Supply Scan

All Aboard The Produce Train
New refrigerated rail service moves fruits and vegetables cross country in three days.

Every Thursday morning, a six-and-a-half mile long train makes the cross-country trek from Wallula, WA to Rotterdam, NY.

The train brings 55 refrigerated rail cars filled with potatoes, onions, apples and pears from growers in the Pacific Northwest to the East Coast, where the produce is loaded onto trucks and shipped to supermarket chains.

"It's a new kind of logistics platform," says Paul Esposito of Railex LLC, a division of Ampco Distribution Services, a Riverhead, NY, foodservice distributor. Railex teamed up with Union Pacific and CSX railroads, which provide the rail service, to move the goods transcontinental in as little as three days.

With transportation costs skyrocketing, Esposito believes that Railex offers a lower-cost, faster and more secure alternative to trucking. The train consumes 40,000 gallons of diesel fuel on each one-way trip, vs. the 150,000 gallons of fuel that trucks would use moving the same amount of product. That adds up to about a $13 million savings in fuel costs, according to the company.

Railex works with about 20 growers in Washington, Oregon, California and Idaho, enabling them to target the East Coast. The company guarantees to get the product to New York on schedule. "At times of the year, it's not only difficult to get a rail car, it's also difficult to get a truck out of the Pacific Northwest—especially if the trucks are busy hauling Christmas trees or nursery stock," says Esposito.

Railex built 200,000-square-foot refrigerated warehouses at both ends of the circuit. The journey begins at the Wallula facility, where Union Pacific drops off an empty train. The warehouse has a two-and-a-half mile loop of railroad track inside. Railex uses its own locomotive to pull the train through the building, where it loads 19 64-foot refrigerated cars at a time. Next, it seals off the cars and delivers them back to Union Pacific.

UP uses its own crew and locomotives to bring the train as far as Chicago, where they transfer the train to CSX, who takes it the rest of the way to Rotterdam.

The rail cars feature Intelliset Star Track GPS units for tracking, temperature monitoring and control capacity. "We can turn a unit on or off remotely," says Esposito, "and know exactly within a mile where it is."

Once the train arrives at the Rotterdam warehouse, workers uncouple the cars in 14 boxcar segments to minimize shifting, and pull them into the temperature-controlled building. They're able to empty the entire train—approximately 160 truckloads—within 24 hours.

One of the reasons Railex picked Rotterdam, which is 145 miles north of New York City, is that it's centrally located in the Northeast. Shippers are able to target major markets from New York to Boston and all the way down to Virginia. "We can pretty much hit anything out of that area," says Esposito.

The program, only 21 weeks old, has been successful. The trains are approximately 85 percent full and most of the major retailers on the East Coast are buying from them, including such retailers as Wal-Mart, Hannaford Bros., Food Lion, Sysco, Stop and Shop and Giant Foods.

"It's a service that we can add to our logistical toolbox," says John Patriquin, director of logistics for Hannaford Bros. Co., a Scarborough, ME-based supermarket chain. "We can use it as a pass through, or as just a transportation play."

Hannaford can also use the service to partner with its vendors and have them "forward deploy" or store product at the Rotterdam warehouse. The company then buys the product from there. "It gets us closer," he explains, "because of the proximity to our Schodack, NY, warehouse, this puts the vendors in our backdoor. Instead of being 3,000 miles away, they're 30 miles away."

Railex is also shipping produce on the return trip to the West Coast, though only a few cars so far. The company is planning on an aggressive expansion program in the coming year, including the addition of a second train for the Wallula to Rotterdam run, as well as other destinations in the Southeastern United States and California. —Brian Schiavo

FMI Says COOL Isn't Cool For Retailers

Mandatory country of origin labeling (COOL) for seafood is failing to deliver the benefits promised by the law, according to a statement issued by The Food Marketing Institute (FMI), Arlington, VA.

FMI says the COOL regulation has not increased sales of U.S. seafood. At the same time, the supermarket industry's cost to comply with the law is up to ten times higher than the U.S. Department of Agriculture (USDA) estimated when it issued the interim final rule for labeling seafood.

Proponents of mandatory COOL are nonetheless urging Congress to implement the law for produce, meat and peanuts sooner than September 30, 2008. FMI says the move would be extremely unwise given the industry's two and one-half years of experience labeling seafood under this law.

FMI presented comments to USDA last month in response to the agency's request for cost and benefit information.

"The industry's experience underscores the need to replace the law with a flexible, industry-led program that would be far less costly and provide information that would actually resonate with consumers, such as 'Wild Alaskan Salmon,' 'Georgia Peaches' or 'Vidalia Onions,'" says Tim Hammonds, FMI's president and CEO.

"Because of limited label space and limited time for busy consumers to make their decisions, when government continually mandates requirements for signs and labels that generate large fines for noncompliance, we have the labeling equivalent of Gresham's Law: Bad information drives out the good.

"A law this flawed cannot be corrected simply by tinkering with the administrative rules. The likely result of tinkering around with the margins would be to make the bureaucratic nightmare and the resulting costs even worse, not better. The only way out of this mess is to replace the current law with something useful."

The comments contrasted USDA's first-year cost estimates to implement the law for retailers and their intermediary suppliers with the industry's actual expenses based on FMI case studies involving more than 1,000 stores.

The USDA estimate of the retailer cost per store was $1,530, but the actual cost was somewhere between $9,000 to $16,000. The USDA estimate of the supplier cost per company was $1,890, but the actual cost was $200,000 to $250,000.

The food industry has proposed an effective, flexible labeling model that would communicate the same information in ways consumers would actually find useful without driving costs sky high.

"It is time for Congress to correct its mistake and let the industry implement a plan that delivers more without building in the excessive costs that ultimately discourage consumers from buying the seafood we all want to promote," says Hammonds.

Whole Foods Guarantees Responsible Sourcing

With growing consumer concern about ethical and responsible trade, Whole Foods Market has created a buying program to ensure that its products from developing countries meet a strict set of criteria.

"We have a long track record concerning ethical business practices, equitable pay for team members and suppliers and safe working environments," says John Mackey, co-founder and CEO of the Austin, TX-based company.

"We are extending that concern to the global community by bringing products from developing areas to the marketplace in a way that is a win-win for all."

Dubbed the Whole Trade Guarantee, the program ensures:

Exceptional product quality: Each Whole Trade product must meet the same strict quality standards that guide the company's buyers every day in decisions about which products to offer shoppers.

More money for producers: Producers receive a premium price for their goods as an investment in their communities, allowing them to put money back into and continually improve their operation and cover their cost and production fluctuations.

Better wages and working conditions for workers: The program gives low-income producers a market to sell their products while ensuring better wages and working conditions for workers.

Sound environmental production practices that promote biodiversity: Seek out and promote products that are grown or produced using sound environmental practices such as integrated pest management systems and the practice of soil and water conservation techniques like reforestation and composting.

Certified Grocers Midwest Promotes Leadership

Certified Grocers Midwest Inc. has teamed up with Tom Zosel Associates (TZA) to deliver a management training curriculum and help its warehouse supervisors gain the knowledge needed to become great leaders.

The training program is specifically tailored to the challenges of distribution environments. Certified Grocer's floor managers will receive practical tips, techniques and solutions they need for supervisory success when coordinating people and tasks.

"The training focuses on the challenges they face every day on the floor and offers solutions to help them fully achieve their potential—not just as managers but also as true leaders who command the respect, commitment and credibility that moves people to action," says Todd Avery, director of distribution operations for the Hodgkins, IL-based grocery wholesaler.