CHALLENGES & LOGISTICS ISSUES REEFER PROTEIN SHIPPERS FACE
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1 CHALLENGES & LOGISTICS ISSUES REEFER PROTEIN SHIPPERS FACE Presentation for the Cool Logistics Session TPM Conference February 29th thru March 2 nd, 2016 Presented by: Perry M. Bourne Tyson Fresh Meats
2 LOGISTICS ISSUES FACING REFRIGERATED EXPORT PROTEIN Concerns over: Perishability Shelf Life Heat Temperature control within tolerance Transit Modes Truck, Rail, Ocean & Air Packaging Loading Trans-loading Transit schedule Consistency Fixed day sailings and arrivals
3 LOGISTICS ISSUES FACING REFRIGERATED EXPORT PROTEIN Concerns over: Equipment & Space availability Competitive all-in freight costs Within U.S. market among competitive product substitutes Other world suppliers of commodity protein Sophistication of Cold Chain at foreign destination Truck/Rail infrastructure between port of entry and customers Refrigerated warehouse space available in the foreign port close to docks New FDA regulations FSMA (Food Safety Modernization Act First major overhaul of U.S. Food Regs. since 1938 Places primary Federal control over the movement of food within the U.S. with FDA Focuses on the transportation movement of food grade products for human and pets within U.S.
4 LOGISTICS ISSUES FACING REFRIGERATED EXPORT PROTEIN New FDA regulations FSMA (Food Safety Modernization Act Concern shifts to food contamination while in transit not after there is a problem and people are sick Control points: Sanitation of vehicles (trailers, containers, rail cars, etc.) Refrigeration Asset maintenance Trace-ability of food grade product enroute Carrier and Shipper record keeping and verification will be a major undertaking New FSMA regs. are being phased in Deadlines for compliance August 30, 2016 and May 31, 2017
5 COLD CHAIN HISTORICAL DEVELOPMENT Timeline: Frozen products (Beef, Pork & Poultry) Break-Bulk refrigerated vessels Initial shipping option used extensively until ocean container vessels came on scene circa 1970 This method used generally only in developing markets with limited transportation infrastructure in the interior of the country (i.e. Cuba & Africa) Containerized ships with refrigerated container service developed in early 1980 s Chilled meat products (Beef, Pork & Poultry) From the 1980 s until 1990 airfreight was the only safe method for transporting chilled protein due to the perishable nature of the products Costly and difficult to ship large quantities--no temperature controlled containers as on ships Had to ice cargo to keep from spoiling By the 1990 s ocean containers become more sophisticated and the refrigeration control more reliable Ocean container carriers became interested in developing door service with Mid- West Meat Packers Transits became predictable and service was consistent Refrigerated container availability away from the ports improved greatly
6 BREAK-BULK FROZEN MEAT
7 MODERN AGE OF CONTAINER SHIPPING
8 CHILLED PORK SOURCE LOAD OCEAN CONTAINER
9 RAIL REEFER RECEIVED AT CROSS-DOCK USWC
10 IMPACT OF TEMPERATURE & TRANSIT Shelf-Life: Chilled meat protein to Asia from USWC: Beef Temp +29F 90 days Pork Temp +29F 50 days Poultry not applicable Frozen meat protein worldwide from any U.S. Port 1 yr+ minimum (Beef, Pork & Poultry) Dependent on various factors previously outlined under perishability (i.e. temp control, transit, packaging, etc.) Transit from warehouse thru USWC gateway to Japan days Transit from warehouse thru USEC to Hong Kong 42 days
11 CHILLED TRANSIT EXAMPLE FROM JOSLIN, IL TO TOKYO
12 FROZEN POULTRY EXAMPLE FROM USEC TO HONG KONG
13 USWC PORT DISRUPTION 2014/2015 Effects to the U.S. refrigerated Cold Chain: Vessel delays Vessel services changed to avoid specific ports (Oakland) Terminal Gate congestion Increased cost of trucking to cover lost capacity-- turns/day Significant cost to shippers who had no dog in the fight Rail car demurrage costs Eventually both UP & BNSF embargoed CFS up and down the USWC. Extra freezer space in the interior of U.S. as well as new space required in CA & WA to unload rail cars and trucks when cargo couldn t be moved to the ships and terminals Tyson alone reported in their third Qtr. financials 2015 that the Fresh Meat (Beef & Pork Div.) experienced a $80MM hit to their earnings Export disruption The USWC port situation that lasted months brought our foreign customers to question the U.S. supplier s reliability to serve their needs. Reputation to a commodity based industry such as meat protein is huge and very hard to put a price to it
14 USWC PORT CONGESTION
15 CONTAINER VESSELS AT ANCHORAGE USWC
16 SOLAS SHIPPER VERIFIED VGM SOLAS Rules Shipper Responsible For Certifying the Gross-Mass (VGM) Weight Of All Containers Loaded New SOLAS regulations for VGM by shippers becomes effective 7/1/16 Shifts the responsibility for weight determination VGM includes: Ocean container tare weight Gross wgt. of all boxes/packages loaded in containers Any dunnage (air bags/ pallets/ bracing added to the container to secure the cargo) Problems created: Shipper must certify tare weight on assets most shippers have no ownership/lease or maintenance responsibility for Costly to weigh loaded containers prior to delivery to the terminals at the port as most U.S Reefer exports are cross-docked at the ports into ocean assets Congestion in the port will further increase in getting this accomplished Trucker delays in getting this service preformed No effective way to provide a 100% accurate weight on the container as the carriers can t or won t provide at time of bkg as the container hasn t been assigned The only way shippers can comply: Use the tare wgt. stenciled on the ocean container at time of manufacture which is an estimate of the current actual wgt. at the time of loading depending on the age of the asset, repairs done to the container over the assets life. Shippers must take the liability responsibility for the accuracy of the weights that were determined years before when the asset was manufactured. Must get the VGM weight to the carrier the same day the cargo is trans-loaded and prior to the trucker delivering to the terminal to avoid being turned away
17 TYSON FEEDING THE WORLD Roughly 300 million times each day, people around the world enjoy Tyson products!
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