From October 21-22, Armstrong & Associates held its annual 3PL Value Creation Summit. One of the expert panels featured on the agenda was “Key Trends in Food and Beverage Logistics.” KANE Logistics’ Alex Stark was on this panel, along with representatives from CJ Logistics, Matson and RLS Logistics.
Here’s a quick rundown of what these experts are seeing in the food and beverage logistics space.
There are freight capacity challenges as the holidays approach and as more retail outlets open up. Some shippers are shifting modes from truck to rail due to OTR constraints, while others are shifting from rail to truck in response to customer pressures for faster deliveries. Last-minute spot requests are up as businesses scramble to ship freight. Since capacity is limited, all panelists agreed on the need to be absolutely clear with customers about what is and is not possible in terms of pick-up and delivery times. False promises help no one. Better to present the facts and then let the customer seek a faster alternative, if they can find one.
Turn rates are up significantly for staple items like water and beverages – as much as 10x normal, mirroring a cross-dock operation. But the biggest food and beverage logistics issue raised by panelists was staffing. COVID-19 has impacted staffing levels, so there’s real pressure to improve associate retention and identify well-qualified new hires. 3PLs are stepping up efforts in both areas. In a related issue, productivity has diminished somewhat as a result of procedures established to keep logistics workers safe during the pandemic. For instance, workers along a line are more spaced out and the time between shift changes has been extended to avoid contact between people on different shifts.
Freight capacity challenges are also impacting refrigerated transportation. D2C business is up significantly for things like gifts or subscription box orders that ship cold. (Side note: a shortage of dry ice has made it more challenging to meet this D2C volume increase since the existing supply of dry ice is being sucked up by pharma companies for vaccines.) New builds of temp-controlled warehouses are on the rise and some major 3PLs are building such facilities on spec in anticipation of large-scale vaccine distribution. For operators of temperature-controlled warehouses, energy use is a large cost driver, so these providers are some of the biggest users of solar and other alternate energy sources to control these costs.
Shippers expect logistics partners to reduce their carbon footprint with initiatives like LEED-certified food warehouses, SmartWay membership, LNG- and CNG-powered trucks. and recycling. However, KANE’s Alex Stark noted a shift in priorities since the pandemic hit. Sustainability features less in the recent RFPs that have been issued and shippers are more concerned with learning a 3PL’s protocols related to keeping warehouse associates safe to ensure shipping continuity.
VISIBILITY/CHAIN OF CUSTODY
Shippers place great emphasis on this issue in their RFPs as they seek 100% regulatory compliance. More shippers seek, for instance, real-time temperature monitoring in the truck trailer. Carriers vary in their ability to deliver this capability. There has not yet been a real push from shippers on blockchain technology, which requires connections between ELD devices, cell phones and various systems to work effectively. The consensus: blockchain is coming, just not yet.
Through the pandemic, food shipping has remained an essential service. The volume of business at food and beverage logistics companies has been stable – not something all logistics businesses can say.
Since the company’s founding in 1930, food logistics has been a core service of Kane Logistics. For more information on our services to food sector clients, talk with one of our experts.