Two weeks ago, Stoecklin Logistics had the pleasure of being part of the GCCA Policy Forum in Washington, DC. The program was filled with a variety of speakers touching upon the most critical topics that have had and are still having a significant impact on the cold storage and food and beverage industries. Although the sessions and speakers addressed different subjects, a few common denominators were mentioned repeatedly, highlighting their importance for the food logistics supply chain now and in the future.
The COVID-19 pandemic has put immense pressure on industries all over the world. While other businesses had to decrease output/ production, companies in the food and beverage industry did the opposite.
Generally speaking, there are three ways for consumers to source their food: grocery stores, restaurants, and e-commerce. As many restaurants had to close or reduce their service to take-out only during the pandemic, grocery stores, and their vendors experienced a tremendous surge in demand while working with very limited resources. During his keynote, Robb MacKie, President and CEO of the American Baker’s Association, presented one of the main concerns companies within the food and beverage industry are coping with to a point:
“During the lockdown(s), where grocery shelves were empty throughout the country, it was never because there weren’t enough goods to fill the shelves, it was because there weren’t enough people to move the goods and make them arrive at the right time at the right place.”
Labor constraints were one of the biggest topics in nearly every session. During the COVID-19 pandemic, employers around the country were forced to lay off workers. As businesses open back up, the increased unemployment benefits now leave a lot of companies struggling to acquire new talent and hire employees. This is the case for warehouse staff as well as fleet drivers, which poses a tremendous challenge for companies trying to keep up with the changing structure of the market.
Infrastructure expansion is a topic that has gotten significant attention during COVID-19, with a focus on expanding transportation networks especially in and around ports. The existing infrastructure in a lot of the main hubs is simply not able to keep up with the increasing demand for goods and imports/ exports. This was highlighted especially by supply chain breakdowns requiring overlapping cold storage needs as goods were not able to be transported to the designated ports for distribution before spoiling.
Another constraint on supply chain capacity is the relatively slow adoption of technological advancements, especially cybersecurity, and digitalization, due to strict regulatory frameworks. Studies conducted by the U.S. Department of Agriculture (USDA) Economic Research Service indicates that 30 – 40% of food in the US is wasted in the supply chain. Further, the USDA reports recalls jumped 83% since the Food Safety Modernization Act was enacted, and the Consumer Brands Associated (CBA) reports the average recall costs $10 Million. Although the USDA and the Food and Drug Administration (FDA) have provided some regulatory flexibility during emergency situations throughout the past year, there is still a need to increase the number of Food Safety and Inspection Services (FSIS) inspectors and veterinarian capacity to optimize processes and improve supply chain efficiency.
The volatility and interruptions companies have experienced in their supply chains due to the challenges outlined above and others have motivated many companies to consider automated warehouse systems to ensure a more stable and reliable supply chain and create a competitive advantage over other market players.
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