Best Practices & Innovations

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1 WHITE PAPER Evolving the Cold Chain: Best Practices & Innovations

2 Introduction The global economy is reinforced by the strength of supply chains. Moving goods reliably and quickly from the point of production to the point of purchase is what makes large scale retailing, manufacturing, and even some types of farming possible. The supply chain becomes all the more critical when the freight is perishable or delicate, or requires other forms of special handling especially controlled temperature. Consider that ten percent of all fruit and vegetable waste that occurs in North America (some $4 billion worth) happens during the distribution process. 1 Following is an explanation of how the refrigerated supply chain (cold chain) has improved in recent years, and the ways businesses can take advantage of the benefits made possible by new innovations and best practices in warehousing, transportation, and freight management. $ 4 BILLION worth of fruit and vegetable waste occurs during the distribution process. 1 Food and Agriculture Organization of the United Nations, Global Food Losses and Food Waste (2011). p. 7. Food Logistics, Real Steps for Curbing Food Waste (2013). Retailers and manufacturers bringing frozen and refrigerated goods to market require comprehensive, tightly coordinated supply chains to reduce spoilage in transit and increase the shelf life of their products. Cold Chain Elements 3 Evolution of the Cold Chain 4 Innovation & Best Practices 5 Future Plans 7 NFI Refrigerated Facts & Figures 8 Evolving the Cold Chain 2

3 Cold Chain Elements In order to be effective a cold chain must be comprehensive, taking goods from the manufacturer or processor through to the final point of purchase. Temperature of the freight must be controlled at all times and should be kept within the range established by the shipper. Remote monitoring and adjustment capabilities are instrumental to maintaining continuous control of temperature. It is advantageous to utilize a provider that can offer all of the above cold chain elements or, at a minimum, one that will coordinate all of the logistics and vendors and take responsibility for the freight throughout the entire transit process. This practice will shorten time in transit and create efficiencies, and is key to creating the precise mix that will move a given product reliably and within the necessary time frame for maximum shelf life. Depending upon the product's shelf life and the needs of individual shippers and retailers, the cold chain may include: Import / Export In addition to transportation, this includes management of any regulatory processes necessary to move goods across international borders. Handling, importing and exporting expertly can greatly reduce the time that goods are in transit, potentially saving some spoilage and reducing labor and fuel costs. Ocean and / or Air Transportation Ocean and/or Air Transport modes are integral to the cold chain's ability to move goods from offshore. It is critical to ensure temperature control while goods are moved between continents by setting standards for loading at the point of origination, cutting local travel times, and maintaining visibility to each container throughout the trip. Warehousing Some refrigerated goods may be stored or cross-docked in warehouses or distribution centers along the cold chain. Shippers should seek out warehouses that have adequate refrigeration, pallet spaces, and especially cooler docks so that the cold chain is never compromised, even during loading and unloading. Ground and Intermodal transportation Trucking and rail transportation are essential to the cold chain. For decades, only dry goods could be shipped using intermodal hauling which combines drayage trucking over short distances - and final mile trucking with railroads to cut the cost and carbon footprint of long-haul shipping. Technology was then introduced to bring refrigerated containers into the intermodal system. This development created significant new opportunities in several industries. Evolving the Cold Chain 3

4 Evolution of the Cold Chain Until 2008 the cold chain was limited in reliability and capabilities. Very large industries, such as produce and frozen foods, were not able to take advantage of the many economic and environmental benefits available to dry goods businesses. However, technological advances, investment in infrastructure, and improved management practices have since combined to greatly upgrade the cold chain. Today the process of importing, exporting, warehousing, distributing, and transporting frozen and refrigerated goods is much more cost-effective and efficient, and this new efficiency can provide bottom-line savings, as well as be instrumental in opening new geographic opportunities for doing business. Technological Advances Infrastructure Investment Improved Management Practices Cold Chain Upgrades Reduced Labor Costs Increased Shipping Capacity Reduced Fuel Consumption The benefits of this shift have been felt throughout the economy and the environment. Produce and frozen food companies are able to realize substantial cost-per-mile savings from reduced labor costs, reduced fuel consumption, and increased shipping capacity, even as they are able to bring their goods to market sooner and keep them on shelves longer. Cold Chain capabilities have opened up a new universe of potential markets for freight companies, retailers, warehousing, agribusiness, and frozen food processors and manufacturers. One of the major technological developments that made a broader cold chain possible is refrigerated Container On Flat Car (COFC) intermodal, wherein containers are double-stacked onto flat rail cars, providing for greatly increased capacity. Before this innovation, many types of long-haul refrigerated trips simply were too expensive and/or uncertain to undertake. In the U.S., refrigerated intermodal service is still evolving toward increased use of containers rather than Trailers On Flat Cars (TOFC). In Canada, all cold chain intermodal shipping is done using COFC, which is more efficient, environmentally friendly, and profitable. With smart engineering, planning, and execution, refrigerated intermodal using COFC equipment provides cost efficiencies compared to long-haul refrigerated OTR trucking. The threshold for realizing gains in efficiency and cost savings is 700 mile routes and longer. Cost-Per-Mile Savings These advances in transportation have been matched by similarly impactful developments in refrigerated warehousing. Refrigerated warehouses have improved the cold chain through engineering a mix of levels of refrigeration, and by introducing cooler cross-docks, which allow goods to be unloaded from an inbound trailer or container, and immediately packed for final mile delivery in an environment that is completely temperature controlled. This keeps the cold chain intact. Offshore goods have seen transit times reduced through more efficient and effective methods for navigating the regulatory requirements involved in crossing international borders. In the past, clearing U.S. Customs could cause long delays, exposing freight to the elements and risking spoilage or shortened shelf life. Smart management can significantly reduce such delays at borders, ensuring that goods are cleared as quickly as possible, and that the next mode of transportation is in place. The benefits of the expanded cold chain extend beyond cost savings. Today s business climate is one in which consumers, suppliers, employees, and investors place a value on social responsibility. This reality adds another dimension to supply chain planning and execution, because bringing goods quickly and safely to market - though still the main objective - is no longer satisfactory to some stakeholders. Fortunately, portions of the cold chain, such as COFC intermodal hauling and fuel efficient shipping containers, also benefit the environment by significantly increasing capacity and reducing carbon emissions. This added value may be promoted by companies seeking green credibility. Evolving the Cold Chain 4

5 Innovation & Best Practices Some supply chain companies have invested heavily in order to maximize the advantages of an upgraded cold chain. Freight and railroad companies have introduced new kinds of equipment to make the transition from trailer to rail car quicker and safer, and have taken steps to further increase capacity. Some have also developed new processes, policies, and technologies to ensure the safety and freshness of goods. Performance and efficiency within the supply chain are of paramount importance. Businesses that utilize cold chains should ensure their providers offer these innovations: Telematics Telematics is the ability to remotely monitor, operate, or adjust each individual container while it is on a truck, rail car, or even a ship. There are containers in use that send real-time information about location and conditions via satellite as frequently as every fifteen minutes while in transit. This level of real-time information ensures that proper temperatures are maintained at all times. Some systems are so advanced that adjustments to individual container's temperature or fuel usage can be made from any computer or mobile device. For example, a shipper may have the ability to cycle the refrigeration unit on and off to maintain a desired temperature while expending less fuel. This is also useful in tracking the course of a trip and preparing for a shipment to arrive at a specific time. Light tractors Reducing tractor weight is essential to maximizing lading weight. Although industry standard for intermodal drayage tractors is to weigh 16,000-19,000 pounds, there are options as low as 14,500 pounds for shippers looking to achieve maximum efficiency. An unbroken cold chain A successful provider endeavors to control temperature throughout the entire transit process, and works to make the trip as short as possible. Larger fuel tanks Standard refrigerated trailers have a 75-gallon fuel tank, but there are COFC options available up to 120 gallons. The extra fuel capacity ensures that the temperature remains controlled throughout the entire time in transit even if there are delays. Larger tanks also obviate the need for refueling en route, which eliminates the cost associated with refueling the unit while they are on trains. Container-on-flat-car (COFC) This method of intermodal hauling involves securely doublestacking refrigerated containers onto flat rail cars, nearly doubling the hauling capacity of a train. This is a recent (2010) improvement upon the existing TOFC system, which cannot be double-stacked. A train equipped for TOFC can hold up to 140 trailers full of freight, while a COFC train can accommodate up to 250 containers. This technology makes it possible to provide a cost-effective, environmentally-friendly alternative for longer ground routes, while still delivering door-to-door service for refrigerated loads within the same transit time as trucking. Cross border and U.S. Customs Logistics providers should be able to manage all aspects of the offshore portion of the trip, including loading and local transportation. Seek a provider that will negotiate vendor terms, and that has a track record for moving goods across borders without being needlessly delayed by Customs. Evolving the Cold Chain 5

6 Refrigerated warehouse technology Multi-temperature warehouses are preferable because they can store both frozen and refrigerated products in the same facility. Food grade refrigerated storage space is sanitary, free from chemicals, and should be constantly monitored. Refrigerated product can be stored from 0-45 Fahrenheit, and frozen product should be kept between -20 and 45 Fahrenheit. Cooler cross-dock This is a temperature-controlled area of a warehouse where inbound trucks and containers can be unloaded and the goods reloaded for final mile deliveries, which keeps the cold chain intact even when containers are opened and goods are moving from one mode of transportation to another. Control ambient temperature Conditions outside a container influence conditions inside it. A flexible cold chain can adjust for externalities to generate fuel savings, which benefits the environment and the bottom line. Choose railroad routes to avoid hot climates without sacrificing transit time or service, so the refrigeration units consume less fuel while maintaining desired temperature. Fuel efficiencies Drop & hook Containers should be pre-loaded and ready to go when the driver arrives at the warehouse. This eliminates hours of down time each trip, and is a good example of the synergy to be found when multiple divisions of a single company work collaboratively toward the client's goal. It's another way of keeping the cold chain intact throughout. Live unload The option of having a refrigerated container unloaded in real time as it arrives, and sending it to multiple locations. This is a flexible alternative to drop & hook and reduces labor and fuel costs by sending the same refrigerated container to multiple locations. Accuracy Choose a vendor that can reliably state when long lead shipments will arrive. Accuracy is critical with perishables, and more so when the product is arriving from offshore. Fully integrated shipping The cold chain originates as close to the manufacturer (or grower or processor) as possible, which reduces local transportation time and cost. Industry standard fuel burn is one gallon per hour, but optimally efficient containers burn slightly more than half that amount. Fuel burn can be influenced by the weight of a shipment, ambient temperature, and other external factors. Insulation Seek containers that are well insulated. Go beyond the industry standard. This will allow for climate control with slower fuel burn while in transit. Evolving the Cold Chain 6

7 Future plans End-to-end management of a global cold chain is still a new solution that is currently being offered by only a small number of key players. But, demand for elements like refrigerated intermodal, is at an all-time high, and the supply is far below what the market can support. Food production is outpacing GDP by almost 2 to 1, according to TTX Economic Monitor. The frozen food sector is at a plateau despite having grown rapidly during the previous several years. The cold chain has much room for continued growth. NFI Intermodal Revenue Growth Grown at a rate of 100% Each Year Opportunity is apparent in further developing infrastructure, such as expanding available refrigerated warehouse space and the number of refrigerated containers, in order to service far greater numbers of produce and frozen food manufacturers. These items include paints, cosmetics, pharmaceuticals, and any other product that requires controlled temperature at all times and/or protection from the elements Many non-food consumer goods require climate-controlled shipping, and would benefit from the cost savings, efficiencies, and environmental benefits now available via the cold chain. NFI, one of the leading logistics providers in North America, was the first company to offer refrigerated COFC, and remains the leader in this category. Since entering the refrigerated intermodal space in 2010, this division of NFI has grown at a rate of 100% each year, and the future seems to hold the potential for boundless growth. The company also plans to expand its Canadian cold chain in coming years to provide the same benefits to global clients. Evolving the Cold Chain 7

8 NFI Refrigerated Facts & Figures In addition to the innovations and best practices listed, NFI offers a number of advantages to manufacturers, wholesalers, and retailers throughout the refrigerated supply chain. Very few companies provide refrigerated COFC intermodal service, and NFI was first to bring this most efficient and most advanced variation to market in the U.S. and Canada. There are 120 dedicated NFI refrigerated COFC containers, and an additional 50 will be available in summer Each refrigerated container can accommodate nearly 44,000 pounds of freight on a single trip. NFI ships about 500 refrigerated loads every month via intermodal in the U.S. NFI s refrigerated containers utilize the lowest fuel burn per hour in the industry without compromising temperature. A major component of NFI Canada's cold chain is its role in providing produce to the country's largest grocery chain. NFI was tasked with streamlining the existing patchwork process in order to reduce spoilage and extend shelf life. Changes were made at several points, including offshore vendor terms, adding efficiency and expertise to the U.S. Customs process, and introducing seasonal flexibility. Working with NFI has shortened the time in transit by several days, and at a lower cost. The retailer now utilizes NFI for importing produce from South America, Florida and California depending on the time of year. 20 MILLION ft 2 NFI owns and leases more than 20 million square feet of warehouse space around the world for client use, including about 400,000 square feet in Canada. 2,600 TRUCKS Clients are served by a fleet of 2,300 NFI trucks, and an additional 300 leased trucks. 21,000 REFRIGERATED LOADS NFI Canada moves approximately 21,000 refrigerated loads each year. Evolving the Cold Chain 8

9 NFI is cognizant of its role as a pioneer in maximizing the cold chain, and takes that responsibility seriously. Measurement and careful evaluation of all processes is a high priority, as the company is aware it is creating new industry standards and best practices. All procedures are tested and proven, but always subject to improvement. NFI is constantly monitoring, measuring, and upgrading the equipment in order to further reduce costs, lower the carbon footprint, and provide the smartest, most efficient service possible. The global economy is creating more and better choices and opportunities for businesses and consumers, and strengthening existing supply chains or developing new ones makes all of this possible. There are many advantages and savings to be had through efficient utilization and management of the different elements of the cold chain. For more information about cold chain and refrigerated efficiencies, contact NFI at or by calling NFI Evolving the Cold Chain 9

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