Friday, October 8, 2010

Logistics Professionals Discuss Waste And Freight Capacity In The Cold Supply Chain

Half of the World's Food is Lost en route to the Table
Shipping News Feature

GERMANY – Last month over 160 participants from 24 different countries representing the complete cold chain met at the Cool Logistics 2010 conference in Hamburg to discuss ways to improve efficiencies between all parties involved. Worldwide, half of all food production is lost between harvest/production and consumption was the shocking assertion made by Derk van Mackelenbergh, Managing Director of European cold storage and distribution specialist Eurofrigo.

This is the third year the conference has been held in Germany before heading to Antwerp next year. With both ocean carriers and airfreight companies warning of ongoing shortages of suitable containers and controlled temperature facilities going on to 2011, much of the debate surrounded transport capacity issues.

Current inefficiencies in the global perishable supply chain cannot be laid solely at the door of the transport sector. However, it is no secret that as a commodity food has to fight for space on both aircraft and ships, and that 2010 has been a bruising year. Food and other perishable exporters attending and speaking at the 3-day specialist event expressed particular frustration at reefer container and vessel slot shortages.

Andrew Ngan, Assistant VP MOL Global Reefer Management, outlined the issues faced by carriers in managing reefer box logistics, including huge seasonal swings in demand on key trade lanes and the significant costs of equipment repositioning. He commented: “We need to talk more with shippers. Tell us what is happening with your season. We need to manage this together.”

Mr Ngan’s sentiments were echoed both by shippers and carriers in attendance with representatives from Maersk, APL, MOL and others indicated that the tight supply of reefer boxes and vessel plugs had not yet come to an end. Slow steaming was described as a ‘new normal’ that must be adjusted to, lengthening supply chains and requiring 5-7% more containers to service the same amount of trade.

A similar perspective was offered for airfreight. While renewing its commitment to operating dedicated freighters, Lufthansa Cargo warned that capacity constraints were due to increase in the future. According to Martin Schlingensiepen, VP Product Management, global long haul capacities are set to grow approximately 11% over the next five years, but demand will increase by around 31% over the same period.

Ulises Carrillo, Vice President Global Logistics at Dole Food Company told delegates that in such a pressured marketplace, shippers and carriers both need to take responsibility for tackling inefficient business practices. Shippers must be better at forecasting, communicate frequently and in advance. He said: “The value of a true strategic partnership is that both parties are there in good times and in bad, recent capacity and service issues are not sustainable.”

Philip Symons, Category Buyer Produce at UK retailer Marks & Spencer highlighted the recent trend for retail groups to cut out middlemen from the procurement chain, with Asda, Tesco and others setting up direct sourcing arms. He said: “More streamlining of the supply chain is definitely coming. From a multiple’s point of view, wholesalers have virtually vanished.” However, he questioned whether being locked into a single in house sourcing structure would reduce buying agility and might in fact lead to increased stock if not properly managed.

Next years conference will concentrate on the improvement of international cold chains on land, at sea and in the air.

Photo: A scene from the 2010 Hamburg Conference