple of years, Republic National Distributing Co. (RNDC), the nation’s second largest wine and spirits distributor, believed there were some inefficiencies with its routing software and last-mile transportation initiatives. The Atlanta, Ga.-based company operates a fleet of more than 1,000 trucks and delivers from 29 warehouses across 16 states. The company was using an on-premise route planning package and multiple GPS tracking solutions for its fleet, none of which had the ability to produce the results RNDC was looking for. RNDC wanted access to real-time delivery information in order to make route planning more effective, but their route planning software system was not capable of providing that level of functionality. “We needed to get the plan updated to better mirror what was actually happening in the field to improve delivery results

OCTOBER 2015

and customer satisfaction levels,” says Distribution Director John Friel. The routing system had the technology to integrate GPS/ telematics data, but RNDC found it too expensive, antiquated and not right for RNDC’s business. In addition, the GPS system did not include vehicle performance data that RNDC would need to compare vehicle performance with forecasts. Hence, the problem was two-fold: RNDC needed a better dispatching and fleet performance platform and it needed more vehicle performance data. RNDC found a more economical solution by deploying a cloud-based vehicle dispatching and fleet performance platform from Orlando, Fla.-based

Greenmile, along with Geotab telematics devices supported by eSquared, the Scottsdale, Ariz.based IT consultancy. RNDC was able to access critical data on their delivery day in real time – as well as course correct on potential delivery issues such as missing a customer’s promised delivery time window. eSquared provided visibility to the telematics data coming from vehicles in real-time, allowing management to quickly spot issues such as jackrabbit starts or harsh breaking, which impact fuel economy. The deployment has proved successful both in terms of economics and return on investment. It has delivered a 10 percent reduction in mileage and fuel spend, a 5 percent gain in cases per truck, and better customer service.

Processor has different TMS needs JBS S.A., a Greeley, Colo.based protein processor, faced a different set of challenges. The company operated its own fleet and outsourced other deliveries to 3PLs. They wanted to auto-

• FOOD LOGISTICS

mate their outbound logistics and manage different logistics requirements for domestic beef and pork shipments. A TMS system from Kewill Transport gave JBS access to 16,000 carriers to move more than 6,000 loads per week using more than 500 carriers and its own fleet. The system enables JBS to consolidate orders into loads and find the best option for expediting shipments. “JBS is (now) able to efficiently handle more shipment volume than before and can more effectively track outbound shipments,” says Rogerio Peres, chief information officer at JBS. “JBS has improved on-time deliveries and increased order fill rates, leading to improved customer satisfaction, efficiency and margin growth.” Flagship Food Group switched to the 3Gtms solution because it has algorithms applicable for a non-asset-based business, says Rob Holland, CEO of the Greeley, Colo.based 3PL. Other TMS systems that his company had been using were designed for assetbased trucking companies and he needed something that was built from the ground-up with the 3PL model in mind. RNDC, JBS S.A. and Flagship Food Group are among www.foodlogistics.com

Photo Credit: Manhattan Associates

FLOG1015_44-47_SecRptTMS_EM_ES_LS.indd 44

10/5/15 3:36 PM

VISIT US AT IFDA

BOOTH #421

It’s why every detail matters in our plants.

Quality is the only standard our reefer plant employees know. They don’t just work the line, they stand watch on it.

To find out more, call your local dealer or visit www.utilitytrailer.com.

FLOG1015_44-47_SecRptTMS_EM_ES_LS.indd 45

10/5/15 3:36 PM

many companies in the food and beverage (f&b) supply chain that have found new TMS tools can make a difference. TMS solutions have expanded capabilities in recent years. With more tools available, fleet managers, 3PLs and carriers can all better identify more efficiencies in their transportation networks.

Capabilities expand Transportation management needs vary in the f&b supply chain. Many companies have invested in routing and scheduling software. But routing and scheduling only address some of the functions shippers and fleet managers have to address in today’s supply chain. State-of-the-art software can allow them to improve more transportation efficiencies. The expansion of the f&b supply chain is driving much TMS innovation, says Ajesh Kapoor, vice president at GT Nexus, the Oakland, Calif.based supply chain services provider. Because supply chains are longer and expand across multiple enterprises nowadays, some of the largest food companies are investing in what Kapoor calls an end-to-end approach. Such a plan brings together multiple applications used to manage transportation, including route scheduling, telematics, yard management and inbound logistics. “Transportation strategy and operations have to align with larger supply chain strategy. We look at TMS always within the context of the supply chain,” he says.

Interoperability critical Interoperability of software systems – whether the systems are within an organization, 46

OCTOBER 2015

between different companies or across varying geographies – is an issue many f&b companies confront when looking to improve efficiencies. Carriers, shippers and 3PLs are discovering that TMS can integrate with enterprise resource planning (ERP), warehouse management systems (WMS), inventory management, purchasing and other functions. Several TMS experts interviewed by Food Logistics claim merging TMS software with other software silos is a common need, but one that is manageable. Penske Logistics believes that one of its top benefits is its ability to integrate its TMS with all the major ERP systems, says Dave Bushee, vice president of IT. This is especially important when servicing a company that has acquired other companies that use different software systems. Software specialists largely agree that merging TMS with WMS presents the most challenging integration. Functions such as proof of delivery, financials and sales are usually easier. Integrating different TMS systems can also be challenging, says Brian Taylor, president of Vancouver, Canada-based CAMS Software Corp., which specializes in grocery TMS. “You’ve got to get two different vendors to agree how they’re going to integrate,” he says. “With cloud-based systems becoming more prevalent, there is even more emphasis on vendor-to-vendor collaboration.” Walt Heil, vice president of sales at Kewill Transport, adds that the cloud’s speed is especially important to a manufacturers in communicating to carriers. Vehicles equipped with GPS can relay critical tracking

• FOOD LOGISTICS

FLOG1015_44-47_SecRptTMS_EM_ES_LS.indd 46

information in real time. If a delivery should fall off schedule, the notification can allow the manufacturer or fleet manager to reschedule. The cloud also makes invoicing faster and easier, Heil adds. One of the biggest improvements in TMS is not unique to TMS software: predictive analytics. Predictive analytics is the application of advanced statistical analysis of structured and unstructured data sources to identify patterns and predict future events or outcomes. It allows shippers to do scenarios to see how costs change if they adjust routes or move a load to a different warehouse.

Key differentiator: route optimization All TMS providers agree the route optimization engine is the most important TMS function. “Logistics in the food industry is a dynamic process and requires complex transportation capabilities to address. Optimization is the most critical part of the TMS to get that right,” says Mitch Weseley, president of Shelton, Conn.-based 3Gtms. “Without complete and accurate data resulting, plans will not be able to be executed properly. That leads to quality issues, manual adjustments, and costs that are significantly more than planned. It is essential that cold chain continuity, executable routes, receiving schedules and many more constraints are considered in the optimization process.”

LTL planning critical LTL planning remains an important part of f&b. Logility Inc. has an algorithm that determines whether different orders can be combined in a delivery. The demand for LTL will increase as e-commerce grows, says Lisa Aull, senior business consultant at Atlanta, Ga.-based Logility Inc. The sys-

tem consists of three areas: 1) shipment planning, 2) execution, and 3) freight accounting. Shippers often error in basing carrier assignments on cost, Aull says. Shippers need to keep in mind that when the market favors the carriers, carriers will remember who gives them work when they needed it. “Routing is more than who is my lowest cost carrier,” she says.

Telematics expands As telematics play a bigger role in fleet management, TMS systems need to be able to download telematics-generated data. Carriers, private fleet owners and asset-based 3PLs have to decide how often to access the data. Most TMS experts listed integrating telematics as one of the easier integration tasks. But this was not the case for RNDC, the company referenced at the beginning of this article. “One of the most valuable aspects of a TMS is the ability to seamlessly automate functions like dispatching, tracking, and even payments,” says Andy Yearout, vice president of supply chain solutions at Veritiv Corp., the Atlanta, Ga.-based distribution solutions provider. “Automation allows a large company like Veritiv to take steps to consistently improve our transportation processes and our customer service platform.” ◆

For more information: 3GTMS, 3Gtms.com CAMS SOFTWARE CORP., camspro.com ESQUARED, e2cc.com FLAGSHIP FOOD GROUP, flagshipfoodgroup.com GREENMILE, greenmile.com GT NEXUS, gtnexus.com ★KEWILL TRANSPORT, kewill.com LOGILITY INC., logility.com ★PENSKE LOGISTICS, penskelogistics.com VERITIV CORP., veritivcorp.com www.foodlogistics.com

10/5/15 3:36 PM

THE LINE FOR SUPPLY CHAIN SOLUTIONS STARTS HERE. At MODEX, you’ll find the solutions you need to solve tough manufacturing and supply chain challenges, identify best practices, exceed customer demands and gain competitive edge. There’s a reason we call MODEX “the Greatest Supply Chain Show on Earth.” It’s where 850 of the leading manufacturing and supply chain providers gather to showcase their latest and greatest solutions to an audience of more than 25,000. If your business needs to maximize operational efficiency and cut costs, your solutions will be waiting at MODEX. The industry’s brightest minds will gather to network and share their perspectives on the ever-evolving state of the supply chain – where it’s headed, new ideas, innovation and more. With powerful keynotes and more than 100 hands-on education sessions, you’re sure to find your edge.

Georgia World Congress Center Atlanta, Georgia April 4-7, 2016 THE GREATEST SUPPLY CHAIN SHOW ON EARTH. Collocated with MODEX 2016

MODEX is FREE to attend. Can you afford not to be here?

LEARN MORE AND REGISTER AT MODEXSHOW.COM

FLOG1015_44-47_SecRptTMS_EM_ES_LS.indd 47

10/5/15 3:36 PM

2015 Educational Webinar Series JOIN US FOR OUR 20 15 EDUCATION AL W EB I N AR SER I ES , av ailable t o yo u at no charge thank s to our generous sp on sors. Reg is t e r f o r o ne , s e v e r al o r all o f t he s e s s io ns c o v e r ing t h e en tire glob al su pp ly c hain f o r t he f o o d and be v e r age indus t r y.

DETAILS & REGISTRATION: FOODLOGISTICS.COM/WEBINARS TIME: 1:00 P.M. ET/ 1 2: 00 P.M . C T / 11:00 A.M . M T / 10:00 A.M . PT

Coming in 2016: Wednesday, January 27

Warehouse Automation

Wednesday, March 23 Wednesday, November 4

Wednesday, December 9

Software & Technology Part II: Wringing Out Costs, Elevating ROI

Hottest Food Supply Chain Trends for 2016 NEW E:

_________________

The inherent power and potential of software and technology solutions is augmented when applied throughout an organization’s supply chain, wringing out costs and elevating ROI. Learn best practices for creating an enterprise-wide software and technology strategy.

_________________

TIM

2 p.m. ET

Get up to speed on the hottest food supply chain trends for 2016 from a diverse panel of experts and forward-thinkers. Sponsored by:

3PLs

Wednesday, May 25

Software & Technology I Wednesday, August 24

Cold Chain

Wednesday, September 21

Software & Technology II