Forecasts are fun. The experts and analysts get to roll up their sleeves, dive into the data, do some deep thinking and come up with predictions and estimates they believe will prove correct. Everyone else enjoys, ponders—and in some cases really depends on—these big picture exercises to get a feel for what we should be watching, when it will happen, and why it’s important.
Suffice it to say there’s a lot happening in the food logistics sector and related sectors like agriculture, life sciences, transportation, technology as well as countless social and cultural changes that are truly transforming the future of food logistics in 2013 and beyond.
Fuel remains fundamental
For many businesses, especially those with a transportation component, a substantial amount of time is spent monitoring and strategizing over fuel prices. The days of cheap oil are over, and that means some tough decisions need to be made by businesses and consumers alike.
“It seems very clear that the U.S. government is not going to undertake the hard work to create a comprehensive energy bill to move away from fossil fuels,” says Donald “Dee” Biggs, director of customer logistics, Welch Foods. “As a result, we will see a continuing increase in fuel prices over the next 10 years as this becomes a bigger and bigger issue. The price of fuel will impact how supply chains are organized, and it will also impact the number of trips consumers make to the stores.”
Manufacturers are likely to respond to higher fuel costs by positioning DCs closer to the consumer, says Biggs, along with more use of intermodal transportation. In addition, “Natural gas has great potential to work as an alternative fuel, but we are still a few years away from seeing widespread use in the trucking industry,” he says. “One of the biggest issues for long-haul truckers is the lack of a refueling network right now,” although that issue will ultimately be addressed as the price gap between diesel and natural gas continues to widen, says Biggs.
Jaymie Forrest, managing director of the Georgia Tech Supply Chain & Logistics Institute and co-founder of the Integrated Food Chain Center, also sees a shift towards more intermodal, which is not only a response to higher fuel prices, but ongoing issues like driver shortages and regulations such as hours-of-service that continue to impact the trucking industry.
Nick Pacitti, a partner with Sterling Solutions and a co-founding member of Georgia Tech’s Integrated Food Chain Center, agrees that the trend is towards more efficient logistics, and moving more perishable products in a more controlled state—something that highway trucking is finding more difficult to do these days, he adds.
Pacitti mentions CSX’s Green Express service as a good example. The service operates a dedicated fleet of state-of-the-art refrigerated boxcars from Florida’s Port Manatee to an inland logistics port in Kingsbury, Indiana, moving fresh produce from Central and South America north to the Midwest U.S., then dairy products like powdered milk and cheese on the backhaul to South America and other markets.
The smartphone effect
When it comes to mobile devices, over half (50.4 percent) of those in the U.S. use smartphones now, according to research firm Nielsen, and the numbers are growing. The omni-shopper has arrived and retailers are under pressure to deliver, with some doing it better than others.
Perhaps the biggest laggard in adapting to this shift has been the grocery sector, says Nikki Baird, managing partner at Retail Systems Research. In her report, “Omni-channel and Replenishment: The Future of Grocery,” Baird notes that while many retailers in the fast-moving consumer goods sector have been reworking their businesses to accommodate the omni-shopper, grocery retailers “for the most part, sat out this transformation.” And, while “it may be more than 15 years since the first store-based retailer opened a selling channel online,” says Baird, the waiting game is over for the grocery sector.