For Chiquita Brands, moving 60 million boxes of pineapples and bananas from Central America to U.S. grocers each year is the easy part. The challenge is making sure its refrigerated ships and containers don't return without a payload.
Peter Bradley is an award-winning career journalist with more than three decades of experience in both newspapers and national business magazines. His credentials include seven years as the transportation and supply chain editor at Purchasing Magazine and six years as the chief editor of Logistics Management.
If you're enjoying a fruit salad on one of these hot summer nights, odds are at least some of the ingredients—those fresh sliced bananas or chunks of pineapple, perhaps—were brought to you by Chiquita Brands International. Chiquita, a major marketer, producer and distributor of fresh produce, supplies fruit to both North American and European markets, reaching about 60 countries overall. Last year, the company had sales of about $3.1 billion.
Each year, the company imports some 60 million boxes packed with fresh fruit into North America, reports Deverl Maserang, Chiquita's vice president, global supply chain strategy and North American logistics. The fruit—60 percent of which is bananas—is grown primarily in Panama, Costa Rica, Colombia, Guatemala and Honduras as well as Chile and Ecuador, which means getting it to markets throughout the United States and Europe in good condition is something of a challenge.
Shipments of fruit grown in Chile and Ecuador are handled by a third party, but Chiquita's own supply chain group has responsibility for shipping the fruit grown in Central America. Today, it moves most of that fruit by water via what's known as the Great White Fleet, its fleet of about a dozen refrigerated vessels, which are painted white to keep the ships and their contents cool in the tropical sun. Great White Fleet vessels bound for North America deposit fruit destined for distribution in the East at ports in Wilmington, Del.; Port Everglades, Fla.; Gulfport, Miss.; and Freeport, Texas; shipments headed for destinations west of the Rockies are routed via Port Hueneme, Calif., north of Los Angeles. The shipments are then hauled inland by truck, primarily owner/operators pulling 53-foot refrigerated containers.
Though most would consider moving vast quantities of perishables thousands of miles by land and sea to be a challenge, Chiquita, which has been doing it for over a century now, has got that down to a science. But though the company may find it easy, it's still not cheap. When it comes to transporting highly perishable produce, there's no getting around the need for expensive refrigerated equipment (never mind that Chiquita's principal product sells for less than 60 cents a pound in North America). And given the high costs associated with operating reefers, it's not hard to understand why Maserang and his team are committed to finding backhauls for as many of its vessels and containers as possible.
Follow that container!
Of course, before you can find backhauls for your containers, chassis and pin sets, you first need to know where those assets are—no easy task when you have 9,000 containers scattered throughout Europe, North America, and the tropics. That's why, two years ago, Maserang began a pilot test of visibility tools available through the On-Demand transportation management system (TMS) marketed by LeanLogistics, a Holland, Mich.-based company that offers hosted applications.
"The first goal was to gain visibility," Maserang says. Chiquita's motor carriers operate on multi-stop routings to customers' DCs. "We first wanted to take the technology and gain visibility across the network," he says. "We had good success with that." Today, he says, the LeanLogistics system is giving Chiquita a better view of where and when capacity is available.
Maserang also reports that the LeanLogistics Supply Chain Monitor system has improved Chiquita's ability to manage the containers within its own Container Fleet Management System (CFMS). For example, the system allows Chiquita to track fuel levels in the devices used to power the refrigeration units. "When a carrier picks up a container unit," says Maserang, "we know if it's full."
The system also helps Chiquita managers keep track of each asset when it's in a carrier's control, allowing the company to assess per diem charges accurately. The system even provides Chiquita with data on carrier performance. "We are able to evaluate each carrier," Maserang says. "We're able to work with each carrier on on-time performance."
Ripe for expansion
Buoyed by the success of the visibility tools pilot project, Chiquita decided to expand the application. "We said let's move forward and go over to the core of our business on the banana side and the Great White Fleet," says Maserang. "We took those two business units and in 2004 integrated LeanLogistics' TMS with our ERP [from J.D. Edwards]."
Maserang's goal was to use the system to identify operational efficiencies and improve customer service. The company began working with carriers to enter appointments and status updates, and to provide visibility into shipments to Chiquita, carriers and customers. The system has helped Chiquita and its carriers identify continuous move opportunities for its motor carriers.
That led to the next step, bringing Chiquita's freight payment and audit provider, Cass Bank, into the picture. Chiquita and LeanLogistics have begun an aggressive project to implement an integrated application linking its CFMS, LeanLogistics' Supply Chain Monitor and the Cass Bank third-party payment system.
Chiquita charges carriers a per diem rate for use of the containers for backhauls. A fixed number of days are allotted in each lane for banana delivery and return of the container to the port, and carriers are charged for additional days at that contracted per diem rate. Until now, Maserang says, accounting for the container rental period was difficult, labor-intensive and error-prone. Because Chiquita was not able to accurately capture the number of days carriers had possession of the containers, it was losing significant rental income. At the same time, Maserang reports, the company was finding managing charges and payments to carriers to be a particular headache. Per diems had to be invoiced separately from freight payments to the carriers.
Now, he's launching an application to eliminate the invoice and set up an automatic payment system that matches per diems with payments to carriers. The LeanLogistics On-Demand TMS system will assign per diem charges to the appropriate carriers at the transaction level, allowing direct deduction of the container rental charges from Chiquita's freight bill, which will then enable Cass to make a net payment to the carriers.
The idea is to operate a mutually beneficial system, says Maserang. "We're trying to provide value back to the carriers, by not sending invoices, by understanding how to evaluate the use of a container, and by matching a carrier with a backhaul.We need to grow the backhaul component.We don't fill all the containers on our own accord. We rely on the truckers to provide the backhaul. Now we're working more to grow the network."
The backhaul business connects directly to the Great White Fleet, whose managers are always on the lookout for international shipments that can provide backhauls on the vessels. Products such as paper, resin, and automobiles all represent potential backhaul business. Likewise, Chiquita's truckers are constantly on the lookout for domestic backhauls destined for the Gulfport, Miss., area. Chiquita needs empty containers there for its own shipments of rolled paper stock used to build boxes for bananas in Central America.
Getting leaner
While Chiquita has been fine-tuning its transportation management, the company has also started to evaluate use of a dedicated truck fleet in some areas. "We wanted to add capacity where it was appropriate," Maserang says. "We've started to pick lanes and recently implemented [dedicated carriage] on those lanes."
Ryder, a third-party logistics company, provides the dedicated contract carriage on those initial lanes. But it may eventually be joined by other vendors. Maserang says he is considering using multiple providers.
As for the future, Maserang says that he now wants to take advantage of the technological capabilities offered by the LeanLogistics tools to develop more in-depth applications. "We want to grow our ability to provide service at a lower cost and to provide better service to our customers," he says. "We have started to look for better ways to manage with this tool."
make it fast
At 99 Cents Only Stores, speed is crucial, especially when it comes to perishable foodstuffs. As its name suggests, the City of Commerce, Calif. based chain, which operates nearly 230 stores in California, Texas, Nevada and Arizona, specializes in selling products at a single price. Operating under what's known as the "opportunistic purchasing" business model, the chain's buyers basically scour the country for deals, scooping up merchandise or foodstuffs that someone else is anxious to sell. And when it comes to bread, deli items and produce, that generally means the products are well into their brief shelf life.
That creates some interesting challenges for the retailer's DCs in City of Commerce, Calif., and Katy, Texas, near Houston. To begin with, the centers never can be certain exactly what products will come pouring through their doors on a particular day. What they can take for granted, however, is that much of it will be perishable. Although the exact product mix varies, between 40 and 50 percent of the stores' products at any given time are foodstuffs, says Robert Adams, vice president of information systems for 99 Cents Only Stores.
Though canned goods typically move through the retailer's capacious main warehouse in City of Commerce, which measures close to a million square feet, fresh and frozen food goes through a smaller frozen and refrigerated warehouse nearby. And it moves quickly. Adams says that fresh food is shipped to stores close to the day it arrives. "We turn the stuff incredibly fast," he says. He notes that because the company buys only bagged products, not loose fruits or vegetables, "it goes in and out pretty easily." Most of the picks are full case. Very few full pallet loads leave the frozen and refrigerated warehouse.
In Katy, a small portion of the 750,000-square-foot warehouse is set aside for fresh and frozen goods, although Adams says the space can be expanded to about 250,000 square feet if necessary. And it may well be necessary: The company is in the early stages of a major expansion in Texas, with plans for no fewer than 150 stores on the drawing board.
Though you might not expect it of a chain that has made its fortune doing everything on the cheap, several of those DCs boast both high-tech warehousing systems and voice-recognition technology. When the chain acquired the Katy warehouse and began to outfit it for its planned expansion in Texas, Adams selected Supply Chain Advantage software from HighJump, a Minnesota-based supply chain software company, in large part because of its ability to integrate receiving with other functions. The warehouse management component also is integrated with the Voxware voice picking system installed in Katy. Recently, 99 Cents Only Stores added the HighJump and Voxware technology to the California food warehouse, and it's now completing the systems' implementation at the main DC.
Congestion on U.S. highways is costing the trucking industry big, according to research from the American Transportation Research Institute (ATRI), released today.
The group found that traffic congestion on U.S. highways added $108.8 billion in costs to the trucking industry in 2022, a record high. The information comes from ATRI’s Cost of Congestion study, which is part of the organization’s ongoing highway performance measurement research.
Total hours of congestion fell slightly compared to 2021 due to softening freight market conditions, but the cost of operating a truck increased at a much higher rate, according to the research. As a result, the overall cost of congestion increased by 15% year-over-year—a level equivalent to more than 430,000 commercial truck drivers sitting idle for one work year and an average cost of $7,588 for every registered combination truck.
The analysis also identified metropolitan delays and related impacts, showing that the top 10 most-congested states each experienced added costs of more than $8 billion. That list was led by Texas, at $9.17 billion in added costs; California, at $8.77 billion; and Florida, $8.44 billion. Rounding out the top 10 list were New York, Georgia, New Jersey, Illinois, Pennsylvania, Louisiana, and Tennessee. Combined, the top 10 states account for more than half of the trucking industry’s congestion costs nationwide—52%, according to the research.
The metro areas with the highest congestion costs include New York City, $6.68 billion; Miami, $3.2 billion; and Chicago, $3.14 billion.
ATRI’s analysis also found that the trucking industry wasted more than 6.4 billion gallons of diesel fuel in 2022 due to congestion, resulting in additional fuel costs of $32.1 billion.
ATRI used a combination of data sources, including its truck GPS database and Operational Costs study benchmarks, to calculate the impacts of trucking delays on major U.S. roadways.
There’s a photo from 1971 that John Kent, professor of supply chain management at the University of Arkansas, likes to show. It’s of a shaggy-haired 18-year-old named Glenn Cowan grinning at three-time world table tennis champion Zhuang Zedong, while holding a silk tapestry Zhuang had just given him. Cowan was a member of the U.S. table tennis team who participated in the 1971 World Table Tennis Championships in Nagoya, Japan. Story has it that one morning, he overslept and missed his bus to the tournament and had to hitch a ride with the Chinese national team and met and connected with Zhuang.
Cowan and Zhuang’s interaction led to an invitation for the U.S. team to visit China. At the time, the two countries were just beginning to emerge from a 20-year period of decidedly frosty relations, strict travel bans, and trade restrictions. The highly publicized trip signaled a willingness on both sides to renew relations and launched the term “pingpong diplomacy.”
Kent, who is a senior fellow at the George H. W. Bush Foundation for U.S.-China Relations, believes the photograph is a good reminder that some 50-odd years ago, the economies of the United States and China were not as tightly interwoven as they are today. At the time, the Nixon administration was looking to form closer political and economic ties between the two countries in hopes of reducing chances of future conflict (and to weaken alliances among Communist countries).
The signals coming out of Washington and Beijing are now, of course, much different than they were in the early 1970s. Instead of advocating for better relations, political rhetoric focuses on the need for the U.S. to “decouple” from China. Both Republicans and Democrats have warned that the U.S. economy is too dependent on goods manufactured in China. They see this dependency as a threat to economic strength, American jobs, supply chain resiliency, and national security.
Supply chain professionals, however, know that extricating ourselves from our reliance on Chinese manufacturing is easier said than done. Many pundits push for a “China + 1” strategy, where companies diversify their manufacturing and sourcing options beyond China. But in reality, that “plus one” is often a Chinese company operating in a different country or a non-Chinese manufacturer that is still heavily dependent on material or subcomponents made in China.
This is the problem when supply chain decisions are made on a global scale without input from supply chain professionals. In an article in the Arkansas Democrat-Gazette, Kent argues that, “The discussions on supply chains mainly take place between government officials who typically bring many other competing issues and agendas to the table. Corporate entities—the individuals and companies directly impacted by supply chains—tend to be under-represented in the conversation.”
Kent is a proponent of what he calls “supply chain diplomacy,” where experts from academia and industry from the U.S. and China work collaboratively to create better, more efficient global supply chains. Take, for example, the “Peace Beans” project that Kent is involved with. This project, jointly formed by Zhejiang University and the Bush China Foundation, proposes balancing supply chains by exporting soybeans from Arkansas to tofu producers in China’s Yunnan province, and, in return, importing coffee beans grown in Yunnan to coffee roasters in Arkansas. Kent believes the operation could even use the same transportation equipment.
The benefits of working collaboratively—instead of continuing to build friction in the supply chain through tariffs and adversarial relationships—are numerous, according to Kent and his colleagues. They believe it would be much better if the two major world economies worked together on issues like global inflation, climate change, and artificial intelligence.
And such relations could play a significant role in strengthening world peace, particularly in light of ongoing tensions over Taiwan. Because, as Kent writes, “The 19th-century idea that ‘When goods don’t cross borders, soldiers will’ is as true today as ever. Perhaps more so.”
Hyster-Yale Materials Handling today announced its plans to fulfill the domestic manufacturing requirements of the Build America, Buy America (BABA) Act for certain portions of its lineup of forklift trucks and container handling equipment.
That means the Greenville, North Carolina-based company now plans to expand its existing American manufacturing with a targeted set of high-capacity models, including electric options, that align with the needs of infrastructure projects subject to BABA requirements. The company’s plans include determining the optimal production location in the United States, strategically expanding sourcing agreements to meet local material requirements, and further developing electric power options for high-capacity equipment.
As a part of the 2021 Infrastructure Investment and Jobs Act, the BABA Act aims to increase the use of American-made materials in federally funded infrastructure projects across the U.S., Hyster-Yale says. It was enacted as part of a broader effort to boost domestic manufacturing and economic growth, and mandates that federal dollars allocated to infrastructure – such as roads, bridges, ports and public transit systems – must prioritize materials produced in the USA, including critical items like steel, iron and various construction materials.
Hyster-Yale’s footprint in the U.S. is spread across 10 locations, including three manufacturing facilities.
“Our leadership is fully invested in meeting the needs of businesses that require BABA-compliant material handling solutions,” Tony Salgado, Hyster-Yale’s chief operating officer, said in a release. “We are working to partner with our key domestic suppliers, as well as identifying how best to leverage our own American manufacturing footprint to deliver a competitive solution for our customers and stakeholders. But beyond mere compliance, and in line with the many areas of our business where we are evolving to better support our customers, our commitment remains steadfast. We are dedicated to delivering industry-leading standards in design, durability and performance — qualities that have become synonymous with our brands worldwide and that our customers have come to rely on and expect.”
In a separate move, the U.S. Environmental Protection Agency (EPA) also gave its approval for the state to advance its Heavy-Duty Omnibus Rule, which is crafted to significantly reduce smog-forming nitrogen oxide (NOx) emissions from new heavy-duty, diesel-powered trucks.
Both rules are intended to deliver health benefits to California citizens affected by vehicle pollution, according to the environmental group Earthjustice. If the state gets federal approval for the final steps to become law, the rules mean that cars on the road in California will largely be zero-emissions a generation from now in the 2050s, accounting for the average vehicle lifespan of vehicles with internal combustion engine (ICE) power sold before that 2035 date.
“This might read like checking a bureaucratic box, but EPA’s approval is a critical step forward in protecting our lungs from pollution and our wallets from the expenses of combustion fuels,” Paul Cort, director of Earthjustice’s Right To Zero campaign, said in a release. “The gradual shift in car sales to zero-emissions models will cut smog and household costs while growing California’s clean energy workforce. Cutting truck pollution will help clear our skies of smog. EPA should now approve the remaining authorization requests from California to allow the state to clean its air and protect its residents.”
However, the truck drivers' industry group Owner-Operator Independent Drivers Association (OOIDA) pushed back against the federal decision allowing the Omnibus Low-NOx rule to advance. "The Omnibus Low-NOx waiver for California calls into question the policymaking process under the Biden administration's EPA. Purposefully injecting uncertainty into a $588 billion American industry is bad for our economy and makes no meaningful progress towards purported environmental goals," (OOIDA) President Todd Spencer said in a release. "EPA's credibility outside of radical environmental circles would have been better served by working with regulated industries rather than ramming through last-minute special interest favors. We look forward to working with the Trump administration's EPA in good faith towards achievable environmental outcomes.”
Editor's note:This article was revised on December 18 to add reaction from OOIDA.
A Canadian startup that provides AI-powered logistics solutions has gained $5.5 million in seed funding to support its concept of creating a digital platform for global trade, according to Toronto-based Starboard.
The round was led by Eclipse, with participation from previous backers Garuda Ventures and Everywhere Ventures. The firm says it will use its new backing to expand its engineering team in Toronto and accelerate its AI-driven product development to simplify supply chain complexities.
According to Starboard, the logistics industry is under immense pressure to adapt to the growing complexity of global trade, which has hit recent hurdles such as the strike at U.S. east and gulf coast ports. That situation calls for innovative solutions to streamline operations and reduce costs for operators.
As a potential solution, Starboard offers its flagship product, which it defines as an AI-based transportation management system (TMS) and rate management system that helps mid-sized freight forwarders operate more efficiently and win more business. More broadly, Starboard says it is building the virtual infrastructure for global trade, allowing freight companies to leverage AI and machine learning to optimize operations such as processing shipments in real time, reconciling invoices, and following up on payments.
"This investment is a pivotal step in our mission to unlock the power of AI for our customers," said Sumeet Trehan, Co-Founder and CEO of Starboard. "Global trade has long been plagued by inefficiencies that drive up costs and reduce competitiveness. Our platform is designed to empower SMB freight forwarders—the backbone of more than $20 trillion in global trade and $1 trillion in logistics spend—with the tools they need to thrive in this complex ecosystem."