Food Logistics July 2019 by Supply+Demand Chain/Food Logistics

AN ELD CONUNDRUM

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THE RISE OF AUTOMATION

Food Logistics

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FoodLogistics.com

Global Supply Chain Solutions for the Food and Beverage Industry

3PLS KEEP UP WITH DEMANDS: Issue No. 208 July 2019

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ON THE MENU

July 2019 ISSUE NO. 208

COLUMNS FOR STARTERS

The Case for 3PLs

3PLS increased collaboration between logistics providers and clients, determining the value of relationships. COOL INSIGHTS

COVER STORY

Logistics Providers Keep Pace With New Demands Online grocery shopping and the expanding cold chain are driving new products and services.

“Food Everywhere” Brings Operational Considerations

The right controlled atmosphere protocol and the proper system will help extend transit life potential of fresh produce. FOOD (AND MORE) FOR THOUGHT

FEATURE

THIRD-PARTY & REFRIGERATED LOGISTICS

Consumer Demands for Fresh Foods are Transforming Cold Storage

The bottom line is that more consumers want their food in “near real time”—and they’re willing to pay for it.

SECTOR REPORTS WAREHOUSING

The Rise of Automation

The “Amazon Effect” has now reached the food and beverage industry, forcing companies to act on technology investments that they would have held off on in the past. TRANSPORTATION

An ELD Conundrum

The second phase of ELD implementation carries critical decisions for food distribution companies with transportation fleets. SOFTWARE & TECHNOLOGY

Blockchain Built on Trust

Food industry players can now participate in blockchain with minimal cost and implementation for greater supply chain accountability. OCEAN PORTS & CARRIERS

Achieving a Smarter and More Connected Global Cold Chain

Smart containers are promising, but overall customer service still needs a boost.

Blockchain Protects the Food Supply Chain

For food logistics operations, blockchain is poised to address challenges and improve efficiency.

DEPARTMENTS

Supply Scan 12 Food on the Move 8

WEB EXCLUSIVES Top Five Technologies Transforming Food Logistics foodlogistics.com/ 21074801

Cloud ERP for Food and Beverage Manufacturing: Let the Systems People Manage the System foodlogistics.com / 21074947

How Has Modern Material Handling Equipment Impacted the Food and Beverage Industry? foodlogistics.com/ 21074955

www.FoodLogistics.com

Published and copyrighted 2019 by AC Business Media. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording or any information storage or retrieval system, without written permission from the publisher. Food Logistics (USPS 015-667; ISSN 1094-7450 print; ISSN 1930-7527 online) is published 10 times per year in January/February, March, April, May, June, July, August, September, October and November/December by AC Business Media, 201 N. Main Street, Fort Atkinson, WI 53538. Periodicals postage paid at Fort Atkinson, WI 53538 and additional mailing offices. POSTMASTER: Send address changes to Food Logistics, P.O. Box 3605, Northbrook, IL 60065-3605. Subscriptions: U.S., one year, $45; two years, $85; Canada & Mexico, one year, $65; two years, $120; international, one year, $95; two years, $180. All subscriptions must be paid in U.S. funds, drawn from a U.S. bank. Printed in the USA.

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FOR STARTERS

FROM THE EDITOR’S DESK

MAKING THE CASE FOR 3PLS

O SOWINSKI

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ver the past few years, our coverage of 3PLs has included considerable mention of the increasing collaboration between logistics providers and their shipper-clients, and the value of relationships. Those characteristics were confirmed in Penske’s 2019 Third-Party Logistics Study: State of Logistics Outsourcing. Among the findings, 89 percent of shippers and 98 percent of providers polled agreed that using 3PLs contributed to improving services to the ultimate customers. In addition, 73 percent of 3PL users and 91 percent of 3PL providers agree that 3PLs offer new and innovative ways to improve logistics effectiveness. The study summed it up this way: “The collaborative nature of shipper-3PL relationships is leading to greater overall value for shippers as well as improved service and supply chain optimization. It is increasingly obvious that 3PLs are doing much more than just moving products from one place to another. Instead they are creating dynamic and responsive supply chains that can create a competitive advantage for shippers, allowing them to speed their products to market and flex their capabilities up or down based on demand.” Understandably, shippers remain focused on costs when evaluating their logistics providers, but costs alone aren’t the most important concern. Shippers want a 3PL that

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is nimble and able to scale quickly in response to e-commerce demands and seasonal swings, especially in the food/beverage space. They also want a partner that can help mitigate supply chain risk and they want access to a range of technology tools and solutions. Shippers also want a logistics provider that brings cold chain expertise to the table. Last month, I moderated a cold chain panel at eyefortransport’s 3PL & Supply Chain Summit in Atlanta. My panelists: John Haggerty of Burris Logistics, Brian Rooney of Fresh Avenue, and Greg Hundt of The Honey Baked Ham Company, discussed the importance of incentivizing performance to achieve a strategic partnership between shippers and logistics providers. That is, both stakeholders need to bring their “A” game to the cold chain equation. In addition, there was plenty of discussion around technology—speciﬁcally, predictive and prescriptive analytics, the rise of AI, and the democratization of data. Check out our cover story for more on how 3PLs are supporting their clients in an ever-changing environment, while staying focused on the all-important relationships. Enjoy the read.

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

DETAILS

Published by AC BUSINESS MEDIA 201 N. Main Street, Fort Atkinson, WI 53538 (800) 538-5544 • www.ACBusinessMedia.com

WWW.FOODLOGISTICS.COM PRINT AND DIGITAL STAFF Group Publisher Jolene Gulley Associate Publisher Judy Welp Editorial Director Lara L. Sowinski lsowinski@ACBusinessMedia.com Editor John R. Yuva jyuva@ACBusinessMedia.com Assistant Editor Jennifer Eisenbart jeisenbart@ACBusinessMedia.com Web Editor Mackenna Moralez mmoralez@ACBusinessMedia.com Contributing Editor Barry Hochfelder Senior Production Manager Cindy Rusch crusch@ACBusinessMedia.com Creative Director Kirsten Wiskus Audience Development Director Wendy Chady Audience Development Manager Angela Franks ADVERTISING SALES (800) 538-5544 Associate Publisher (East Coast) Judy Welp (480) 821-1093 jwelp@ACBusinessMedia.com Sales Manager (Midwest and West Coast) Carrie Konopacki (920) 542-1236 ckonopacki@ACBusinessMedia.com National Automotive Sales Tom Lutzke (630) 484-8040, tlutzke@ACBusinessMedia.com EDITORIAL ADVISORY BOARD Jaymie Forrest, President & CEO, Activ Technologies, Inc. John Haggerty, Vice President of Business Development, Burris Logistics Robert A. Norton, Ph.D., Professor of Veterinary Microbiology, Public Health and Biosecurity, Auburn University; Coordinator of National Security Initiatives, The Futures Laboratory Jon Shaw, Director of Sustainability and Global Marketing Communications, UTC Climate, Controls & Security Smitha G. Stansbury, Partner, FDA & Life Sciences Practice, King & Spalding CIRCULATION & SUBSCRIPTIONS P.O. Box 3605, Northbrook, IL 60065-3605 (877) 201-3915, Fax: (847)-291-4816 circ.FoodLogistics@omeda.com LIST RENTAL Jeff Moriarty, InfoGroup (518) 339-4511 jeff.moriarty@infogroup.com REPRINT SERVICES Carrie Konopacki (920) 542-1236 Fax: (920) 542-1133 ckonopacki@ACBusinessMedia.com AC BUSINESS MEDIA CEO Barry Lovette CFO JoAnn Breuchel Vice President, Sale & Marketing Amy Schwandt Editorial Director Greg Udelhofen Digital Operations Manager Nick Raether Director of Digital Strategy Joel Franke Published and copyrighted 2019 by AC Business Media. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage or retrieval system, without written permission from the publisher.

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SUPPLY SCAN

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CONSUMERS CONFUSED BY FOOD LABELS

NEW AUDIT SYSTEM FOR ANIMAL CARE

Food Safety Net Services Certification and Audit has created the FSNS C&A Temple Grandin Responsible Cattle Care Program under the guidance of Dr. Temple Grandin. The program is driven by science, founded in practicality and dedicated to servicing the meat industry and improving animal welfare. The system focuses on objective scoring at meat harvesting facilities for indicators of responsible care and management of animals intended for human consumption. Participants have committed themselves to developing a management system that uses routine monitoring to enhance animal lives by assessing their condition when received at the meat processing facility. Nolan Ryan Beef is the first beef company to utilize the FSNS C&A Temple Grandin Responsible Cattle Care Audit to assess animal conditions prior to harvest. During the audit, animals were inspected upon arrival for lameness, health condition, injuries, cleanliness and signs of overall level of care from their previous point of ownership. Only suppliers providing proper animal care will be accepted by Nolan Ryan Beef. “As a lifetime cattle rancher who has a heart and passion for animals, I’m honored to partner with FSNS C&A and Dr. Grandin in the utilization of this program,” says Nolan Ryan, Texas rancher and majority owner of Nolan Ryan Beef. “We feel this is an essential step in ensuring the continuous improvement of animal welfare throughout the supply chain.”

Research from Spoon Guru found that 72 percent of consumers don’t understand the recommended levels of salt, fat and sugar consumption. Meanwhile, only 28 percent of shoppers reported that they can confidently decipher the value of nutrients in food, with an opportunity for retailers to offer new tools to allow more transparency. The study looked into consumer spending habits and motivations for purchasing decisions, noting that 54 percent of U.S. shoppers want retailers to encourage healthy eating. In addition, respondents have also said that retailers should offer tools in order to identify the right foods to improve health and fulfill dietary requirements. In a bid to prevent health-related diseases by improving their diet, 59 percent revealed the cost of their weekly grocery pexels shopping had increased, with more claiming to spend as much as $31 more each week. However, the cost associated with eating healthy proved to be the biggest barrier for respondents as 67 percent said they would purchase healthier foods if retailers lowered costs.

COLD STORAGE DEMAND HEATS UP

A CBRE report found that as a result of online grocery sales growth, there is now heavy demand for cold-storage warehouses—100-million square feet over the next five years. The Food Marketing Institute and Nielsen predict that online grocery orders will account for 13 percent of total grocery sales by 2022, adding $100 billion in annual grocery sales conducted online— significantly changing the cold storage industry. The report predicts that the sector’s largest growth will occur in markets such as Los Angeles and New York, but also in leading food-production states like California, Washington, Florida, Texas and Wisconsin. “Few sectors of commercial real estate will undergo as much transformation in the coming years as the cold storage industry due to e-commerce’s impact on this previously underpenetrated market,” says Matthew Walaszek, CBRE associate director of Industrial & Logistics Research, Americas. “We will see robust demand, further innovation in delivery and automation, and possibly more consolidation among major players.

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SUPPLY SCAN

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Daily Updates at FoodLogistics.com

ORACLE ADVANCES SAFER, MORE TRANSPARENT RETAIL SUPPLY CHAIN

CBD products are growing in popularity, popping up on shelves within major retail outlets. However, the edible products infused with CBD are still illegal across the country. Last week, the FDA began hearings examining the potential de-regulation of CBD from hemp within food products. If legalized, this would have a major impact on the U.S. consumer packaged goods industry, potentially becoming a $6 billion industry by 2025. CBD has wellness benefits, something that today’s shoppers are increasingly seeking out. A Nielsen report predicts that adaptogens and botanical hemp extracts that naturally contain CBD could be the next “big thing” in snacks because the product can enhance focus, relaxation and assist in promoting general health and wellness. Big name brands are currently searching for ways to reach consumers through the benefits that CBD provides. Incorporating it into a snack category fits into an existing routine that may perform better than those that are more oriented around indulgence or infrequent occasions.

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The Oracle Retail Brand Compliance Management Cloud service is helping retailers monitor the integrity of their materials and end products to improve customer experiences and protect their brands. The software is designed to enable retailers, restaurants, food service providers and manufacturers to source, develop, track and market products. As products are developed, the solution audits and manages all aspects of the process, creating accurate and certiﬁed labeling detail against local regulatory and industry policies. With it, brands can rapidly and nimbly respond to and rectify product and industry incidents. “Delivering on your brand promise today is as much about quality and trust as it is about cost,” says Jeff Warren, vice president of strategy and solution management for Oracle Retail. “Customers expect retailers to know everything about the items they purchase, whether this is information on availability, ingredients or the manufacturing process. They expect transparency and greater access to information in real time. The biggest names in grocery rely on Oracle Retail Brand Compliance to meet these expectations while protecting their customers and brands.” With new enhancements to the offering, retail supply chain professionals will be able to more easily provide transparency of product information across partners and channels, with enhanced: KPI dashboards that deliver key insights, business intelligence and operational reporting on supply chain and product analysis Consumer product compositions to enable in-store formulations, labeling and digital dietary advice API integrations with key Oracle applications.

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FOOD ON THE MOVE

LOGISTICS TRENDS IN OUR INDUSTRY

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UBER MAKING PLANS TO DELIVER FOOD BY DRONE

CMA CGM MAKES INAUGURAL CALL AT PORT TAMPA BAY

Walmart shocked the industry a few months ago when it said that it was hoping to deliver groceries straight to customers’ refrigerators while they’re away from home. Now, it’s happening. According to CNN, customers will be able to order groceries online and then a Walmart worker will drive the food from a nearby store and deliver it to fridges in customers’ kitchens or garages. The company piloted the service in New Jersey for five months prior to the expansion to Kansas City, Pittsburgh and Vero Beach, Florida. Walmart already charges a fee for regular grocery delivery orders. However, the company did not disclose how much customers will have to pay for in-home delivery. It is unclear if customers will be able to monitor the delivery in their homes, but Bart Stein, a Walmart executive who leads the in-home delivery service, acknowledged that during the pilot customers were initially skeptical, but became accustomed to it. In order to alleviate customer concerns, the retailer is offering a biography with “three fun facts” about their delivery employees.

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COAST GUARD WARNS OF NEW CYBER ATTACK AGAINST SHIPPERS

The CMA CGM Group has made its first call at Port Tampa Bay with the arrival of the 8,469 TEU CMA CGM DALILA on the PEX3 service. The port’s central location allows exporters and importers to serve the entire state and reach markets throughout the Southeast and beyond. With the CMA CGM Group’s PEX3 service, they will now be connected to markets in Asia with a high-quality weekly service. The unparalleled 37-day transit time to Singapore will also open up new opportunities for the region’s fast-growing economy. “As the leading carrier in the U.S., we are pleased to extend the direct service of the PEX3 to Tampa to support Central Florida’s growth,” says Ludovic Renou, president of CMA CGM America. “We have been serving the Gulf since 2005, and the inaugural call of the CMA CGM DALILA marks another milestone in our longterm commitment to the region. By adding Tampa to the PEX3, we demonstrate an agility that is a hallmark of the customer-centric approach we bring to all aspects of our business, in line with Rodolphe Saadé’s strategy for the Group.”

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6/27/19 3:24 PM

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WALMART WANTS TO DELIVER GROCERIES STRAIGHT TO YOUR FRIDGE

The United States Coast Guard has warned shippers of a new phishing and malware attack that is targeting the industry. In a safety bulletin issued in late May, the USCG warned of a cyber attack that is taking aim at commercial vessels. According to Splash 247, hackers are attempting to gain sensitive information by posing as official Port State Control and using the content of an official Notice of Arrival. In addition, the agency has also received numerous reports of malicious software that is designed to disrupt shipboard computer systems. It has been urged that maritime stakeholders verify the validity of their email prior to responding to unsolicited email addresses. If there are concerns regarding the legitimacy of an email request, vessel representatives should contact the PSC authority directly by using verified contact information.

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Uber announced Wednesday that it has plans to start testing food delivery by drone in urban areas, The Washington Post reported. Working with Uber Eats and Uber Elevate, the company began testing the process in San Diego, using McDonald’s, but expects to expand to other restaurants and start commercial food delivery this summer in the same city. The cost will be similar to the Uber Eats pricing model. According to Bloomberg Businessweek, while Uber Technologies Inc. has had a difficult year, Uber Eats has reported revenue of $1.5 billion in 2018.

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FOOD ON THE MOVE

LOGISTICS TRENDS IN OUR INDUSTRY

WASHINGTON PORTS HOPE TO WORK DURING OFF-PEAK HOURS

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SSA Marine out of Seattle, which runs two of seven Northwest Seaport Alliance marine terminals in the state of Washington, will be the first to take part in an incentive program to open marine ports on off-peak hours. The NWSA, which runs the ports of Seattle and Tacoma, announced a $2 million program last week at its June 4 meeting. The incentive is being put into place to try and reduce terminal congestion and avoid backups for marine terminal operators. Seattle and Tacoma combine for the fourth-largest container gateway in North America.

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DOMINO’S AND NURO PARTNER TO BRING AUTONOMOUS PIZZA DELIVERY TO HOUSTON Domino’s Pizza and Nuro are partnering on autonomous pizza delivery using the custom unmanned vehicle known as the R2 later this year. The company will use Nuro’s unmanned fleet to serve select Houston Domino’s customers who place orders online. This partnership will expand Nuro’s autonomous delivery operations, which have safely been running in the Houston metro area since March 2019. “We are always looking for new ways to innovate and evolve the delivery experience for our customers,” said Kevin Vasconi, Domino’s executive vice president and chief information officer. “Nuro’s vehicles are specially designed to optimize the food delivery experience, which makes them a valuable partner in our autonomous vehicle journey. The opportunity to bring our customers the choice of an unmanned delivery experience, and our operators an additional delivery solution during a busy store rush, is an important part of our autonomous vehicle testing.” Select customers who order online from one of Domino’s participating stores will have the opportunity to use Nuro’s autonomous delivery. Once they have opted in, customers can track the vehicle through the Domino’s app and will be provided with a unique PIN code to unlock the compartment to get their pizza.

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π MAERSK AND DB SCHENKER TEAM UP TO REDUCE OCEAN POLLUTION Maersk and DB Schenker are teaming up once again to fight ocean pollution and reduce CO2 emissions. According to Port Technology, the companies formed a partnership back in 2014 to create a more sustainable and environmentally-friendly transportation network. With the collaboration, a CO2 target was agreed to reduce carbon emissions by 20 percent per container transported. The companies are pleased to announce that the target has been met two years ahead of schedule. “We’ve been focused on improving fuel efficiency and reducing pollution for more than 10 years now thanks to higher fuel prices and a bigger emphasis being placed on sustainability and low-carbon,” says Mads Stensen, senior sustainability advisor at Maersk. The companies are now focusing on the International Maritime Organization’s impending sulphur regulations, which will cap sulphur fuel at 0.5 percent starting next year. The companies are working together to comply with the new regulations and help shippers prepare for upcoming changes.

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FOOD ON THE MOVE

LOGISTICS TRENDS IN OUR INDUSTRY

TRADELENS SECURES MAJOR FOLLOWING Since IBM and Maersk announced blockchain-based shipping tool, TradeLens, to limited availability last year, the companies have worked to bring other major shippers on board. CMA CGM and MSC Mediterranean Shipping Company have joined TradeLens. The platform now encompasses nearly half of the world’s cargo container shipments, according to TechCrunch. Shipping has largely been a manual process and can greatly beneﬁt from digitization, but previous attempts haven’t always been successful. Participants are hopeful DESK that blockchain will solve the THE EDITOR’S problem as they can easily follow the ﬂow of shipments along the chain and trust that the immutable record has not been altered at any point. “We believe that TradeLens, with its commitment to open standards and open governance, is a key platform to help usher in this digital transformation,” said Rajesh Krishnamurthy, executive vice president for IT & Transformations at CMA CGM Group, in a statement.

PORT OF SAVANNAH ANNOUNCES RAIL NETWORK The Port of Savannah and the St. Louis Regional Freightway have signed a deal to build a $220 million rail facility. The project is expected to be completed in 2020 and will be the biggest on-terminal facility of its kind in North America. The rail facility will be crucial as the St. Louis region is a key import/export market to which containers can be distributed at a lower cost for shippers. The project will improve efﬁciency at the port and will double terminal lift capacity to approximately 1 million containers. In addition, the facility will allow more frequent rail service to Midwest markets. “We offer a premium, lower-cost option,” says John Trent, senior director of strategic operations and safety at the Georgia Ports Authority. “We believe we have a viable solution to not only support existing business in the St. Louis region, but also to grow business in the St. Louis region.”

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DAT SOLUTIONS’ MONTHLY FREIGHT REPORT

Will Summer Swing to Shippers? Mark Montague is senior industry pricing analyst for DAT Solutions, which operates the DAT® network of load boards and RateView rate-analysis tool. He has applied his expertise to logistics, rates, and routing for more than 30 years. Mark is based in Portland, Oregon.

It’s hard to recall the last time refrigerated truckload freight volumes on the spot market declined from April to May. But that’s what happened this year, with the number of reefer loads moved down 8.3 percent in May. The average spot reefer rate was $2.15 per mile, just one cent higher than the April average and 38 cents lower than May 2018. The month-to-month trends for vans weren’t any better. Full-truckload van load

FOOD LOGISTICS | JULY 2019

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By Mark Montague

counts fell 12 percent compared to April and the national average spot van rate was virtually unchanged at $1.80 per mile, including a fuel surcharge. That’s 35 cents below the average for May 2018. As a result, freight brokers and carriers went into June wondering whether the volumes we expected in May would be delayed or washed away for good by bad weather and disrupted agricultural supply chains? The answer? Volumes in the ﬁrst half of June were right back where they normally should be. This includes both seasonal shipments associated with warmer weather and stored goods from the West Coast. While we are starting to see higher quantities of summer produce on the spot market, USDA and DAT’s own internal data suggest that 2019 will continue to be a subpar year for fruits and vegetables. And that’s unsettling for everyone who hauls freight. Reduced demand for reefer capacity typically has a ripple effect across other

segments of the supply chain, especially van freight since reefers compete for van loads when reefer demand slows. When there’s ample capacity in the van market, which accounts for about 70 percent of all spot loads, that’s good news for shippers—provided they have freight to move.

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COOL INSIGHTS

BY JOHN RHODES

“FOOD EVERYWHERE”

BRINGS OPERATIONAL CONSIDERATIONS

rocery and restaurant chains build their reputations on the ability to consistently deliver fresh, premium quality foods that consumers demand. In recent years, a new food-related phenomenon has emerged: The prevalence of made-to-order food offerings is permeating every corner of the retail market. This “food everywhere” trend brings with it some key operational considerations. Participating retailers must have the infrastructure in place to preserve food quality—lest they face the consequences of a tarnished reputation and associated regulatory complications. The increasing utilization of technology is helping retailers address multiple challenges in order to meet these objectives. New electronic facility supervisory systems offer an Internet of Things (IoT) approach to everything from automated temperature monitoring to controls that ensure comfortable store environments. With consumer preferences driving the “food everywhere” trend throughout retail, here is a look at some key considerations John Rhodes for operators. is group president, Food Safety Cold Chain for Ensuring food safety has always Emerson. been about meeting regulations and achieving compliance with local food codes, but now more than ever it’s essential to preserving the consumer experience. Many retailers are

Consumer preferences are driving the “food everywhere” trend throughout retail, but operators require new approaches to meet those demands.

relying on technology to automate processes and the systems responsible for monitoring, managing, recording and reporting on food conditions throughout cold chain transportation and storage. These technologies are designed to offer connected solutions that automate the capture, collection and validation of temperature-related information at every stage of the cold chain journey—from the supplier to the ultimate points of sale. Using hand-held thermometers, advanced sensors, and automated temperature monitoring and management systems, retailers are working to make the necessary investments to ensure food safety and deliver more consistent hot and cold food-holding temperatures.

Improving the Customer Experience It’s important for retailers to create inviting, comfortable and safe environments for consumers to interact with their brands—and deliver on each factor in this equation consistently. More than ever, retailers are turning to the next generation of facility management and building automation systems to help ensure the reliable performance of coolers, freezers, HVAC and lighting services. Through advanced electronic controls, these supervisory systems help retailers optimize in-store environments and improve the consumer experience in a variety of ways: • Lighting that highlights featured areas of a facility • HVAC automation that provides enhanced comfort by making cold aisles or hot food-preparation areas more pleasant

• Automated environmental controls that create ideal dining areas. These technologies are also helping retailers address their sustainability goals by improving energy efﬁciencies, reclaiming heat for reuse, and recycling and/or waste stream reduction. Regardless of the food retail format, not being able to get a speciﬁc item due to mechanical equipment failure is very frustrating from a consumer perspective. By allowing equipment downtime to interrupt the delivery of consumer items, retailers could not only lose sales, but potentially face losing customers permanently. Facility and equipment monitoring technologies provide the connectivity needed to help assure an “always available” environment that helps provide positive consumer experiences to keep them coming back.

Technology to Enable “Food Everywhere” An important part of meeting the demand for “food everywhere” potentially requires fail-safe food preservation strategies. Retail operators and their suppliers should manage temperatures and ensure food quality along every step of food’s journey to consumers. To appeal to the growing “foodie” culture and capitalize on this trend, retailers and their suppliers may require speciﬁc tools throughout the cold chain and in their retail outlets. Temperature monitoring and facility management technologies will become increasingly imperative to help them ensure food quality and create the consistent dining experiences that today’s consumers demand.

ViDi Studio / iStock / Getty Images Plus

FOOD LOGISTICS | JULY 2019

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6/28/19 9:49 AM

COVER STORY

BY JOHN MCCURRY

LOGISTICS PROVIDERS

Online grocery shopping and the expanding cold chain are driving new products and services.

ogistics providers are stepping up their game to offer enhanced products and services aimed at meeting increasingly complex global food supply chain requirements. This includes measures directed at increasing speed, security, safety and transparency. Many of these efforts include technologies designed to make better use of data and data collecting. Following is a look at the strategies several supply chain specialists serving the food sector are using to enhance their offerings and meet customer demand.

Responding to the Amazon Effect Rob Kriewaldt, senior vice president at Milwaukee-headquartered 3PL Phoenix Logistics, says although the Food Safety Modernization Act (FSMA) is old news, companies are still grappling with it in terms of traceability requirements. “We’ve seen a lot of customers

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coming to us to see if we have those traceability capabilities,” Kriewaldt says. Phoenix is deploying the latest technologies to address traceability and improve facility security. About 90 percent of Phoenix’s business involves food or food packaging. Kriewaldt says the main concerns of customers involve security, traceability, cleanliness and damage prevention. “Security is right up there as a concern, and a lot of that comes from the potential for contamination or the potential for tampering,” he says. Kriewaldt says there is deﬁnitely growing pressure to increase delivery speed. Some of this can be attributed to the growing popularity of food delivery services. “I have been in this industry for about 25 years now,” he says. “Twenty-ﬁve years ago, you would get an order on Monday and it would have to ship out on Wednes-

day. Fast forward to 2019, and we are now in the world of two-hour lead times. That’s the norm and that’s the expectation. That’s what Amazon has done to consumer expectations.” Phoenix operates three facilities and also has signiﬁcant leased space. Altogether, the company has more than 25 million square feet of space around the Eastern U.S. Adjusting to the needs of individual customers can be an ongoing challenge, Kriewaldt says. One example is a ﬁrm in the Upper Midwest that is relatively new to outsourcing warehouse and distribution functions. “We’ve had to change our methodology, anticipating what they are going to do before they do it, learning their habits. We have to plan ahead.” So, what is on the horizon in terms of technology? Kriewaldt acknowledges it is trendy to talk about blockchain and its potential

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Burris Logistics

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Burris Logistics

Phoenix Logistics’ network of warehouses includes food grade facilities and state-ofthe-art WMS solutions.

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Burris Logistics

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A Burris Logistics employee scans produce in one of the company’s facilities.

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effects on supply chain, but he says the impact will be huge. “As consumers demand more traceability at every step of the process, it’s just a matter of time before blockchain is used to track every ingredient every step of the way, just like in the pharmaceutical industry.” Kriewaldt is among those in the industry who view attracting and

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retaining qualiﬁed people—both at the corporate level and on the warehouse ﬂoor—as one of the biggest challenges.

Harnessing the Power of AI Burris Logistics, headquartered in Milford, Delaware, has annual revenues in the $4 billion range

Phoenix

and employs more than 2,000 with facilities and ofﬁces throughout the U.S. About half of the company’s business is food-related. Burris increased its size and technological capabilities with the April acquisition of Trinity Logistics, another Delaware-based, family-owned 3PL. John Haggerty, Burris’ vice president, business development, says customers are looking for greater transparency, visibility and access to data. They want all of that in real time. “We partner with multiple sources to capture data,” Haggerty says. “If we do not own an asset, then we are looking at ways we can gain data and share it with customers. We also do procurement where we actually buy products and take title to goods, which many 3PLs do not do.” Haggerty says Burris’ Supply Chain Portal helps address the speed issue. The portal has multiple modules for customers to use, including a produce inspection visibility tool where data is captured, including pictures, real-time temperatures or anything the customer wants. Everything the shipper and the customer wants can be presented visually. Another Burris initiative aimed at increasing speed and supply chain agility is greater utilization of its own ﬂeet to backhaul product. “The minute we touch the product, it becomes our responsibility and we can better handle the receipt of the goods into our building,” Haggerty says. Current industry trends center on improving speed and gaining agility in the supply chain. “There has been a shift from diagnostic analytics to prescriptive and predictive diagnostics,”

Burris Logistics’ fleet is ready to roll. The company also offers cold storage, custom dedicated distribution, freight management, and foodservice redistribution.

It’s just a matter of time before blockchain is used to track every ingredient every step of the way, just like in the pharmaceutical industry.” Rob Kriewaldt, senior vice president, Phoenix Logistics

JULY 2019 | FOOD LOGISTICS

6/28/19 10:18 AM

We control the process from a

food quality perspective

and give customers real-time data.” Michael Lebovitz, business development director, Romark Logistics.

Haggerty says. “As we utilize artificial intelligence, we have decisions made in a more automated way.” Burris continuously evaluates technology. It acquires some technologies from vendors, and its IT team develops others. Much of it focuses on improving speed to market and on precision logistics. The company also creates tools for specific customers and then leverages those tools for other customers. “Most importantly, we evaluate technologies collaboratively with our customers,” Haggerty says. “It gives our customers some control, if you will, in the tools that we develop. Some of the technologies are purely IT-based and others are IT-enabled. For example, it may be a transportation technology where we need an interface developed by IT.” Haggerty says it’s essential that Burris stay on top of the rate of change taking place in the marketplace and the needs of empowered consumers. There are complex issues involved in addressing the explosive demand for fresh foods. “It’s important that we are always listening to our customers,” Haggerty says. Burris is offering fulfillment services to assist companies in some direct-to-consumer operations. Haggerty says some traditional

Romark

 Romark uses the latest software and stringent internal processes for enhanced traceability throughout the food supply chain.

continued

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Burris Logistics

COVER STORY

manufacturers, in addition to new companies focused solely on direct-to-consumer, are opting for this method. “There is a great demand for scalability,” he says. “They all want to grow fast.”

Investing in Real Estate, Assets Michael Lebovitz, business development director at Romark Logistics, says a major way the company provides improved customer service is by ensuring that it has sufficient real estate to meet distribution space demand. He says Romark has been developing its own facilities to address growing demand for warehouse space. “We have built the amount of space we believe we need to handle demand,” he says. “We aren’t relying on other real estate owners and developers. With that comes more refrigerated trucks and trailers to meet and exceed logistics requirements.” Other areas in food where the company is working to improve things fall within its packaging businesses, Lebovitz says. Romark offers both primary and secondary packaging. As part of its traceability efforts, Romark uses the latest software to track products and monitor trends. “We are able to demonstrate to our customers that we have ways to control the process from a food quality perspective,” Lebovitz says, “and give them real-time data.” Lebovitz says the ongoing labor market difficulties across the

 About half of Burris Logistics’ business is food-related. Earlier this year, the company acquired Trinity Logistics.

nation has affected most businesses. Romark does what it can to attract and retain employees, but is also turning to technology to help address the challenge. “We have been a family-owned business for close to 70 years,” Lebovitz says. “We create a family atmosphere and we pay good wages and benefits. For us, being in different labor markets has forced us to look at automation in some areas.” Lebovitz says technology is not the entire answer in addressing labor shortage issues, and should only be used when it enhances a process and helps employees do their jobs better. “Overall, labor is in a difficult position and we need to look at ways to attract and retain labor as well as technologies to support it,” Lebovitz says. “We are very connected to the local communities, which has been an advantage.” Another trend of note is the effect that meal kit shipping has had on volume. “We are shipping to almost all of the food delivery and meal kit manufacturing services,” Lebovitz says. “The biggest impact in newer meals are smaller sizes, so we are seeing some SKU growth. There is more volume, but smaller packages. Overall, shipping to these customers has been nothing but seamless. It’s been a big area of growth from a

www.foodlogistics.com

6/28/19 10:18 AM

Armada creates innovative,

fully integrated supply chain solutions

Burris Logistics

that deliver competitive advantages and improve business performance for our clients.

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641 Alpha Drive • Pittsburgh, PA 15238 • www.armada.net

JULY 2019 | FOOD LOGISTICS

6/28/19 10:18 AM

COVER STORY

continued

ship-to perspective. We are shipping more frequently to these customers. They are not wanting to hold inventory.”

The Digital Supply Chain Pittsburgh-based supply chain specialist Armada strives to stay on top of emerging technologies and trends in its quest to provide stellar customer service, according to two executives. Meredith Neizer, Armada’s senior vice president of operations, says some of the latest trends related to food transportation are farm-to-fork traceability and the environmental monitoring of food products, especially perishables. “We also have seen over the years the proliferation of digital freight solutions that systematically match freight with truck capacity as well as the continued advancement of blockchain solutions in product sourcing and traceability, Neizer says. Armada’s capabilities include warehouse and transportation solutions that eliminate and conRomark solidate shipments for its clients’ networks. “We have created supply chain efficiencies and minimized costs, driven continuous improvement and led change management initiatives with their network stakeholders,” Neizer says. “In addition, we put a lot of focus on supporting sustainability proWe put a lot of grams through the reduction of GHG emisfocus on supporting sions in freight movement and warehouse sustainability waste disposal.” programs through Mark Ohlund, Armada’s chief information the reduction of officer and senior vice president, says having GHG emissions...” accurate data is a key component of the company’s strategy, and Armada has invested in Meredith Neizer, senior vice president of data quality initiatives. These include staffing operations, Armada a data quality team to work with trading partners to correct the data anomalies the company encounters. “In parallel with this team’s efforts, Armada is working with a data science artificial intelligence company to create a dashboard to identify large volumes of data to detect anomalies,” Ohlund says. “This dashboard has machine learning capabilities extensible to other datasets we transact. It is through these efforts we are working to create more accurate data from which we can manage our clients’ supply chains.” Ohlund says Armada is using its operational data to be more proactive in responding to supply chain disruptions, which are occurring at increasing rates as supply chains become more complex. “This includes anticipating freight price increases based on statistical models we build from the data,” he says. “We also build custom visualizations for our trading partners to give them greater insight into their supply chains and provide engineering analytics to optimize networks.” Armada is using augmented analytics to support the detection of data anomalies. This technology employs data science and machine learning techniques in business intelligence frameworks. Ohlund says Armada

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is also piloting database machine learning techniques to understand data relationships and build more rapid models to help predict disruptions. “We are investigating robotic process automation (RPA) tools to help automate rote internal activities as well as automate and expedite responses to supply chain disruptions,” Ohlund says. “We expect these tools to dramatically improve process execution and adherence as we remove the human factor. Finally, we are looking at various cloud technologies to provide ‘infrastructure Phoenix Logistics on demand’ operates 25 million sq. feet of warehouse space in the form of in the Eastern U.S. technology sandboxes for experimentation, ﬂexible storage and compute power opportunities.” Ohlund notes that ﬁnding technical talent continues to be a big challenge. He says Armada strives to maintain constant awareness of emerging technologies and how they can be employed as “business enablers” for a competitive advantage.

Cold Storage Capacity, Automation

The expanding cold chain is putting pressure on capacity in the cold storage space, notes John Gaudet, vice president, business development, for RLS Logistics. “Cold storage right now is at a premium,” he says. It’s not just tight at key gateway ports, but at inland locations, too. Demand for cold storage is coming from multiple areas, says Gaudet. “We’re seeing a lot of companies from the U.K. and Europe

.” ta g

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that are looking to enter the U.S. packaging and e-commerce fulfillmarket.” RLS Logistics recently ment services. All RLS temperaon-boarded two U.K. companies, ture-controlled operations are GFSI one of which is a bakery. certified for storage and distribution Gaudet is also seeing signifiby the British Retail Consortium cant activity in e-commerce and (BRC), and comply with all governdirect-to-consumer fulfillment. “Ev- ment and USDA regulations. erybody wants to be in this space,” Technology is another area that he says. “At RLS, we do a lot of is advancing rapidly. Autonomous direct-to-consumer fulfillment for trucks will be “welcomed in the our clients and it seems like every industry because we have a driver day we get one or two inquiries for shortage and this is one way to this service.” combat it,” says Gaudet. The warehouse is also undergoRLS supports clients’ diing dramatic change as a result of rect-to-consumer business with technological advances, he adds. its own staff and cold storage No longer do warehouse operators facilities. “It’s very labor intensive,” have the luxury to build sprawling says Gaudet. facilities in the U.S. Rather, the While automation addresses European model characterized by some of the labor requirements in highly automated, vertical space is the cold storage space, “it’s tough one that is gaining favor. to achieve complete automation” In addition, RLS is providing and eliminate the manual labor clients with better business intelpiece entirely, he says. ligence to improve visibility into For that reason, RLS invests inventory, “what that inventory is heavily in its employees. “We do a good job,” says Gaudet. “We spent a doing, where it’s selling, and what the costs are, so that clients can lot of money, time and effort in our human resources department over the last four or five years and we’re better at what we do. Our goal is to not only hire the right people, but retain them too.” Meanwhile, RLS is committed to expanding its fulfillment lines in the cold storage space in response to the growing direct-to-consumer business and also plans to expand its overall footprint with a new location, says Gaudet. The logistics provider is also expanding its transportation offerings. In June, it announced temperature-controlled LTL service for orders originating in all lower 48 states to anywhere in the U.S. Previously, RLS offered temperature-controlled LTL service for orders originating in the Northeast specifically. The new service offers complete support for clients’ cold chains throughout the U.S., including LTL and TL SHIPCHOPTANK.COM transportation, warehousing,

Our goal is to not only hire the right people, but to retain them too.” John Gaudet, vice president, business development, RLS Logistics

JULY 2019 | FOOD LOGISTICS

6/28/19 10:18 AM

THIRD-PARTY & REFRIGERATED LOGISTICS

BY MARY SHACKLETT

CONSUMER DEMANDS FOR FRESH FOODS

ARE TRANSFORMING COLD STORAGE The bottom line is that more consumers want their food in “near real time”— and they’re willing to pay for it.

recent report from remand. Third, the global food supply recalls and product withdrawsearch firm Packaged Facts chain is expanding.” als. The number of cold-stored states that Generation He adds that, “Five years ago, products in demand has also grown. Z, the group born between 1995 consumers weren’t asking for more Products now range from refrigand 2010, is characterchoices in fresh and erated or frozen desserts, fruits, ized by households that vegetables, and beverages, to meat, GENERATION Z frozen foods. This are “25 percent to 29 has changed [in part] fish and seafood. Food products percent more likely to with the advent not stored and distributed within MORE LIKELY TO CONSUME consume microwaveable of social media required temperature ranges will MICROWAVEABLE DINNERS dinners and 26 percent promoting healthy adversely affect quality and food more apt to eat frozen eating trends. As a safety, so refrigeration and cold breakfast entrées or result, instead of 10 storage are very important.” MORE LIKELY TO EAT FROZEN BREAKFAST ENTRÉES OR sandwiches—23 percent varieties of frozen Nick Pacitti of Tippmann InnoSANDWICHES more likely to eat frozen pizza, we now have vation confirms that, “We see more dinners and 10 percent entire freezer aisles and more food shippers, distribmore [likely] to eat dry devoted to dozens utors and MORE LIKELY TO EAT packaged dinners, dinner of pizza varieties We see more efulfillment FROZEN DINNERS mixes and kits.” The same with new, healthier providers in and more Packaged Facts group was also more likeoptions.” companies need of cold ly to be vegetarian, and These changing consumer storage and looking definitely more likely demands aren’t unique to the U.S., refrigerated for cold to demand organic and however. centers.” storage and healthy foods. Increased demand for seafood What refrigeration.” companies Consumer food habits is evident around the world, given Nick Pacitti, are clearly changing—and the significant population growth like Tippmann Tippmann Innovation it is having a direct impact in China, India and Brazil that is Innovation on food supply cold chains driving the frozen are doing is and cold storage facilities. fish and seafood increating more US POPULATION dustry. This growing “building in a GROWTH What’s Driving desire for seafood box” cold storToday’s Cold and other foods age, actually Storage has led to a rise in redesigning SINCE 2010 Demand? imports and exports existing avail“Three factors are among countries. able commerdriving cold chain In turn, this is driving the need for cial space into sections of internal demand today,” said more cold storage and refrigerated cold storage that are housed within Carl Fowler, SVP transportation. the walls of these existing facilities. of regional sales at “Other trends are adding to this “The demand for cold and fresh Americold. “First, as well,” notes Heena Patel, food goods has grown,” says Pacitti. consumer demand safety technical director for SCS “Since 2010, the U.S. population for fresh food is growing. Global Services. “The retail sector has grown by 20 million people. Second, retail outlets are exploring has grown and there is increased This has placed pressure on the U.S. new channels to meet customer de- concern about food waste, product supply chain infrastructure. There is

25-29% 26% 23%

20 MILLION

Magone / iStock / Getty Images Plus

FOOD LOGISTICS | JULY 2019

www.foodlogistics.com

PixelBay / E+ / Getty Images

also a need for a ‘distributed cold chain’ where the placement of refrigerated fulfillment centers are closer to demand clusters enabling more efficient and faster deliveries direct to the consumer.” While expanding the network of cold storage facilities so they can be proximate to consumer markets is one trend, another notable trend is the adoption of Internet of Things (IoT) systems and technologies to improve cold storage and refrigeration processes. “There are more companies using tools for automated temperature monitoring in the refrigerated or freezer trucks (reefers) that are used to transport food products,” says Patel. “The FDA also has

specific stipulations under the Food Safety Modernization Act (FSMA) for maintaining temperature, and customers that use transport trucks request temperature and environmental verifications at times. Transporters and distributors are using cellular and Wi-Fi capabilities that enable a device to connect via cell service when necessary and via the customer’s existing Wi-Fi network when available. These monitoring devices act as a cold chain reliability data logger, ensuring food safety monitoring and compliance.”

time and “on demand” to consumers who are accustomed to Amazon service • A wide variety of foods that gives consumers options— which means that those in the food supply cold chain must deal with many more products, product SKUs and environmental cooling conditions. This isn’t an easy order to fill. Ground beef recalls are all too common. In April, the CDC announced a new E. coli outbreak that infected 109 people in six states,

Mounting Cold Chain Pressures Meanwhile, food manufacturers, shippers, distributors and retailers are up against several challenges: • Foods must be delivered in fresh, good tasting and safe condition for consumers to enjoy so they maintain a good impression of the company brand • Foods that are delivered on

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JULY 2019 | FOOD LOGISTICS

3PL

continued

THE RISE OF THE REFRIGERATED BOX-IN-A-BOX

Tippmann Innovation’s Modular Cold Box or Ti-MCB is experiencing a spike in activity. The rise in popularity and use of the Ti-MCB comes from its flexibility, speed of installation and cost. Ti-MCB is a highly suitable alternative to new construction as it is less expensive and it can perform at any temperature range. Processors in need of additional refrigeration capacity who have suitable ambient space available often decide for a box-in-a-box installation. These installations require little “prep” work and can be put up in phases or increments as needed by the user. With virtually nonexistent cold storage capacity throughout the entire U.S., industrial building owners or landlords are quickly adopting modular cold boxes to increase the value and utility of their buildings. One of the key drivers for a box-in-a-box installation is return on investment. From experience, a box-in-a-box installation for mid-30-degree temperatures is cheaper than the cost of new construction. Landlords find these installation upgrades highly appealing as they increase property values.

Our newest facility in Rochelle, Illinois, can

automatically process orders around the clock without human intervention.” Carl Fowler, SVP of regional sales, Americold

which was tied to ground beef. This recent incident followed on the heels of the E. coli outbreak that struck romaine lettuce in January. Food recalls like these as well as the expense of spoiled food caused by inadequate refrigeration can quickly turn consumers away from a food brand or retail outlet. “It is this lack of food safety and quality awareness in the storage and transportation industry about the importance of cold chain maintenance from door-to-door that can have a major impact,” said Patel. “Freight and transportation companies need to train their drivers on the maintenance of product integrity and how the lack of cold chain maintenance can affect product quality and safety.”

Can Technology Help? For the past five years, a host of technologies ranging from cloud-based supply chain software to IoT sensors and devices to near real-time analytics reports have all offered partial answers to managing the cold chain and cold storage. Company efforts

FOOD LOGISTICS | JULY 2019

have focused on bringing all of these technologies together into solution sets that present total solutions, but perfecting these systems is still a work in progress. “We are seeing automation and robotics replacing time-consuming manual processes, speeding up the movement of food through the nation’s supply chain,” says Americold’s Fowler. “Our newest facility in Rochelle, Illinois, can automatically process orders around the clock without human intervention… This is not to say that automation will replace the human workforce— rather, we implement automation when appropriate and where it makes sense to free up people to perform higher-value work.” The need for highly qualified

personnel in the food supply cold chain cannot be overstated. In 2017, it was estimated by the Council of Supply Chain Management Professionals (CSCMP) that there was one qualified person for every six job openings in the supply chain industry; and in 2018’s forecast it was projected that the supply chain industry in the United States alone would need to recruit an additional 1.4 million individuals to meet its talent needs. “The driver shortage is one major issue in logistics and for the cold chain,” says Pacitti. “It is estimated that by 2026 there will be a shortage in the U.S. of 180,000 drivers. No one wants to drive long distances and cold storage facilities will be much more localized, being placed well within a 500 mile radius. Today, this radius is moving even closer, with mini regions setting up where cold storage facilities are placed within a 250-300 mile radius.”

Cold Storage Best Practices

Given the diversity and the increasing volumes of perishable goods that consumers are demanding, food retailers, distributors, logistics providers, producers and those that provide cold chain and cold storage services must develop strategies for meeting changing markets. “Consumers want more products delivered to them more often,” says Pacitti. “There is also a move toward specialty foods, and more products are being imported and exported to markets.” For companies with cold chain needs, what best pracLABOR tices will help them get the most out of their cold chains? “Look to the cold chain for PEOPLE NEEDED TO FILL THE JOB OPENINGS IN THE SUPPLY CHAIN INDUSTRY innovation and inspiration,” advises Fowler. “By partnering with a company with strong cold chain expertise, companies can FOR EVERY 6 JOB OPENINGS use the cold chain as part of the IN THE INDUSTRY product life cycle (i.e., ripening, preservation, waste elimination). In one case, a customer SHORTAGE IN THE US BY 2026 leveraged our guidance on new innovations to drastically CSCMP

1.4 MILLION 1 PERSON

180,000 DRIVERS

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Americold

reduce waste by 100 percent.” There are also many common-sense practices that companies can enact to position their cold chain to perform more optimally. “These practices include the maintenance of refrigeration systems and door seals in the trucks,” says Patel. “Companies can also use continuous temperature monitoring devices in their trucks to ensure proper temperatures are maintained. Finally, do not overload

www.foodlogistics.com

trucks with products to maintain consistent temperature, and keep reefer units on when unloading and loading products.” The bottom line is that more consumers want their food in “near real time”—and they’re willing to pay for it. “Shoppers want to click a button and have their food delivered to their doorstep,” says Fowler. “This specific demand is driving food producers and cold storage providers

to find new ways to bring product to market faster.” An example is the growing demand for fresh beef in Asia. A North American company can slaughter the animal, refrigerate it in a distribution facility near an airport, and then ship the product in a refrigerated container by air to meet the demand. “There is a shift happening in the cold storage industry, and it’s also influencing workforce skills needed for the cold chain,” explains Fowler. “The shift is driven by two key factors: SKU proliferation and technology. SKU proliferation means workers use data analytics to pick and fill orders, often in real time. Big data is changing the way we look at food in the supply chain process. For example, we can now track fresh and frozen produce from the farm to the retailer. “This requires warehouse workers to be trained in new 3PL technologies and information processing,” says Fowler. “It is a marked change from simply clocking in and moving products around using paper invoices.”

Shoppers want to click

a button

and have their food delivered to their doorstep.” Carl Fowler, SVP of regional sales, Americold

JULY 2019 | FOOD LOGISTICS

SECTOR REPORTS WAREHOUSING

BY MACKENNA MORALEZ

THE RISE OF AUTOMATION E The “Amazon Effect” has now reached the food and beverage industry, forcing companies to act on technology investments that they would have held off on in the past.

billion grocery market in 2018. ment centers in the U.S. However, The number is momentous for the the No. 1 challenge that grocers industry, furthering the proof that are facing today when it comes to online orders of groceries is here to automation is the growth of their stay. However, when surveyed, 76 business. percent of consumers said they pre“Virtually every company we’re talking to today is looking fer same-day delivery ONLINE GROCERY at how they can grow over next-day delivery GROWTH and curbside pickup. and what they can do to support growth in In order to close the the future,” said Scott e-commerce fulfillment Growth Is a Challenge Deutsch, president of FROM 2017-2018 gap, companies have CommonSense Robotic Ehrhardt Partner Group begun adopting and Amazon’s purchase of Whole Americas during a recent investing in emergFoods in 2017 for $13.7 billion Food Logistics webinar. “The thing disrupted the entire industry. Groing technologies and opening that scares people the most about micro-warehouses closer to the cers were forced to come to terms technological investments, whether customer. with the fact that online grocery it’s automation or another technol“One of the main challenges we orders are the way of the future. see is the rise of e-commerce in the According to a Commonogy, is making sure they food and beverage space. We’re scale and that they’re sense Robotics 2018 now seeing models of ‘click-andflexible enough for an report titled, Crossing collect’ and food delivery that is unknown future.” the Grocery E-Commerce CONSUMERS Online orders of food driving a new labor challenge. You Rubicon, major retailers PREFER and beverages are start- have to think of what that means have invested over $28 billion in online grocery. SAME-DAY ing to outpace fashion from a fulfillment perspective,” Just last year Walmart DELIVERY purchases for the first says Saif Sabti, vice president of sales and Canadian operations for spent over $11 billion in OVER NEXT-DAY time. According to the SSI Schaefer. “Traditionally, you technology investments CommonSense RobotDELIVERY AND have a store or a warehouse that while Kroger partnered CURBSIDE PICKUP ics report, the average CommonSense Robotic allowed you to absorb some of the with Ocado, a British industry estimate for peaks and valleys. Now, we have e-grocer that focuses on online grocery growth highly-automated warehouses to from 2017 to 2018 was 35 percent, very short fulfillment windows and create over 20 automated fulfillsecuring 3 percent of the total $800 people are moving toward urban -commerce has seen a steady uphill climb in recent years. All industries are scrambling to keep up with online orders, investing significant amounts of money into a revamped online presence, new warehouse space and automation. The food and beverage space is no exception.

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SR: WAREHOUSING

help work with the technologies what Kroger is doing with Ocado, that are in-house. will help improve efficiencies and deliver to the consumer quicker “The people that we are recruitthan ever before. distribution centers where labor is ing today are millennials,” Deutsch “Microfulfillment is on the rise already challenging.” explains. “They’re technology savvy and solely driven and from an age group by the short fulfillin the workforce that Technology Drives RETAILERS LOSE has higher standards Decision-making ment window and for technology than close proximity The United States is seeing a what we have ever to the customer,” record low for unemployment ON EVERY ONLINE experienced before.” within the last year. In a tight labor GROCERY ORDER THAT IS Sabti says. “They cannot afford to market, warehouses are struggling Right now, autoPICKED MANUALLY CommonSense Robotic be fully manual. to recruit and retain skilled talent. mated warehouses There has to be a Adding in the challenges of the “Am- are not a one-sizetechnology level at smaller centers.” fits-all scenario. It is essential that if azon Effect” and having to deliver Meanwhile, there are several you look to automate your facility, orders quickly, many are unable to different definitions when it comes then you retrain your workforce to compete in a market that is already to automated warehouses. The be more up to compact. The rise type used depends on the challenge date with the of e-commerce needing to be solved. The food technology. is complicating and beverage space is unique as The study an area that is WAREHOUSING AND warehouses are often climate conestimates that already complex TRANSPORTATION retailers lose to begin with. trolled and have different operating SPACE HAS SEEN THE $5 to $15 on Labor—or challenges. SHARPEST GROWTH every online lack thereof—is “It’s a great industry to get into IN THE LAST 10 YEARS grocery order a major issue right now because there’s such SINCE 1970. that is picked that is plaguing a broad range of products,” says Bureau of Labor Statistics manually. That the industry. Norman Leonhardt, director of number is only expected to increase business development for WITRON According to the Bureau of Labor as the volume of online orders go Statistics, the warehousing and Integrated Logistics. “Before up. Automation solves for scale and transportation space has seen the someone gets into warehouse sharpest growth in the last 10 years economics, so only having one large automation, extensive research distribution center is no longer since the 1970s. In order to fill the must be done to ensure your own going to work. Having several autopositions, companies are turning data and operations align with your toward tech-savvy millennials to mated micro-warehouses, similar to automation partner.” continued

$5-$15

Microfulfillment is on the rise and solely driven by the short

fulfillment window and close proximity to the customer.”

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Saif Sabti, vice president of sales and Canadian operations, SSI Schaefer

LABOR:

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SECTOR REPORTS TRANSPORTATION

BY JIM GRIFFIN

AN ELD CONUNDRUM

The second phase of ELD implementation carries critical decisions for food distribution companies with transportation fleets.

he two-year grace period allowing automatic on-board recording devices (AOBRDs) in place of electronic logging device (ELD)-compliant devices will expire December 16, 2019. This means that food distribution fleets that have not yet upgraded to ELD-compliant devices, but have been operating under the AOBRD extension, are losing time to make a commitment to an ELD provider. While time is getting short, it is important that companies not make a hasty decision that can be detrimental in terms of data and technology. The ELD conversation for food distributors is larger than just an hours-of-service (HOS) determination, especially for time- and temperature-sensitive operations—due to the Food Safety Modernization Act (FSMA). ELDs are also part of a broader discussion about telematics and on-board computers, and the use of telematics to optimize data that comes from the truck—as well as the use of that data for overall fleet compliance, analytics and operations.

ELD and AOBRD— the Differences ELDs can be a different technology than an AOBRD. ELD’s are not required to capture all the operating data that your AOBRD may have been capturing. ELD data requirements are focused and governed based on the HOS rules. What this means is that the food distributors now staring down

FOOD LOGISTICS | JULY 2019

the deadline this year need to be Are they giving up access to critical careful in their selection to ensure data they use now, additionally are they do not focus only on ELD comthey possibly giving up the ability to gain access to data that would help pliance. Fleet executives need to also determine what data they need with FSMA compliance in the futo manage their food distribution ture? This depends on the viability fleet efficiently and in compliance of the technology platform offered with FSMA. For example, by the provider. If ELD’s are they may select a comfleet managers are not required not careful, they may pliant ELD, but may lose important operational to capture lose out on critical truck data they can data including load data, all the use, or have been maintenance and fuel data operating using, for performance used to monitor total cost data that optimization via data of ownership. your AOBRD analytics. AOBRD’s have been may have This additional data around for several years been could be of further and can capture an extensive amount of data. capturing. use for food distribMany telematics providutors with time- and ers have upgraded their technology temperature-sensitive loads. These organizations rely on identifying to maintain the data collection and longer idling times and when commonitoring and enhance them with ELD mandate-compliant functionbined with temp-sensitive orders can greatly impact fuel expenditure ality. These devices will continue and critical routing data that can to record the same data as the AOalso impact perishable deliveries. BRD. However, newer ELD devices What’s more, FSMA mandates that and services may not be collecting sanitary transportation of food the same rich data set. requires temperature monitoring The ELD mandate opened a vast and control to prevent refrigerated/ market opportunity that attracted frozen food from becoming unsafe several new providers claiming to be ELD compliant. Many of these provid- during transportation. This inforers are focused on ELD compliancy mation can be monitored with the and not the valuable fuel, diagnostic right ELD telematics solution. and fault code data, or the load-speFood distributors will also need to have more stringent routing cific data that might be needed for plans in place for deliveries as data food distributors under FSMA. extracted from the ELD might Cover Your Data Needs make it more difficult for timeA key question that food distribu- and temp-sensitive operations to remain compliant. A real scenario is tion fleets need to get answered is:

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a load time and temperature-sensitive load being stranded because the driver is out of hours, not only delaying the load but potentially putting the whole load at risk. Do food distributors view the telematics mandate as a “necessary evil” and spend the least amount to meet compliance, or do they go allin and realize the value of the data that the entire ecosystem provides to the operational bottom line?

Choosing a Provider Amid the overload of applications, hardware and services available in the ever-changing telematics world, deciding on the range of system functionality and associated costs can be overwhelming. Pricing for hardware can range from free to several thousand dollars per truck, while functionality can range from basic GPS tracking to a fully inte-

grated mobile asset management system. With options on vendors, applications, features and costs, where do fleets begin? Fleet managers must think beyond ELD compliance and think strategically about the data they need to manage their food distributor’s compliance, performance, driver behaviors and vehicle life cycles that will ultimately pay off in improved fuel economy, enhanced preventative maintenance, lower operating costs and improved driver retention. The hardware is just the first decision. Fleets must also choose a provider/partner that is there for the long-haul, and that can support the organization and fleet well into the future. A short-sighted decision to simply meet the ELD mandate without understanding the actionable data potential for greatly reducing operating costs is ill advised. The incremental costs to acquire systems and services that provide additional data and applications to modernize the fleet is minimal and its return on investment is substantial. By attempting to minimize this step and focusing strictly on ELD compliance, fleets will find they have lost substantial operational savings and actually increased costs by not having access to actionable decision-making data that can assist in optimizing the food distributor’s fleet performance.

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What does a good partner/vendor look like?  How long have they been providing telematics? Fleets need a provider that has a legacy of providing solid telematic technology and services. Telematics and transportation technology are a lifetime of lessons learned. It is beyond the technology, and it is also understanding how the technology impacts the operation of the fleet. No two fleets are the same.   What does their technology roadmap look like? What is the strategy for the advancement of technology in the future, and how will this impact the collection and interpretation of data? Remember, this is a long-term investment, and it is unwise for fleets to jump between providers frequently. The operational disruptions/costs alone will deplete any realized savings. Fleets also don’t want to lose any competitive edge due to their competitors’ actionable data strategies.    How good are they at deployment and support services? It is important to find a partner that understands all complexities involved from planning to execution and is there to work with fleet management teams to overcome any unforeseen challenges. Choosing the right business intelligence partner can help fleets interpret the abundance of data that’s collected by the AOBRD and ELD. Beyond this critical interpretation, the right partner offers its own technology resources that can help fleets make sense of data from many different platforms and sources—a difficult action when fleets try to make sense of data on their own. With the right partner selection, fleets can be compliant and obtain business intelligence and analytics allowing fleets to maximize the value of the data they extract from each truck to create both operational and bottom-line financial efficiencies that provide significant return on the investment into the technology itself, as well as their partnership with the data purveyor.

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Jim Griffin has been a thought leader in transportation technology for over 25 years and is the chief operations officer and chief technology officer for Fleet Advantage, a leading innovator in truck fleet business analytics, equipment financing and life cycle cost management.

JULY 2019 | FOOD LOGISTICS

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SECTOR REPORTS SOFTWARE & TECHNOLOGY

BY JOHN R. YUVA

BLOCKCHAIN BUILT ON TRUST T

Food industry players can now participate in blockchain with minimal cost and implementation for greater supply chain accountability.

he concept of blockchain is no mystery for most supply chain professionals. With several high-profile pilots occurring in the food and beverage space alone, it’s more of a question of execution. How do you transition from a pilot to a real-world application? The answer, as some companies have realized, is more complicated due to system compatibilities, governance and other issues. However, this doesn’t mean blockchain is out of reach. IBM Food Trust, for example, provides food and beverage companies with the interface to integrate blockchain into their operations and among supply chain partners, with capabilities even beyond the digital ledger. Nigel Gopie, global marketing lead for IBM Food Trust, says despite digitization and better data utilization, the same challenges permeate supply chains—poor data visibility, inefficient processes

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and underwhelming process optimization. In short, there’s a lack of true demand management occurring and businesses are suffering by their inability to serve customers effectively.

Beauty of Blockchain Enter blockchain. Gopie believes blockchain is often too compartmentalized as a solution because of the hype and its niche utilization. What many in supply chain fail to see is how the technology can serve as a catalyst for data visibility and process automation. “Blockchain’s greatest asset is its application as a data sharing platform in a multi-stakeholder environment. And while blockchain is critical to transforming food safety, the data can benefit other supply chain initiatives as well,” says Gopie. “Most people don’t realize that only 20 percent of the world’s data is searchable, while the other 80 per-

 IBM Food Trust’s intuitive interface powered by blockchain benefits all network participants with a safer, smarter and more sustainable food ecosystem.

cent is locked within organizational silos. Blockchain allows us to unlock those data sets to better connect supply partners and customers for greater insights.”

IBM Food Trust To address growing supply chain complexity and build stronger trust in the food industry, IBM Food Trust is comprised of different modules that address a suite of solutions: 1) food safety, 2) food fraud, 3) food freshness, 4) sustainability, 5) brand story, 6) reduce waste and 7) supply chain efficiencies. Whether it’s connecting farmers to consumers or focusing on food waste in the supply stream, Food Trust bridges those initiatives and associated

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