The U.S. Food and Drug Administration’s (FDA) Food Safety Modernization Act (FSMA) is among the most profound regulatory changes to impact the global food supply chain in modern history. It comprises seven separate regulations, each with its own area of focus and implementation date. One, the Sanitary Transportation of Human and Animal Food (typically abbreviated as STF), continues to generate considerable attention from logistics providers and others involved in food transportation.
In preparation for the release of the final STF rule, which is scheduled for Mar. 31, 2016, food shippers, carriers and receivers alike are taking a closer look at their operations and business practices to assure they meet the new regulatory compliance requirements.
Getting down to basics
According to Smitha G. Stansbury, partner, FDA & Life Sciences Practice, King & Spalding, “A lot of companies are revisiting their current food safety systems, especially those related to STF, and asking, ‘Are we close to what has been proposed? If not, where are the gaps?’ and ‘Are there additional records that we should be keeping?’”
Many of the major food companies and logistics providers feel confident that they are within—or at—compliance with STF, she says. But for those with identified gaps, corrective steps should be well underway.
“Even before the proposed STF rules were released, the FDA issued guidelines on the sanitary transportation of food. Companies should already be doing most of what this rule requires. However, I don’t get the sense that the industry has gone far enough in formalizing and establishing all of those food safety systems.”
The reason for the industry’s foot-dragging is due in large part to confusion over several components of the STF.
In its comments to the FDA concerning the proposed STF rule, the Grocery Manufacturers Association (GMA) raised a number of concerns about certain aspects of the rule.
The requirement pertaining to continuous temperature monitoring was one requirement the GMA opposed.
“While carriers can and often do engage in continuous temperature monitoring, there are some parts of the industry where demonstration of the continuous temperature is not the norm because there are other methods available to ensure the safe transportation of food,” stated the industry group.
For example, checking the temperature of the product at departure and arrival is a common practice to check that the food temperature remained safe, the GMA noted, adding that not only is continuous temperature monitoring not aligned with current industry practices, but it also has significant cost implications.
Stansbury says there are “significant concerns around temperature control and monitoring” as it exists in the proposed STF, not to mention the proposal is contrary to the FDA’s intention of giving the industry flexibility in how they comply with the new requirements.
There is also a lot of concern over the FDA’s standards for determining when food becomes adulterated during transportation, she explains.
For example, a shipper typically specifies a temperature to the carrier. This information also appears most times on the Bill of Lading. However, the specified temperature is usually lower than the food safety threshold in order to provide a margin-of-error in case the temperature increases slightly.
There are other reasons why a shipper may specify a lower temperature for their product. Sometimes it’s to optimize the color, flavor and texture, other times it could be to offset the impact of transporting food products in hot climates during summer months.
Furthermore, deviating from the shipper’s specific temperature requirement does not necessarily mean that food is adulterated, both Stansbury and the GMA point out.
“In the event the carrier is not able to demonstrate that it met the shipper’s transportation requirements, the shipper and/or receiver should have the discretion to thoroughly assess whether the deviation rendered the food adulterated. In many cases, the food may still be fit for its originally intended use,” the GMA stated.
Even if the food was no longer suitable for its intended use it doesn’t necessarily mean it is entirely unfit for any food use, or adulterated. It could be used for animal food, for instance. The GMA also warned the requirement would result in significant amounts of food waste, disposal costs and increased cargo insurance claims without providing any corresponding food safety benefit.
Cross-border shipments add another twist to the STF, starting with the sometimes ambiguous definition of a “shipper.” The FDA’s proposed definition of a shipper is “a person who initiates a shipment of food.” Yet with cross-border shipments, a retailer could conceivably qualify as a shipper if he “initiates” the shipment by placing an order and hiring a carrier to transport the food. A third-party broker could potentially be a shipper if it facilitates the shipment and identifies and hires the carrier.
“In our view, the shipper should generally be the food manufacturer because they are most familiar with the food and what is needed to keep it safe,” commented the GMA, which also requested the FDA to clarify how the word “initiates” is interpreted by the STF.
Not only is the FDA being asked to more clearly define a shipper, carrier and receiver, but the GMA also wants more flexibility for companies to enter into contractual agreements that allocate the responsibilities of these roles to other parties such as traders, distributors and third-party warehouses.
Compliance doesn’t come cheap, either. The FDA estimates that it will cost the industry $149.1 million to comply with STF during the first year and $30.08 million for subsequent years, and even those figures are underestimated, asserted the GMA.
“For example, the hardware and installation for telematics devices that monitor time versus temperature cost on average $735/unit,” the GMA explained. “A large trucking company that has a significant presence in temperature controlled shipments in the U.S. food industry has reported they operate 7,000 refrigerated trailers/containers. The cost to install telematics devices in all of this company’s refrigerated trailers/containers equates to $5,145,000.”
Staying ahead of the curve
Penske Logistics is taking a proactive approach to the STF regulation. In fact, “installing telematics on the trailers to record and provide visibility of temperatures while the trailers are out on the road is one of the biggest steps we’ve taken so far,” says Tom Scollard, vice president—dedicated contract carriage.
Temperature control and monitoring technologies not only assure compliance with food safety regulations, they help the food distribution network ensure product consistency and quality deliveries for Penske Logistics’ customers and can even provide exception alerts for shipments in transit so corrective action can be taken before the load is delivered.
In addition to telematics, Scollard says that, “Penske Logistics continues to expand the use of our proprietary on-board devices and look for more applications for these types of tools, especially as we expand more into the fresh chain.”
Using on-board devices for tracking is one example.
“A lot of fresh food products are shipped in totes, so we’ve developed an app to keep track of totes and crates with our on-board devices,” he says.
Tracking and tracking technologies are vital for compliance with the STF regulations and others contained within the FSMA. They also improve the ability to respond to a recall event.
“Everyone in the food industry is concerned about the potential for recalls,” acknowledges Scollard. “Penske Logistics can work with customers to set up a contingency plan to facilitate a quick response in getting product off the shelf and back to the manufacturer or distributor so they can properly handle it. The biggest part we play is demonstrating the ability to deploy a recall strategy—making equipment and drivers available and executing.”
The FSMA gives the FDA mandatory food recall authority for the first time. Previously, the FDA relied on responsible parties to voluntarily recall food products that were adulterated, misbranded or could cause serious health consequences or death to humans or animals.
According to a report from Stericycle ExpertSolutions, during the fourth quarter of 2014 allergens were again the leading cause of recalls. However, whether the recall is allergenic, pathogenic or due to misbranding or other reason, time is of the essence for food manufacturers, retailers and logistics service providers to act quickly in order to protect public safety as well as brand reputation.
The Acheson Group (TAG), founded by David Acheson, who served as the Chief Medical Officer at the USDA and FDA before establishing the consultancy, observed that Stericycle’s report revealed “intensified scrutiny and fines from regulatory bodies in some industries…”
However, “While the food industry is certainly under increased scrutiny, we’ve not yet seen a significant increase in fines. But that doesn’t mean it’s not coming or that Congress won’t consider enacting legislation to allow for greater fines,” warns The Acheson Group.
Undoubtedly, remaining compliant with the FSMA’s rules and avoiding fines and penalties is extremely important for the industry. Yet in terms of enforcement, “it’s going to be interesting,” remarks King & Spalding’s Stansbury.
For example, shippers who ship from an FDA-registered facility undergo routine inspections from the FDA, she explains, although receivers such as retail stores are not FDA-registered facilities, assuming the deliveries are made to the store and not to a receiving warehouse.
“In those cases, it’s unclear how those entities will be regulated by the FDA,” says Stansbury.
Furthermore, “There are many different agencies that are involved in regulating the food supply chain, among them the DOT, FSIS for meat and poultry, the FDA and individual states. It’s going to be interesting to see how they divide up their oversight and responsibility.”
Budget constraints complicate the issue, Stansbury adds. “The FDA is severely underfunded. They requested more funds from Congress for 2016 towards FSMA implementation, but they’re not going to get anywhere near what they want or need. I think it will be some time before the STF, for example, is actively enforced.”
The FSMA is definitely a priority for FDA, assures Stansbury. “But in practice, it’s such a big task and big to enforce. And given the flexibility of the FSMA, different inspectors may come to different conclusions about things. We’ll have to see how it plays out and what’s ultimately acceptable, and what’s not. There needs to be more training on an agency level to help set certain baselines.”
In general, Stansbury credits the FDA for continuing to work with industry to roll out the legislation.
“The FSMA team at FDA is really engaging the trade to try and answer questions, and they’re learning at the same time. I’ve been impressed. They’re not ‘in the weeds,’ so they’ve held a number of public meetings to encourage discussions and they’re carefully reviewing comments from the trade,” she says.
While many details of the FSMA, and the STF regulation in particular, are still vague, “companies are hoping that once the final rule for STF is released much of it will be clarified in the preamble and in the regulatory language as well,” concludes Stansbury.
FSMA: Are Truckers Ready, or Not?
An online survey conducted by Hanover Research in July 2014 polled members of the American Trucking Associations (ATA) to gauge their preparedness for the FSMA’s Sanitary Transportation of Human and Animal Food (STF) regulation. The survey also revealed the types of conversations, or lack thereof, that carriers were having with their refrigerated shipper customers.
When asked if they had discussed the proposed STF regulation with shippers, nearly three-quarters (72%) admitted they had not. However, most respondents agreed that sanitation requirements for trailer interiors and temperature control tolerance requirements are important topics.
Temperature violations were identified as the No. 1 non-conformance for shipping companies, followed by missing paperwork. Meanwhile, the cost of rejected shipments as a result of non-conformance varies widely, the survey showed. The average cost among respondents is around $20,000, but it can range from $300 to as high as $80,000.
Pulping, or measuring the internal temperature of fruits, vegetables or other perishable food, is not a common practice among those ATA members polled. Almost half (48%) reported they do not pulp the cargo or measure the temperature of cargo prior to accepting a load, while 22% claimed to pulp their cargo on a frequent basis.
As for recordkeeping, the majority of respondents (66%) said they keep records of the type of cargo hauled in previous shipments. On average, these records cover the last three years. The survey also found that telematics and data loggers are not widely used among those polled. For those using telematics, however, the average cost of installation is close to $87,000 and telematics users tend to implement temperature-monitoring equipment in the majority of their carriers.
Are You Cold Chain Compliant?
Tom Scollard, vice president—dedicated contract carriage at Penske Logistics, says that while the FDA continues to craft its final rules related to the Food Safety Modernization Act (FSMA), carriers know there will be new restrictions on food haulers, which will add to the complexity of food delivery and affect everyone in every segment of the food supply chain.
Here are some ways carriers can prepare their cold chains to meet the new regulatory compliance requirements:
• Spec newer, late-model equipment and conduct routine maintenance
• Install on-board, real-time, GPS-enabled temperature tracking devices, designed to monitor and record temperatures within the trailer throughout a route, ensuring food safety from dock to customer
• Use RFID technology on pallets or items for quick, easy traceability in the event of a food safety crisis
Tech Tools Support Cold Chains & Compliance Efforts
• Real-time tracking using GPS technology provides accurate temperature monitoring
• Active monitoring to adjust temperature if there is a fluctuation
• Passive monitoring provides a report at the end of the trip
• Barcode inventory tracking systems—down to the item level
• RFID devices that can be embedded into pallets or individual items
And keep it cool in the trailer with …
• Properly insulated containers
• The right reefer unit for the job
• Proper use of bulkheads, chutes and venting
• Quality equipment: emissions-compliant trailers for optimum fuel- and cost-efficiency