Food Logistics May 2015

Food Logistics +

SECTOR REPORTS • F SMA Highlights A Role For Reusable Plastic Pallets • Can Railroads Stay On Track?

•W hen Is The Right Time For ERP?

®

Issue No. 166 May 2015

Global Supply Chain Solutions for the Food and Beverage Industry

PORTS

GET READY

FOR FOOD TRADE BOOM

▼

Podcast: IARW Attendee On FSMA: ‘It’s Utter Chaos!’

Blog: West Coast Port Slowdown Gives Glimpse Into Future Shipping Rates; What To Do About It Expo Reports: Lessons From IARW/WFLO Expo In Orlando, Fla.

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COOL INSIGHTS: Study Calls For Improvement In Safe Food Transportation Practices Pg. 12

▼

WEB EXCLUSIVES

Photo by: Peter Forestm Courtesy of Port of New Orleans

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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

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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.

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

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ON THE MENU MAY 2015 • ISSU E N O . 166

14

COVER STORY

Food Trade Set To Expand As Ports Upgrade Infrastructure

Ports, container terminals, cold storage facilities and even governments are getting on board.

By Elliot Maras

22

FEATURE

3PLs & REFRIGERATED LOGISTICS

Keeping It Cool

Examining challenges faced in the containerized reefer trade.

By Professor Jean-Paul Rodrigue and Professor Theo Notteboom

14

26

SECTOR REPORTS WAREHOUSING

FSMA Highlights A Role For Reusable Plastic Pallets

There’s more riding on your pallets than just your product.

By Bob Klimko

22

30

TRANSPORTATION

Can Railroads Stay On Track?

Some shippers are questioning reliability despite years of steady improvements.

By Lara L. Sowinski

32

26

SOFTWARE & TECHNOLOGY

When Is The Right Time For ERP?

Food safety and visibility concerns are driving food/beverage companies to take a closer look at enterprise resource planning (ERP) solutions.

By Eric Sacharski

DEVELOPMENT 36 ECONOMIC Pacific Northwest

Carves Out A Food & Beverage Niche

The region’s growing artisan food culture finds support from unique natural resources and a growing logistics network.

By Elliot Maras

COLUMNS

Play Expanding 6 Ports Role In Global Food Supply Chain

Box ports and niche ports alike are key supporters.

By Lara L. Sowinski

INSIGHTS 12 COOL Benchmark Study

Finds Room For Improvement In Food Transport Safety

Industry study reveals varying degrees of readiness for new regulations.

By Elliot Maras

(AND MORE) FOR THOUGHT 38 FOOD Food Shippers Could

Reap Huge Savings From Bold Fuel Efficiency Standards

Strong truck fuel efficiency and greenhouse gas standards are a win-win for government regulators and industry.

By Jason Mathers

DEPARTMENTS 8

Supply Scan

10 Food on the Move

30 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.

4

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• FOOD LOGISTICS

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For several years, retailers and major food processors have been asking suppliers for certification to GFSI standards to ensure safety of the products they supply. And as many of those suppliers have complied with the request, there was another gap noticed – storage and transportation.

US Foods, in their quest to be an industry leader and prove to customers that they have the systems and processes in place to ensure storage and delivery of safe food, began implementing the IFS Logistics certification standard in their facilities.

In 2014, The Acheson Group, led by Dr. David Acheson, a strategic consulting firm for food and beverage companies and those providing technical support to the food industry, released a case study on the success of US Foods outlining their reasons for certification and their experience with FSMA compliance.

These results were significant.

But now, US Foods has gone a step further and commissioned the business department at the University of Michigan to study the business effects of certification pre- and post-certification.

The results of this study, one that was designed to understand the business value of certification, has yielded valuable results.

These results were delivered at the Food Safety Summit in Baltimore, Maryland.

As the gap in storage, distribution, and transportation certification narrows, more and more companies providing these food services will look to global standards. And understanding the value of the chosen standard is very important.

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.

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FOR STARTERS FROM THE EDITOR’S DESK

WWW.FOODLOGISTICS.COM Published by AC Business Media Inc.

Ports Play Expanding Role In Global Food Supply Chain

T

he global food supply chain is on course for further expansion in 2015, driven in part by developed markets’ desire for year-round access to fresh fruits and vegetables and emerging economies’ growing middle class and rising consumption of meat and dairy products.

Every major trade lane is seeing higher volumes of refrigerated cargoes, particularly fresh produce from South America heading to the U.S. and Europe and beef/poultry/pork exported from the U.S. and Europe to Asian countries.

SOWINSKI It is obvious how important seaports are in this equation.

Major containerized ports along the U.S. West, Gulf and East Coast along with niche ports whose focus includes agricultural and food products are supporting the food supply chain. Infrastructure projects at the box ports include adding more reefer plugs and racks, while the areas surrounding ports are experiencing a buildout of cold storage facilities. Overweight corridors, on-dock rail, 24/7 inspection services from FDA and USDA also add support. Niche ports, meanwhile, continue to capitalize on their expertise in handling perishable cargoes as a selling point, not to mention a high level of customer service.

On the carrier side, more containerized carriers (Maersk, Hapag-Lloyd, Hamburg Sud, UASC, CMA CGM etc.) are investing in their reefer business, especially buying new reefer conContainer yard at the Port of New Orleans. tainers to expand their fleets, while specialized carriers (Seatrade, Sea Star Line, etc.) too are making similar investments to remain competitive.

Software and technology solutions designed to optimize the atmosphere inside the reefer container are becoming more sophisticated—and affordable—which means shelf life for perishables is improving. Tracking and tracing capabilities are getting better too, although the affordability aspect isn’t quite as attractive for lower value perishable shipments, such as bananas, for instance (as opposed to pharmaceutical shipments).

This is an exciting time for our industry with the global food supply chain poised to grow even more this year. We’ll continue to follow and report on trends and developments as they materialize.

Enjoy the read.

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

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MAY 2015

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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; Fax: (480) 240-4897 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.

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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 food itself is not the only thing discarded; valuable natural resources go into producing the food, including water. In addition, methane from food decomposition accounts for 7 percent of greenhouse gas emissions.

Loblaws Saves Waste Selling ‘Ugly’ Produce At A Discount

Report: FDA Lacks Funds To Enforce FSMA

Loblaws, Canada’s largest food retailer, recently announced the launch of a new campaign to combat food waste. Called “no name Naturally Imperfect,” the promotion publicizes Loblaws’ sale of misshapen, “ugly” produce at a discounted rate. If successful, the program will reduce the C$27 billion worth of food Canadians waste each year. The program also promotes public health by making nutritious food more affordable; mitigates the devastating impact of food waste on the environment; and provides greater economic security for the farmers producing the food. Globally, over 1 billion tons of food goes to waste each year—a total annual economic impact of C$750 billion. The

In 2010, the Congressional Budget Office determined that the U.S. Food and Drug Administration (FDA) would require $580 million from 2011 to 2015 to execute the demands of the Food Safety Modernization Act (FSMA).

To date, Congress has allocated less than half of that amount to the cause, according to The New York Times. Michael R. Taylor, the FDA’s deputy commissioner for foods and veterinary medicine, said that although there are still plans to move forward with enforcing the FSMA, the agency doesn’t have the money. Connecticut state representative Rosa DeLauro (D) – who played a key role in writing the food safety act – says that two parties are to blame: the White

House, along with the FDA’s parent agency – the Department of Health and Human Services.

Both entities attempted to “impose user fees on the food industry to help fund the law.” Such fees, paid by food companies, are used by the FDA for other programs.

latory agencies, including in the European Union. Still, a number of companies, consumer groups and advocacy organizations have been sampling foods, as well as human urine and breast milk, to try to determine the pervasiveness of glyphosate residues.

Worst U.S. Bird Flu Outbreak Strikes; Wisconsin Declares State Of Emergency

Feds Consider Testing Food For Glyphosate Herbicide Amid rising public concern over possible links to disease, U.S. regulators may start testing food products for residues of the world’s most widely used herbicide, the Environmental Protection Agency (EPA) told Reuters. Glyphosate, the active ingredient in Roundup herbicide, has come under scrutiny since a research unit of the World Health Organization reported it was classifying glyphosate as “probably carcinogenic to humans.” The herbicide is considered safe by the EPA, as well as many foreign regu-

A lethal strain of bird flu has caused the worst U.S. outbreak ever and prompted Wisconsin to declare a state of emergency. The infected birds were raised at an Iowa facility. The flock has been quarantined, and birds on the property will be culled to prevent the spread of the disease. The virus can kill nearly an entire infected flock within 48 hours.

U.S. FRUIT AND NUT IMPORTS TOP U.S. IMPORTS OF FRUIT AND NUTS FROM SOUTH AMERICA TOP 10 HTS CODES

TOTAL VALUE

080610 Fresh Grapes

$846,944,289

080390 Fresh Bananas

$540,880,898

081040 Cranberries and Blueberries

$353,070,290

080440 Avocados

$213,327,508

080810 Fresh Apples

$144,051,436

080450 Fresh Guavas, Mangoe

$127,511,227

080520 Mandarins

$118,711,848

081190 Frozen Fruits and Nuts

$111,414,095

080310 Fresh or Dried Plantains

$98,461,255

081120 Raspberries and Blackberries

$86,308,450

All Other

$558,753,130

As Americans’ taste buds expand, so does the demand for exotic, fresh fruit year-round. U.S. imports of fruit and nuts from South America have grown rapidly from 2007 to 2014. Fruit imports are naturally seasonal and 36 percent of U.S. fruit imports arrive from South America during the months of December, January and February. In 2014, Americans ate more South American fruit than ever before with values reaching nearly $3.2 billion.

U.S. IMPORTS OF FRUIT AND NUTS FROM SOUTH AMERICA $3.0

$1,756,766,382

Peru

$466,140,812

Ecuador

$446,471,035

Colombia

$225,826,460

Argentina

$152,089,117

Brazil

$94,523,534

Bolivia

$40,186,500

Uruguay

$16,957,338

Guyana

$464,820

Paraguay

$8,428

Total

$3,199,434,426

$2.5 Billions

TOTAL VALUE

Chile

by Total Value

$3.5

COUNTRIES OF ORIGIN FOR FRUIT AND NUT IMPORTS TOP 10 COUNTRIES

All data provided by Zepol. Visit zepol.com for a Free Trial

$2.0 $1.5 $1.0 $0.5 $0

2007

2008

2009

2010

2011

2012

2013

2014

Source: Zepol, www.zepol.com

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• FOOD LOGISTICS

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Pallet Flow

Push Back

Wide Span

Selective Rack

Cantilever

Warehouse Racking

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

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FOOD ON THE MOVE LOGISTICS TRENDS IN OUR INDUSTRY

Investment To Spur Tiger Cool Express Rail Container Fleet Wood Creek Capital Management, LLC has purchased an ownership interest in Tiger Cool Express to support the expansion of its refrigerated rail container fleet. Tiger Cool Express expects to acquire an additional 300 refrigerated rail containers for a targeted 2015 fleet size of 735. It announced in February the acquisition of 200 containers from Quingdao CIMC Special Reefer Co., Ltd.

USDA Expands Beef And Pork Trade With Mexico And Peru The U.S. Department of Agriculture reached agreements allowing beef and pork

First Global Cold Chain Expo To Be Held In Chicago June 2016

T

he Global Cold Chain Alliance and United Fresh Produce Association announced the inaugural Global Cold Chain Expo, to be held in June 21 to 23, 2016 at McCormick Place in Chicago. The announcement was made during the IARW-WFLO convention and expo in Orlando, Fla. Co-located with FMI Connect, the International Floriculture Expo and United Fresh, the expo is expected to attract more than 15,000 decision makers.

producers greater access to Mexico and Peru.

The agreements will allow U.S. producers to export slaughtered cattle to Mexico and expand access to consumer markets in Peru for U.S. fresh and chilled pork.

Trade Bill Passes Committee The U.S. House Ways and Means Committee recently passed Trade Promotion Authority legislation. The National Cattlemen’s Beef Association applauded the move.

DAT SOLUTIONS’ MONTHLY FREIGHT REPORT

From Backhaul To Headhaul And Back Again

By Mark Montague

A

s the need to move truckload freight shifts toward seasonal summer patterns, many lanes that paid headhaul rates just a month ago have turned into backhauls, where a headhaul is defined as the higher rate in a pair of moves (A to B and B to A).

Florida is a classic example.

Take a look at a 13-month history comparing average spotmarket truckload reefer rates between Atlanta and Miami.

For 11 months of the year, Miami to Atlanta is the lowpaying half of an imbalanced lane. When reefer demand spikes in Florida during produce season, the average rate flips and the southbound direction becomes the backhaul.

Seasonal demand for reefers can flip lane rates for vans, too.

Reefer carriers compete with vans when the availability of refrigerated freight is low. During peak harvest times, when there’s more freight and little available reefer capacity, vans will compete for some of that agricultural freight. As a result, van rates rise generally. Hence, the Southeast typically enjoys higher rates in the spring and early summer as produce season starts sooner. The Midwest and Northeast have higher rates in the fall.

Another example of a lane with a seasonal rate flip is between Los Angeles and Stockton. Average outbound reefer rates from Stockton to Los Angeles rarely match L.A.-to-Stockton levels, but they do swing from highly imbalanced into balanced in the fall. We’ll be watching how potentially more labor problems at Long Beach and L.A. ports, as well as drought conditions in Central California, affect demand and rates on this lane.

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MAY 2015

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SPOT REEFER TL RATE: ATLANTA-MIAMI $2.50 $2.35 $2.20 $2.05 $1.90 $1.75 $1.60 $1.45 $1.30

$1.15 $1.00

Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Atlanta to Miami

Miami to Atlanta

SPOT REEFER TL RATE: LOS ANGELES-STOCKTON $2.50 $2.35 $2.20 $2.05 $1.90 $1.75 $1.60 $1.45 $1.30

$1.15 $1.00

Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Los Angeles to Stockton

Stockton to Los Angeles

Shifting freight patterns create new opportunities elsewhere. But in some circumstances, the better rate is on the flip side of a lane you’re already on.

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

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FOOD LOGISTICS

• MAY 2015

11

5/6/15 8:49 AM

COOL INSIGHTS

BY ELLIOT MARAS

MARAS

Benchmark Study Finds Room For Improvement In Food Transport Safety

S

anitary transport practices have gotten a lot of attention of late, thanks to the Food Safety Modernization Act (FSMA). All players in the supply chain are examining sanitary protocols more closely.

Last July, Hanover Research, based in Arlington, Va., surveyed American Trucking Associations (ATA) members about their practices to ensure the sanitary transportation of food. The survey was conducted on behalf of ATA and Thermo King Corp. (Download the survey at foodlogistics.com/12069156.)

The study’s purpose was to inform modifications to the FSMA’s sanitary transportation rule.

Eighty ATA members participated in the survey, which shed light on some important safety and sanitation practices.

Temperature violation costs

One of the survey’s key findings was the cost of temperature violations. Respondents ranked temperature violations as the top non-conformance issue they are facing. The average cost of rejected shipments as a result of non-conformance is around $20,000.

However, it can range from $300 to $80,000.

Close to a third of respondents said rejected shipment costs range from $1,000 to $5,000, while nearly a quarter pegged it somewhere between $10,000 and $20,000.

When you multiply that cost against all the rejected shipments that do occur, it’s not hard to recognize the need to manage this cost. Whatever the actual cost of rejected shipments, it undoubtedly weighs heavily on the food supply chain.

Overall, the survey found that safety control measures leave a lot of room for improvement.

Nearly half of the drivers do not pulp cargo or measure cargo temperature prior to accepting a load. Less than a quarter perform these actions 76 percent of the time or more.

Most respondents (68 percent) do not issue their drivers pulp or temperature accept/ reject standards.

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MAY 2015

• FOOD LOGISTICS

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PERCENT OF SHIPPING AND RECEIVING NON-CONFORMANCES RELATED TO TEMPERATURE VIOLATIONS

76%-100% 51%-75%

11%

5%

11%

0%

30%

Telematics slow to take hold

43%

26%-50%

1%-25%

AVERAGE COST OF REJECTED SHIPMENTS IN SHIPPING NON-CONFORMANCES More than $40,000 $20,001 to $40,000

$10,001 to $20,000 $5,001 to $10,000

$300 to $1,000

17% 14%

9%

23%

ated units and loads. But the majority (62 percent) do not issue loading guidelines to their drivers.

Wide variance exists on how much training carriers provide drivers on refrigerated loads. Nearly a quarter of the respondents said they give drivers no training on refrigerated loads while 10 percent provide one hour of training or less.

29% 11% $1,001 to $5,000

Eighty-two percent do not have drivers fill out in-transit monitoring logs for refrigerated cargo shipments, while an additional 7 percent are unsure if they do or not.

While most carriers limit their exposure to non-temperature controlled docks, the record is far from perfect. More than a third of respondents said between 1 and 25 percent of their refrigerated cargo comes from nontemperature controlled docks.

Driver training is another area that needs work. Over three quarters of respondents provide training to new drivers on refriger-

As for telematics systems and electronic data loggers, these innovations are not yet widely used. This is understandable, given the costs involved. For those carriers who use telematics, the average cost of installation is close to $87,000. The study did not indicate what size fleets are using telematics, but based on the number above, it’s safe to assume the larger fleets do most of the investing in this area.

Whatever the size of a company’s fleet, telematics and electronic data loggers is an area where the most progressive players are going to distinguish themselves from the pack.

Trailer sanitation is another area that needs work. There is a wide variance in how frequently trailers interiors are washed with 180-degree water and disinfectants. Nearly a quarter said trailer interiors are never washed with 180-degree water and disinfectants.

No doubt, a lot of work needs to be done in improving sanitary transport practices.

Most carriers are committed to safe practices, but many need to take a closer look at what they are doing to accomplish this goal.

Safety and temperature control technologies have made big strides in recent years. But before carriers can invest in these systems, they need to conduct a cost-benefit analysis.

In the meantime, a lot of work needs to be done in the more traditional areas such as intransit monitor logs, cargo pulping, temperature measuring and driver instruction.

The survey gives carriers a good benchmark to make the investments that will allow them to distinguish themselves from the pack. ◆ www.foodlogistics.com

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C O V E R

• California’s Port of Hueneme managed to largely escape the months-long labor issues affecting U.S. West Coast ports.

S T O R Y

Food Trade Set To Expand As Ports Upgrade Infrastructure Ports, container terminals, cold storage facilities and even governments are getting on board. BY ELLIOT MARAS

D

espite the World Trade Organization’s recent lowering of global trade growth estimates for 2015 and 2016, the agricultural sector continues to outperform most other trade segments.

terminals and equipping them with plug-in reefers and container moving equipment.

The bigger picture to be gleaned from conversations with ports nationwide is that infrastructure investment is charging full speed ahead. Ports recognize the rising demand for U.S. food and beverage products, particularly in Asia, where incomes are rising and people are acquiring a taste for American frozen, refrigerated and fresh food.

In several regions, state and local governments are recognizing the need to upgrade road infrastructure to improve transportation to and from the ports. Economic development groups are also playing a role by encouraging investment in food and beverage (f&b) manufacturing and making companies aware of export growth opportunities.

Statistically, f&b represents a small portion of total global trade. Among the top 20 most active U.S. ports, only the Port of Wilmington, Del., (ranked 16) listed food producers as a major source of imports, according to Zepol. (The port’s top importers are Dole Food Co., Chiquita Brands International, Hanover Foods, Bounty Fresh Chicken and El Sol Brands.)

Nonetheless, f&b is gaining its fair share of expanding global trade.

U.S. agricultural exports set a record $152.5 billion in 2014, according to the U.S. Department of Agriculture. Imports also set a record at $109.2 billion. Seaports play a dominant role in agricultural trade and U.S. ports are gearing up for increasing volumes.

The growth in global trade hasn’t been lost on government policymakers as they scramble to remove trade barriers to support job growth.

But the nation’s ports are already ahead of the curve, investing in harbor deepening and other capital improvements. The ports’ terminal operators are also on cue, investing in more • A container terminal at the Port of Long Beach is adding reefer stack spaces.

Photo courtesty of Port of Long Beach.

Ships expand, carrier alliances follow

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Notwithstanding the recent labor dispute that resulted in serious slowdowns along U.S. West Coast ports, port officials are quick to note that the situation should not cloud the bigger picture, which is positive.

The Port of Los Angeles, the biggest port in the U.S., actually increased its TEU throughput in 2014 by 7.7 percent over 2013, while the Port of Seattle suffered an almost 20 percent decrease in its TEU throughput year-on-year, according to Zepol. Hence, despite the setbacks caused by congestion and labor issues this year, there has not been an across-the-board trade decline on the West Coast.

Port congestion did not begin with the recent labor dispute, according to port officials.

The growth in ship sizes and the emergence of carrier alliances began causing congestion early last fall. “Bigger ships are coming in more frequently than they used to,” says Lee Peterson, a spokesman for the Port of Long Beach (POLB). Larger ships have caused more trucks to converge on ports simultaneously, Peterson says, creating congestion. Ports are brainstormwww.foodlogistics.com

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to Pier A Street and Fries Avenue in Wilmington. A new grade separation facilitates emergency vehicle access, eliminates truck queues and traffic delays, and improves pedestrian safety.

The project also eases access to facilities south of Harry Bridges Boulevard, including a new entrance to the port’s TraPac container terminal.

The TraPac terminal has introduced an automated operation to handle containers. This has increased the efficiency of loading and offloading from vessels. The terminal now uses automated lift trucks and stacking cranes. “It is a quicker system,” says Marcel van Dijk, the port’s business development manager.

In addition, Lineage Logistics is building a new, 196,000-square-foot cold storage facility to serve both Los Angeles and Long Beach ports, Van Dijk says.

Photo courtesty of Port of Hueneme.

Port of Hueneme expands

expand infrastructure is a “good problem” to confront.

• Asian shippers played a role in the Port of Los Angeles increasing its TEU throughput 7.7 percent in 2014.

Photo courtesty of Port of Los Angeles.

Port of Long Beach invests

ing ways to address this. POLB, for instance, is exploring new appointment systems. The port will also try to improve information exchange regarding the demand and availability of labor.

Shipping delays prompted the Federal Maritime Commission to allow the ports of Long Beach and Los Angeles to cooperate on finding ways to prevent congestion, improve the transportation network and enhance air quality.

Port officials emphasize that the need to www.foodlogistics.com

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POLB is one of several ports that recognize growth opportunity in beef, poultry and pork exports. POLB has the advantage of on-dock rail and is a destination for both the Burlington Northern Sante Fe and Union Pacific rail lines, according to spokesman Peterson. Cargo container trade climbed 1.3 percent in 2014, bringing the POLB its third busiest year ever behind the peak years of 2006 and 2007.

One POLB container terminal now features stackable refrigerated containers, Peterson says.

“We’re opening it in Photo courtesty of Port of Seattle. phases,” he says.

In addition, Vernon, Calif.-based Baker Cold Storage and Colton, Calif.-based Lineage Logistics are building a 250,000-square-foot cold storage facility within the port district.

At the nation’s largest port, the Port of Los Angeles, growth is happening on several fronts.

In April, the port opened the South Wilmington Grade Separation Bridge, a 4,100-footlong structure linking Harry Bridges Boulevard

The Port of Hueneme, a Southern California port that specializes in fresh fruit imports, has expanded its export trade this year, says CEO Kristin Decas. The port has a total 300 on-port and 300 off-port reefer plugs. Decas says there is a lot of growth in container cargo, although breakbulk remains central to Hueneme.

The port has developed a strategic plan, Decas says. Among the capital projects being considered are deepening the harbor to handle bigger ships, adding to the railroad lines, wharf modernizations, shoreline protections, and adding electrical plug-in devices to reduce carbon emissions.

Hueneme managed to escape most of the congestion that affected other West Coast ports during the labor dispute, Decas says.

Northwest ports form alliance The Federal Maritime Commission has also supported an alliance for the Seattle and Tacoma, Wash., ports called Seaport Alliance. The alliance was formed to unify management of the ports’ terminals. The alliance will manage cargo • The Port of Seattle’s terminals have some of the largest terminal operations, planning gantry cranes in the country. and marketing, while the ports will retain their existing governance structures and ownership of assets.

The Port of Seattle has opened a dedicated truck lane to the Union Pacific’s ARGO rail yard, which will improve access and speed up FOOD LOGISTICS

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turn times for trucks moving containers to the rail, says Steve Balaski, the port’s national accounts manager.

The port’s marine terminals have some of the largest gantry cranes in the country. These cranes, along with a naturally deep harbor, allow the port to handle the largest ships currently operating in the trans-Pacific trade.

The port is also moderinizing one of its terminals to make it “big-ship” ready and offer on-dock rail capability. Additionally, the port has invested in projects outside the terminals to ensure that cargo can move in and out of the harbor area as quickly as possible.

The Tacoma port, meanwhile, will benefit from a “heavy-haul corridor” for transporting overweight sealed containers used in international trade. The State of Washington has agreed to designate a section of SR 509 as a “heavy-haul corridor.” Through a permitting process, transloaders can transport this cargo on designated roads in the port area.

The Washington ports could also benefit from the misfortune of another Pacific Northwest port, the Port of Portland.

The Port of Portland’s major container terminal recently lost its two main customers, Hanjin Shipping Co. Ltd. and Hapag-Lloyd. The two shipping lines decided to leave the port because of continued labor unrest. After their departure, only Puyallup’s Westwood shipping line will serve the Port of Portland with monthly container ship calls.

Rail access holds a key to West Coast ports Al Muehlenbruch, a facility manager at San Leandro, Calif.-based PCC Logistics, a 3PL with facilities at both Washington ports along with two in California (Los Angeles and Oakland), cites rail access as a key advantage of the West Coast ports. Containerized, refrigerated cargo represents the majority of the business at these ports, but the trade has also expanded • The Port of Stockton has plentiful from protein (beef, cold storage capacity chicken and pork) to for fresh fruit. dry goods.

Rail access has been a challenge for West Coast ports, Muehlenbruch and others have noted.

Cold Train Express ended its intermodal service in August 2014 due to a slowdown in BNSF’s service schedules on its Northern Corridor line.

The shutdown of Cold Train was

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caused by a significant slowdown in BNSF’s service schedules on its Northern Corridor line beginning in the fall of 2013. Cold Train blamed the slowdown on increased rail congestion as a result of BNSF hauling larger volumes of oil and coal from the Northern Plains region.

From November of 2013 to April of 2014, BNSF’s on-time percentage dropped from an average of over 90 percent to less than 5 percent.

In April of 2014, BNSF advised customers it would reduce intermodal train service from Washington State to only one train a day instead of two and that transit time would take three more days from Seattle/Quincy to Chicago.

Refrigerated rail: mixed views Port officials gave mixed views overall about railway investment in refrigerated rail cars.

While refrigerated rail remains a subject of

debate, Muehlenbruch acknowledges that railways are expanding. This could benefit refrigerated service in the long run.

Joe Stivala, sales manager at Seattle-based MacMillan-Piper, a container freight station with six facilities near the ports of Seattle and Tacoma, shares Muehlenbruch’s concern about rail availability. But he thinks other factors affect congestion as well, such as labor cooperation and road infrastructure. He welcomes recent proposals by Washington State to invest in road infrastructure. “The transportation package is finally getting some movement,” he says.

MacMillan-Piper this past year invested $1 million in an upgraded conveyor system for bulk transport, which serves the grain trade.

The grain flows from the rail car into an open container. “It’s the only way to load loose grain,” says Stivala.

California’s Port of Stockton Eyes More Food Imports & Exports

By Lara L. Sowinski orts are typically a good bellwether of broader economic conditions, and trade activity at California’s Port of Stockton is one example of a steadily improving global economy that is largely fueled by imports and exports.

Construction materials are key commodities for the port. However, agriculture and food are playing a more important role.

According to Mark Tollini, senior deputy port director for trade and operations, “During the recession, we realized that the port was too heavily invested in construction materials and we needed to diversify. Food and energy are two things everyone needs regardless of the economy, and we’ve been focusing on these sectors a lot more over the past five to six years.”

Given its close proximity to central California’s prime agricultural growing areas, the Port of Stockton is a leading import gateway for fertilizer, including urea. American River Ag is a major importer of urea and animal feedstuffs at the port. The company benefits from the port’s strategic location to Interstate 5, international waterway, and transcontinental rail access provided by Union Pacific and Burlington Northern Santa Fe. Tollini said that while the port “integrates into the global food supply chain primarily on the fertilizer side,” more food shippers are exploring options for temperature-controlled shipments, and particularly those transported by specialized reefer containers rather than containerized carriers.

“One exporter of frozen meat products told us the company’s supply chain was hinging on container carriers’ ability to provide an adequate supply of reefer containers,” explained Tollini. “The company was unable to deal with this equipment issue. It was backing them up all the way to the slaughterhouse. So, they’re starting to explore using more conventional reefer ships in their supply chain.”

Despite the migration of temperature-controlled perishable food shipments to containerized carriers and ports, specialized reefer carriers are staying competitive by offering premium service, including more direct routes and reliable reefer capacity when and where shippers need it. Niche ports like Stockton with plentiful cold storage capacity and rail links are seeing more interest from food shippers who not only want to diversify their transportation and logistics mix, but are still feeling the sting of West Coast labor disruptions that only recently subsided.

Although the Port of Stockton uses International Longshore and Warehouse Union laborers, the relationship between the port and the union is far less acrimonious.

“We have union labor, but weren’t impacted nearly to the degree as Los Angeles-Long Beach,” noted Tollini, who adds that “being a small, inland non-containerized port” also helped in avoiding the brunt of the disruptions.

P

Photo courtesty of Port of Stockton.

www.foodlogistics.com

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East Coast ports invest

Pennsylvania for promoting export trade.

East Coast ports The Port of Savannah offered mixed reports in Savannah, Ga., also ineage Logistics recently introduced a new drayage solution for transporting reefer ocean containers on the impact of continues to invest in between ports and their temperature-controlled warehouses. The new solution runs the refrigeration West Coast labor infrastructure. unit built into the ocean container using power from the tractor, eliminating the need for a clip-on issues on their trade.

“The Port of Savangenset unit. The new technology, which was developed in Europe, weighs only 400 pounds compared to clipDominic O’Brien, nah continues to invest on genset units that weigh 2,500 pounds. The 2,100 pounds difference can be allocated to cargo weight, senior marketing rep in infrastructure and which allows customers to ship more products for their transportafor the Port of Philaprocesses to accommodate tion dollars. delphia, thinks the refrigerated commodities,” By replacing the diesel-driven genset with a truck-driven, allWest Coast slowdown says Chris Logan, senior electric power source for the cooling system, the Lineage Logismight have played a director of trade developtics drayage solution reduces exhaust emissions for every truck role in his port winment. “We have significant transporting reefer containers. Since the new unit is permanently ning a meat shipper’s landside operations to attached to the truck and the clip-on genset is eliminated, trucks business from West handle both refrigerated avoid going through the mounting process at the port.

Coast ports. Holt exports and imports. FroLineage Logistics has tested the solution at ports in Savannah, • Lineage Logistics has a drayLogistics, a Glouceszen protein exports is and Ga., Los Angeles, Calif., Oakland, Calif., Seattle, Wash., Tacoma, age solution that runs the refrigter City, N.J.-based has been a significant comWash., and Norfolk, Va., and will be launching at Charleston, S.C., eration unit built into the ocean terminal operator, ponent of our business, and Long Beach, Calif., shortly. container using power from the landed the export but perishable imports are “It’s another value-added service we are offering,” says Tim tractor, eliminating the need for contract and built growing rapidly.”

Smith, executive vice president of sales and business developa clip-on genset unit. a transfer platform Refrigerated import ment at Lineage.◆ for it. volumes rose 15 percent Other factors that in fiscal 2014 for the weigh in the Philadelphia port’s favor include plans to deepen the Delaware River port chanport. This past March, total volumes jumped reefer plugs and an on-dock USDA inspecnel by 40 to 45 feet.

28 percent. “We’re in a unique area that is close tion warehouse. One terminal has added 300 Long-term, the East Coast ports believe they to both production and consumption areas for new reefer plugs while another is adding 2,500 will benefit from a growth in global trade. refrigerated commodities,” Logan says. square feet of docking space. There are also “The economies of scale of bigger ships will “Perishable imports from Latin America provide more export and other areas are growing” he adds. There is opportunities for a growing demand by importers of perishable U.S. food exporters,” cargo to land cargo closer to the point of conO’Brien says. sumption, which offers reduced transit times Containerized cargo and lower delivery costs. is growing faster than “Consumer demand for perishable imports bulk and breakbulk, he is growing in the Southeast, and the Port of adds. “We see a shift.

Savannah is uniquely prepared to meet these More of the fruit gets customers’ needs,” Logan says. put in a container and The port is also participating in a USDA comes to our port in a container ship.”

O’Brien is optimistic about both import and export trade. Foreign food producers have improved their professionalism in recent years. At the same time, the U.S. government is working to expand free trade agreements.

“The fact that we were able to get a shot at this business is exciting to us,” O’Brien says regarding the new meat export contract. He notes that while Philadelphia is well known as an import facility, export trade is growing.

He credits the state of

Lineage Logistics Debuts ‘Eco Genset’ Drayage Solution

Photo courtesy of PortMiami.

Photo courtesty of Lineage Logistics.

L

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cold treatment pilot, which is a procedure to kill the Mediterranean Fruit Fly.

PortMiami launches Faster is Fresher This year, PortMiami rolled out a “Faster is Fresher” campaign highlighting the port’s proximity to Latin America and the Carribbean as well as access to the U.S. East Coast. Nearby highway and railway allow next-day delivery to the Southeast U.S., with access to 70 percent of the U.S. population in four days or less. The port also offers more than 1,000 reefer plugs and USDA-certified, on- and off-port fumigation.

The “Faster is Fresher” campaign has already delivered a 25 percent growth in perishable trade.

PortMiami has established a cold treatment program that has allowed it to gain additional Latin American import trade, says Eric Olafson, manager of trade development.

This USDA-certified in-box fumigation system has been a big benefit to food shippers, he says. The 5-hour process saves the shipper the trouble of having to remove the product from the container, fumigate the product in pallets, then load it back into containers. “It’s been a complete success, providing a cost-effective convenience for shippers,” he says.

PortMiami’s perishables committee recently learned about a technology that extends the shelf life of fresh proteins using a fuel-cell-based oxygen management system, Olafson says.

Using technology to increase shelf life or bring new products to market, whether it is fresh fish or pharmaceuticals, is essential as the port grows as a global perishables gateway.

Retailers are recognizing that Florida’s

expanding population makes it a more attractive destination than it used to be, Olafson adds.

Looking forward, he thinks PortMiami will win some of the Asian trade from West Coast ports. “We think some of the grain doesn’t have to go across the Rocky Mountains,” he says.

He further notes that transshipping activity has been recovering from the setback caused by the 2001 World Trade Center bombing. “Transshipment is coming back now,” he says, “and PortMiami is located at the nexus of NorthSout/East-West trade routes, making it ideal for transshipment.”

Port Manatee expands Port Manatee, which currently has a depth of 40 feet, is targeted to receive $700,000 in feasibility study funding in the federal budget for the fiscal year that begins Oct. 1, 2015.

Port Manatee hopes to deepen the harbor depth to 45 feet, which will allow it to accommodate the majority of vessels transiting the expanded Panama Canal, says Carlos Buqueras, executive director. Port Manatee in Palmetto, Fla., is the closest U.S. deepwater port to the Panama Canal, where a new, larger traffic lane is slated to open in early 2016.

• Florida East Coast Railway is a key partner in PortMiami’s Faster is Fresher campaign.

www.foodlogistics.com

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Northwest Ports Respond To Challenges

O

regon and Washington ports continue to face challenges to take advantage of global trade opportunities.

The Port of Portland commissioned a study in 2011 that found that from 2006 to 2011, the port increased its cargo volume by 517,700 tons, mostly consisting of grain exports, scraps, and containerized cargo. However, this year, Hapag-Lloyd and Hanjin Shipping Co. announced they will no longer use the port.

Together, the two shipping lines accounted for virtually all of the Port of Portland’s cargo container business.

The Washington Legislature in 2013 directed the Department of Commerce to develop a strategy to leverage the state’s maritime assets. The department noted three specific opportunities – recreational boating, commercial fishing, and port competitiveness.

Even before the West Coast port slowdown, the ports of Seattle and Tacoma had lost substantial market share to other regions, according to the Pacific Merchant Shipping Association. From 2005 to 2013, all North American port regions gained container traffic except for the Puget Sound ports, the association reported.

Puget Sound ports can become more competitive by moving cargo more effi-

ciently, not just through their terminals, but also through the entire system, according to a 2014 Commerce Department report. For that to occur, improvements are needed in port access projects and “last mile” connections. The connection of state routes 167 and 509 to the interstate highway system and the ports will improve access for the state’s exporters as well as importers, the report noted.

The advent of larger, mega-container ships has resulted in shipping lines making fewer vessel calls, the Commerce Department noted. This results in bypassing some ports in favor of larger “load centers” such as Los Angeles and Long Beach.

In addition, some cargo that used to transit West Coast ports now goes to the East Coast through the Panama Canal, the report noted. While that route takes longer, it costs less. Both the Panama and Suez Canals are undergoing significant expansions, which could further erode West Coast market share.

The Washington State Senate recently approved a $15 billion transportation revenue package to speed the movement of cargo through the ports of Seattle and Tacoma. “Farmers, manufacturers and businesses of all sizes need an efficient gateway to reach global markets,” said Port of Seattle Commission Co-President Courtney Gregoire.

beans and salt account for a large portion of the bulk freight.

Orange juice has been a growing export and import, he says, as juice trade has significantly increased in the last 18 months. “Europe provides a good market for the export of Florida juice,” he says.

The port plans to add an additional 50,000 square feet of refrigerated warehouse space and more plug-in reefers. “We need capacity,” Sanford says. “Our current warehouses are full.”

While Sanford has high hopes for Panama Canal trade, he notes that Cuba, Jamaica, SUCCESS? Puerto Rico and the Bahamas are all investing in their ports for transshipment opportunities.

Logistec Corp., a Montreal, Canadabased marine service provider, manages the handling of palletized and containerized cargo for Del Monte Foods and Fresh Quest, based in Plantation, Fla., and Oakland, Calif., Sanford says.

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Food played a big role in the Port of New Orleans record year for container volume in 2014. According to year-end totals, 490,526 20-foot TEUs moved through the Port’s

Photo courtesty of Port Manatee.

Dave Sanford, the port’s deputy executive director, says Palmetto, Fla.-based World Direct Shipping, a new port tenant, recently began a container service to Coatzacoalcos, Mexico, and is experiencing steady growth.

Sanford notes that all types of cargo – containerized, bulk and breakbulk – are expanding.

Food products – pineapples, bananas, melons, peppers and avocados – account for nearly half of the breakbulk freight, while grain, sugar, soy-

• Logistec Corp. manages the containerized cargo for Del Monte Foods at Florida’s Port Manatee.

Napoleon Avenue container terminal during the 12 months – an 8.8 percent increase over the 2013 total.

Many of the port’s top food commodities realized healthy gains. Export poultry grew by 5.5 percent to 331,523 tons and imported bananas grew by 251 percent to 72,165 tons despite only seven weeks of cargo delivered by Chiquita Brands LLC. The port welcomed a new weekly European service from French container carrier CMA CGM in February with the arrival of the CMA CGM Jamaica. In addition, Chiquita Brands, along with its sailing partner Mediterranean Shipping Co., began weekly service to the port in October after relocating its shipping operations to New Orleans following a 40-year hiatus.

Maersk Line returned vessel service to the port in February, says Matt Gresham, the port’s director of external affairs. The Northern European service teams with a weekly Mediterranean service through the 2M Alliance Maersk formed with Mediterranean Shipping Co. The 7,400TEU Maersk Kotka serves as the largest ship in the seven-vessel service.

More infrastructure improvements are on the way in New Orleans. A $25.1 million investwww.foodlogistics.com

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Photo courtesty of Port of New Orleans.

• The Port of New Orleans welcomed a new weekly European service from French container carrier CMA CGM.

ment, mostly from the federal government, in the 12-acre Mississippi River intermodal terminal will facilitate the movement of marine and rail cargo. The intermodal terminal will add an estimated 200,000 TEUs of capacity to the Napoleon Avenue container terminal – bringing total capacity to 840,000 TEUs per year.

Expected completion date is February of 2016.

In addition, the port and New Orleans Terminal LLC are jointly investing $7.9 million in a refrigerated container racking system within the container terminal to store more than 600 refrigerated containers at a time. The increased capacity

For more information: BAKER COLD STORAGE, 323-268-2801, bakercommodities.com FEDERAL MARITIME COMMISSION, 202-523-5807, fmc.gov HOLT LOGISTICS, 856-742-2020, holtlogistics.com LOGISTEC CORP., 514-844-9381, logistec.com MACMILLAN-PIPER, 206-624-5135, macpiper.com LINEAGE LOGISTICS, 800-678-7271, lineagelogistics.com MAERSK GROUP, 45-33-63-33-63, Maersk.com MEDITERRANEAN SHIPPING CO., 212-764-4800, msc.com NEW ORLEANS TERMINAL LLC, 504-648-6211, notml.com PORT OF HUENEME, 805-488-3677, portofhuneme.gov PORT OF LOS ANGELES, 310-732-7678, portoflosangeles.org PORT OF LONG BEACH, 562-283-7000, polb.com PORT MANATEE, 941-722-6621, portmanatee.com PORTMIAMI, 305-347-4800, miamidade.gov PORT OF NEW ORLEANS, 504-522-2551, portno.com PORT OF PHILADELPHIA, 215-790-4447, portsamerica.com PORT OF PORTLAND, 503-415-6591, portofportland.com PORT OF SAVANNAH, 912-963-2504, gaports.com PORT OF SEATTLE, 206-787-5388, portofseattle.org PORT OF STOCKTON, 209-946-0246, portofstockton.com PORT OF TACOMA, 253-383-5841, portoftacoma.com PCC LOGISTICS, 800-458-4788, pcclogistics.com TRAPAC, 877-387-2722, trapac.com WORLD DIRECT SHIPPING, 941-729-5828, worlddirectshipping.com www.foodlogistics.com

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will help meet the surging demand for refrigerated cargo in New Orleans – primarily imported bananas and exported poultry. The installation is scheduled for completion by year’s end.

Meanwhile, concern about the impact of sanctions against Russia did not materialize for the Port of New Orleans, says Gresham, since rising demand from Southeast Asia and other markets made up for the Russian sanctions.

Panama Canal will affect trade Port and logistics observers are optimistic that the Panama Canal expansion will increase f&b trade. How much it will impact existing trade routes, however, is a matter of debate. Some observers think the expansion will raise the cost to an extent that it could adversely affect shippers’ willingness to use it.

“The Gulf will definitely experience growth” from the Panama Canal, the Port of New Orleans’ Gresham remarked.

Everyone agrees that f&b will play a big role in expanding global trade. ◆

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3 P L s

KEEPING IT

COOL

Challenges for the containerised reefer trade.

BY PROFESSOR JEAN-PAUL RODRIGUE, PROFESSOR THEO NOTTEBOOM

• Maersk Container Industry manufactures dry

Editor’s note: This paper marks the second installment of Jean-Paul Rodrigue and Theo Notteboom’s “Looking Inside the Box’”initiative.

Part one was featured in Issue 64 of PTI (www.PortTechnologyInternational.com)

and reefer containers in China and Chile. Its Star Cool reefers are used by global carriers to support the growing cold chain.

• Controlled atmosphere technology controls the oxygen and carbon dioxide mix in the reefer container to extend perishable shelf life.

Globalising the chill Temperature control is a component of containerisation that has continued to rise in importance with international trade. As a number of countries focus their export economy around food and produce production, the need to keep these products fresh for extended periods of time has gained in importance. Growing income levels have seen a change in dietary trends, with a growing consumption of fresh fruits and vegetables, as well as meat and fish, and producers and retailers have responded with an array of exotic fresh products originating from around the world, taking advantage of seasonality.

Any major grocery store around the world is likely to carry tangerines from South Africa, apples from New Zealand, bananas from Costa Rica and asparagus from Mexico. Alone, the U.S. imports about 30 percent of its fruits and vegetables, and 20 percent of its food exports can be considered perishables.

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Reefers and the cold chain industry A cold chain industry has emerged to service these commodity chains. Refrigerated containers, also known as reefers, account for a growing share of the refrigerated cargo being transported around the world. In 1980, 33 percent of the refrigerated transport capacity in maritime shipping was containerised. This share rapidly climbed to 72 percent in 2013. Because of the additional insulation, and particularly because of the power plant, a 40-foot reefer costs in the range of six times more than a regular container.

Reefer containers are competing with reefer ships, and the former are rapidly gaining market share. Traditional systems built around reefer ships, where food sits on pallets in a refrigerated hold and is delivered to a cold store on arrival, are shifting to systems to handle goods

in containers with refrigeration units, sometimes bypassing cold storage on arrival. The world’s refrigerated ship fleet is fast shrinking as a new generation of container ships with a large reefer capacity transforms how fruit, meat and other perishable foods move around the globe.

Inside the reefer What is being carried inside reefers is revealing of the trade and supply chains it supports.

The main reefer commodity groups are divided into living and non-living cargo. Bananas, exotics (pineapples, kiwifruit, avocados), deciduous (apples, grapes, pears) and citrus (oranges, lemons/limes, grapefruit, others) are a part of the living group; the non-living commodities are products such as fish/seafood and meat.

The dairy and “others” group (tomatoes, frozen potatoes, berries, melons, frozen vegetables, fresh vegetables) contain living and non-living commodities. The transport of bananas, meat, www.foodlogistics.com

5/5/15 10:58 AM

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Whether it’s thermal efficiency, corrosion protection or floor strength, our engineers design and build every reefer to only one standard.

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

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fish and seafood products account for 63 percent of the reefer trade. Alone, 3% bananas account for 20 percent of the trade. (See Figure: Seaborne Reefer Trade, 2008. Source: Drewry Shipping Consultants, Reefer Shipping Market 2010/11, Drewry Publishing, London) Making the distinction between the living and the non-living is of vital importance for transport because of the distinction in temperature setup and atmosphere control. Living commodities will be transported under refrigerated conditions with a limited lifespan (shelf life); non-living commodities can be frozen, resulting in a longer lifespan. Out of the 144.2 million tonnes of worldwide reefer trade in 2009, it is estimated that 54 percent was seaborne, although the percentage varies significantly by commodity and by region.

A problem of integrity A chain is as strong as its weakest link. This is of particular relevance for a cold chain, which preserves the integrity of a product by maintaining its temperature within a specific temperature range (2 to 8 degrees C is common, ranging to 13 degrees C for bananas). Many products, such as food, pharmaceuticals and some chemicals can be damaged when not kept within a specific temperature range. Thus, supply chain integrity for temperature-sensitive products includes the additional requirements of proper preparation, packaging, temperature protection, and monitoring, which is fuelling the growth of in-transit temperature monitoring. Attaching monitoring devices to the freight insures the recipient that the product integrity was maintained during transportation, and whenever a breach occurs, it helps identify the location along the supply chain where the breach of integrity took place (identification of the liability).

Controlling the reefer cold chain Due to the growth of temperature-controlled shipments, particular attention must be placed at identifying the locations, equipment and circumstances in which a breach in integrity can take place. During transport, a malfunction (or an involuntary interruption of power) of the refrigeration equipment can compromise the cold chain in as little as two hours. Reefers are designed to keep temperature constant, not to cool down the cargo, which needs to be refrigerated before being loaded in a reefer. A batch that was not previously cooled may place an undue stress on the equipment to the point that the temperature cannot be brought to the specified range. The reefer, due to wear and tear or defective equipment, may offer an improper cold storage environment, namely poor air circulation and defective insulation at seals (such as doors).

During the loading, unloading or warehous-

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SEABORNE REEFER TRADE, 2008 14%

20% 7%

24%

10% 19%

• BANANAS • CITRUS • DECIDUOUS • EXOTICS • FISH& SEAFOOD • MEAT • DAIRY • OTHER

3%

ing of a product, there are many potential situations where a cold chain can be compromised. For instance, a product can be left on the loading dock for an extended period or the refrigeration unit can be turned off during transshipment. Some warehouses can have poor temperature maintenance and control, while others do not have different temperature storage facilities so all the freight is stored at the same temperature. Due to the limited economies of scale of the cooling unit inside a reefer container, if compared to the central cooling unit of a specialised reefer vessel, the quality of cooling is lower and the costs are higher.

Terminals on ice The growth of the reefer trade has increasingly required transport terminals, namely ports, to dedicate a part of their storage yards to reefers.

This accounts for between 1 to 5 percent of the total terminal capacity, but can be higher for transshipment hubs and facilities servicing markets actively involved in the reefer trade.

The stacking requirements simply involve having an adjacent power outlet, but the task is more labour intensive as each container must be plugged and unplugged manually and the temperature to be monitored regularly as it is the responsibility of the terminal operator to insure

that the reefers keep their temperature within pre-set ranges. This may also forbid the usage of an overhead gantry crane, implying that the reefer stacking area can be serviced by different equipment. Even if reefers involve higher terminal costs, they are very profitable due to the high value commodities they transport. Yet, they are a complex and distinct component of terminal operations.

Keeping it cool Reefer cold chains show growing needs in terms of capacity, integrity and reliability. However, many containerised services are based on low cost and show a rather low schedule reliability. Combining dry cargo and reefer cargo on ships and in terminals thus poses increasing challenges. It is not unthinkable that the growing reefer trade will result in some level of specialisation and market segmentation in terms of shipping lines and terminals, even up to a level where specialised reefer services might emerge in the future. ◆ This article is a brief of the paper: Rodrigue, J-P and T. Notteboom (2014) “Looking Inside the Box: Evidence from the Containerisation of Commodities and the Cold Chain” Maritime Policy and Management. For additional reading, see: Rodrigue, J-P (2014) Reefers in North American Cold Chain Logistics: Evidence from Western Canadian Supply Chains, The Van Horne Institute, University of Calgary.

About the authors: Dr. Jean-Paul Rodrigue is a professor at Hofstra University, New York.

His research interests mainly cover the fields of economic and transport geography as they relate to global freight distribution. Dr. Theo Notteboom is a foreign expert professor at Dalian Maritime University in China, a part-time professor at ITMMA (an institute of the University of Antwerp) and the Antwerp Maritime Academy, and a visiting professor in Shanghai and Singapore. He has published widely on port and maritime economics.

• Reefer

containers transport a variety of temperaturecontrolled products, including fresh and frozen produce and food, pharmaceuticals and flowers.

www.foodlogistics.com

5/5/15 10:58 AM

Fresher solutions. That ’s Ryder.

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SECTOR REPORTS

WARE HOUS ING: PA LLE TS , PA CK A GING A ND TOTE S

FSMA Highlights A Role For Reusable Plastic Pallets There’s more riding on your pallets than just your product. BY BOB KLIMKO

T

he Food Safety Modernization Act (FSMA) has moved into its fourth year of practice, highlighting the continued importance for food/beverage processors and suppliers to reassess how they’ve been operating over that period.

But, as with the implementation of any new strategic and overarching guideline, what really has some companies thinking is not just (or merely) compliance – it’s the potential costs associated with operational change.

FSMA dictates a number of regulations and inspections. While these preventative measures will result in a safer supply chain, the costs can easily rise for companies trying to comply with such extensive organizational change.

The situation has placed reusable plastic packaging in the spotlight as a solution. Reusable plastic packaging can support the sanitation standards FSMA demands.

It also opens up opportunities to make holistic supply chain improvements and reduce costs, while enabling compliance.

Let’s explore just how your company’s answer to FSMA might be right under your product.

For years, palletization has driven efficiency in food processing plants and distribution systems. Raw materials and finished goods fit on standard sized pallets and these pallets fit into a 53-foot trailer for distribution. In today’s food and beverage supply

chains, these pallets touch nearly everything.

With that in mind, one thing has become increasingly clear during the past four years of the FSMA: Companies that are reviewing and reevaluating the packaging used to ship their goods have a ready-made solution.

It just makes sense. The FSMA guidelines set up safety parameters throughout the supply chain, at every touchpoint, to proactively prevent food contamination. If every touchpoint is an opportunity for improvement, clear focus would be on transport pallets.

I recently had the opportunity to serve on the working group that assisted the Reusable Packaging Association (RPA) with the devel-

Plastic rackable and reusable pallets can be used for the storage of finished goods cases.

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• FOOD LOGISTICS

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opment of comprehensive guidelines for the use of reusable plastic containers for fresh and perishable products in the supply chain.

These guidelines detail best practices for washing, handling, storing, packing, displaying and managing reusable plastic containers in the supply chain.

These updated protocols are essential to what we do in this industry, particularly as we strive to meet and exceed the strict rules in the food and beverage supply chain. These RPA guidelines dovetail perfectly with the FSMA instructions.

Reusable plastic packaging can be a vital option to help companies meet current and future FSMA standards.

Why reusable pallets?

Food and beverage companies are implementing plastic pallets and containers at an ever-increasing rate, for economic, environmental and sanitation benefits.

They’re reusable, hygienic, easily

sanitized, non-porous and can cleanly move and store food products within a facility – supporting overall sanitary conditions required in the FSMA. For transport packaging in the food and beverage industry, cleanability is top of mind. Reusable plastic pallets used within the food supply chain need to be designed with non-porous material that does not absorb moisture.

These pallets feature one-piece designs with no crevices, cells, hollow area or cavities, eliminating the potential for contaminants to collect, regardless of pallet orientation (on floor, stacked, upright, etc.).

An open-deck pallet allows for more efficient flow-through cleaning and quick drying, getting the pallet back into your supply chain with little downtime.

The benefits don’t stop there.

Plastic pallets are designed to be dimensionally consistent. They are free of sharp edges or protruding fasteners that can damage products, automation, the plant floor or personnel. They are also free of nails or staples and will not splinter or break, causing damage to machines and downtime in your facility. This ensures greater safety for the end product, a cleaner workplace for floor workers, and repeatable performance that keeps your facility functioning efficiently.

There’s also more room for innovation. Reusable plastic pallets can be molded with a wide variety of innovative materials and can be processed in different ways to deliver the right performance characteristics for a given operation.

The process all starts with a www.foodlogistics.com

5/6/15 1:58 PM

The path to a cleaner supply chain is only five steps long.

ORBIS is the industry leader in reusable plastic pallets. That’s because we not only have the widest breadth of products for the food industry, we also have a proven, five-step process for making your supply chain more cost efficient.

Many of the world’s leading food companies are realizing reusables can create a cleaner plant and support food safety initiatives. A switch to plastic shouldn’t mean choosing between profitability and cleaner supply chain. Let us show you the path to improving both. Contact us to learn more. orbiscorporation.com/plasticpallets a shift in thinking

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5/6/15 1:58 PM

Go green

supply chain assessment. Companies exploring a reusable plastic packaging partnership should expect actual consultation to ensure the right solutions for the right opportunity. That absolutely keeps in mind the need to meet FSMA standards – and, in fact, to lead their industry. That includes the benefits reusable plastic packaging provides, beyond ensuring product integrity throughout the supply chain.

Uncovering more than just a clean plant

Lower Costs Great news for your bottom line.

There are more than 40 areas of savings when businesses switch from wood pallets to iGPS plastic platforms. This includes lower transport costs, less product damage and reduced equipment downtime. The new and stronger iGPS has reemerged as a driving market force with its unique Plastic Pallet Pooling System, that provides cutting edge, global supply chain solutions for some of the leading companies and manufacturers in the world.

The FSMA impacts all facets of how a company serves its customers and conducts its logistics management. That includes packaging, internal processes and education to manage packaging assets through storage, use and shipping, and how packaging is ultimately delivered to and presented in its final destination. This goes beyond the walls of the plant.

By observing your transport packaging movements, you have the unique opportunity to attain a holistic view of your entire supply chain – allowing you to see more than just reusable plastic packaging’s impact on food safety.

When companies shift to using reusable plastic packaging, a proper next step is to adopt a management program of those pallets.

Manage it like the asset it is.

Services like asset management, tracking, cleaning and replenishment are critical to the success of a reusable pallet program. With these services, decision makers and stakeholders can be sure they’re extracting full value from their assets.

Benefits don’t stop with FSMA

To see more green for your company call 1(800) 884-0225, or visit:

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There are additional benefits that can be used to justify change beyond food safety. Within any supply chain, transport packaging travels far and wide, through numerous starts and stops. Capturing all associated packaging movements that occur through the various stages of a supply chain is essential in order to comprehend the financial and environmental benefits associated with a given supply chain.

By collaborating with supply chain partners (suppliers and customers alike), companies will reduce operational expenses, streamline logistics and increase labor efficiencies at touchpoints throughout that supply chain – making positive economic and environmental impacts.

To financially justify your investment in reusable packaging, be sure to conduct a cost analysis.

And, don’t forget to calculate the cost-per-trip of your packaging.

With reuse, trip costs can be dramatically reduced.

It’s also good practice to gain a thorough understanding of the environmental impacts of your packaging program. Factors such as packaging weight, volume, velocity, density and more are all collected to provide a more complete picture of the sustainability score that could win or lose millions of dollars’ worth of business or drive significant, legacy-defining profit or positive environmental stewardship. One of the best ways to view a full 360-degree picture of this is through life-cycle assessment (LCA) methodology.

With the calculations available through tools like these, your business can compare the carbon emissions, solid waste generated and energy use of different packaging scenarios to help you make informed decisions.

By taking a closer look and carefully analyzing these measurements, you’ll have the data needed for your company to make a significant impact. That gives businesses a tremendous opportunity to make a difference — delivering a consumer-safe product quickly and efficiently to the marketplace, therefore increasing profitability, enhancing safety, increasing consumer confidence and saving those dollars that used to collect in loss margins.

In short, yes. Reusable plastic packaging is in the spotlight because their specific features positively impact every supply chain’s compliance with FSMA standards.

Bob Klimko is director of market development at Orbis Corp. www.foodlogistics.com

5/6/15 1:58 PM

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5/6/15 1:58 PM

SECTOR REPORTS

TRA NS P ORTATION: RA IL

Can Railroads Stay On Track?

Some shippers are questioning reliability despite years of steady improvements. by Lara L. Sowinski

T

o their credit, major freight railroads in the U.S. have come a long way in redeeming their image over the past few decades. Improved on-time performance and overall reliability continues to position rail as an alternative—or at least a component—for justin-time supply chains that require dependable service and reduced fuel costs for long-haul transportation.

Considerable investments are paying off and more are on the way. In its 2015 Outlook publication, the Association of American Railroads (AAR) states that U.S. freight railroads expect to spend a record $29 billion on the nation’s rail network and hire about 15,000 people this year.

The planned $29 billion in projected spending in 2015 brings the freight railroads’ private investments to $575 billion since 1980. Investments have gone towards upgrading track and purchasing new locomotives and freight cars to meet growing demand. While the ongoing driver shortage

Food Logistics checked in with Tom Polidoro, director of strategic business development, pricing and procurement at Yusen Logistics (Americas) Inc., for his perspective on the current marketplace.

• A crane loads a refrigerated truck trailer onto a flat car (TOFC) at a BNSF intermodal facility.

TOFC is one type of intermodal transport.

in the trucking sector makes rail more attractive for many shippers, the railroads’ service improvements ultimately earned the confidence—and business—of shippers, including those whose freight is time- and temperature-sensitive.

However, service levels made a notable downturn last year. For its part, the AAR stated that: “In 2014, America’s freight railroads experienced a surge in demand for rail service across multiple industrial sectors.

Thanks to a variety of factors, including a record grain crop in 2013, increased demand for coal to generate electricity, and better general economic conditions, railroads saw a 4.5 percent increase in carload and intermodal traffic in 2014 compared with 2013. This surge in traffic was largely unexpected, but railroads are striving to meet this increased demand through infrastructure investment and hiring.”

Credit BNSF Railway.

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Q&A FL: In regards to food/bev shippers, to what extent are Yusen’s customers in these sectors converting over-the-road shipments to rail as a way to offset capacity issues with trucks, save transportation/fuel costs, and even improve their sustainability efforts? Are there any particular customers or trade lanes that you can give as an example?

Polidoro: Yusen Logistics Americas does business with a wide array of food industry/beverage shippers, both domestic and international, all having different service and economic requirements. Over the last 18 months, there has been a definite move by many to explore added capacity opportunity by looking at the conversion of OTR to intermodal service. New rail ramp service offerings, especially in the East, contribute to this. The press and peak constraints caused by the OTR sector’s dwindling driver capacity shortages is also fueling these opportunities to handle customers’ growth requirements and changing needs. Also,

Shippers and multimodal transportation providers are feeling less cheerful. One in particular, Cold Train, filed a lawsuit against Burlington Northern Santa Fe (BNSF) last month, claiming “a significant slowdown in BNSF’s service schedules on its Northern Corridor line beginning in the fall of 2013 because of increased rail congestion as a result of BNSF hauling larger volumes of oil and coal from the Northern Plains region” forced the shutdown of Cold Train’s intermodal service that targeted perishables goods moving between Quincy, Wash., and terminals in 19 states throughout the country.

In conversations with other stakeholders in the food supply chain that are using rail, it’s clear that service issues are not isolated to Cold Train. The questions, nonetheless, are what’s responsible for the sudden service failures and when will they be resolved? ◆ • A BNSF train hauls grain in Montana. BNSF hauls enough grain to supply 900 million people with a year’s supply of bread, and enough fertilizer in one year to fertilize a field the size of Kansas.

In 2014, BNSF hauled 974,535 carloads of agricultural commodities. www.foodlogistics.com

5/5/15 11:20 AM

the closer the customers’ DC network is to viable rail ramps, the more lucrative intermodal starts to become from a price and service condition.

Last year’s well known and well-documented winter vortex rail service deterioration definitely impacted a slowdown, and in some cases, a short-term reversal of OTR to intermodal conversion. However, once it was over—and as service has improved—we see more opportunity requests coming in from these and other customers with greater frequency who are now exploring or embracing intermodal service in more lanes, especially in and with eastern markets/railroads. It depends upon each customer and the price/service/capacity concerns and sensitivity; however, many set up their distribution networks to use intermodal where it served their best interests and we see this now expanding.

We do significant business with major packaged food, food ingredient and food service companies.

Although I’m not at liberty to mention them without their expressed permission, they would be well-recognized companies within the food/beverage industry, using major trade lanes that are or have been recognized as solid intermodal service in the Pacific Northwest to the Midwest, Southwest, South and East; and emerging markets in the South through new eastern railroad services.

FL: For customers who are moving some of their freight on rail, what is their experience in the service

arena? It’s no secret that the Class I’s have had serious service issues this past year, negatively impacting their perception at a time when Class I’s have worked to regain shippers’ confidence.

Polidoro: As previously stated, the service meltdown that occurred in intermodal prompted by the winter vortex and slow recovery of the railroads along with Chicago Gateway congestion greatly impacted service and the perception of intermodal within the logistics sector. If you were just looking to start with intermodal, the service experience would not have been a “good” one. However, the railroads have invested a lot of time, money and personnel to get back on track service-wise.

This past winter’s severe weather conditions did not impact service anywhere near where it had in the past. With the exception of places like the Boston area, or select ramp markets where extraordinary snow and conditions prevailed, the service stayed its course. All railroads are reporting vastly improved service and intermodal continues to grow on all North American railroads. There is always concern, but overall performance has allowed for renewed sustainability and growth. Customers who might have shifted business off intermodal for service conditions during those times/conditions are returning and looking to how they grow the capacity.

FL: Is there anything else related to food/bev

RUGGED CONSTRUCTION

shippers, including those that ship time- and tempsensitive cargoes, that you can comment on?

Polidoro: Intermodal offers various opportunities for service and capacity. There are expedited services with a premium rate structure available. There are new intermodal refrigerated carriers and services coming into play that did not exist before, offering new dimensions in service. We are starting to see more delivery times during off-peak hours, for example, at grocery warehouses that allow for dray equipment to be more optimized around the clock, rather than just during day.

We have seen an increase in the use of one-way temperature control blankets to protect select goods from winter travels and conversions to maintain sustainable intermodal services during winter months, which creates added capacity at competitive pricing versus conventional transportation mode/cost.

As the railroads become more service consistent (and continue to stabilize and improve), along with new service lanes being implemented—especially on Eastern railroads—the opportunities will continue to provide sustainable transportation, not just as added capacity or alternative, but more from a regular committed basis. The equipment condition requirements for “food grade” equipment to be provided by the intermodal community is currently a driving force behind the railroads looking at equipment conditions and how they better serve this industry. ◆

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FOOD LOGISTICS

• MAY 2015

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SECTOR REPORTS

SOF TWA RE /TE CHNOLOGY: E RP

When Is It The Right Time For ERP? With food safety and full visibility into operations as the driving force, f&b companies looking to expand are finding enterprise resource planning solutions a necessity. By Eric Sacharski

I

t wasn’t that long ago that the mere mention of the letters E.R.P. would cause many in the food and beverage (f&b) industry to cringe and maybe utter a string of four letter words in response. The idea of software suites designed to give insights into inventory, warehouse management and purchasing, along with other back-end office functions in order to perform more accurate planning and business forecasting, had and still holds appeal for f&b executives. It’s just that the execution of the concept hasn’t always lived up to the hype.

But times are changing, and continual advances in technology now mean that ERP solutions have the ability to collaborate both internally and externally in an unprecedented manner. With competition in f&b is fierce and getting real-time advanced supply chain planning and analytics to other departments as well as key trading partners and stakeholders has become more critical than ever. It’s almost as if the definition of ERP has evolved to keep up with today’s f&b landscape.

“It really has changed in recent years what ERP really means. ERP to us is the whole business solution that helps each f&b company achieve their goal from end-to-end,” says Christian Hutter, executive vice president, products and strategy at Junction Solutions, a single-source provider of enterprise solutions. “It’s not just the technology stack, but the processes, procedures, functions and the assets with which you use to execute those with and the technology behind it that helps enable all of it; that’s what ERP really stands for in modern terms.”

Steady growth pushes need for ERP After buying the chicken division of a competitor, then acquiring a former Tyson Foods poultry facility soon thereafter, George’s, an Arkansas-based frozen and refrigerated poultry processor, is currently in the middle of trying to implement a new 32

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ERP solution. The decision to go with one ERP system was easy for George’s, but the implementation has been nothing of the sort.

“We’re running pieces of three different systems right now, and we’ve tried to support all three systems because each system keeps that operation running,” says Darrel Keck, vice president of sales and marketing at George’s.

“It’s becoming too much of a commitment to keep all three running,” he says. “As we look to the future and if we continue to grow and expand, we can’t just continue to expand by incorporating another system and another system. It’s something we just have to do. We need an ERP and planning system that we can plug and play.”

After testing a few systems, including their current ERP project that Keck terms as still in its “exploratory stages” with a vendor on site for the last six months, George’s has been blown away with the amount of time the project has taken.

“It’s been very, very slow. And very tedious,” says Keck. “We still have a business to run at the same time, so the time commitment has been huge and all-encompassing.

“You really need to get everyone involved

The use of enterprise resource planning (ERP) has changed from the legacy systems of the past to extremely comprehensive solutions for any size f&b business — large or small.

and take the time to fully vet all of the scenarios enterprise-wide,” he says. “Until you get into it, you just don’t understand the amount of time it takes.”

Consider the company’s strategy It’s especially important to take a top-tobottom look at the entire enterprise because even though many companies in the f&b sector are similar, no two businesses or longterm growth strategies are the same.

“Growth through acquisition and organic growth offer two completely different ways on how you want to approach the ERP system and the capabilities of an ERP system,” says Hutter. “Both look at growth, but how it is achieved and the solution set that needs to be in place to facilitate both versions of growth are very different. You have to fundamentally shift how you look at ERP. If you’re looking at ERP only as a tool to make you more efficient, you might end up optimizing bad processes.” www.foodlogistics.com

5/5/15 11:22 AM

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Integration Doesn’t Need To Be Painful;

It Should Be Logical

C

hances are every supplier of technology and performance optimizing solutions for f&b has heard the argument before … “I need this to integrate into my ERP … can you assure me your solution can do that?”

Integrating one vendor’s solution into a different vendor’s ERP isn’t as hard as it has been made out to be. Oftentimes, it’s the ERP system that has its limitations.

“Integrating a solution like Terra Technology’s demand sensing solution with existing ERP systems is straightforward in terms of technical implementation, so there tends to be little fear that systems will not fit together,” says Robert F. Byrne, CEO at Terra Technology, the Norwalk, Conn.-based provider of demand sensing, inventory optimization and transportation forecasting solutions. “The more common challenge is logical integration.”

Byrne points out that traditional demand planning runs weekly or monthly, while distribution and logistics depends on daily execution. That means the demand plan is out of date six days a week or 83 percent of the time, and it is even worse for systems using monthly planning. This is where a clear disconnect occurs between

Full Integration and “one source” are key Will Foods started out in the late 1920s as a simple poultry slaughterhouse, but acquisitions in recent years has turned them into a broadline foodservice distributor with over 4,000 items servicing the Buffalo, Rochester and Syracuse, N.Y., markets as well as southern and northern Pennsylvania. But for Will Foods, the acquisition of a larger poultry

solutions like demand planning and existing ERP systems.

“The first step of logical integration includes rethinking how inefficient processes caused by ERP limitations should be adjusted to directly use accurate daily forecasts produced by demand sensing,” says Byrne. “Once more efficient processes are in place, the second step is to reassess how the automation inherent in our demand sensing solution can improve productivity.”

As Byrne also points out, some of the best minds from inside the supply chain continue to tout the services of specific solution providers over the larger ones.

“The greatest improvement in inventory and overall value in supply chains continues to come from best-in-breed solutions,” says Lora Cecere, founder of Supply Chain Insights and the author of the enterprise software blog “Supply Chain Shaman” that focuses on how to use enterprise applications to drive supply chain excellence. “While the large system integrators will push offerings from ERP expansionists like SAP and Oracle, I see greater value coming to clients that bypass hype and focus on business results through the implementation of best-of-breed products on the top of ERP backbones.”◆

business in 2013 also included inheriting an existing ERP solution, one that has never really proven to be useful.

“They had the ERP system already in place, but they weren’t using it consistently and they weren’t using a lot of the functionality it was supposed to provide,” says Bob Manley, executive vice president at Will Foods. “So we purchased routing optimization software and tried to integrate it into the

ERP. The ERP already had a warehouse management system, but it was weak at best, so we purchased a WMS and integrated it. But both times, the integration was a nightmare.”

The integration of different solutions from different vendors has been so frustrating to Manley and Will Foods that they are about ready to give up the search altogether.

“Our focus is to have a fully-integrated system where everything communicates prop-

The Big Boys Muscling In On Your 3PL Cold Storage Turf?

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erly,” says Manley. “We haven’t been able to accomplish this yet. We’ve tested a few different solutions, but none of them have met our needs to be fully integrated.”

With today’s advances in technology -- more solutions moving to cloud-based and Web-based technologies and improved modular software designs -- f&b companies should be able to mix and match modules from different vendors and add new ones to improve performance.

Oftentimes, the solutions that offer one source of data are the easiest to integrate enterprise-wide. ERP providers like AFS Technologies offer advanced service oriented www.foodlogistics.com

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architecture (SOA) designed to allow quick upgrades of system components without the company-wide disruptions of a traditional ERP upgrade.

“To be fully integrated, it is imperative that you have one single database. Many ERP solutions combine multiple solutions together and sell them as an integrated solution, when actually they are separate software solutions, sometimes authored from different vendors, that have separate databases that have been integrated to keep the data in sync. Data integrity always becomes a problem in this type of environment,” says Joe Scioscia, vice president of sales at Vormittag Associates, Inc., an enterprise management software provider based in Ronkonkoma, N.Y. “Having a single database not only insures accurate data, but single database systems perform faster, are more scalable, and are easier to maintain and integrate with other solutions.”

Rewards are worth the wait One fact that nobody seems to debate is the benefits a fully-integrated ERP solution offers to an f&b company that is looking towards expansion, or even just improving the bottom line.

“The rewards on the back end are huge

though,” says Keck. “The intel you get (from an ERP) is really good stuff, and how it relates downstream is hard to put into words.

Having a good forecast can make everything so much smoother for production, for purchasing, for the finance department. It really gives you a lot more clarity on what’s driving your business.”

As ERP technology continues to improve, the f&b companies that continue to evolve along with it will no doubt hold a competitive advantage over the ones left behind the curve.

If the big picture at your company projects towards continued growth and expansion in more markets, a fully-integrated ERP solution is quickly becoming an essential tool of the trade. ◆

For more information: AFS TECHNOLOGIES, 877-821-3007, www.afsi.com JUNCTION SOLUTIONS, 888-404-3533, www.junctionsolutions.com TERRA TECHNOLOGY, 866-575-0755, www.terratechnology.com VORMITTAG ASSOCIATES, INC., 800-824-7776, www.vai.net FOOD LOGISTICS

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SECTOR REPORTS

ECO N DE V: US PA CIF IC NORTHWE S T

Pacific Northwest Carves Out A Food & Beverage Niche The region’s growing artisan food culture finds support from unique natural resources and growing logistics network. by Elliot Maras

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he Pacific Northwest – Washington, Oregon and Idaho – has long played an important role in the food and beverage (f&b) industry, due to the ports, the agriculture and low costs of doing business compared to their big neighbor to the South.

In recent years, the region has also acquired an expanding tourism trade and an “artisan” (or “specialty”) food culture.

The software, technology and aerospace industries that have dominated the region’s economy over the years have attracted a highly-educated workforce that has strengthened the demand for artisan foods and beverages in recent decades.

But the industrial expansion of the 1980s and 1990s delivered a mixed blessing to the f&b industries. Rising population naturally boosted consumer demand, creating a larger f&b market. On the other hand, the transportation infrastructure had to accommodate rapid industrial growth, a task that hasn’t been easy. Transportation resources are especially critical for f&b manufacturers, wholesalers and retailers.

State and local governments have responded to transportation infrastructure challenges with mixed results over the years. A driving force has been the rising global trade, pressing the capabilities of the Northwest ports.

country and even from outside the country discover its unique benefits.

In 2000, Japan-based Aginomoto Co. established Ajinomoto Frozen Foods USA, Inc. in Portland, Ore., to serve the U.S. frozen food market. Oregon’s business community took note of the fact that the proximity to high-quality food ingredients was a key factor in Aginomoto selecting Portland.

Business and government organizations felt that the region’s natural advantages – namely its ports and access to agriculture – could lure more food and beverage businesses. Over the years, these organizations have have done a good job attracting entrepreneurs.

In fact, the region’s artisan food culture remains an incubator for product innovation.

Lauren Johnson, chief operating officer for Newport Avenue Market, an independent grocery store in Bend, Ore., has a bird’s eye

view to the local food culture. Where most independent grocers source from 10 or fewer vendors, Newport Avenue Market uses around 1,000. The market carries 500 different craft beers and 3,000 different wines.

Johnson notes there are 27 craft brewers in her county alone.

Johnson credits a growing tourism trade for the growth in artisan food.

Nor can one discount the region’s access to high quality ingredients.

The founders of Portland-based Jacobsen Salt Co., a maker of sea salt, and Bee Local, a honey manufacturer, came from the East Coast to the Northwest in search of better quality cooking ingredients for restaurants and retailers nationwide, notes Matthew Domingo, sales and marketing manager for both companies.

Kevin Fortun, founder of Stockpot Soups, which Campbell Soup bought in 1998, got back into the soup business three years ago. He added soups to his original launch in Kirkland, Wash., of Fortun’s Finishing Touch Sauces, a collection of gourmet ready-to-serve sauces for retail and foodservice. The idea to expand to soups was born when a restaurant chain told Fortun they wanted a clam chowder that was not

An artisan food culture The emergence of what many in the Pacific Northwest refer to as its “artisan” food culture portends an important role for this region as it bids for its place in an increasingly global economy. Consider how Starbucks, once a solitary coffee shop in Seattle’s Pike Place Market, has revolutionized the nation’s coffee industry.

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• Fortun roasted tomato bisque, shown above, uses vegetables sourced locally.

• Newport Avenue Market in Bend, Ore. offers 3,000 different wines. www.foodlogistics.com

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powdered and has no artificial flavor. Fortun developed a fresh-prepared soup packaged in a 4-pound, Cryovac bag.

Using vegetables grown in California and salmon caught and smoked in the Northwest, Fortun distributes internationally from its Southern California manufacturing and distribution facility.

As for why the company is based in the Northwest, “The Northwest is where our roots are,” says Mary Fortun, director of sales.

Craft beer leadership Portland continues to lead the U.S. for the percentage of dollars spent on craft beer.

According to the Oregon Brewer’s Guild, there are 179 brewing companies operating 221 brew facilities in 71 cities across the state of Oregon. With 56 breweries in Portland, and 76 in the Portland metro area.

Brewers are currently preparing for Oregon Craft Beer Month in July, with more than 500 events in 60 cities. All leading up to the largest of beer festivals, the annual Oregon Brewers Festival, which drew about 85,000 attendees in 2014.

Don’t forget the coffee It’s impossible to talk about the Pacific Northwest without mentioning its role as the nation’s leader in the specialty coffee industry, best represented by Seattle-based Starbucks Corp. Coffee lovers visit the region to learn about roasting. The Northwest remains the nation’s specialty coffee capital, and is the only part of the country where coffee carts and coffee drive-thrus are commonplace.

One of the most recent developments in coffee has been the growth of “direct trade” coffee. The movement evolved from “fair trade.” Many coffee enthusiasts believe the fair trade goal of ensuring fair and sustainable coffee practices is better accomplished by importing coffee from farms directly. Hence the new label.

Portland Roasting, a Portland roaster and retailer, imports its “direct trade” coffee through ports in Oakland, Calif., and Tacoma, Wash., says owner Nathaneal May. The company has doubled in size in the last five years.

One of the reasons the Northwest dominates roasting is the availability of coffee storage facilities, May says. He arranges his deliveries from the ports to his warehouse with local carriers.

Transportation challenges remain Perhaps the biggest challenge the region faces is making sure the transportation infrawww.foodlogistics.com

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two years, the initiative expanded to attract foreign investment as well. The Global Cities Initiative forced business leaders to recognize the insufficient transportation system.

One recent sign of progress: Shamrock Foods, the seventh-largest food distributor in the U.S., recently announced its first DC in Oregon, making $1.2 million in improvements to a former produce facility in Gresham, Ore. The DC will allow the company to • Imported coffees such as the Brazilian serve clients in the Pacific roast shown above have Northwest. made the Northwest the Grocery Outlet, an nation’s specialty coffee Emeryville, Calif.-based disleader. • Meanwhile, July is Oregon Craft counter with more than 200 stores in five Beer Month, with hundreds of craft beer western states and Pennsylvania, recently festivals for the state’s many craft beer brewers. moved to a larger building in Gresham, Ore., to better serve the Northwest. Mike Thomas, vice president of logistics, says it makes sense structure is capable of making it easy for for his company to have a distribution facility companies to deliver food to market, both in the region. The economics of servicing the domestically and globally. region from the outside proved challenging.

In 2005, the Oregon Legislature created Thomas says there has always been an the Multimodal Transportation Fund to imbalance of freight going south from the invest in air, marine, rail, and public transit Northwest. For example, it costs between infrastructure improvements. The Fund is $2.15 to $2.25 per mile going north, but part of the ConnectOregon program, which only $1.40 to $1.55 per mile going back provides grants and loans to non-highway because of the difference in demand. transportation projects that promote ecoTransportation infrastructure has been nomic development. The legislature found particularly challenging in Washington State. that local governments and businesses often The state went two decades without investing lack sufficient capital and technical capacity in its road infrastructure, says Larry Pursley, (i.e. engineering, executive vice president planning, labor and/ of the Washington or equipment) to Trucking Associations. undertake multiThe proposed Puget modal transportaSound Gateway Project tion projects. would relieve traffic In 2011, the congestion and improve Oregon Economic freight mobility by • Grocery Outlet recently expanded to a Development Asso- larger DC in Gresham, Ore. to better serve completing the longciation, a private, planned SR 167 and the Northwest stores. non-profit organiSR 509 corridor conzation, launched nections to I-5. The Oregon Food Processing to lure more food project is designed to strengthen the state’s processors to Oregon. Sarah Case, Oregon economic competitiveness, both nationally Food Processing’s team leader, says one goal and globally, by connecting its largest ports was to make food companies aware of the to key distribution centers in King and Pierce state’s 200 unique food crops, along with the counties and to eastern Washington. The low energy costs, competitive labor rates and project adds more capacity to I-5 through access to ports and railways. express toll lanes, reducing congestion and That same year, Portland became one of travel times between Seattle and Tacoma. four cities to join the Global Cities InitiaIt remains to be seen how much support tive, a collaboration between the Brookings the state government can muster for infraInstitution and JPMorgan Chase to help structure improvements. Clearly, there is a lot metropolitan areas thrive in the global econoat stake for the f&b industry and the Pacific my. After focusing on supporting exports for Northwest as a whole. ◆ FOOD LOGISTICS

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FOOD (and More) FOR THOUGHT

JASON MATHERS

Food Shippers Could Reap Huge Savings From Bold Fuel Efficiency Standards

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he U.S. food industry, which relies heavily on trucking to get improve their environmental footprint and product to its distributors and end consumers, is in a great increase access to high-quality, affordable position right now to influence the environmental sustainequipment. These more fuel-efficient tractor ability of the industry by enthusiastically supporting the trailers would reduce exposure to fuel price adoption of strong truck fuel efficiency and greenhouse gas volatility and appeal to freight customers’ standards. Substantial financial, as well as environmental, increasing preference for sustainable partners benefits would result. and practices.

It is expected that the Obama Administration will announce a new Technology is not an obstacle to moving round of these standards in the coming weeks. A comment period forward. In fact, many of the solutions that will follow the release of the proposal. This is a critical opportunity to could be used to meet strong standards have MATHERS underscore the long-term business and environmental gains that result already been adopted, such as automated from robust, cost-effective standards. Your voice will count. manual transmissions. Others, such as wasteWe have an urgent need for deploying fuel efficiency technologies. heat recovery, are at advanced stages of development.

Heavy trucks account for 6 percent of U.S. global warming Leveraging this technology, Super Truck projects from leading emissions, and are the single fastest growing end-use source of emismanufacturers, including Cummins and Peterbilt, and Daimler Trucks sions—on pace to add nearly 120 million more tons annually over the North America, are demonstrating trucks capable of delivering 10.7 coming years. mpg and 12.2 mpg, respectfully. Wabash National unveiled a new Existing fuel efficiency standards went into effect in 2014 and trailer aerodynamic product that can boost fuel efficiency by 9 percent run through 2018. They will through this technology alone. increase the fuel efficiency of The progress we’ve made has resulted, tractor trailers to an average in part, from standards that challenged of 7.0 mpg, up from 5.8 mpg the industry to address freight’s growing in 2010. These standards will contribution to greenhouse gas emissions.

SECOND PHASE OF HEAVY TRUCK reduce the lifecycle cost of new We know robust fuel efficiency programs EFFICIENCY STANDARD trucks by $42 billion, delivering can work. Truck sales reached record levels 2010 2014 10.7 MPG significant value to manufacturin 2014, bolstered by the more efficient 5.8 MPG 7.0 MPG ers, trucking companies and equipment available and the owners’ and freight shippers. operators’ enthusiasm for it.

R E D U C T I O N F U E L We have the technology Setting a bold standard will help com% CONSUMPTION today to build on this successpanies reduce both their costs and carbon REDUCING PER-MILE FREIGHT COSTS BY 21 CENTS A MILE. ful program and deliver more risks, while delivering benefits for comefficiency improvements. The munities’ air quality and the climate.

Environmental Defense Fund (EDF) is calling for a second phase of How does your company push for a better outcome? Weigh in for heavy truck efficiency standards that would result in new tractor trailstrong standards during the comment period this summer and/or ers achieving 10.7 mpg, reducing fuel consumption by 46 percent attend a hearing on the proposal. compared to 2010 levels.

To keep up to date on the status of the proposal, feel free to email Such a move would have a positive impact across the spectrum. me at jmathers@edf.org.

A bold standard would drastically reduce fossil fuel consumption Meanwhile, of course, there’s always an opportunity to improve the and greenhouse gas emissions from heavy trucks and move the U.S. sustainability of your logistics operations—whether it’s rejigging your toward a more energy-independent future. distribution network to maximize full truckloads, or making the most Fuel efficiency is good for the food shipper’s bottom line, too. Fuel of backhaul opportunities, or even collaborating with other shippers to has long been the single largest operating cost for trucks, accounting see if you can share transportation networks in a way that saves both for nearly 40 percent of per-mile cost. of you money. Freight operations can become a model for sustainable A bold miles-per-gallon standard would significantly lower l business, and we urge you to remember that you have the power to ifecycle costs, and reduce per-mile freight costs by 21 cents a mile. influence the future.

For a large food shipper with 50,000,000 annual truckload miles in Jason Mathers is senior manager of supply chain logistics at Environdistribution, that translates to $11.5 million in annual savings—pure mental Defense Fund, where he leads the EDF Green Freight initiative. profit—by 2030.

He works with some of the world’s largest companies to improve the botFor trucking companies, more fuel-efficient standards would further tom line and cut fuel consumption associated with freight movement. ◆

FUEL EFFICIENCY STANDARD

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