U.S. food imports from around the world have continued to increase during the past 15 years, accounting for about 32 percent of fresh vegetables, 55 percent of fresh fruit and 94 percent of seafood consumed by Americans annually. These imports originate in more than 200 countries from about 125,000 different food export facilities. This year alone, the Food and Drug Administration expects the U.S. to import between 14 million and 15 million food shipments.

The Agency’s Food Safety Modernization Act has allowed it to expand its regulatory focus from responding to food contamination to preventing it and this is core to its “Strategy for the Safety of Imported Food” that was released recently. The Strategy includes 4 pillars:

  • Food offered for import meets U.S. Food Safety Requirements
  • Border surveillance prevents entry of Unsafe Food
  • Rapid & effective response to Unsafe Imported Foods
  • Effective & Efficient Food Import Program

The ultimate objective is to ensure the food offered for import meets the same standards as those domestically produced. One of the main critical control mechanisms is inspections of foreign food facilities but these are resource-intensive, so the FDA is adopting a risk-informed prioritization.

The FDA is also encouraging more food safety regulators to match its program; to date Canada, New Zealand and Australia have ones that are comparable.

The Agency is relying on data sources and streams to better predict potentially problematic suppliers; responding quickly to unsafe imported food and continuously measure performance of the program.

You can download the entire document at: https://www.fda.gov/media/120585/download

Euro Pool System

Euro Pool System, a provider of logistics services and reusable packaging for the food supply chain, has launched a dedicated, temperature-controlled train to transport fresh produce between Valencia, Spain and Rotterdam, as part of a new cool-chain European rail network.

The organization plans to carry 42 containers between the two points, three times a week, 48 weeks a year. This “CoolRail” service will carry fresh fruit and vegetables such as lettuce, tomatoes, cucumbers and oranges.

Another important facet of this initiative is supply chain sustainability with a claim that it is just as fast as road transport but offering a significant reduction (between 70-90%) of CO2. The use of rail will reduce the number of truck movements by 12,096 annually and as a result, emissions will be decreased by 15,000 tons annually.

Euro Pool System is working with the following partners: Shuttlewise, Bakker Barendrecht/Albert Heijn, Visbeen, Kloosterboer, DailyFresh, EasyFresh, Primaflor, Bollo, Agroiris, Fruveg, TobSine, Pozo Sur and Samskip. Further, the initial route is just the beginning of a network with an intention to create links to Germany, Scandinavia and the United Kingdom.

Controlled Environment

On yet another item relating to products requiring a controlled environment, customers of the combined Maersk and Hamburg Sud’s fleet can now monitor their refrigerated container shipments with a new remote container management technology. It monitors temperature, relative humidity and concentration of oxygen and carbon dioxide within each container in real time using an online App featuring a virtual assistant “Captain Peter”, accessible via desktop, tablet or smartphone. If any preset parameters exceed critical limits, the ocean carrier’s operation team receives an alert, so they can take measures to safeguard the cargo.

The collected data is now Cloud-based to increase agility and allows or customization of the information to each shipper’s specific needs.

Supply chain predictions

Market research and consulting form IDC issued their 15th Annual Supply Chain Predictions. Here are a few and note that most talk about things they expect to occur a few years down the road.

  • By 2021 half of all manufacturers will have invested in supply chain resiliency and artificial intelligence.
  • By 2022 firms will dedicate 35% of their outsourcing spend on automation focusing on order, inventory and shipment tracking
  • By 2023, 65% of warehousing activities will involve robots and data analytics to allow for storage optimization
  • By 2023, 25% of OEMs will leverage Blockchain to source spare parts
  • By 2023, 60% of Global 2000 manufacturers will invest in AI-infused robotic process automation
  • By 2024, 40% of Customs agencies will join Blockchain trade platform systems to increase cross-border compliance

Companies will continue to leverage technology to support supply chain functions whether it is AI enabling faster decisions, or Internet of Things (IoT) providing more and different types of data or Blockchain to give more reliable information. One wonders how resilient the manufacturing sector is already given the two major disruptive forces over the past few months: tariffs and coronavirus.

New refrigerated container

Detecting a theme here? CakeBoxx Technologies announced the introduction of their “ThermoBoxx refrigerated container, the latest two-piece unit to come from the McLean, Virginia-based company.

Believing the new model, available in both 20’ and 40’ high cube versions, is a time saving and cost-effective solution for the movement of temperature-sensitive cargo for cargo that would be difficult to load and unload through conventional reefer container doors due to size, shape or weight.

The two-piece deck and removable lid design offers the ability to handle cargo from the rear, side and top is the key differentiator. Target customers seem to be in the defense, aeronautics, composite and electronics markets as there is far less value proposition for the normal fruit, vegetable, dairy and meat trades.

45’ and 53’ high cube ThermoBoxx units are expected shortly; the company has also designed a “no doors” container for those with special transportation or storage security requirements. This doorless unit has the U.S. government designation as Qualified Anti-Terrorism Technology.

The company will be arranging demonstrations in both North America and Europe in 2020. These are innovative but again the requisite handling equipment needs to be available to the discharge point unless the cargo can be accessed via the rear doors in which case why would anyone opt for this container.

Coronavirus creates record amount of idled tonnage

The coronavirus has set a record for the amount of inactive container tonnage around the world, smashing the huge volumes of idled boxships seen at anchorages in the wake of the global financial crisis or in the months after the collapse of Hanjin Shipping in 2016.

Data from Alphaliner shows as of nine days ago the idled liner fleet had reached 2.04m teu. The previous high of 1.59m teu was set four years ago after Korea’s Hanjin folded, while a high of 1.52m teu was recorded in 2009 during the depths of the global financial crisis.

Percentage-wise, the 8.8% of idled fleet today is lower than the 2009 record of 11.7%, registered when the total fleet stood at just 13.02m teu, compared to today’s containership fleet which has grown to 23.27m teu.

More than one in two carrier departures from Asia to North Europe are being cancelled in the wake of the spread of the deadly coronavirus. Capacity reductions over the eight-week period from Chinese New Year are expected to reach about 700,000 teu according to Alphaliner, far more severe than the 340,000 teu cuts seen in the same post-Chinese New Year period last year. Capacity reductions on other routes have been similarly debilitating for global supply chains with Alphaliner estimating the Asia – Med route will reach about 290,000 teu, while 680,000 teu will be removed from the transpacific. Alphaliner has predicted the virus will reduce container cargo volumes at Chinese ports – including Hong Kong – by more than 6m teu in the first quarter of 2020.

Data from Sea-Intelligence earlier this month suggested the illness has been costing liners up to $350m in lost revenues every week.

Illustrative of the huge drop in container shipments seen around the world, something BIMCO warned last week that could soon translate into global supply outages in retail stores, the head of the largest container port in the US has said he is anticipating throughput to have dropped by an unprecedented one quarter when volumes are tallied for February.

Speaking with CNBC yesterday, Gene Seroka, the head of the Port of Los Angeles, said he expected box throughput at his sprawling Californian terminals to drop by 25% in February and by 15% for the whole of the first quarter.

In China, meanwhile, truck drivers are still thin on the ground and the People’s Republic’s ports remain clogged up with the number of boxes waiting to be unloaded at Chinese ports remaining more than twice the recent average as the chart below from Capital Economics shows.

Nobody imagined a few months ago that something like this could happen in the world. One of the largest economies in the world affected by a virus that has almost stopped the processes of production and purchase of goods. Does anyone supply chain expert imagine it?

The information for much of the content was taken from a number of public sources that, to the best of the undersigned’s knowledge, is accurate. The views expressed in this document should be regarded as the personal opinion of the undersigned and not necessarily of the Chubb.

If anyone wants additional information on any of the topics covered contact the authors.