More Perishables, More Supply Chain Complexity

The recession has forced grocery shoppers in the U.S. to place an even greater emphasis on price and value. Therefore, private label brands have become more popular over the past four years, as have discount grocers and club stores. Yet, access to high quality produce and a great selection of fresh food continue to rank high on consumer surveys.

Consumer trends and regulatory crackdowns

In the U.S., the fresh produce industry is valued at $100 billion and growing. More healthy eating habits along with Americans’ desire for fresh fruits and vegetables year-round are big drivers.

At the same time, emerging markets in Asia, Latin America, Eastern Europe and the Middle East and Africa are adopting Westernized palates, which means more fresh (and frozen) food is being transported, oftentimes over great distances. The easing of trade restrictions and the formation of new free trade pacts is also expanding fresh food imports and exports.

Not surprisingly, longer transit time and distance puts more pressure on fresh food shippers and transportation providers. Profit margins in the food sector in general are already relatively thin, which means it’s imperative to avoid any compromises to temperature or proper handling that can lead to shorter shelf life or complete spoilage altogether.

More advanced refrigerated equipment, storage, and software and technology tools that continually monitor temperature and environment make it possible to support a global supply chain for fresh food. However, there are some glaring weak links in this chain, which are mostly related to cutting corners as opposed to lack of adequate equipment.

Last year, Indiana’s state police began cracking down on hot trucks—refrigerated trucks that transport food in trailers whose temperature exceeds safe limits. The crackdown made national headlines because of the sheer number of refrigerated shipments that were non-compliant. An unusually warm summer exacerbated by steep fuel prices were partly to blame for the high number of hot trucks snagged in the crackdown, according to the state’s law enforcement and public safety officials.

Recently, Indiana implemented stiffer laws that give state police authority to impound trucks that transport food in unsafe conditions and levy steep fines on drivers. The state now boasts some of the strictest food transportation laws in the nation.

In California, tougher rules governing refrigerated trailers, which came into effect on January 1, also have steep fines attached for non-compliance. For example, soon after the new regulation was implemented, the California Air Resources Board (CARB) fined Ontario, California-based Foster Enterprises $300,000 for failing to upgrade its diesel engines on its refrigerated trailer fleet to meet the new emissions standards.

Meanwhile, the Food Safety Modernization Act (FSMA) is also ratcheting up regulations—and fines—surrounding refrigerated transportation of food as it continues its phase-in.


Advances in equipment and technology

For shippers not willing to sacrifice food safety, the good news is that the latest equipment and technology is making it easier, safer, more environmentally friendly, and even cheaper in some cases to transport fresh and frozen food.

Manufacturers of refrigeration units along with manufacturers of refrigerated containers and trailers are constantly improving their products, from the design and engineering of the cooling units to the insulating ability and performance of the containers and trailers. In addition, other companies are introducing new software and technology to monitor and control temperature and environment.

Indeed, the market for cold chain monitoring tools has plenty of room to grow, according to Tom Chicoine, vice president of business development for Cooltrax.

“Approximately 500,000 trailer refrigeration units operate across the United States, but only an estimated 15 percent of these vehicles operate with on-board telematics technology,” he states in a recent white paper. “Companies operating trucks without this technology deny their fleet managers the ability to monitor reefer unit and refrigerated box temperatures, or to be alerted to truck locations and open-door durations. Fleet managers also lack the ability to remotely change reefer settings when necessary. Having these capabilities allows transportation firms to react when temperatures fall outside of accepted ranges—whether based on government regulations or internal requirements. More importantly, having these capabilities can help companies avoid catastrophic consequences.”

While remote monitoring devices have been available for years, telematics technology that allows for remote management of temperature and environment is still relatively new, notes Chicoine.

Telematics technology can zero in on other problems in the cold chain, he says. “One food transportation company discovered that some drivers left the doors open from their arrival until their departure at each delivery location—often for 20 minutes or more. The company instituted a policy requiring drivers to close their trailer doors immediately after removing products. Not only did this new SOP (standard operating procedure) ensure product temperatures remained consistent, with telematics, the company was able to monitor drivers.”

For companies looking to invest in telematics technology, Chicoine advises considering solutions “that extract as much data as possible through alerts, fault codes, temperature set points, door open/close statuses, and geo-zone tracking. The data can serve as the ultimate proof of your company’s ability to properly care for food and adhere to regulations.”

In the meantime, containerized ocean carriers are transporting more refrigerated cargo while the specialized reefer carriers are losing market share, and they’re investing in equipment and technology to support this key business segment.

For example, Hamburg Sud says it aims to achieve a 15 percent reduction in energy consumption from its reefer containers by 2015, with the newest reefer containers expected to save up to 20 percent in energy consumption. The box carrier says its new reefers will use inverter technology to produce cooling power only when it’s needed, making it more energy efficient and cost effective.

Meanwhile, Global Fresh Foods has begun shipping fresh salmon from Chile to the U.S. West Coast by ocean cargo, a route that was previously serviced only by air. The company’s patented fuel cell technology, Safe and Fresh Distribution (SAF-D), controls oxygen levels inside the ocean container to keep the salmon fresh during the longer transit. Ultimately, the solution provides a more cost effective transportation solution and a more sustainable alternative (no ice, polystyrene foam packaging, or carbon-intensive airfreight). Buyers, including food wholesalers and restaurant operators, have expressed interest in the service not only because of the lower freight costs, but also because it offers a dramatic reduction in the use of Styrofoam. In addition to the U.S. West Coast market, Global Fresh Foods will soon be shipping fresh salmon to Japan via ocean cargo.

Battery technology is also advancing. Last month, Emerald Technology Partners and EnerDel announced they would work together to develop EnerDel’s lithium-ion battery for commercialization with Emerald’s WedWay Zero-Emission Refrigeration Power System.

The system uses kinetic energy produced by a semi-trailer’s rotating wheels to produce power, which is stored in the lithium-ion battery and used to run the refrigeration or freezer unit of the semi-trailer when it is stationary anywhere from 12 to 24 hours. It also allows for the removal of a dedicated fuel system, which reduces the weight of the semi-trailer and makes it possible to carry more cargo.