The value of a third-party cannot be overlooked when getting fresh products to market, particularly in times of limited capacity and excess product.
3PLs' Role in Getting Fresh Produce Farm to Fork
Jonathon Swart, BlueGrace Director of Sales
May 4, 2022
Can you tell the difference between a fruit and a vegetable?
Well, it has something to do with the seed placement; fruit seeds are on the inside, vegetable seeds are on the outside. Others may say that with fruits, you eat the part of the plant that contains seeds. Everything else un-bloomed is classified as vegetables.
There is a consumer explanation that may explain buying patterns, and therefore shipping patterns heading into produce season. It is said that “vegetables are used to complement other items in a main dish, while fruits would generally be consumed by itself as a snack or as a dessert.” This will help to underscore “what’s fresh” for shippers and consumers for produce season 2022.
There is more to consider when it comes to the movement of perishable goods. Besides determining when fruits and vegetables will hit peak quality, there is complexity in the movement of temperature-controlled commodities like seafood, dairy, bakery products, meats and more.
In fresh logistics, timing is everything, much like truckload capacity. All indicators point to similar truck capacity from 2021 for grower-shippers for this year. The main difference? The industry has adapted and evolved strategies to combat increasing costs, chaotic weather conditions and the ever-growing consumer demand. In previous years, the rate of change in capacity and volume availability dictated a 10-15% climb, but change has been the only constant in supply chain and logistics. Last year brought challenging times amongst shippers, brokers, and carriers, often resulting in unplanned rates of nearly 30 percent during peak harvest.
Although it may not last, the first quarter of the year allowed for a much-needed lull period. Most economic indicators point to strong demand through 2022. According to the American Trucking Associations, retail and wholesale inventories are on the rise following a decrease since 2020. Additionally, the truck driver shortage continues to trend upwards. Drivers have left the industry without the addition of enough new drivers to replace them. As a result, driver pay will increase as we continue to dig out of this supply hole.
Perishable goods require a specialized service provider with deep-seated knowledge of refrigerated trailers (reefers). Reefers are in higher demand during seasonal harvest months simply because fresh foods need to get to market faster, yet nobody can predict exact timing on peak yields. Refrigerated trucking helps connect farmers, bakers, meat production plants and pharmaceutical companies with markets and ensure end customers, even at remote locations, get fresh and quality products. Even with lowered inventory numbers, the high demand forreefers shows no sign of slowing down through 2022. Good planning notwithstanding, there is an extreme impact to capacity when additional tonnage comes into the marketplace and needs to be moved quickly.
It is apparent the value that strong shipper, third-party logistics (3PL) provider and carrier alignment brings to the fresh supply chain. Prior years’ “shipper of choice” designation was an ancillary pro or con when evaluating freight opportunity. In today’s tightly capped environment, the moniker has made its way to the top of priority lists for many carriers and became a number one goal of many shipper growers. What is hardest to fathom for many in the industry is that consistent capacity and on-time performance have overcome price in many procurement conversations. The value of being on time and on retail shelves in partnership with quality transportation providers has become the golden rule for shippers to operate effectively.
The recent shifts in the industry have also created some new best practices amongst shippers, carriers and 3PLs. When moving perishable goods, each has a specific requirement. This includes the mode of transportation, type of container, temperature setting and the transit time it can tolerate. Additionally, communication of expected volumes and yields to carriers are important because it allows for advanced planning to help balance (freight) networks. The right conversations with the right partners will bring stability to fragile, temperature-controlled freight.
If even one of the transport requirements of perishables is not met, the goods can become unfit for consumption or further processing. So, how do you ensure this does not happen?
- Complete product knowledge. For safe and smooth transport of perishable products or fresh produce, it is necessary for shippers to clearly define product expectations to their warehousing and transportation partners.
- Conduct a market study. It is important to find the right market for fresh produce, especially for those products that spoil easily. It is financially beneficial for the shipper if this product reaches the market quickly and in good condition. It is also beneficial for the buyers as they get higher quality and fresher products. So, before you decide on a specific market, conduct a study.
- Choose the right transportation. If fresh produce is not managed correctly during transit, the quality and shelf life can be negatively affected. The choice of transportation provider can make a dramatic difference in how your product is shipped.
- Provide clear instructions. Once you have selected the best transportation, it is important to communicate specific instructions of your product to them. Ensuring a clear understanding of how the product is to be handled, temperature needed to be maintained throughout transit, and which products/goods cannot be carried with or kept close to it if being shipped LTL.
- Communication with the buyer. While goods often reach their destination safely, a lack of proper instructions on how to manage/store the goods causes them to spoil while at the buyer’s facility. Therefore, it is crucial for proper instructions to be communicated to the buyer as well.
- Get adequate insurance coverage. Transporting perishables and fresh produce is expensive. Before your product is in transit, verify you have the correct cargo insurance to protect your shipment in the event it spoils or does not arrive at the destination in its ideal condition.
Capacity as it relates to the transportation of perishable goods is dictated by consumer buying habits. Shippers, carriers and 3PLs alike are at the mercy of the consumer. When changes to patterns are detected, we must take stock. The impact of direct-to-consumer purchases of perishable goods is trending down as of recent months. Prior to the pandemic, people mostly spent their weekends shopping for next week’s groceries at their local markets with an average of $100 per transaction.
At the height of the pandemic, however, people drastically changed their shopping habits by buying groceries online, averaging $25 per transaction during weekdays which created a more evenly spread supply and demand effect, particularly on delivery of goods. Variability in volumes from the shipper grower can help maintain a fragile balance, which of course, is why you will see perishable items with short life spans going on sale. Consumers are now reverting to pre-pandemic behaviors, which once again, affects capacity, particularly at distribution centers.
The value of a third-party cannot be overlooked when getting fresh products to market, particularly in times of limited capacity and excess product. The goal is to find capacity where and when shippers need it. Understanding where that capacity is coming from and how that might affect your business down the line is of the utmost importance. Having knowledgeable partners to understand the freight market helps deliver ‘what’s fresh’ in stores on-time and in full.