A dedicated facility for home delivery of fresh and frozen groceries in Kobe, Japan, assures that orders are processed quickly and accurately. Automation is the differentiator.
David Maloney has been a journalist for more than 35 years and is currently the group editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.
The Japanese are known for their hard work and long hours on the job. That doesn't leave a lot of time for mundane tasks, such as shopping for the weekly groceries. And as people's lives grow increasingly busy, sales and home delivery of groceries is becoming one of the fastest-growing markets for e-commerce in the Land of the Rising Sun. That's where a home delivery service like the one offered by CO-OP Kobe makes life easier.
The Consumer Cooperative Kobe, or CO-OP Kobe, as it's popularly known, is part of a national co-op network in Japan, which itself is a member of a large international alliance of consumer cooperatives. CO-OP Kobe, located in the city of the same name in South Central Japan, focuses on retail stores and groceries. It operates 163 stores, most of which are comparable in size to convenience stores in the U.S. CO-OP Kobe also does a substantial business in home delivery of groceries and gifts.
CO-OP Kobe operates three logistics streams: store delivery, home delivery of food and consumer goods, and giftware. The giving of gifts is an important part of Japanese culture, and CO-OP handles gifts for both individual and corporate use through a separate distribution center and delivery service. Distribution of food, beverages, and clothing to CO-OP Kobe's stores is handled from two distribution centers. And finally, home delivery of food, beverages, and clothing is accomplished through three DCs, one in Western Kobe and two located in the Uozakihama district of the city. One of those is for dry (non-refrigerated) goods, while the other, known as the cold storage and fresh center, handles frozen foods, refrigerated products, and fresh produce. Goods from the two Uozakihama facilities eventually make their way to 25 "delivery centers," where they are split into truck routes for home delivery.
The Uozakihama cold storage distribution center, a highly automated 24,000-square-meter (258,000-square-foot) operation in a two-story building, was built in 2004, but it went through a major retrofit in 2014 with new technologies that have increased capacity and throughput, says CO-OP Section Manager Takashi Kusaka. Many of its former systems were replaced with innovative equipment provided by Daifuku Co. Ltd., including goods-to-person picking, pick-to-light systems, radio-frequency identification (RFID), and other automated systems to speed orders through the building. Some of these technologies are used in combinations that are not yet available to facilities in the United States.
The upgraded distribution center is one of the most advanced operations for home delivery in all of Japan. "We can now handle 43.6 billion yen of product here each year," reports Hiroki Tanaka, the facility manager. That translates to about US$385 million worth of products. Tanaka works for Mitsubishi Shokuhin, a third-party logistics company that specializes in food distribution. It manages the Kobe facility for CO-OP and is a logistics division of the giant Mitsubishi conglomerate.
THE COLD FACTS
Working in arctic-like conditions is not enjoyable for anyone. That's why machines perform much of the work in the freezer area, where frozen goods are stored at minus 25 degrees Celsius (minus 13 degrees Fahrenheit). Similar automated systems store refrigerated goods at appropriate temperatures.
Suppliers deliver their products each morning to the 12 receiving docks. (An exception is fruits and vegetables, which are picked in the morning and arrive in the afternoon.) Almost all items will remain in the building for only a short time half a day or less, as most products will ship out later the same day. After receipt, the automated systems take over nearly all processes.
Palletized products are first conveyed to a six-aisle automated storage and retrieval system (AS/RS). The system has four aisles for frozen goods with a capacity of 424 pallets. The two remaining aisles of the AS/RS handle refrigerated goods with 242 pallet storage positions.
Cases of products arriving from the pallet storage system and directly from the receiving docks replenish two automated miniload systems. The first, which handles frozen goods, comprises three aisles and can hold 2,400 cases. The second miniload system has 16 aisles with 9,984 storage locations to hold both refrigerated goods and fruits and vegetables in containers. It does double duty at CO-OP Kobe: from 4 a.m. until 3 p.m. it holds refrigerated goods, and then from 3 p.m. to 2 a.m. it holds fresh goods, such as fruits, vegetables, and breads. Both miniloads feed goods-to-person processing stations where orders are filled. Cranes on the refrigerated miniload are also designed to handle two cases or cartons at a time for faster transfers.
COOL TOOLS
CO-OP Kobe serves about 450,000 households in Hyogo prefecture and part of the Osaka area as well. Customers place their orders once a week; about 45 percent of the average customer order value consists of frozen items. Incoming orders for the day are assigned to pick stations. Picking for frozen items begins at 8: 30 a.m., and picking for refrigerated products takes place in a separate area beginning at 9 a.m.
To begin the process, cranes working in the aisles of the miniloads gather products within the systems. These are transferred to conveyors that transport them to the picking areas, which are located on the second floor of the building. Upon arrival there, the conveyor transfers the containers to storage and retrieval (S/R) machines that pass along the back side of the picking zones. The S/R machines automatically unload the containers into flow racks that feed the pick faces.
Both the frozen and refrigerated picking areas were completely renovated during the recent upgrade. Changes included the elimination of one of the frozen picking lines and one of the refrigerated picking lines. Even with fewer picking lines, the new systems are much more productive, according to CO-OP's managers.
The three frozen and six refrigerated lines are equipped with Daifuku's unique "eye-navi" pick-to-light system and another new Daifuku technology called Seven-9, which uses RFID to confirm picks and works together with the eye-navi system to increase picking accuracy.
Here's how they work, using the frozen picking lines as an example. A plastic bag to contain the frozen selections is placed inside each delivery container before picking commences. The container is then placed on a conveyor that feeds the picking lines, which are broken into zones. Across from the conveyor are flow racks containing the frozen products. Workers stand between the racks and the conveyors.
As each container enters the pick area, a put-to-light display unit moves on a track behind it so that the container and display are traveling in concert. The system reads RFID tags attached to each display unit as it enters a zone. This causes lights and quantity displays to illuminate at a flow-rack position to indicate which frozen product should be picked from that zone, and in what quantity. The worker gathers the prescribed number of items and turns around to look at the containers rolling through his or her zone.
Some of the displays riding along behind the delivery containers will then illuminate with a quantity indicator, which tells the worker which containers require that product, and how many items to put into each one. There are two lamps on the display. One lamp indicates to the worker that the container requires a product in his or her zone, while the other lamp indicates to workers a little further down the line whether a product will be placed in the container in their zone, which allows them to have those items ready before the container arrives.
Workers also wear a battery and RFID reader on the waist, and an antenna in a fingerless glove that wraps around the hand. As the order picker gathers the items, the antenna reads the RFID tag on the shelf to ensure the correct item was picked. When he or she reaches into the container to deposit the required items, the wrist antenna gathers data from the tag on the display unit to confirm that the item has been placed into the correct container. So essentially, the RFID tag replaces the need to hit a confirmation button, as is commonly done with light-based systems.
The light-directed system is an effective choice here. While temperatures in the pick zones are not as cold as in the freezer, workers still must don hats and gloves. Using lights eliminates fumbling to press keys or cross off items on paper lists. Plus, it is faster and more accurate, and the light displays perform well in the cool environment.
The containers continue to pass through all zones until they reach the end of the line, where the displays drive an order-confirmation process designed to verify that the total number of items placed into the container is correct. The light displays direct three people to perform this process by showing one of three colors: red, yellow, or blue. Each worker is assigned to count items only in the containers displaying his or her assigned color; this eliminates any potential confusion about which container to check and helps to keep the line moving at the required speed. The display also shows the total quantity of items that should be in that delivery container. The workers count the items in the assigned containers, and if the count matches the display, they then push the confirmation button and the shipping containers continue along on a conveyor.
The delivery containers from the frozen picking area then pass to a packing area, where workers remove the bag liners and the items they contain, and then transfer them to thermo boxes with foil exteriors. Once the boxes reach the delivery center, items inside will be removed and packed into Styrofoam containers for home delivery. Refrigerated and fresh products, which are packed in the foam delivery containers at the warehouse, are delivered to an automatic stacker that places them in two rows up to 10-high on wheeled pallets. The pallets are then rolled directly into trucks destined for the delivery centers.
FAST AND FRESH
Fresh fruits and vegetables are also handled in the cold storage DC. Farmers pick fresh produce in the morning and ship it to the fresh produce processing area on the first floor, where it is washed, trimmed, and prepared by teams of workers. The fruits and vegetables sometimes in very small quantities, such as a handful of tangerines or one-half of a daikon radish are placed into plastic bags. These are put into plastic containers, which in turn are loaded into miniload storage containers. The goods then head to the refrigerated miniload, where they wait until they are picked for orders later that day.
All of the orders from the DC ship to the 25 delivery centers on either freezer or refrigerated trucks. The facility ships 220,000 containers daily from its 19 outbound docks; about 70,000 of those containers hold frozen goods. Once at the delivery centers, the containers will be sorted by delivery route and loaded onto delivery trucks. Customers receive deliveries once a week.
The new automated handling systems at CO-OP now provide fast fulfillment with a very high degree of accuracy. They also allow the cooperative to handle much greater capacity. "With our recent addition of the eye-navi and other systems, our productivity has increased and we are very happy with the results," says Mitsubishi Shokuhin's Tanaka. "This center has a much higher throughput than other centers," he adds.
As home delivery of groceries continues to grow in popularity in Japan, CO-OP will be ready to grow along with it. Even with the efficient new equipment, business volume is growing so fast that the distribution center plans to add one more picking line and expand the AS/RS this year.
Senior Editor Toby Gooley contributed to this report.
Most of the apparel sold in North America is manufactured in Asia, meaning the finished goods travel long distances to reach end markets, with all the associated greenhouse gas emissions. On top of that, apparel manufacturing itself requires a significant amount of energy, water, and raw materials like cotton. Overall, the production of apparel is responsible for about 2% of the world’s total greenhouse gas emissions, according to a report titled
Taking Stock of Progress Against the Roadmap to Net Zeroby the Apparel Impact Institute. Founded in 2017, the Apparel Impact Institute is an organization dedicated to identifying, funding, and then scaling solutions aimed at reducing the carbon emissions and other environmental impacts of the apparel and textile industries.
The author of this annual study is researcher and consultant Michael Sadowski. He wrote the first report in 2021 as well as the latest edition, which was released earlier this year. Sadowski, who is also executive director of the environmental nonprofit
The Circulate Initiative, recently joined DC Velocity Group Editorial Director David Maloney on an episode of the “Logistics Matters” podcast to discuss the key findings of the research, what companies are doing to reduce emissions, and the progress they’ve made since the first report was issued.
A: While companies in the apparel industry can set their own sustainability targets, we realized there was a need to give them a blueprint for actually reducing emissions. And so, we produced the first report back in 2021, where we laid out the emissions from the sector, based on the best estimates [we could make using] data from various sources. It gives companies and the sector a blueprint for what we collectively need to do to drive toward the ambitious reduction [target] of staying within a 1.5 degrees Celsius pathway. That was the first report, and then we committed to refresh the analysis on an annual basis. The second report was published last year, and the third report came out in May of this year.
Q: What were some of the key findings of your research?
A: We found that about half of the emissions in the sector come from Tier Two, which is essentially textile production. That includes the knitting, weaving, dyeing, and finishing of fabric, which together account for over half of the total emissions. That was a really important finding, and it allows us to focus our attention on the interventions that can drive those emissions down.
Raw material production accounts for another quarter of emissions. That includes cotton farming, extracting gas and oil from the ground to make synthetics, and things like that. So we now have a really keen understanding of the source of our industry’s emissions.
Q: Your report mentions that the apparel industry is responsible for about 2% of global emissions. Is that an accurate statistic?
A: That’s our best estimate of the total emissions [generated by] the apparel sector. Some other reports on the industry have apparel at up to 8% of global emissions. And there is a commonly misquoted number in the media that it’s 10%. From my perspective, I think the best estimate is somewhere under 2%.
We know that globally, humankind needs to reduce emissions by roughly half by 2030 and reach net zero by 2050 to hit international goals. [Reaching that target will require the involvement of] every facet of the global economy and every aspect of the apparel sector—transportation, material production, manufacturing, cotton farming. Through our work and that of others, I think the apparel sector understands what has to happen. We have highlighted examples of how companies are taking action to reduce emissions in the roadmap reports.
Q: What are some of those actions the industry can take to reduce emissions?
A: I think one of the positive developments since we wrote the first report is that we’re seeing companies really focus on the most impactful areas. We see companies diving deep on thermal energy, for example. With respect to Tier Two, we [focus] a lot of attention on things like ocean freight versus air. There’s a rule of thumb I’ve heard that indicates air freight is about 10 times the cost [of ocean] and also produces 10 times more greenhouse gas emissions.
There is money available to invest in sustainability efforts. It’s really exciting to see the funding that’s coming through for AI [artificial intelligence] and to see that individual companies, such as H&M and Lululemon, are investing in real solutions in their supply chains. I think a lot of concrete actions are being taken.
And yet we know that reducing emissions by half on an absolute basis by 2030 is a monumental undertaking. So I don’t want to be overly optimistic, because I think we have a lot of work to do. But I do think we’ve got some amazing progress happening.
Q: You mentioned several companies that are starting to address their emissions. Is that a result of their being more aware of the emissions they generate? Have you seen progress made since the first report came out in 2021?
A: Yes. When we published the first roadmap back in 2021, our statistics showed that only about 12 companies had met the criteria [for setting] science-based targets. In 2024, the number of apparel, textile, and footwear companies that have set targets or have commitments to set targets is close to 500. It’s an enormous increase. I think they see the urgency more than other sectors do.
We have companies that have been working at sustainability for quite a long time. I think the apparel sector has developed a keen understanding of the impacts of climate change. You can see the impacts of flooding, drought, heat, and other things happening in places like Bangladesh and Pakistan and India. If you’re a brand or a manufacturer and you have operations and supply chains in these places, I think you understand what the future will look like if we don’t significantly reduce emissions.
Q: There are different categories of emission levels, depending on the role within the supply chain. Scope 1 are “direct” emissions under the reporting company’s control. For apparel, this might be the production of raw materials or the manufacturing of the finished product. Scope 2 covers “indirect” emissions from purchased energy, such as electricity used in these processes. Scope 3 emissions are harder to track, as they include emissions from supply chain partners both upstream and downstream.
Now companies are finding there are legislative efforts around the world that could soon require them to track and report on all these emissions, including emissions produced by their partners’ supply chains. Does this mean that companies now need to be more aware of not only what greenhouse gas emissions they produce, but also what their partners produce?
A: That’s right. Just to put this into context, if you’re a brand like an Adidas or a Gap, you still have to consider the Scope 3 emissions. In particular, there are the so-called “purchased goods and services,” which refers to all of the embedded emissions in your products, from farming cotton to knitting yarn to making fabric. Those “purchased goods and services” generally account for well above 80% of the total emissions associated with a product. It’s by far the most significant portion of your emissions.
Leading companies have begun measuring and taking action on Scope 3 emissions because of regulatory developments in Europe and, to some extent now, in California. I do think this is just a further tailwind for the work that the industry is doing.
I also think it will definitely ratchet up the quality requirements of Scope 3 data, which is not yet where we’d all like it to be. Companies are working to improve that data, but I think the regulatory push will make the quality side increasingly important.
Q: Overall, do you think the work being done by the Apparel Impact Institute will help reduce greenhouse gas emissions within the industry?
A: When we started this back in 2020, we were at a place where companies were setting targets and knew their intended destination, but what they needed was a blueprint for how to get there. And so, the roadmap [provided] this blueprint and identified six key things that the sector needed to do—from using more sustainable materials to deploying renewable electricity in the supply chain.
Decarbonizing any sector, whether it’s transportation, chemicals, or automotive, requires investment. The Apparel Impact Institute is bringing collective investment, which is so critical. I’m really optimistic about what they’re doing. They have taken a data-driven, evidence-based approach, so they know where the emissions are and they know what the needed interventions are. And they’ve got the industry behind them in doing that.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”
That result showed that driver wages across the industry continue to increase post-pandemic, despite a challenging freight market for motor carriers. The data comes from ATA’s “Driver Compensation Study,” which asked 120 fleets, more than 150,000 employee drivers, and 14,000 independent contractors about their wage and benefit information.
Drilling into specific categories, linehaul less-than-truckload (LTL) drivers earned a median annual amount of $94,525 in 2023, while local LTL drivers earned a median of $80,680. The median annual compensation for drivers at private carriers has risen 12% since 2021, reaching $95,114 in 2023. And leased-on independent contractors for truckload carriers were paid an annual median amount of $186,016 in 2023.
The results also showed how the demographics of the industry are changing, as carriers offered smaller referral and fewer sign-on bonuses for new drivers in 2023 compared to 2021 but more frequently offered tenure bonuses to their current drivers and with a greater median value.
"While our last study, conducted in 2021, illustrated how drivers benefitted from the strongest freight environment in a generation, this latest report shows professional drivers' earnings are still rising—even in a weaker freight economy," ATA Chief Economist Bob Costello said in a release. "By offering greater tenure bonuses to their current driver force, many fleets appear to be shifting their workforce priorities from recruitment to retention."