Morten Johansen is its COO DP World Americas.
Scanning the produce section of almost any neighborhood grocery store reveals an array of products: Peruvian blueberries, Chilean grapes, Ecuadorian bananas—an iconic fruit of the United Nations. According to USDAmore than half of the fresh fruit and one-third of the fresh vegetables Americans buy come from other countries.
Unfortunately, as anyone who has paid $10 for a pint of raspberries knows, we all struggle with the volatile and rising cost of perishable food. From 2021 to 2022, the volume of fresh and frozen fruit imports increased by 3%, while the value of these products increased by 9%.
While food prices can be affected by a wide range of factors, I believe that improving the efficiency, resilience and sustainability of the supply chain can reduce inflation and price volatility. Innovations in cold chain solutions allow us to enjoy fresh produce all year round, but further innovation could help stabilize prices, expand choices, reduce risks and reduce environmental impact.
Understanding Cold Chain Logistics
Have you ever wondered how a blueberry gets from a farm in Peru to a supermarket in New York? How does cold chain logistics successfully deliver fresh agricultural products to markets thousands of miles away and ensure they arrive in good condition?
A blueberry’s journey involves many steps and players, including farmers, packers, exporters, shipping companies, customs brokers, distributors and retailers. The berries are picked on the farm, then sorted, cleaned and packed before being cooled and prepared for export—all while meeting Peruvian export regulations and US import requirements.
The berries are then placed in refrigerated containers and shipped by truck to the port, where they are loaded onto a cargo ship and shipped to the U.S. Upon arrival, they must clear customs and USDA inspections before being transported to a distribution center, where they are repackaged for delivery to supermarket chains. Finally, the blueberries are placed on the shelf, ready for purchase.
Throughout this journey, maintaining the cold chain is vital to keep the blueberries fresh and edible. Technologies such as real-time monitoring and refrigerated shipping containers are used to monitor and control humidity, temperature and other environmental factors.
Address supply chain threats and costs
In 2022, the US imported more than 28 billion dollars worth of fruit—including berries, tomatoes, avocados and bananas—making it the No. 1 global importer. Almost all these crops are grown in Latin Americawith the US importing most of its fresh fruit from Mexico, followed by Chile, Guatemala and Peru—because after all, you can’t dry or close to dry seasonal fruit.
Inflation and rising costs are on the minds of many consumers. Logistics and product pricing are closely related, with transportation reflected over 26% of the cost perishables for wholesalers. Unfortunately, transport costs can be volatile – linked to fuel and electricity costs, and when oil prices rise, imports become more expensive.
But with demand for fresh produce continuing to grow and new challenges on the horizon, the price of perishables will likely remain vulnerable to market pressures. To fix this, I recommend that logistics operators work with producers to find new ways to reduce transportation costs and increase efficiency. This includes looking for ways to reduce carbon emissions and finding opportunities to make the supply chain more sustainable, such as investing in alternative energy sources and replacing old diesel equipment with newer, electric versions.
Infrastructure is another matter. Latin America suffers from aging, lack or lack of infrastructure. Road networks are not necessarily in the best condition. The existing infrastructure should be renovated and improved to cope with the increasing perishable exports. Climate change is also a concern. for example, increased hurricane activity is leading companies in the Caribbean and Latin America to tighten operations and increasing resilience in the face of increasingly extreme weather events.
To help solve these issues, consider how you can prepare your supply chain infrastructure to move perishable items for the future. The barrier to entry is very high when building a new seaport, ranging from tens of millions to 5 to 6 billion euros and receiving at least 5 years to complete. To overcome this, consider investing in existing ports by expanding and upgrading existing infrastructure and berthing capacity. This may include methods such as upgrading the power capacity to allow more reefer containers (known as “reefers”) to be connected at the same time.
I also recommend considering alternate routes and entry points to get the job done more efficiently. The establishment of air cargo hubs is one option to enhance export capacity, especially of perishables, but the development of these infrastructure elements is not always feasible in the short to medium term. Consider Ecuador as an example: Limited road, rail and air freight connectivity inhibits its ability to export fruits in the most desirable quantities. However, taking a regional approach to solving the challenge could allow the fruit to be shipped by container ship to a nearby air cargo hub, such as the Dominican Republic, and then transported by air, reducing shipping time and virtually eliminating wear and tear.
conclusion
The complex web of global food supply chains shows how rising costs, inefficiencies, climate change and transport barriers collide. As demand for perishables continues to rise, the pressure to combat food inflation will likely only intensify.
Cold chain logistics continues to evolve as suppliers and logistics partners implement new approaches and strategies—e.g. hardening operations against extreme weather, upgrading aging infrastructure and exploring alternative shipping methods—in pursuit of improved efficiency and reduced transportation costs. These efforts have a broader impact than just keeping blueberries accessible—they also present opportunities to build a more resilient, sustainable future for the global food supply.
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