FOOD LOGISTICS May 2019

CONSUMER DEMANDS DRIVE FOODSERVICE

CREATE WAREHOUSE VERSATILITY

SHIPPERS PREPARE FOR IMO 2020

Food Logistics

®

Global Supply Chain Solutions for the Food and Beverage Industry

U.S. BOX PORTS REAP BENEFITS OF

REEFER CARGO Issue No. 205 May 2019

FoodLogistics.com

PORT OF L.A. AND PORT TAMPA BAY ARE AMONG MAJOR BOX PORTS THAT ENJOY STEADY AND RELIABLE BUSINESS ASSOCIATED WITH REEFER CARGO

180° SWINGING REAR CARGO DOORS AND CITY-FRIENDLY DUAL SIDE ACCESS.

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THE SMART MONEY’S ON TRANSIT CONNECT.

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ON THE MENU

May 2019 ISSUE NO. 206

COLUMNS FOR STARTERS

U.S. Infrastructure Continues to Crumble 6

Deteriorating bridges and roadways are a problem, but new tools like AI and computer vision could provide help.

COOL INSIGHTS

COVER STORY

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Reefer Cargo Represents a Reliable Cargo Segment for U.S. Box Ports Port of L.A. enjoys balanced imports/exports of perishable food, while Port Tampa Bay is eyeing growth.

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TRANSPORTATION

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Interest in Kansas City’s SmartPort has grown as speed to market becomes critical.

FEATURE THIRD-PARTY & REFRIGERATED LOGISTICS

Consumers Demand Convenience and Variety in Foodservice

glegorly / iStock / Getty Images Plus

As consumer trends shift, it is important for foodservice distributors to shift with them.

SECTOR REPORTS WAREHOUSING

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Collaborate for Success

If your company is already considering how collaboration outside your walls can improve your supply chain, you’re one step ahead.

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Create Warehouse Versatility

Reusable totes can increase efficiencies and improve processes at every point along the food and beverage supply chain.

Frozen food energy costs can be reduced with the right technologies.

FOOD (AND MORE) FOR THOUGHT

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Paging All Logistics Professionals

With hurricane season around the corner, now is the time to consider how you can assist in relief efforts.

DEPARTMENTS

Supply Scan 14 Food on the Move 49 Ad Index 8

KC SmartPort

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Middle America: A Logistics Gold Mine

Lower Energy Costs— Should Frozen Food be a Battery?

SOFTWARE & TECHNOLOGY

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Protecting the Food Supply Chain Against Cyber Threats

Whether it’s processing food or transporting it, protection is key.

OCEAN PORTS & CARRIERS

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Shipping Lines Prepare for IMO 2020

Shipping lines focusing on the use of compliant fuel, surcharges and scrubbers to offset potential higher prices.

WEB EXCLUSIVES Configurable Modular Robotic Autonomous Guided Vehicles Ideal for the Food Sector foodlogistics.com/21066234

How the Driver Shortage is Impacting the Food and Beverage Supply Chain foodlogistics.com/21066235

Top 3 Challenges in Modern Food Distribution foodlogistics.com/21066236

www.FoodLogistics.com

Published and copyrighted 2019 by AC Business Media. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording or any information storage or retrieval system, without written permission from the publisher.

Food Logistics (USPS 015-667; ISSN 1094-7450 print; ISSN 1930-7527 online) is published 10 times per year in January/February, March, April, May, June, July, August, September, October and November/December by AC Business Media, 201 N. Main Street, Fort Atkinson, WI 53538. Periodicals postage paid at Fort Atkinson, WI 53538 and additional mailing offices.

POSTMASTER: Send address changes to Food Logistics, P.O. Box 3605, Northbrook, IL 60065-3605. Subscriptions: U.S., one year, $45; two years, $85; Canada & Mexico, one year, $65; two years, $120; international, one year, $95; two years, $180. All subscriptions must be paid in U.S. funds, drawn from a U.S. bank.

Printed in the USA.

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EVERY DEGREE COUNTS.

Ship your temperature-sensitive cargo by CN intermodal and get up-to-the-minute temperature monitoring, door-to-door service, specialized equipment, a dedicated team and extensive reach into the U.S., Canada and Mexico.

Count on CN as your true partner in the food value chain. cncargocool.com

Celebrating 100 years

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FOR STARTERS

FROM THE EDITOR’S DESK

DETAILS

U.S. INFRASTRUCTURE CONTINUES TO CRUMBLE

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recent report from the American Road & Transportation Builders Association (ARTBA) shows that U.S. infrastructure continues to deteriorate.

Specifically, the organization estimates there are 178 million daily crossings on over 47,000 bridges in the country today that are classified by the U.S. Department of Transportation as “structurally deficient and in poor condition.”

States with the largest number of structurally deficient bridges are: Iowa (4,675); Pennsylvania (3,770); Oklahoma (2,540); Illinois (2,273); Missouri (2,116); North Carolina (1,871); California (1,812); New York (1,757), Louisiana (1,678); and Mississippi (1,603).

Meanwhile, the most traveled structurally deficient bridges are on parts of Route 101, Interstate 405 and Interstate 5 in California, where crossings by cars, trucks and school buses are as high as 289,000 every day.

“America’s bridge network is outdated, underfunded and in urgent need of modernization. State and local government just haven’t been given the necessary resources to get the job done,” notes Dr. Alison Premo Black, the ARTBA chief economist who conducted the analysis. “At the current pace, it would take more than 80 years to replace or repair the nation’s structurally deficient bridges.”

Technology advancements are providing some good news in this otherwise bleak story, however.

Two companies, Sund & Baelt from Denmark and Japan’s Kawasaki Geological Engineering, are testing and rolling out machine learning and computer vision tools to analyze data from infrastructure sensors and cameras to predict when components of a structure might need maintenance. A Wall Street Journal article explains that the goal is “to better prevent major structural failures and limit costly human inspections.”

Bjarne Jorgensen, executive director of asset management at Sund & Baelt, says that, “Until now we’ve been using Excel spreadsheets and all kinds of databases, but we hadn’t been able to gather all of this data together.” The new system from IBM will provide preventative maintenance suggestions based on need, rather than routine maintenance schedules, which Jorgensen estimates will lower maintenance costs by about 10 percent over the next four years.

At the same time, Kawasaki Geological Engineering is fine-tuning an AI tool that can analyze image data and identify cavities forming beneath roadways.

On the legislative front, the ARTBA notes that lawmakers in 37 states have introduced 185 bills aimed at boosting transportation investment during the first two months of 2019, a higher number than the amount of legislation introduced during the same period last year.

Enjoy the read.

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

Published by AC BUSINESS MEDIA 201 N. Main Street, 5th Floor, Fort Atkinson, WI 53538 (800) 538-5544 • www.ACBusinessMedia.com

WWW.FOODLOGISTICS.COM PRINT AND DIGITAL STAFF Group Publisher Jolene Gulley Associate Publisher Judy Welp Editorial Director Lara L. Sowinski lsowinski@ACBusinessMedia.com Editor John R. Yuva jyuva@ACBusinessMedia.com Web & Copy Editor Mackenna Moralez mmoralez@ACBusinessMedia.com Contributing Editor Barry Hochfelder Senior Production Manager Cindy Rusch crusch@ACBusinessMedia.com Creative Director Kirsten Wiskus Audience Development Director Wendy Chady Audience Development Manager Angela Franks ADVERTISING SALES (800) 538-5544 Associate Publisher (East Coast) Judy Welp (480) 821-1093 jwelp@ACBusinessMedia.com Sales Manager (Midwest and West Coast) Carrie Konopacki (920) 542-1236 ckonopacki@ACBusinessMedia.com National Automotive Sales Tom Lutzke (630) 484-8040, tlutzke@ACBusinessMedia.com EDITORIAL ADVISORY BOARD Jaymie Forrest, President & CEO, Activ Technologies, Inc. John Haggerty, Vice President of Business Development, Burris Logistics Robert A. Norton, Ph.D., Professor of Veterinary Microbiology, Public Health and Biosecurity, Auburn University; Coordinator of National Security Initiatives, The Futures Laboratory Jon Shaw, Director of Sustainability and Global Marketing Communications, UTC Climate, Controls & Security Smitha G. Stansbury, Partner, FDA & Life Sciences Practice, King & Spalding CIRCULATION & SUBSCRIPTIONS P.O. Box 3605, Northbrook, IL 60065-3605 (877) 201-3915, Fax: (847)-291-4816 circ.FoodLogistics@omeda.com LIST RENTAL Jeff Moriarty, InfoGroup (518) 339-4511 jeff.moriarty@infogroup.com REPRINT SERVICES Carrie Konopacki (920) 542-1236 Fax: (920) 542-1133 ckonopacki@ACBusinessMedia.com AC BUSINESS MEDIA CEO Barry Lovette CFO JoAnn Breuchel Vice President, Sale & Marketing Amy Schwandt Editorial Director Greg Udelhofen Digital Operations Manager Nick Raether Digital Sales Manager Monique Terrazas

Published and copyrighted 2019 by AC Business Media.

All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage or retrieval system, without written permission from the publisher.

FOOD LOGISTICS | MAY 2019

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It takes more than sound technology and know how to plan and realize the best logistics systems.

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It doesn‘t matter if the products are picked into totes or cartons, onto trays, pallets, or roll containers, or other dispatch units. All warehouse solutions – whether highly automated, semi-automated, or manual – are modular and based on standardized system components.

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SUPPLY SCAN

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

Virginia Governor Ralph Northam announced that Preferred Freezer Services will invest $60 million to construct a 200,000-square-foot cold storage warehouse in the City of Portsmouth.

The new facility will be used to import, export, process, and distribute a variety of food products, positioning the company to meet the growing demand for cold storage space.

“Preferred Freezer Services’ new operation in the City of Portsmouth will harness the region’s valuable assets, including unparalleled access to global markets through the Port of Virginia and the world-class workforce in Hampton Roads,” says Governor Northam. “The company’s significant investment and major footprint expansion further reinforces the strength of the area’s logistics infrastructure, supply chain industry, and dedicated talent pipeline. We are proud to partner with Preferred Freezer as it nearly doubles its workforce in Virginia and grows its business in our Commonwealth.”

Lineage Logistics acquired Preferred Freezer Services in February.

ALBERTSONS TO USE BLOCKCHAIN TO TRACK ROMAINE LETTUCE SUPPLY CHAIN

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PREFERRED FREEZER SERVICES INVESTS $60 MILLION IN CITY OF PORTSMOUTH

UK KFC SEVERS TIES WITH DHL SUPPLY CHAIN

U.K. KFC is cutting its partnership with DHL Supply Chain just a year after the company struggled to deliver chicken to its stores, forcing the chain to close down hundreds of restaurants for several days.

The move will affect at least 100 employees at DHL Supply Chain’s Rugby DC. Best Food Logistics, formerly known as Bidvest, was previously ousted by DHL in October 2017 for the contract. However, during the chicken shortage last year, the company was brought back on board by KFC to run the northern half of DHL’s distribution deal and will now take on the southern half of DHL’s contract.

“After last year, we’ve been working really hard to make sure we can continue to deliver fresh chicken every day to our restaurants. We’ve decided to switch distribution partners back to Best Food Logistics, who’ve done a great job in supporting us while we’ve been getting back on track this year,” KFC said in a statement.

Albertsons is joining IBM’s blockchain solution, IBM Food Trust, to help track the global food supply chain.

With the addition of Albertsons, the IBM Food Trust network brings more than 50 brands across the food industry to the technology. With blockchain, companies can have greater transparency and collaboration in the food supply chain to help make it safer.

According to Venture Beat, Albertsons will begin piloting the technology for tracing bulk romaine lettuce from one of its distribution centers. It plans on expanding to other food categories throughout its distribution network as well.

GROCERY STORE EXPANSION UP 30 PERCENT IN 2018

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FOOD LOGISTICS | MAY 2019

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Online grocery captures a lot of buzz, but traditional grocery stores continued to expand their footprint in 2018, driven by small-format concepts and the expansion of regional grocers.

According to the JLL U.S. Grocery Tracker 2019, grocery store expansion was up 29.4 percent in 2018, adding more than 17 million square feet in the United States.

Florida added the most space (9.7 percent) thanks to the regional supermarket chain Publix, and California and Texas following at 7.8 percent, respectively. California’s growth was boosted by Sprouts Farmers Market, Aldi and Smart & Final Stores, while Texas saw growth from Kroger Co. and H-E-B. Despite the uptick in expansion, real estate investment is down year-over-year at $9.9 billion. Chris Angelone, retail capital markets lead at JLL, tells MarketWatch this is in part due to stricter underwriting standards and lack of Trophy and Class A grocery-anchored deals on the market last year, However, she expects an uptick in premium grocery locations in 2019 as real estate investment trusts continue to dispose some of their smaller neighborhood and community centers.

www.foodlogistics.com

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Welcome to the peak of cold storage fire protection.

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Take fi re protection for cold storage and unheated warehouses to the next level. Literally. FM Approved QUELL Fire Sprinkler Systems allow you to store commodities up to 55-feet high—10 feet higher than other sprinkler systems.

Maximize storage. Lower costs. And eliminate the costly false activations of damaged in-rack systems. Enjoy peace of mind from powerful protection above.

Learn how to upgrade your cold storage fire protection at tycofpp.com/quell.

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

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Leading Canadian produce company, EarthFresh, will invest $22 million in an advanced technology packing plant and distribution center in College Park, Georgia. The distribution hub is expected to create 100 jobs and utilize the newest available technologies and equipment to serve customers throughout the Southeastern United States.

“This new location perfectly complements our vision and plan to provide fresh potatoes to our retailers, food service distributors, and consumers,” said Tom Hughes, CEO of EarthFresh. “The addition of this new location will allow us to keep expanding our base of business and target new customers. The assistance provided to us by the Georgia Department of Economic Development was invaluable. The State and people of Georgia will benefit from our investment of bringing fresh potatoes to the area and creating more jobs.”

The Atlanta location will offer EarthFresh the opportunity to become a solid home base as they expand across the U.S. In addition, the company can easily service customers with the state’s interconnected logistics infrastructure and skilled workforce.

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EARTHFRESH PLANS FOR GEORGIA DISTRIBUTION HUB

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ALMOND, WINE GRAPE GROWERS EXEMPT FROM FSMA’S PRODUCE SAFETY RULE

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The FDA issued final guidance this week on its intent to enforce requirements of the Food Safety Modernization Act’s (FSMA) Produce Safety Rule in regards to the growing, harvesting, packing and holding of grapes used to produce wine, hops, pulses and almonds.

According to the agency’s final guidance, Produce Safety Rule: Enforcement Policy for Entities Growing, Harvesting, Packing, or Holding Hops, Wine Grapes, Pulse Crops, and Almonds, the FDA does not intend to enforce requirements of the rule for farmers and producers of these commodities due to the unique production circumstances and intended uses that reduce the presence of foodborne pathogens.

The final guidance explains that after reviewing data presented, the FDA does not expect entities growing, harvesting, packing or holding these commodities to meet any of the rule’s requirements while the agency considers pursuing rulemaking to address the unique circumstances of these commodities.

NEW WATER RULES MEANS SAFER ROMAINE LETTUCE FOR EVERYONE

After several deadly E. coli outbreaks linked back to romaine lettuce, growers are imposing strict measures to ensure the safety of their products.

California and Arizona have adopted new standards for growers from the Leafy Greens Marketing Agreement that includes new equipment cleaning practices, proactive steps for extreme weather, mandatory traceability measures and buggers between growing areas and feedlots. The standards are in direct response to investigations conducted by the FDA and have specific directives for water use, Food Safety News reports.

New water requirements include additional safeguards that ensure farmers categorize the source of their water and to consider how and when it is applied to crops. In addition, farmers will also have to conduct water testing to ensure it is safe for its intended uses. www.foodlogistics.com

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SUPPLY SCAN

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

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ALDI is helping combat the global plastics crisis by committing 100 percent of its packaging to be reusable, recyclable or compostable by 2025. In addition, the company will also reduce packaging material across its entire range by 15 percent.

“ALDI has never offered single-use plastic shopping bags. And while we’re pleased that we’ve helped keep billions of plastic grocery bags out of landfills and oceans, we want to continue to do more,” said Jason Hart, CEO of ALDI U.S. “The commitments we’re making to reduce plastic packaging waste are an investment in our collective future that we are proud to make.”

These packaging goals, along with other environmental initiatives, are part of the larger ALDI Corporate Responsibility program, which actively works to reduce food waste, support natural disaster relief efforts through employee volunteerism and donations, and build stronger communities through a long-standing partnership with Feeding America.

YUM BRANDS TO REDUCE EMISSIONS IN ITS SUPPLY CHAIN

Yum Brands is continuing to make improvements to its environmental impact by pledging to reduce greenhouse gas emissions within its supply chain.

According to Louisville Business First, the company has committed to pursue a science-based target to reduce greenhouse gas emissions from its operations, franchises and supply chain while exploring potential purchases of renewable energy.

“As Yum grows as a business, we aim to do so in a way that respects the planet,” Jon Hixson, vice president for global government affairs and sustainability for Yum, said in a statement. “We remain committed to energy and climate initiatives to minimize the environmental impact of our restaurants and supply chain. To continue on this journey across our brands, franchises and suppliers, our study will initially evaluate our greenhouse gas (GHG) data to better understand our footprint, to help refine GHG reduction targets and to identify emission reduction initiatives, such as renewables and conservation measures, to further improve our environmental performance on the path to developing approved science-based targets.”

FLEXPORT LAUNCHES OCEANMATCH TO LOWER FREIGHT SHIPPING

Flexport has launched OceanMatch, the first data-informed ocean freight consolidation offering that identifies available container space on compatible shipments and matches them to save shippers time and money.

In a review of all ocean freight imported into the U.S. in 2018, Flexport found that Full Container Load (FCL) containers were only 65 percent utilized, amounting to more than one-third of the available U.S.-bound container space moving across the ocean without cargo.

With OceanMatch, shippers can access the benefits of FCL freight without needing to fill or pay for a whole container. This is made possible by Flexport’s Operating System for Global Trade, a strategic operating model that blends technology, infrastructure and human expertise to deliver faster and more reliable transit times, lower and more predictable supply chain costs and deep visibility and control from origin to destination.

In addition, all cargo moving within an OceanMatch shipment comes from existing Flexport customers who have undergone extensive compliance and onboarding processes, minimizing the odds of regulatory holds during transit.

www.foodlogistics.com

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ALDI ANNOUNCES COMMITMENTS TO PLASTIC PACKAGING REDUCTION

BEEF. IT’S WHAT’S FOR DINNER. LAUNCHES VIRTUAL BEEF ASSISTANT

Beef is going virtual as the Beef. It’s What’s for Dinner brand launches its new virtual assistant, Chuck Knows Beef. The virtual chef is powered by google artificial intelligence and was developed in partnership with VMLY&R, a leading digital marketing agency. Chuck can be easily accessed at chuckknowsbeef.com or by enabling the program with Amazon Alexa or google Home Assistant devices.

Chuck is designed to be a go-to resource for beef knowledge and recipe inspiration. Consumers can ask Chuck a series of beef-related questions as well.

“We were inspired to develop a tool that empowers shoppers to feel more confident when approaching the meat case and purchasing and cooking beef for their families,” says Season Solorio, executive director of brand marketing and communications at the National Cattlemen’s Beef Association, a contractor to the Beef Checkoff. “Chuck is an ideal solution for bridging the gap between consumers’ love of beef and increasing use of technology in the kitchen.”

MAY 2019 | FOOD LOGISTICS

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SUPPLY SCAN

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

LOCAL BRANDS LEVERAGE FORECASTING TOOL TO OFFER FRESHER PRODUCE TO CUSTOMERS

The East Coast will have fresher groceries as Retail Business Services, the services company of Ahold Delhaize USA, will implement an innovative end-to-end forecasting and replenishment solution that will provide fresh foods to millions of customers each week, regardless of how they shop.

“By implementing this game-changing solution, Retail Business Services is further enabling Ahold Delhaize USA’s local brands to deliver on their ambitions to be there for their customers anytime, anywhere with the freshest products,” says Chris Lewis, executive vice president of supply chain for Retail Business Services. “Not only will it provide local brand stores with the flexibility they need to best serve their customers, it will enable a complete supply chain transformation at a time when customer expectations are rapidly changing the way groceries are bought, sold and delivered.”

The solution will deliver integrated, efficient end-to-end forecasting and replenishment for both fresh and center store products using a flexible rules engine that enables local brands to tailor the solution to customers’ needs. By leveraging artificial intelligence, the system will learn from itself to enable increasingly sophisticated forecasting decisions.

SOWINSKI TO MODERATE AT UPCOMING COLD CHAIN EVENTS

Lara L. Sowinski, editorial director for Food Logistics and Supply & Demand Chain Executive, is moderating a cold chain panel at the 2019 JOC Gulf Shipping Conference in Houston May 20-22. Now in its fourth year, the event provides essential information, insights, and solutions that cargo owners, including food and other cold chain shippers, can use to plan and execute shipments of containerized cargo through U.S. Gulf ports. For more information, visit https:// www.joc-gulf-shipping.com/ and use promo code “ACBM” for an exclusive discount.

On June 10, Food Logistics will again partner with Q Products & Services for the Cold Chain Council (www.coldchaincouncil.com) in Chicago, an intimate and interactive forum for industry professionals to explore a range of topics related to cold chain transportation and distribution.

Finally, eft’s 3PL & Supply Chain Summit: Atlanta, will feature a Cold Chain Track this year moderated by Sowinski. For more information, visit https://events.eft.com/3pl/.

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FOOD LOGISTICS | MAY 2019

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Companies are consistently thinking of ways to become more eco-friendly when it comes to their packaging and transportation of goods.

However, figuring out a way to fit more wine bottles in a box has left many stumped.

British bottle-maker, Garcon Wines, may have come up with a solution: flat bottles. The flat wine bottles, made from durable recycled plastic, are spatially smaller and 87 percent lighter than round glass bottles of the same volume. Flattened into a flask shape, the bottles can be stacked more densely into rectangular crates than standard bottles.

Garcon Wines

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FLAT BOTTLES OF WINE CUT DOWN ON PACKAGING

The company says it is able to eliminate almost all of the unused airspace in a typical wine case by packing eight flat bottles vertically and two more bottles lying horizontally in the open space. The 10 flat bottle case is roughly 55 percent smaller than traditional boxes that are built for six round glass bottles of wines.

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WE’LL PROTECT YOUR RETAIL RELATIONSHIPS.

OD’S MABD SERVICE MEETS TODAY’S SUPPLY CHAIN CHALLENGES Old Dominion’s Must Arrive By Date (MABD) service is supported by a 99+% on-time rate and #1 ranking for damage-free deliveries.1 With OD, your time-sensitive shipments will arrive intact and are guaranteed2 to meet shrinking retail delivery windows. MABD helps strengthen your retail partnerships, protects your vendor scorecard and delivers value in every shipment. Throughout the entire process, you have 100% door-to-door

Old Dominion Freight Line, the Old Dominion logo, OD Household Services and Helping The World Keep Promises are registered service marks of Old Dominion Freight Line, Inc. ©2019 Old Dominion Freight Line, Inc. Major League Baseball trademarks and copyrights are used with the permission of Major League Baseball Properties. Visit MLB.com.

visibility with an OD Customer Service Representative as your single point of contact.

Source: 2018 Mastio & Co. National LTL Carrier Report If scheduled delivery time is missed, charges revert to standard rates. Restrictions apply.

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For more information, visit odfl.com or call 1-866-637-7333.

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FOOD ON THE MOVE

LOGISTICS TRENDS IN OUR INDUSTRY

CARRIER TRANSICOLD’S LATEST TRUCK REFRIGERATION UNIT BOASTS “SUPRA” POWERS

Carrier Transicold’s latest Supra S6 truck refrigeration unit has improved performance, efficiency and reliability with a contemporary new design.

“Our Supra platform is known for outstanding dependability and high standards of performance,” says Scott Parker, product manager, truck products, Carrier Transicold. “With the new series, we’ve improved upon the platform, giving it all-new ‘Supra’ powers.”

The unit has processing speeds that are 20 times faster than the original and can provide intelligent performance optimization. Drivers can tap into the APX system’s functionality through the dash-mounted Cab Command control interface, with a backlit LCD display that provides operating information.

“Over a range of set points, the Supra S6 unit provides up to 18 percent greater cooling capacity and faster pulldown in a smarter, more efficient package than the Carrier Transicold model it succeeds, ensuring dependability and peace of mind for operators,” said Parker. The unit offers cooling capacity of 16,000 BTU at a set point of 35 degrees Fahrenheit in both diesel operation (road mode) and, if so equipped, on electric standby power.

PORT TAMPA BAY EXPANSION COMPLETED A YEAR AHEAD OF SCHEDULE

Port Tampa Bay’s Big Bend Channel expansion has completed a year ahead of schedule. The $63 million milestone project deepened and widened the channel, allowing for larger ships to call at the terminals.

The expansion will ultimately reshape the port into a vibrant distribution and manufacturing district, bringing millions of goods through the I-4 corridor, the fastest growing sector of the state.

“This is one of the largest projects we have worked on at Port Tampa Bay,” said Port Tampa Bay President/CEO Paul Anderson. “This is a legacy that truly reshapes our economic landscape and will impact generations to come.”

The project deepened the entrance channel, east/ west channel, inner channel, turning basin, and local service facilities at Big Bend from 34 to 43 feet. It widened the entrance channel from 200 to 250 feet for a length of 1.9 miles. It also deepened the existing turning basin to 43 feet and expanded the existing turning basin to 1,200 feet.

DAT SOLUTIONS’ MONTHLY FREIGHT REPORT

Spring Brings an Uptick in Truckload Freight By Mark Montague Mark Montague is senior industry pricing analyst for DAT Solutions, which operates the DAT® network of load boards and RateView rate-analysis tool.

He has applied his expertise to logistics, rates, and routing for more than 30 years.

Mark is based in Portland, Ore.

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Spring is a busy time for truckload freight, and 2019 has been no exception.

In March, freight volumes increased 4 percent for vans and 2 percent for refrigerated goods compared to February.

Year over year, van and reefer volumes were just 2.5 percent and 3.4 percent lower in March—not bad, considering the record-level load-to-truck ratios ahead of last year’s ELD enforcement deadline.

Yet in March, the national average spot van rate fell 3 cents to $1.85 per mile and the reefer rate declined 4 cents to $2.17 per mile compared to February.

FOOD LOGISTICS | MAY 2019

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When thinking of what happened to truckload pricing we need to consider two things: First, flooding and snow has disrupted supply chains from Colorado to the Upper Midwest and beyond.

In some cases, weather can elevate rates because shippers will pay more to make

sure their freight gets moved. Though, weather can hurt rates too. For instance, when snow pummeled the Rockies in March, the challenge to get freight into Denver led to a sharp increase in rates on the van lane from Seattle to Salt Lake City.

Then the surplus of West Coast trucks in SLC caused rates on the lane from there to Stockton to sharply decline.

This highlights a second factor affecting rates: capacity.

Many carriers have invested in new equipment recently and increased their use of owner-operators. With more freight to move and ample trucks to cover the demand, rates have not increased as expected.

It’s a win-win for shippers.

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FOOD ON THE MOVE

LOGISTICS TRENDS IN OUR INDUSTRY

DELIVERY ROBOTS ROLL ONTO MORE COLLEGE CAMPUSES

Colleges that offer robot delivery have seen an uptick of breakfast orders as more students are starting to prioritize the meal.

Sodexo and Starship Technologies report that an extra 1,500 breakfast orders have been delivered autonomously since the two companies joined forces to debut the Starship delivery robots at George Mason University at the end of January, following a similar pattern at other campuses where delivery robots were added.

To raise awareness of the breakfast offerings, the companies are partnering with Einstein Bros. Bagels and are offering free breakfast for the remaining academic year to the Northern Arizona University (NAU) student who places the first order via the Starship app. NAU students can now use the app to order food and drinks from local retailers to be delivered anywhere on campus, within minutes. Each on-demand delivery reportedly costs $1.99 and works with the student meal plan.

Sodexo and Starship plan to continue to expand the program to additional campus locations globally in the future.

CAPTEMP TEMPERATURE RECORDING SYSTEM ENSURES PROPER CONDITIONS IN FRUIT COLD STORAGE UNITS

CapTemp developed an automated temperature recording system for the CPF Group, an organization comprised of pear and apple producers throughout Portugal, to continuously monitor and report ambient temperature and relative humidity of fruit storage units as well as fruit pulp temperatures while in cold storage.

The CapTemp temperature recording system ensures the cold storage units maintain ideal conditions for different fruit lots. In addition, monitoring of fruit pulp temperatures enables CPF to extend the life of the fruit while performing heat treatment to fruit lots in response to phytosanitary requirements for export to certain markets such as Colombia and Mexico.

The company configured a temperature recording system for remote monitoring and reporting of storage room and pulp fruit temperatures that includes its own digital temperature sensor and perforation sensors that are located in four points of the cool chambers within the pallets containing fruit boxes. By being wired to a Nidus-iT web data-collector, sensors send output to a PLC in a remote-control room where operators can monitor and control temperatures.

With the temperature recording systems, the CPF Group has increased production, met demanding quality certification requirements and has established a higher standard of process modernization.

PORT OF OAKLAND ADDS NEW SHIPPING SERVICE TO VIETNAM

The port of Oakland is adding a new direct service to Vietnam starting in April. Pacific International Lines (PIL) will launch direct Vietnam links using vessels that can carry up to 11,900 twenty-foot containers.

The new service, known as AC5, will service Haiphong, Nansha, Hong Kong, Yantian, Long Beach, Oakland, Yantian, Haiphong (AC5).

“PIL’s new direct service from the port of Oakland Port of Oakland is a good sign of increasing demand on Vietnam routes,” says port of Oakland maritime director John Driscoll. “Vietnam is showing strong growth in its import and export markets.”

FREIGHTTECH INVESTMENTS TO GROW IN 2019

FreightTech is on the rise as four of the five largest venture capital deals in the first quarter of 2019 involved technology companies that help move people or stuff, FreightWaves reports.

In the first quarter, FreightTech saw an investment of $1.6 billion, greater than the full year of 2017, which only reached $1.3 billion. In addition, the figure is more than half of the $2.9 billion in venture capital invested for the full year of 2018.

Capital continues to shift toward later stage rounds, allowing for a more competitive funding environment for later stage companies. New companies trying to enter the space will confront a more limited seed and angel investment environment, FreightWaves reports.

Meanwhile, size of deals are also increasing.

Mega-deals like the Softbank and Flexport investment are only expected to increase.

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FOOD ON THE MOVE

LOGISTICS TRENDS IN OUR INDUSTRY

NEW TRUCK DEVELOPED FOR CRAFT BEER INDUSTRY

Pexels

Isuzu Commercial Truck of America is creating a new truck specifically for the booming craft beer industry by partnering with Bottle Logic.

The craft beer truck is designed for micro-brew operations that make and locally distribute their products. The NRR truck will enable brewers to be able to advertise their products at live events and also make deliveries.

“The combination of economy, power, maneuverability and low cost of ownership, made choosing the NRR as the basis for our new craft beer truck a no-brainer,” said Steve Napolitano, co-founder and president of Bottle Logic. “We can’t wait to put this truck to work for us.”

The truck is cooled with a Thermo King 680R with electric standby, allowing ample space for kegs and crates while keeping the product refrigerated.

In addition, because the product will always be cooled, the electric standby gives brewers more flexibility about when to load the truck.

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VERIZON CONNECT AND IVECO TEAM UP TO IMPROVE OPERATIONS FOR CUSTOMERS Verizon Connect is partnering with Iveco to help customers gain insights into their fleets by providing comprehensive telematics and a mobile workforce management software platform. The Verizon Connect Fleet and Workforce offerings will provide vehicle and driver information that businesses can use to optimize their mobile business. Iveco fleet management is now available in new Iveco Daily light commercial vehicles.

“Integration of the Verizon Connect platform will extend value and benefits to Iveco customers beyond delivering an outstanding vehicle,” says Fabio Santiago, TCO services director at Iveco. “By fitting Verizon Connect solutions in select new vehicles, we are able to help our customers run their businesses with better control of their operations.”

Now, Iveco customers can select among three Verizon Connect plans at the time of purchase: Fleet Essential without tachograph driver hours, Fleet Essential with tachograph driver hours and Fleet Enhanced with tachograph driver hours and tachograph remote download. The plans will help fleet managers stay informed of driver activity with weekly reports.

UBER TO ALLOW RESTAURANTS TO PAY FOR CUSTOMERS’ RIDES

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Pexels

Uber is allowing restaurants to pay for customers’ rides with their latest feature, Uber Vouches.

The program will make it easy for businesses to sponsor transportation and create a differentiated experience while attracting new customers and rewarding existing ones. For restaurants, the companies can promote dine-in experience by removing barriers to get to their physical location. According to Food and Wine, TGI Fridays has already begun using Uber Vouchers to amplify promotions that help drive foot traffic during a specific time.

Businesses can tailor every part of the Voucher experience by setting up the value, pick-up and drop-off locations and times. When a customer redeems one of the vouchers, it goes to the payment section of their app until it is used or expires.

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FOOD ON THE MOVE

LOGISTICS TRENDS IN OUR INDUSTRY

DOMINO’S AND XEVO DELIVER IN-CAR ORDERING TO NEW VEHICLES IN 2019

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Domino’s Pizza is working with Xevo Inc. to launch an ordering platform pre-loaded in cars starting in 2019. The new in-vehicle Domino’s app is powered by Xevo Market, an automotive commerce platform for connected cars.

“At Domino’s, we want pizza ordering to be simple and always within reach, no matter where a customer happens to be,” says Chris Roeser, director of digital experience at Domino’s. “This new AnyWare platform will make ordering pizza easy, whether you’re in the car waiting for the kids to finish soccer practice or you’re on your way home from work.”

Customers will be able to order from Domino’s with their vehicle’s touchscreen. Once the customer is logged in, they can save time by ordering their Easy Order or most recent order and then track it with Domino’s Tracker. The ordering feature will be automatically loaded on millions of cars with the Xevo platform starting in late 2019.

“We’re excited to work with Domino’s, and to have them join the Xevo Market platform, which is already live in millions of vehicles on the road today. Domino’s is the world’s largest pizza company, and they’ve always been technological innovators,” says Brian Woods, chief marketing officer at Xevo. “Xevo Market makes it possible for Domino’s to reach people directly in their cars, streamlining mobile ordering to help busy consumers save time.”

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COOL INSIGHTS

BY COLLIN COKER

LOWER ENERGY COSTS— SHOULD FROZEN FOOD BE A BATTERY?

A

ll of us working in the cold Frozen food chain realize that energy energy costs costs are a significant line can be reduced item in the monthly budget. Cutting with the right energy costs can be achieved in technologies. two ways—reducing the amount of energy consumed and by reducing the average cost of that energy.

Cold storage operators implement various technologies and strategies to minimize this cost while maintaining the temperatures required to protect food.

Benefits of Flywheeling

Collin Coker is VP sales and marketing at Viking Cold Solutions. He has over 20 years in the energy industry and has led market adoption of TES technology around the globe.

20

One technique widely utilized in low-temperature applications is called flywheeling. Flywheeling is when a facility sub-cools the frozen food and the room below normal operating range prior to peak energy pricing hours and then cycles off, or greatly reduces, active refrigeration during the higher priced periods of the day. When upper-temperature limits are approached, refrigeration systems are re-engaged. By utilizing flywheeling techniques, operators are using the food as a temperature capacitor, or battery, to lower costs.

There are many factors to consider when flywheeling. To sub-cool the food and the room requires more energy than would have been consumed during normal operations. This reduces the economic benefit of the flywheel period and increases the overall carbon footprint of the facility. Considering that grocers and CPG companies are more frequently requiring their supply chain partners to

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contribute to Scope 3 emissions goals, this could conflict with your customers’ goals.

Flywheeling with Less Risk Many operators recognize thermal energy storage (TES) technology as an enabler to extend the benefits of flywheeling, reduce flywheeling’s inherent risks and provide additional operating benefits. TES systems add thermal mass in the form of phase change materials (PCM) combined with intelligent controls that can safely lengthen flywheel periods up to 13 hours per day. Rather than putting the food through damaging sub-cooling and warming cycles, operators use the PCM as the temperature capacitor. Unlike the food, as the PCM transitions between solid and liquid phases it absorbs up to 85 percent of the heat infiltration and consolidates it near the top of the room for efficient removal by the existing refrigeration system’s airflow.

In addition to longer and safer flywheeling, TES provides an average of 26 percent overall reduction in energy consumption, improves temperature stability inside freezers and extends refrigeration equipment life. Efficiencies

come from running compressors at maximum efficiency levels during hours with lower ambient temperatures, consolidating the heat directly in the refrigeration air flow, requiring no additional mechanical components and the PCM’s higher heat transfer rate (eight-times that of frozen food). This means more heat is removed using fewer kWh and less equipment runtime.

Utility Incentives for Improved Flywheeling Utilities and power providers have high-demand periods when they financially incentivized customers to reduce energy use.

Incentive programs often pay for technologies that help their customers use less energy during these periods. Eversource, a Massachusetts utility, added TES to a grant program designed to lower demand during its peak window. Through this grant, nine cold storage facilities have installed TES at no cost and now have lower energy bills and improved operations.

Frozen food should not be used as a battery to lower your energy costs, but your frozen food energy costs can be reduced with the right technologies like thermal energy storage. Technology providers can often help uncover alternative financing sources like utility programs to reduce or entirely cover the implementation of their systems. So, ask your technology providers how to reduce risk, lower energy bills, and minimize costs associated with energy upgrades in your own cold storage operation.

Images / iStock / Getty merve zengin

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COVER STORY

BY LARA L. SOWINSKI

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REEFER CARGO

REPRESENTS A RELIABLE CARGO SEGMENT FOR U.S. BOX PORTS The Port of L.A. enjoys balanced imports/ exports of perishable food, while Port Tampa Bay is eyeing growth.

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efrigerated cargo comprised mostly of perishable food continues to serve as a steady and reliable cargo segment for the Port of Los Angeles and neighboring Port of Long Beach, says Marcel Van Dijk, marketing manager for the Port of L.A. In 2018, the Port of L.A. saw 1.9 million metric tons of reefer cargo move over its docks. The majority of that cargo was a mix of dairy, meat, fruit and vegetables, with a fairly even balance between imports and exports. At neighboring Port of Long Beach, another 1.7 to 1.8 million metric tons of reefer cargo was handled last year. Both ports handled about the same volume of reefer cargo in 2018 as they did in

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2017, notes Van Dijk.

Although there wasn’t significant growth in reefer cargo imports/exports over the past two years, “It’s a very good commodity because even if there is an economic downturn, [perishable food cargoes] do not drop too much,” he points out.

Port of L.A. Sees Opportunity in Automation The Southern California region is an important market for produce importers with about 21 million-plus consumers within a 200-mile radius of the port complex. Some produce even goes to Arizona, Nevada, parts of New Mexico, and up to the San Francisco

Bay area, says Van Dijk.

There are six cold storage facilities within 10 miles of the port complex that provide 170,000 pallet positions, devoted mostly to perishable food imports/exports, which is supplemented with a sizeable network of cold storage facilities in the greater Southern California region.

The Port of Los Angeles handled nearly 9.5 million TEU last year; slightly more than the 9.3 million handled the year prior. While growth is welcomed, “The arrival of very large container ships does present more of a logistics issue at the terminals,” says Van Dijk, particularly when it comes to getting cargo moved off the terminals and

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to an inland distribution center.

“We need to be smarter,” he acknowledges, which means implementing more automation at the terminals to expedite the increasing volume of cargo moving through the port.

Port automation remains a sensitive issue, however.

In April, the Los Angeles Board of Harbor Commissioners delayed for a second time a vote on whether to grant APM Terminals a permit to automate its facility at the Port of Los Angeles. While the terminal operator stresses that automation is critical in order to remain competitive, the potential impact on dockworker jobs is a huge concern for the International Longshore and Warehouse Union (ILWU), which opposes the automation proposal.

The large container ships calling the Port of Los Angeles typically carry 14,000-plus TEU and most of that cargo—85 to 90 percent—is off-loaded in L.A., which means the vessel is at port for a longer duration, explains Van Dijk, usually four-and-a-half days compared to the much shorter (16-24 hour) call the vessel makes

at European ports during a typical loop service.

It’s somewhat of a “unique” situation, yet Van Dijk says the port is always looking to improve its service levels, which are key for time-sensitive, refrigerated perishables.

“The containers are still spending too much time on the terminal,” he says.

It’s not as bad presently compared to what the port experienced during the last quarter of 2018 and in January and February. But, that period was a bit of an anomaly, and due to an abrupt spike in imports from China that were aimed at beating the imposition of additional tariffs by the Trump administration.

“We saw a lot of cargo moving in advance of the Jan.1, 2019 deadline [for the imposition of tariffs on Chinese imports], but then the additional tariffs were postponed until March, and now [the tariffs] have been postponed indefinitely,” says Van Dijk.

As a result, congestion material-

ized not only at the L.A.-Long Beach port complex but in Asia as well.

“The ports of Los Angeles and Long Beach had 34 additional ships that were extra loaders—vessels that were not in a regular loop.

They put 24 additional ships in that loop during the winter season.

We are digging out now. There are still a lot of empty containers from that period that were going to the Midwest and are now coming back to be repositioned in Asia. So, we have a lot of empty containers on the terminals, which adds to the congestion,” he says.

Chassis management is also an

The Port of Los Angeles, along with neighboring Port of Long Beach, handles nearly 40 percent of U.S. containerized imports and 25 percent of exports.

COSCO Shipping launched direct service from Asia to Port Tampa Bay in January.

For Port Tampa Bay, the goal is to deliver product as quickly and as close to the customer as possible.”

Wade Elliott, vice president of marketing and business development

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COVER STORY The arrival of very large containerships does present more of a logistics issue at the terminals.”

Marcel Van Dijk, marketing manager, the Port of Los Angeles

Port Logistics Refrigerated Services (PLRS) provides an array of cold chain solutions on-dock at Port Tampa Bay.

continued

issue, Van Dijk adds. If a beneficial cargo owner (BCO) drays a container to the warehouse, but the warehouse is full and cannot accept the load, then the chassis and container are kept in the yard until space is freed up. This essentially takes the equipment out of service, creating a chassis shortage.

Moreover, many big-box retailers naturally have a close relationship with the ocean carriers, which mean they sometimes get a break when it comes to detention fees that are assessed on equipment that is not returned timely.

In this scenario, the smaller shippers are at a disadvantage “because there is either no chassis available for their cargo, or not enough chassis for their cargo,” says Van Dijk. This is an example of where asset-tracking technology can be applied to facilitate a more efficient terminal operation and cargo flow, he adds.

“We need to know where the chassis are, where the empties are, because while some terminals may have enough, the terminal next door might not have any.”

Meanwhile, Van Dijk spends considerable time talking with and visiting reefer BCOs to understand their concerns and gather information on cargo forecasts. At least once or twice a year he visits California’s Central Valley to talk with food shippers.

“I update them on the situation at the port, and they give me information such as where their grape shipments will be headed…whether more are going to Southeast Asia and less to China, for instance.”

Getting Products Closer to the Consumer at Port Tampa Bay Across the country at Florida’s Port Tampa Bay, perishable food cargoes are a fast-growing cargo segment. The opening of Port Logistics Refrigerated Services (PLRS), the on-dock cold storage facility, in 2017, is fundamental to that growth.

PLRS handles both breakbulk and containerized cargo. The 135,000-square-foot facility has 6,348 pallet positions, 96 reefer plugs, on-site radiation portal monitors, and uses a glycol refrigeration system instead of ammonia.

According to Wade Elliott, vice president of marketing and business development at Port Tampa Bay, the goal is to deliver product quickly and as close to the customer as possible.

In September, Port Tampa Bay and PLRS received its first shipment of Costa Rican pineapples via Seacat Line, on behalf of Chestnut Hill Farms, the third-largest pineapple importer in North America.

“This new routing provides us with excellent access to serve our customers in Florida and throughout the southeastern United States.

We expect this will be the first of regular ongoing shipments,” remarked Raul Romero, president and COO of Chestnut Hill Farms.

The port is also handling imports of avocados, mangoes, limes, and other perishable foods from Mexico shipped via expedited services provided by TransGulf and Linea Peninsular.

Juice is also an important commodity for Port Tampa Bay, says Elliott, who added that poultry exports are another opportunity the port is looking at currently.

China Ocean Shipping Company (COSCO) added Port Tampa Bay to its Gulf of Mexico Express (GME) trans-Pacific service, with the first vessel from arriving in January. The weekly containerized service supports food/beverage shipments and other cargoes, such as furniture, construction materials and textiles.

Meanwhile, CMA CGM will

begin calling Port Tampa Bay in late May with its PEX3 service, whose rotation includes: Singapore-Vietnam-Hong Kong-China-Korea-Panama Canal-Houston-Mobile-New Orleans-Tampa-Miami.

Port Tampa Bay’s president and CEO, Paul Anderson, said the announcement by CMA CGM “is a further testament to the growth of the U.S. Gulf market and the significance of the Tampa Bay/I-4 Corridor region, home to the state’s largest concentration of distribution centers, which has become the heartbeat of Florida’s international trade.”

The ongoing population growth in Florida, and more specifically the central region of the state, including Tampa and Orlando, figures significantly in the port’s expanding business, adds Elliott.

Florida’s population is roughly 22 million, in third place behind California and Texas, he says. “In addition, we have another 125 million tourists who visit every year,” with many of them concentrated in the Tampa and Orlando area.

The region is also a major hub for the grocery and food and beverage sectors. Grocery chain Publix is headquartered in Lakeland, Florida, while Sysco, Walmart/Sam’s Club, Goya, and Southern Wine & Spirits also have a significant presence there, says Elliott.

Port Tampa Bay continues to work on the next phase of its development, a “food campus” for dry/ambient products along with additional refrigerated warehousing for storage, packaging and distribution of perishable food and beverage products.

Elliott notes that, “We’ve been fortunate to continue our expansion without any hiccups or congestion,” which includes “really good gate turns” as well as “easy access” to primary transportation roadways.

“We want to make sure we’re staying ahead of the curve and don’t run into any problems down the road with growth. Some ports are more constrained [in their ability to expand], but we are blessed in terms of having the land.”

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THIRD-PARTY & REFRIGERATED LOGISTICS

CONSUMERS DEMAND

CONVENIENCE AND VARIETY IN FOOD SERVICE As consumer trends shift, it is important for foodservice distributors to shift with them.

H

e wanted Greek and she wanted Chinese—so they ordered takeout from two different Manhattan restaurants offering home delivery, enjoyed dinner and a movie in their living room, and everyone got what they wanted.

This isn’t an unusual scenario for today’s two-career, very busy families—or even individuals who want a variety of food options and just prefer to “dine in.” Nor is it unusual today for restaurant patrons to insist on substitutions and mixes and matches of menu options to get what they want.

“The consumer ultimately drives everything, and the ripple effects are felt throughout the entire food supply chain’s ecosys-

82%

of consumers say convenience is a top concern when dining out.

tem,” says Cullen Andrews, vice president of sales and marketing for Dot Foods, a food industry redistributor.

This makes it imperative for foodservice companies to closely monitor consumer trends so they can stay on top of them.

What Food Consumers Want “We are seeing that consumers want convenience, and that’s espe-

cially true when it comes to food,” notes Mark Allen, president & CEO of the International Foodservice Distributors Association (IFDA).

“Restaurants are investing in technology and changing the experience of dining out. There is a real emphasis on creating a seamless experience for their customers. Mintel (a market intelligence agency) reports that 82 percent of consumers say convenience is a top concern when dining out.”

Also important to consumers are transparency and sustainability.

“They have a strong interest in not only where the food comes from, but how it gets to their table. I believe the emphasis on local, organic and sustainable will continue,” says Allen.

This means there will be a persistent, higher demand for “natural” specialty products and products that are viewed as cleaner and better to consume.

“There is also continued growth

Mintel

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5/1/19 3:39 PM

continued

VTT Studio / iStock / Getty Images Plus

with authentic global ethnic foods,” says Andrews. “Flavors and products that are influenced outside of the United States continue to appear in menus across all segments and channels.”

The foodservice industry is also responding to new technologies and modes of delivery that consumers are demanding. E-commerce has been a major driver of consumer behavior because the broad assortment of food products it offers has exposed consumers to more food options—and has raised consumer expectations that foodservice providers can fulfill demands for more variegated food choices. In other cases, restaurants have teamed up with technology-delivery options like Uber for takeout delivery, and restaurants and meal services have added options so consumers can place orders online and have them ready for pickup at the restaurant or delivery at home.

“One of the most noticeable

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3PL

changes I’ve seen is how restaurants have emphasized the takeout experience with apps like Grub Hub, UberEats and the like,” observes Allen. “They are focused on making things as convenient for their customers as possible—both in the physical restaurant or for take-out.”

Retooling for Freshness, Variety and Convenience For the farms and distributors that support restaurants and stores, evolving consumer demands for freshness, variety and convenience are bringing change to the foodservice industry. For instance, distributors now partner more closely with foodservice outlets by suggesting technology improvements that could be made in the food supply chain. In some cases, distributors even come up with menu suggestions.

To meet consumer desires for sustainable, fresh and varietal foods, foodservice retailers and distributors seek out more locally sourced goods, and use improved packaging options to keep these foods fresh while they travel from farms to distributors, retailers or consumers.

“As the farm-to-table movement grows in popularity, we’re also seeing an increase in indoor farms in urban areas using hydroponic, aeroponic or aquaponic technology,” says Allen. “Some are in greenhouses using natural light and some use shelf-like stacked planes or vertical growing walls with LED lighting.

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One shipping container, for example, can produce as much as two acres of farmland. Unlike outdoor farms, however, the indoor versions can repeat the growing cycle over and over, 52 weeks per year.”

These urban farms can produce food with 95 percent less water than conventional farms—plus, they have no run-off or soil-stripping issues. Food safety can be strictly controlled from seed to restaurant delivery in a way that isn’t possible with a large farm.

An example is Gordon Food Service’s first urban farming campus in Wyoming, Michigan, which it recently announced. Gordon is partnering with Square Roots, a Brooklyn-based urban farm technology provider, in the venture.

It is projected that 10 hydroponic shipping container farms will produce more than 50,000 pounds of herbs annually, which will be made available to nearby GFS customers in retail centers such as the new GFS Detroit grocery store.

The Challenge of Meeting New Consumer Demands The Gordon Food Service urban farming campus project is exciting and forward-thinking. Nevertheless, it doesn’t hide the fact that foodservice retailers and distributors still face challenges as they strive to fulfill elevated customer expectations.  IMPROVING RESULTS THROUGH COLLABORATION. “Distributors today must be a business partner to their customers as well as a vendor,” says Allen. “As foodservice distributors continue to adjust their sourcing, procurement and assortment of products to meet changing consumer tastes, more are also finding that it pays to play a more active role with their customers. When a distributor does this, the distributor can help customers navigate a rapidly changing environment. Foodservice distributors also play a vital role in ensuring products are delivered safely and

efficiently to the customer.”

Allen emphasizes that while technology is seen by many as an enabler and a differentiator in foodservice, it’s also important for distributors to keep a personal relationship with their customers.

“While Amazon might be convenient—are they invested in your success?” he asks. “One of the biggest competitive advantages distributors have is customer service and relationships.”  DEALING WITH EXPANSIONS IN CONSUMER CHOICE. At the same time that distributors and retailers are running and monitoring their supply chains, the variety of foods being funneled through these supply chains is growing.

This means that both distributors and retailers must carry more products, manage increased operational costs for carrying more products, and enact means of ensuring that products stay fresh from farm to table.

While Amazon might be convenient--are they invested in your success?”

Mark Allen, president and CEO, International Foodservice Distributors Association

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continued

 TALENT. Of course, to run the new technology you have to rework your operations—and possess the internal talent to run these new systems. “It’s easy to talk about foodservice trends, but not always so easy to execute thestrategies associated with them,” says Andrews.

“For years, distributors have been experts at supply chain, customer service, inventory management and the like, but now they need technology know-how. One key challenge is attracting and finding the talent that can help lead and execute new strategies that involve new technologies. If you just look at e-commerce, it requires investments in IT, marketing, and e-commerce Warehouse automation, including talent that may drone technology, not exist in your must be embraced by organization distributors. today, as it might not have been a core competency.

It also requires significant planning and alignment across the organization so that you can operationally support new ways of doing business.”

For years, distributors have been experts at supply chain, customer service, inventory management and the like, but now they need technology know-how.”

Cullen Andrews, vice president of sales and marketing for Dot Foots

30

“The move to a broader assortment of products can impact a distributor’s sales team,” Allen explains.

“It’s becoming more important for salespeople to be more consultative and understand the latest consumer foodservice trends so they can add value to their customers with their knowledge of products and consumers. Meanwhile, the more products a distributor carries, the more difficult it is for the distributor’s salesperson to be a product expert. This means they need to have the tools to help them support the customer and offer insights.”  TECHNOLOGY. When it comes to tools, analytics is playing an important role in monitoring and reporting on consumer buying trends in foodservice—and analytics are giving distributors the tools to better assist their retail customers.

Distributors are also expanding their e-commerce capabilities, whether it is providing a better user experience for online ordering, or generating content on products and trends. To do this, they must integrate many disparate systems

FOOD LOGISTICS | MAY 2019

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undefined / iStock / Getty Images Plus

Chiradech / iStock / Getty Images Plus

3PL

and platforms to provide a seamless user experience, and to move data from multiple systems into analytics programs that can produce value-added business insights.

The other operational aspect that technology helps is time to market.

“I think distributors are accepting that ‘the future’ is here,” says Allen. “Delivery drones, warehouse robots, and automated factories are not a thing of science fiction anymore. It’s vital for distributors to embrace this new technology.”

 LABOR SHORTAGES. There are also supply chain realities that impact distributors and retailers, although they don’t necessarily control them.

For instance, as the need for freight transport soars, estimates from the American Trucking Associations (ATA) show trucking companies will need to hire an additional 890,000 drivers over the next decade.

“According to an industry analysis

by DAT Solutions, just one truck was available for every 12 loads needing to be shipped at the start of 2018, which is the lowest ratio since

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the hundreds of thousands of perishable products,” says Allen. “Given that American consumers expect their meals at the speed of an app, this creates a huge challenge.”

Fortunately, work is being done to reduce the truck driver shortage.

In February, bipartisan lawmakers in the Senate and House introduced

continued

2005,” says Allen.

Undoubtedly, the labor shortage is having a huge impact on both the operator and foodservice distribution industries. “If we don’t put more drivers behind the wheel, we can’t make the timely delivery of

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legislation to address the driver shortage with the DRIVE-Safe Act, which modernizes federal law to empower the trucking industry to fill labor gaps with a qualified, highly trained emerging workforce.

What to Do Now As consumer trends shift, it is important for foodservice distributors to shift with them. Here are several steps they can take to stay ahead of market demand: ❶ Include local, sustainable and plant-based foods in your planning.

“The demand for local and sustainable food will only increase, so that is something that should be on everyone’s radar,” says Allen. “In the same vein, I think you’ll see more plant-based foods.” ❷ Network with others. “Industry associations provide opportunities for information and networking,” says Andrews. “There are great industry associations across channels and initiatives that help you learn from those that have experience. It can especially be helpful to network and learn from similar business models in other industries to learn what is happening outside of your primary industry.” ❸ Include emerging trends in your strategic planning. Your foodservice strategic plan should look ahead three to five years, and not just focus on the next 12-24 months. ❹ Use outside market research.

Working with market research companies that have robust operator or consumer data in the food industry can provide valuable input to your strategic planning. ❺ Stay engaged with your customers and stakeholders. “There is still nothing better than being in front of customers, suppliers and other key stakeholders at their place of business,” says Andrews.

“It helps you to understand what they are focused on, what their customers are asking of them, the challenges they are facing and what they see as the current trends.”

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SECTOR REPORTS WAREHOUSING

BY JASON ADLAM

COLLABORATE FOR SUCCESS If your company is considering collaboration outside your walls, you’re already one step ahead.

L

ook around your warehouse, and you’ll see tons of products, carefully packaged and stored. Take a fresh look, and you’ll also see opportunities to improve efficiencies and sustainability, in everything from packaging to pallets.

Collaboration helps us find and capitalize on those opportunities.

Working with strategic partners empowers us to do a better job of meeting expectations faster, easier and cheaper, while shrinking the impact of operations.

Learn From the Leader

Claudiad / E+ / Getty Images

One of the best examples of effective collaboration is Walmart’s Project Gigaton. With this initiative, Walmart is working to take out a gigaton (one billion metric tons) of greenhouse gases from the global value chain by 2030. By creating the program and rewarding suppliers that make progress, Walmart is improving operations and sustainability throughout the supply chain. It’s strategic collaboration at its best.

Happily, companies don’t need to be the size of Walmart to form powerful partnerships, improve efficiencies and help the environment. Companies of all sizes are finding that working together

works. It’s a matter of finding the right partners for specific programs.

1+1 = More Than 2 It might surprise you to learn that the right partner could already be one of your existing suppliers.

By working with others in a similar space or adjacent industry, companies are collaboratively unlocking value throughout the supply chain.

Such strategic partnerships begin with open discussion. It’s important to have shared goals that lead to value creation. Establish metrics.

Then, move forward.

For example, how many empty miles are in your supply chain?

Wasted trailer space has become a major issue for the food industry, and throughout the supply chain.

While year-to-year statistics vary, U.S. trucks drive billions of miles without cargo annually. Those empty miles burn billions of gallons of fuel, and contribute to the environmental issues we all want to address.

Working together, we can reduce empty space and its negative impact. Collaborative transportation solutions use data obtained by new technology to identify transport flows, match shipment needs among companies with complementary routes, and eliminate empty miles.

The technology enables efficiencies.

Are you maximizing trailer space today and, if not, could you share any empty space with an industry-adjacent company? Possibly.

Would both companies, and the environment, benefit? Definitely.

A Juicy Success Story Packaging presents another opportunity for sustainable operational improvements. Look at how your goods are packaged, whether

you’re using corrugate or a shared and reusable plastic container. How about shrink wrap? Are you using the optimal amount? Remember: As your warehouse team breaks down the unit load, improved packaging can reduce costs, drive efficiencies and boost sustainability.

One great example: Packaging was a top concern for Harvest Hill Beverage Company when it acquired Juicy Juice. The company wanted to ensure the product packaging, transportation, shipping and handling protocols were as efficient as possible. Was there a better approach to unit loading? Could product damage be reduced?

To answer those questions, Harvest Hill traveled from its home in Connecticut to collaborate with an ISTA-certified facility in Florida.

The company brought 18 different Juicy Juice loads, including bottles, pouches and boxes. Harvest Hill tested different sizes, packaging, case dimensions and unit load configurations. When the results were in, Harvest Hill had the data needed to achieve greater efficiency, reduce product damage and generate supply chain cost-savings.

Don’t Go It Alone If your company is already considering how collaboration outside your walls can improve your supply chain, fantastic—you’re one step ahead. However, for many companies, collaboration is not second-nature; they cling to the misconception that they can go it alone. They’re pretty sure they have the best mousetrap.

If that’s your thinking, you could be right. But keep this in mind: Someone else might have better cheese. Collaborate, and find out.

Jason Adlam is the vice president, new business development for CHEP USA. He has nearly 25 years of experience in the North American logistics and supply chain industry.

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SECTOR REPORTS WAREHOUSING

BY BOB KLIMKO

CREATE WAREHOUSE VERSATILITY Reusable totes can increase efficiencies and improve processes at every point along the food and beverage supply chain.

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hether you’re looking to increase automation, introduce e-commerce, improve supply chain visibility or increase sustainability, reusable totes are the one-trick-pony of material handling. From the manufacturing plant and distribution center (DC) to delivery and the retail aisle, reusable totes can increase efficiencies and improve processes at every point along the food and beverage supply chain. Overall, reusable totes—including DC totes that hold goods for e-commerce picking, distribution totes that move general merchandise, and retail shelf-replenishment totes and trays that move bread from the bakery to the retail aisle—are intended to

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streamline the supply chain.

Because of this versatility, reusable totes offer a range of benefits.

With modern supply chain needs and increasing labor shortages, reusable totes are more valuable to supply chains than ever before.

Here are three key benefits reusable totes provide.

reusable totes creates smart packaging, which can provide measurable, actionable data to encourage smart business decisions. This data can uncover insightful information like dwell time and packaging loss to improve operations and reduce inefficiencies.

Safe and Sanitary Supply Chains

Reusable totes are durable, moisture resistant, and have no nails or loose corrugated flaps that could negatively affect highspeed systems. Because they are precision molded and adhere to tight tolerances, their consistent dimensions ensure a seamless flow throughout systems, without jams, reducing costly stops and production delays. Their cube efficiency is required in today’s high-velocity food and beverage supply chains, while working interchangeably with existing facility automation.

Reusable totes also don’t shed debris—such as fiber, dust or wood chips—that create unsanitary and unsafe conditions.

Reusable totes are some of the most versatile packaging available.

As more processes become automated, more specialized totes are entering the market—such as totes for picking or automation, and totes that interface with mobile solutions for in-store uses—such as e-commerce fulfillment. Versatile tote designs give supply chain personnel more options for fully- or partially-automated systems.

With increasing needs in the retail supply chain, totes can be repurposed for a variety of uses.

Reusable totes fall within the sustainability business as part of the reduce, reuse and recycle framework. They can replace one-time-use packaging and are designed to be used for many handling cycles and then recycled at the end of their service life to be repurposed into other useful packaging. Reusability also is beneficial when sanitation is required, as they are easily cleanable to ensure clean and safe packaging with every use.

Even the smallest details that go into designing reusable totes—drain holes, collapsible sides, sleek interior and no water-trapping cavities—make them safe packaging options for highly-regulated supply chains such as food and beverage.

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Enhanced Visibility Technology such as RFID, Bluetooth low energy (BLE) and GPS can be added to reusable totes.

This can increase packaging visibility, protect product quality, prevent product loss and better manage reusable tote inventory.

Adding technology to

Seamless System Flow

Bob Klimko is director of market development at ORBIS.

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SECTOR REPORTS TRANSPORTATION

BY AMY WUNDERLIN

MIDDLE AMERICA:

KC SmartPort

A LOGISTICS GOLD MINE

As speed to market becomes increasingly critical for manufacturers across all industries, interest in Kansas City’s SmartPort has grown.

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hen you think of Kansas City, Missouri, chances are corn fields come to mind. Maybe you think barbecue or jazz, but logistics surly isn’t your first thought. The metropolis in the center of America’s heartland, however, has quickly grown into one of the nation’s largest hubs for transportation and logistics operations.

In 2018, the Kansas City region experienced unprecedented industrial growth, with 5.1 million square feet of new industrial space and 4.2

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million square feet under construction (Q4, 2018). The area is home to many large global brands that have either relocated or expanded, including Amazon, Dollar Tree, CVS Health, Overstock.com, Turn5 and Hy-Vee Aisles.

In addition, the region has seen a transportation and warehouse employment growth rate of 3.5 percent for nearly a decade, and 10 new freight-based companies have created nearly 1,000 jobs.

Several key components combine

to make Kansas City a world-class logistics hub, which include: •The largest rail center in the United States by tonnage •A business-friendly Foreign Trade Zone program that can activate space in under 45 days •Located at the intersection of four of the nation’s major interstate highways (I-35, I-70, I-29, I-49) •Access to the Kansas City International Airport, which moves more air cargo each year than any air center in a six-state region •Located on the largest navigable inland waterway (MO/MS River system)

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• All five U.S. Class 1 rail lines (BNSF, CP, KCS, NS and UP) intersect in Kansas City KC SmartPort, a regional economic development group, has led the growth initiative, working to bring freight-based economic development to the area.

“When you think of what we call freight-based economic development—companies that have significant inbound and outbound freight—over 50 percent of the decision of where to put a new facility is transportation costs,” explains Chris Gutierrez, president of KC SmartPort. “And with all four modes of transportation here and significant connections to markets and ports, that transportation cost advantage for us is significant. We also tout more lane miles in the highway, per capita, than any other metropolitan area.”

In addition, KC SmartPort’s pre-existing industrial space (40 million square feet built since 2012) is attractive in an economy where speed to market is essential when companies decide they need a new facility.

“Having available buildings and development, vertical-ready sites, is an advantage for us to win those,” Gutierrez adds.

KC SmartPort

Most e-commerce deliveries today move at the speed of two days or less. In two days, Kansas City can reach 85 percent to 90 percent of the U.S. population.

continued

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An Opportunity Lies in Food

to see more growth,” he says. “It’s a small, single percentage of grocery chains that really have an online network. We’re going to see that continue to grow, and I think Kansas City’s going to benefit from that.”

KC SmartPort has seen significant growth in three manufacturing sectors: automotive, precision and food, with the latter offering the most opportunity for growth over The E-commerce the next few years. According to Uptick Has Just Begun Gutierrez, the hub has about half a dozen food-related projects in E-commerce giants such as the pipeline, which he describes Amazon and Jet.com have already only as regional found a home in Kansas distribution centers City. One of Jet.com’s And with all or manufacturers. three U.S. facilities is four modes of “We’ve got a good located in the region, and transportation base of food technolAmazon has five or six— here and significant one of which is its new ogy here. And then connections to Amazon Flex, an Uberof course, the central location really benefits markets and ports, type delivery service that that transportation allows private citizens to those companies to cost deliver packages for them locate here,” he notes.

Currently, Bimbo advantage through a mobile app.

“That facility is here Bakeries, Frito-Lay, for us is for that same-day-type General Mills, KC Sausignificant.” delivery,” says Gutierrez. sage, Hostess, Tyson Chris Gutierrez, “And within the last mile Foods, Mars and many president, KC SmartPort or e-commerce, we’ve got more have operations solutions and transportaat KC SmartPort.

Gutierrez says much of the hub’s tion options to meet those needs.” efforts over the next few years will Most e-commerce deliveries tocontinue to focus on identifying day move at the speed of two days food-related companies that are or less, and according to Gutierrez, developing new food technology in two days, Kansas City can reach and products that will require 85 percent to 90 percent of the U.S. additional manufacturing and/or population. distribution space.

Investments in the region by UPS and FedEx to grow their ability to “Marry that with e-commerce and deliver those packages in a timely food on demand, and we’re going fashion also makes Kansas City attractive to e-commerce companies.

In addition, having all four modes of transportation at one hub gives the shipper or the BCO a choice.

“They can look at all four modes of transportation as they plan their supply chain, and it helps them in negotiation with the transportation carriers that they have options,” says Gutierrez.

In the coming year, KC SmartPort will continue to position itself as an e-commerce hot spot.

“While e-commerce is a leading sector for leasing industrial buildings around the country, it really hasn’t grown to the level we think it’s going to grow, both B2C and B2B. So, we’re going to continue to see that effort here,” adds Gutierrez. www.foodlogistics.com

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SECTOR REPORTS SOFTWARE & TECHNOLOGY

PROTECTING THE FOOD SUPPLY CHAIN AGAINST

Whether it’s processing food or transporting it, a cyber breach can be detrimental to the systems that monitor and document food safety and supply.

Protection is key.

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I

n June 2018, Mondeléz International was hit by the outbreak of the NotPetya “wiper” malware, which disrupted the shipping of candy and snacks. The company only recently revealed the attack as part of its financial earnings report.

Mondeléz spent close to $180 million on the outbreak, including $84 million to investigate the incident, remove the malware, and restore its systems, according to the company’s recent financial filings.

The snack-food giant is only one example of the threats cyber breaches could have on the food supply chain. Such breaches could be so disruptive that the U.S. Department of Homeland Security labeled the food and agriculture industry one of the 16 national critical infrastructures always at a higher risk for an attack than other sectors. That’s because an attack could disrupt food access and safety for many Americans.

Attacks on the food supply chain can have other far-reaching consequences. A single security breach can run across an entire supply chain, from farmers to shippers to retailers and—ultimately—to con-

FOOD LOGISTICS | MAY 2019

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sumers, says Andres Franzetti, president and chief operating officer at Risk Cooperative, a company that insures against security attacks.

“In the case of Mondeléz the breach created disruptions down various links of the supply chain and affected getting food to consumers,” he says. “If you start looking at it in terms of the production of beef and poultry and other mainstays to diets, you can see how a cyberattack on the supply chain of critical food providers could have a huge impact on the population.

“Folks won’t get access to these foods. Then you see how a breach could cause instability to the population at a catastrophic level,” he says.

As the food and agriculture sector continues to implement more software and hardware solutions— such as drones and soil tracking software for precision farming—it faces heightened vulnerabilities to the type of cyber threats that can impact food production levels and contamination, Franzetti says.

Companies are also stepping up implementation of artificial intelligence, machine learning, and the Internet of Things technologies to

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CYBER THREATS

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streamline the supply chain, eliminate fraud and waste, and improve the customer experience. But these new technologies introduce increased risk and complexity. Complexity is the cybercriminal’s best friend, adds Theresa Payton, chief executive officer at Fortalice Solutions, a security consulting company.

“Just as a shoplifter might strike at a retail business’s peak hours to decrease the risk of being detected, cybercriminals often wait for peak traffic and use the complexity and noise as a cloak of anonymity,” she says.

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Breaches can start anywhere in the supply chain. At this point, not a single technology link in the food supply chain hasn’t been hit, she says.

The biggest impact to the food supply chain so far has been compromised customer payment data and other personal information, Payton adds.

The further the link is from the producer, however, the harder it is to detect. For instance, a 2016 Farm Bureau survey found that farmers and ranchers want to control the information their equipment collects every time it passes through a field. Yet, a 2018 survey from the same advocacy organization reported that 87 percent of farmers were unsure of what to do if a security breach affected them or a service provider.

That calls for an element of trust for all those involved in the supply chain, Payton says.

Security breaches could harm food makers in many ways, says Roger Woehl, chief technical officer at SafetyChain Software, which makes quality assurance, food safety and compliance software.

“The worst scenario would be the leaking of a trade secret; where a competitor in China hacks in and steals something about your specific formula,” Woehl says.

Other risks to food producers and distributors include a threat via ransomware, he adds.

“You need your data to pass your audits. Someone could use ransomware to get into your data and encrypt it, saying, ‘send us a million in bitcoin and then we’ll unlock your data,’” Woehl says.

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FLOG0519_42-45_Software.indd 43

Or, an activist group might try to hack into food production IT systems, he adds.

“They might feel there would be value in exposing some kind of practices they disagree with,” Woehl says.

Keep It Safe So how can these risks be mitigated? Protecting information takes several forms.

Food producers can spend thou-

sands of dollars on the latest lines of security defense, but they’re still vulnerable to data breaches and failed audits due to certain areas they’ve overlooked, says Chris Boyd, a threat researcher at the internet security company Malwarebytes.

Begin with a security assessment, he says. First, look at the firewall, usually the top line of defense against hackers at small- to medium-sized enterprises, Boyd says.

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4/30/19 11:23 AM

SR: SOFTWARE & TECHNOLOGY continued

Jean Thilmany is a freelance writer based in St. Paul, Minnesota.

She specializes in engineering, manufacturing, technology and industrial topics.

For her part, Payton recommends keeping all systems separate. She advocates a practice called segmenWhile producers can never really tation; splitting computer networks be assured their IT operations are into separate network segments.

100-percent secure, by assessing Many of the networks used by food their security methods and taking manufacturers, producinto account areas perhaps overOnce you know the ers and suppliers could looked in the past, worst that can happen, be segmented, she says. they can get a betyou can take That way, if one of the ter understanding steps to lessen networks is attacked, others are safe. of just how secure the impact.”

Also, providers should their enterprises Chris Boyd, threat researcher, plan for security breaches are, he says.

Malwarebytes the same way they do for Every day, hackfires or earthquakes— ers run massive with drills and with pre-determined network scans across the internet response methods. to look for vulnerable firewalls.

“Personally, I’d start with the “Name your top three digital-diassumption that everything has been saster nightmares,” Payton says. compromised—whether that’s the “Then dramatize and talk about physical building security, firewall what might happen if the worst happolicies, malware on the network, or pens. Use that as the foundation to data leaks—then think ‘What’s the build an incident-response playbook. most damage that could come out of “Rehearse a realistic tabletop this?’” Boyd says. “Once you know the exercise for each of your digital worst that can happen, you can take disaster nightmares. Document call steps to lessen the impact.” trees, draft crisis communications

Listeria Learning Lab Returns!

Back by popular demand, the Listeria Learning Lab will engage you in hands-on lessons and activities to enhance your food safety knowledge and decision making skills during United Fresh 2019.

Listeria Learning Lab at United Fresh 2019 Tuesday, June 11 | 4:00 - 6:00 pm

to your executives and customers, determine what you need for legal support, technology support, incident response support,” she says.

One of the key components to mitigation is education, Franzetti adds. That includes educating farmers and others involved in food supply on cyber risks and potential areas for cyber breaches.

He also suggests suppliers and manufacturers consider cyber insurance that includes breach-response coverage. While insurance is not prevention or risk management, it does provide finances and resources to mitigate a breach as soon as it’s identified, he says.

“This allows damage to be contained, rather than spreading throughout the entire supply chain,” Franzetti says.

“Ultimately, a breach to the food supply chain could create a national security issue for our country,” he says. “Protecting the most valuable aspects of our food supply chain is vital.”

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www.foodlogistics.com

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4/30/19 11:23 AM

SECTOR REPORTS OCEAN PORTS & CARRIERS

BY JOHN MCCURRY

SHIPPING LINES

PREPARE T

he Jan. 1, 2020 start date of the International Maritime Organization (IMO) 2020 regulation mandating reduced sulfur oxide emissions for shipping lines will likely result in increased shipping costs for produce, but exactly how much is up to debate.

Peter Friedman, executive director of the Agriculture Transportation Coalition, says as refineries turn their capacity to produce low-sulfur fuels, the cost is likely to drop significantly.

“We have been through this before, and at times, the ocean carriers look to a change in the status quo as an opportunity to generate additional revenue,” Friedman says. “In the past, ocean carriers have clearly manipulated the data involving fuel costs to increase what they charge for freight movement of refrigerated and dry containers of cargo, both imported and exported.”

Friedman says his organization has exposed some of these manipulations in the past and carriers have withdrawn the surcharges. He says agriculture is always more sensitive to cost increases than consum-

er branded goods.

“Perhaps the increased costs will not be as significant as ocean carriers have been saying that they would be,” Friedman says. “All of these refineries will have to purchase low-sulfur fuel and there will be a lot more supply.”

He adds that the scrutiny coming from outside the ocean carrier industry from those who are not impacted is indicating that perhaps the increased cost will not be as significant as ocean carriers have been cautioning.

“There will be increased costs,

CMA CGM is testing the viability of biofuels as a sustainable fuel option.

but it may not be as much as predicted by ocean carriers thus far,” says Friedman. “We applaud those ocean carriers who are refraining from crying wolf, if you

46

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Many are focusing on the use of compliant fuel, surcharges and scrubbers to offset potentially higher prices.

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FOR IMO 2020

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will, and being more cautious in terms of waiting and trying to get a more realistic estimate.”

Friedman says if the cost of low-sulfur fuel is ultimately so high that it makes transportation of produce to the U.S. significantly costlier, it may open opportunities for the U.S. to increase domestic produce production.

Shipping Lines Strategizing Major shipping lines have developed varying strategies on how they will deal with the new requirements and many have been in place for months. Here’s a look at how some of the lines are dealing with the situation.

Anne Sophie Karlson, head of reefer solutions for A.P Moller-Maersk, says Maersk’s IMO 2020 fuel sourcing strategy focuses on compliant fuels. For example, the company has announced joint initiatives with Vopak and PBF logistics for 0.5 percent compliant fuel storage and processing facilities in the key network hubs of Rotterdam and New Jersey. The two facilities will There will handle approxibe increased mately one-third costs, but it may of Maersk’s fleet’s not be as much fuel demand. as predicted by Scrubbers form ocean carriers a secondary part thus far.” of the line’s overall Peter Friedman, IMO 2020 fuel executive director of the Agriculture sourcing strategy Transportation Coaltion to ensure compliance and spread the risk of fuel price uncertainty in 2020—for the price spread between high and low sulfur fuels and for the price of future 0.5 percent compliant low sulfur fuels.

“Low sulfur fuels are significantly more expensive,” Karlsen says.

“For Maersk Line alone, the cost of compliance could exceed $2 billion. Our customers should expect the cost of shipping goods

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to increase to cover the increase.”

To recover costs, Karlsen says Maersk Line is changing its fuel adjustment surcharge ahead of the IMO 2020 sulfur cap. She says the Bunker Adjustment

Factor (BAF) mechanism ensures a simple, predictable way of recovering the increased bunker cost.

“It is very important for us that our surcharges are easy to understand and accept for our customers,” Karlsen says. “Our BAF will be set at individual trade spec-

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5/2/19 8:36 AM

SR: OCEAN PORTS & CARRIERS

continued

ifications, including vessel size, fuel efficiency and utilization. It aims to recover our costs of compliance with the 2020 sulfur cap, whether from investing in scrubbers or burning compliant fuels.”

Karlsen says the BAF is designed to only recover Retrofitting increases in fuel costs. It reships with a places Maersk Line’s current scrubber is also SBF surcharge and consists quite expensiveof two key elements: -the device • The fuel price that is itself plus fitting, calculated as the average fuel ship yard, and price in key bunkering ports additional around the world. operational • A trade factor reflecting costs due to dry fuel consumption on a given docking.” trade, including any imbalRanier Horn, ance between headhaul and spokesman for Hamburg Sud backhaul legs.

Hamburg Sud is approaching the issue in a similar way.

Ranier Horn, a spokesman for Hamburg Sud, says the

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line is also using a combination of compliant fuel and scrubbers.

“Retrofitting ships with a scrubber is also quite expensive—the device itself plus fitting, ship yard, and additional operational costs due to dry docking,” Horn says. “These costs also need to be recovered from the shippers over time.”

Like all other major shipping lines, Hamburg Sud has launched a new BAF, which will recover higher fuel costs in a transparent way.

Horn says this has already been communicated to customers and Hamburg Sud will continue to keep them updated.

“The handling of perishable goods itself won’t change, but the transport will be a bit more expensive,” Horn says. “Consumers will probably not take any notice of it since the additional costs per transported item will be very little. However, for liner shipping companies this extra cost will add up to enormous sums that they won’t be able to absorb without recovery from their customers.”

ORDER BY 6 PM FOR SAME DAY SHIPPING

LNG a Choice of CMA CGM CMA CGM Group says it will be compliant beginning

LNG reduces sulfur and nitrous oxide pollution by 99 percent compared to the current bunker fuel. For its part, CMA CGM sees LNG as a way to both comply with IMO 2020 and boost the Group’s commitment to sustainability.

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Jan. 1, 2020, with a three-pronged approach that uses 0.5 percent fuel oil for its fleet, using LNG fuel for some future container ships and employing scrubbers for some vessels. The additional costs will be passed along through the application or adjustment of fuel surcharges on a market-by-market basis.

In November 2017, CMA CGM announced its decision to equip its nine future ships of 22,000-TEU with engines using LNG, to be delivered beginning in 2020, thus becoming the first shipping company in the world to propel ultra-large container ships with LNG. In March,

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the Group ordered five 15,000TEU LNG-powered vessels to be delivered starting in 2020.

The line also says in December 2018, it took delivery through its subsidiary, Containerships, of its first LNG-powered vessel of 1,400 TEUs. Three more are to be delivered this year, and two more of the same size in 2020.

CMA CGM says it chose LNG as a marine fuel for several reasons.

First, LNG reduces sulfur and nitrous oxide pollution by 99 percent compared to current bunker fuel.

Switching to a fuel with this magnitude of environmental benefit is a responsible choice and confirms the Group’s commitment to the protection of the environment and ocean conservation.

By choosing LNG, the CMA CGM Group says it goes beyond current and future regulations that limit the sulfur cap to 0.5 percent in 2020, and it places the company fully in line with the Paris Agreement and the ongoing discussions at the international level on future reductions.

CMA CGM is also testing biofuels. In March, the line announced the firstof-its-kind partnership

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with IKEA and the GoodShipping Program to test and scale the use of sustainable marine biofuel oil.

For its part, Matson has been planning for the fuel regulation change for years, says John Lauer, the line’s chief commercial officer.

“We are in the middle of a fleet renewal project for Hawaii,” Lauer says. “We ordered the first two ships in 2013, knowing that the emissions change was on the drawing board at the time. We’ve now ordered four new vessels at a cost of almost $950 million.

Each of the ships is bigger, faster and more efficient than the ships they will be replacing.”

Lauer says the new ships will have the option of burning either low-sulfur diesel or LNG. Scrubbers will be installed on other ships.

“The cost of fuel is unknowable at this point, but with all the effort we are doing, we think it’s going to be relatively modest.”

John McCurry is an Atlanta-based writer specializing in logistics and manufacturing.

He is a former editor of Air Cargo World magazine.

Transfers loads from one pallet type to another

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FOOD (AND MORE) FOR THOUGHT

BY KATHY FULTON

Paging All Logistics Professionals C

With hurricane season around the corner, now is the time to consider how you can assist in relief efforts.

Kathy Fulton is executive director of the American Logistics Aid Network (ALAN), a philanthropic, industry-wide organization that provides free logistics assistance to disaster relief organizations before, during and after catastrophic events. Over the years, ALAN has coordinated compassionate supply chain services for numerous natural disasters including hurricanes, wildfires, tornadoes and floods.

To learn more, visit www.alanaid.org.

50

omplete this sentence: I’m not a doctor, but…

Believe it or not, that expression immediately came to mind when I was asked to write about what food logistics professionals bring to the table for disaster relief.

After all, like those actors who only “play one on tv,” most of you aren’t doctors or first responders.

However, you do have many skills and assets that can be equally applicable after disasters hit.

I’m talking, of course, about supply chain management.

When bad things happen, one of the hardest parts of humanitarian organizations’ jobs is getting items like food and hydration to disaster sites as quickly as possible. In fact, logistics accounts for up to 80 percent of their disaster budgets—and as much as 40 percent of that is wasted.

That’s a lot of costs—and considerable opportunity for the logistics community to be of use. Which is why the next time a disaster hits, I hope you’ll consider helping us re-write the script. I’m not a doctor, but…

I Have Extra Trucking Capacity When it comes to transporting goods to disaster sites, getting there isn’t half the fun. It’s twice the challenge, especially when you consider how many public and private entities are also trying to simultaneously

FOOD LOGISTICS | MAY 2019

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rush goods there.

So, if you have room on a truck that’s traveling near a disaster-impacted area (or you’re willing to lend a few trucks and drivers for a little while), contact us to offer it free of charge. Your generous offer will be much-appreciated and in most cases immediately put to good use.

so they can position relief materials before and after catastrophes hit.

Along these lines, think about making some of the excess square footage available to a worthy cause—especially directly before or after disasters. Even 1,000 feet could make a big difference.

I Have Some Boxes

Finally, let’s consider an amazingly useful contraption known as the box.

Although I’m not a fan of donated product drives (sadly, many of them go to waste), I’m a huge advocate of organizing donated products so they’re more cubable during transit—and more easily distributed afterward.

Don’t assume you mixetto / Getty Images Plus can’t offer in-kind assisI Have Additional tance because you can’t spare space, equipment or trucks. Instead, think Industrial Equipment about the other types of supplies I can’t say enough about the food you routinely use, because if they’re banks that work year-round to fight helpful to you, they’d probably be the everyday disaster of hunger—or about why they and other nonprofits equally useful to nonprofits. frequently need help handling the deluge of incoming goods that follow A Prescription a physical disaster. for Compassion More often than not, the shortThere’s much more I’d like to term use of one of your company’s discuss, including how important a forklifts or pallet jacks could be just disaster plan is and why supply chain the ticket. As could lending qualified volunteerism is so essential. operators.

However, for now, let’s just leave it at this: While you may not have the real medical skills of Dr. Oz—or I Have Some the fictional ones of Meredith Warehousing Space Grey—there’s much you can do to Even nonprofits that have large help deliver help and hope when it’s DCs often need extra places to store needed most. The question is, will last-minute donations. A lot of them you respond to the call? also need space near disaster sites

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