TECHNOLOGY’S IMPACT ON PHARMA TRANSPORTATION

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TECHNOLOGY’S IMPACT ON PHARMA TRANSPORTATION

November 9th, 2020 Haylle Sok Leave a comment

Pharmaceutical transportation is no simple task. Particularly this year, the pharmaceutical supply chain has experienced a dynamic shift in operations amid the pandemic. Global players are challenged with the new protocols in place demanding more from shippers while navigating FDA regulations and keeping workers safe. Technology has undoubtedly played a vital role in overcoming recent challenges in the sector while supporting a custom approach for customer needs. The challenges of today are indicators of technological advancements needed for the near future in pharmaceutical goods transportation.

“COVID-19 has changed the way we fundamentally view complex supply chain ecosystems,” explains Gerry Fama, vice president, Europe Sales at BDP International. “As such, BDP’s vision for service in the pharma sector is increasingly dynamic: In a fast, and sometimes unpredictable environment, the pharmaceutical industry needs 3PL and 4PL partners who can manage new and anticipate future challenges. For this reason, BDP aspires to be a proactive partner to orchestrate the entire supply chain and to provide solutions tailored to suit customer needs.”

Fama continues, “Our engineering solution team has the ability to analyze customer needs and guide them in development projects, from the onset of the design phase to final implementation. The goal is to generate integrated solutions that allow customers to have full product visibility along the entire supply chain. Investing in technology is no longer a ‘nice to have,’ but an imperative for those who, like BDP, want to proactively anticipate the new challenges of the pharmaceutical transport and logistics market.”

Technology in today’s market must go beyond gathering data and raise the bar for preparing, transporting, maintenance and communication during each step of the process. Not every industry player will be up for the challenge, but those that do step up to the plate will position themselves in the market as leaders of change in an unpredictable environment while setting the standard for the new future in strategizing and regulation.

“In the coming years, the pharmaceutical supply chain will face new challenges that will have repercussions on all aspects of the distribution chain,” Fama says. “The new rules for the storage and transport of medicines, and the advent of serialization will condition distribution choices and logistical outsourcing strategies. The development of new commercial strategies focused on the patient, the digitalization of the channel, the adoption of the new rules for the storage and transport of medicines, together with the advent of ‘serialization,’ already require a rethinking of production and logistic processes, as well as the outsourcing choices.

“Process automation and data management using new software have proven to be successful strategies for pharmaceutical logistics management. It is essential to evaluate multiple storage and distribution solutions (automatic and digital) to operate in the drug distribution chain.”

Before changes can be implemented in transportation technology, Fama emphasizes the importance of analysis and cost when selecting logistics partners. The interesting thing about pharmaceutical transportation is the cost model originally developed by pharmaceutical companies and how this model was intended. The recent (and potential future changes) in transportation are not considered in this original model. It is imperative that transparency and up-to-date data are communicated when considering ways to modify this model to better support operations.

“The budget intended for logistics by pharmaceutical companies consists of two main cost items: warehouse (storage and preparation of goods) and transport,” Fama explains. “Given the recent regulatory developments (for example in the field of safety and conservation) and the introduction of increasingly specialized products, the weight of transport has increased in recent years, reaching about 55 percent of the overall logistics cost. This increase, inserted in a cost-saving context led by the headquarters of the main pharmaceutical companies, has not changed the average incidence on the logistics costs turnover (remained equal to about 0.5 percent) or on the profits (1 percent).

“Also, for this reason, it is essential to select a logistics partner who can assist with a detailed analysis (costs vs. benefits) before modifying any existing transport and logistics model.”

Where do regulations fit into this equation? Technology paired with pharma transportation is helpful but a tedious process in terms of compliance, depending on location and partners involved. There are ways to ensure your company’s efforts for efficient, compliant transport are on-par with regulations, such as special certifications. Not only do these certifications support the timely and safe delivery of pharma products but serve as a teaching tool for education on technical processes.

“Since 2013, the legislation, especially in air transport, has become more stringent and the European community has issued new guidelines for best practices of distributing the drug for human use (GDP),” Fama says. “These guidelines ensure that all participants involved in the pharmaceutical transport logistics chain are fully compliant. The IATA (International Air Transport Association) has created a special certification called CEIV Pharma (Center of Excellence for Independent Validators) which applies the principles of the GDP and transforms them into requirements of excellence for the air transport of pharmaceutical shipments.

“The certification aims to increase technical knowledge and increase the quality of pharmaceutical transport in the air sector and is based on the training and control by validators external to the IATA who have the task of verifying whether the companies work according to the lines GDP guide.”

Advancing technology applications in any industry requires an honest assessment of the attainability of a seamless transition. The current market challenges create more barriers for technology to become deeply integrated into all processes. Technology is not the only answer needed for improving operations–whether that be transporting pharmaceuticals or other methods of shipping within the supply chain. Costs and risks will always be a factor, regardless of the technology at hand.

“There are few sectors that can boast such a vast technological and regulatory intervention that has improved and disciplined the most intimately operational aspects on several occasions, just to name a few, the constraints on delivery deadlines, minimum availability, exclusive transport obligation, in compliance with the rules of good distribution, to the most recent provisions in terms of drug traceability,” Fama says. “New technologies support the reduction and management of risks, for complete visibility of the global distribution chain: the timely intervention of the logistics operator manages to avoid or sometimes mitigate the unexpected costs caused by an anachronistic and obsolete management of logistics and transport.”

The focus of shipping pharmaceuticals should always be to ensure the products are not compromised or delayed in getting to the patient. The patient will always be at the receiving end of the process.

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Gerry Fama, Vice President, Europe Sales, BDP International

Gerry Fama has been in the logistics and freight forwarding industry for more than 30 years. He has held various managerial roles within some of the largest multinationals in the international forwarding sector (Emery, FedEx, UPS and Panalpina). Since 2011, he has been a member of the American Chamber of Commerce. Gerry joined BDP in 2014, developing sales roles in Europe, the Middle East, Asia, North and South America. He is currently based in Milan and can be reached at gerry.fama@bdpint.com

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LOGISTICS GIANT NAVIGATES TECHNOLOGIES DISRUPTING SUPPLY CHAINS

November 2nd, 2020 Haylle Sok Leave a comment

As challenges continue to evolve, so does technology and its problem-solving capabilities. From communications to reducing inefficiencies, technology’s role in the global supply chain ultimately determines how well a variety of players can respond and recover from disruptions. As we saw throughout the first part of 2020, the COVID-19 pandemic presented a new set of disruptions and challenges impacting global markets at an unprecedented pace. More than ever before, the flexibility and scalability via technology solutions proved effective in restarting global supply chain operations. Beyond solutions, it is equally important to understand where technology can be improved and where it causes added disruption rather than resolving it.

“Technology is currently creating transparency, overall reduction of human error, and better data analytics–so better planning,” explains Guido Gries, managing director of Dachser’s Air and Sea Logistics Americas business unit. “Is it seamless? No, it is not. And there’s a lot of disruption because there is no global standard which allows feeding seamless technology that can provide online tracking connecting all partners on a global transport chain, throughout terminals, ports, container, and air transport transports, once they distribute transport or supply chain on a global scale.”

Gries continues, “Today there is a lot of disruption in a variety of forms. There is still a lot of manpower needed to work through processes and manage open interfaces. Blockchain could eventually be a technology that creates a standard, reducing manual work in the future. It is tested at the moment by various players in the market, but this will not be easy to be the future marketplace, as all transactions are taken in a closed system that does not allow changes. Especially in the maritime industry, however, it’s very traditional document exchange, contract of carriage, proof of entitlement date back more than 400 years, and certain procedures have evolved but not changed.”

With slower-adapting industries and unpredictable factors present in global trade, technology’s limitations on what can and cannot be solved are more easily recognized. There are, in fact, several challenges presented by choosing to utilize technology within the supply chain. These challenges can range from operations and integration to regulation and customer expectations and formalities.

“There are so many formats and different requests from customers on what you have to supply in terms of data with little to no standard on how to achieve it,” Gries notes. “Today, we have bits and pieces all over the place and that causes a lot of disruption in the process.”

So, how are global traders navigating this lack of standard amid current disruptions? For some, reinventing prediction analytics is the first of many steps in evaluating disruption solutions. For others, it is understanding how evergreen disruption at its core is. Disruption–as we saw with the current pandemic–takes form in a variety of challenges. The key here is utilizing what is already on-hand while developing an adaptation to the unimaginable.

“One of the main challenges is that there are so many different changes. What was possible before has been completely disrupted. For example, with air freight. Previously, we could ship air freight from every little airport to others throughout the world. But now, because they reduced their passenger flight schedule drastically, which means no passenger flights, there is no belly capacity for freight. This is a huge reduction of point-to-point capacity in the market. This means that players need to have a solid foundation in their continent while figuring out how they are going to distribute or bring the cargo to the airport.”

Beyond technology creating or solving challenges in the supply chain, it undoubtedly lacks support in domestic and international supply chains in some capacity. There will always be room for improvement, but the key to successful improvements is understanding where improvements are needed. This requires a holistic evaluation of where technology has failed or failed to create a solution. Many times, data is at the center of needed improvements. Outdated processes and a general lack of electronic communications are still creating bottlenecks within the supply chain to this very day.

“Technology solutions need to have open interfaces to translate different formats into readable data,” Gries says. “There are simply too many offerings available that do not integrate or line up with the other offerings coming from customers or partners. There is no standardization whatsoever while all this data must be supplied. That is an issue. We have bits and pieces, which is manageable, but then there are glitches in the middle because of the lack of standards.

“When you have a container arriving in a port, it’s a black box, so you don’t know where the container is. You do not know if it is standing there for three days, four days, five days, six days. This is usually relied on via an arrival notice, which is coming by email or by mail as seen 50 years ago. In some cases, there is no EDI tracker which is telling you how your container arrived and where it is positioned and when it is going to be moved. The process is not like that of Amazon. When you have a container traveling for 36 days on a vessel, there are little things you can do and track in terms of what is happening to the container such as heat, opening, etc., but it’s still limited. There are GPS tools available, but there are limitations there as well.”

It is important to note the plausibility of attaining a seamless flow of integrative data and operations. Many speculate whether it is realistic considering the variables weighing down technology advancements. If one industry is behind, how will this impact integration? Without each part of the supply chain on board to advance and integrate, it might be a while before industries are able to utilize a fully integrated system for a variety of outdated and complex challenges.

“For heavily industrialized trade links, yes, this is attainable. But if you go further, the underdeveloped countries–such as ones that can barely handle a cell phone signal–it is not as easy. This concept of global integration with tracking and the technology with a switch is a little bit of a funny idea when looked at that way. It is a nice idea but would take maybe another 10-15 years until these countries are there to address the infrastructure needed to support this type of technology. Unless you have your port providers who are investing heavily in these areas and providing the infrastructure needed, it will be some time.”

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Guido Gries, Managing Director, Air & Sea Logistics Americas, Dachser

Guido Gries was born in Germany in 1965 and completed a degree in International Freight Forwarding and Logistics. He held several managerial and executive positions with global logistics companies and led the commercial activities for one of the top three global freight forwarders. After more than 30 years of logistics and management experience in Asia, Europe and the Americas, Gries brought a solid international perspective of the transportation industry to Dachser. As the Managing Director, Air & Sea Logistics Americas, Gries oversees the business development for the whole Americas region. As part of the company’s global 2020 Growth Strategy, he is tasked with ensuring Dachser’s representation in the most important economic

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SHIPPERS ON INTERMODAL: CHANGES NEEDED FOR GROWTH OPPORTUNITIES

October 13th, 2020 Haylle Sok Leave a comment

The intermodal transportation sector is experiencing an interesting shift as of lately. The combination of disruptions from the pandemic while others are caught playing catch up to adequately refill warehouses and distribution centers has posed new questions for a variety of sector leaders. For the intermodal sector, however, a new question is present in the minds of leaders and players in this arena: What is needed to leverage opportunities for growth post-pandemic and moving forward with the “new normal” we keep hearing about?

The answer to this question is not found within one single solution or technology offering. In fact, there is no single answer at all. The perfect mix of artificial intelligence, increasing capacity and creating more visibility and agility within operations will ultimately be the key to reviving and maintenance.

The COVID-19 pandemic has challenged all parts of the supply chain, from operations and compliance to technology integration, and although many players have successfully restarted operations, it is important to consider the ways transportation has been forever impacted to better prepare for future disruptions. But in what ways has the pandemic impacted the intermodal industry? Doug Punzel, president of Celtic Intermodal, explains exactly how the pandemic has impacted the sector and how methods are shifting to accommodate continued movement.

“As COVID-19 continues to impact the supply chain and logistics across industries, some areas have limited access to trucks,” explains Punzel. “The truck shortage has increased demand for intermodal transportation. In fact, beginning the third week in April, we have begun to see surges in volume–especially in California, Texas and Mexico. We are seeing shortages of box and train capacity in some areas, as shippers with expanding needs are caught up and filling warehouses. At the same time, many markets in the United States have plenty of box, drayage and train capacity.”

Utilizing a robust technology toolbox further supports the industry, although some sectors are slower to adapt than their partners. The key to remember here is not how much tech is being used, but what challenges are solved through their implementation and how they are customizable for specific customer needs.

“AI, machine learning and other software advancements allow real-time visibility of end-to-end supply chain operations to keep a pulse on the business,” Punzel says. “The ultimate goal is to reduce risks, capture more competitive freight pricing, and identify optimal routes for the greatest cost savings.

“With today’s volatile current events that threaten to disrupt the supply chain on a regular basis, flexibility is vital for business success. For many shippers, intermodal transportation has incredible potential to be a reliable and affordable component of logistics strategy. Technology innovations are supporting real-time visibility, mitigating risks, and optimizing transportation costs.”

Celtic Intermodal, a Transplace company, offers a unique solutions portfolio for customers seeking the perfect solutions, offering flexibility and visibility while keeping an eye on the unexpected. Celtic focuses on what the customer needs are throughout the process while identifying areas of improvement both operationally and financially. The company offers customers Strategic Capacity Solutions, Door-to-Door Intermodal, 53-foot Containers, 40-foot Containers, Cross-border Intermodal and International Drayage in addition to managing more than 20,000 40-foot container shipments each year. Celtic’s robust network of steamship lines and dray provider partners further support consistent capacity to meet the needs of their global customer network.

“We implement dynamic solutions to our customers’ transportation needs by providing exceptional customer services, capacity, reliability and expertise,” Punzel says. “With access to over 70,000 containers every day and strong relationships with major rail providers, including Union Pacific, Norfolk Southern, CSX, BNSF, CN, CP, and KCS/KCSM, our dedicated account team focuses on our customers–providing the best combination of rates and routes.

“Our cross-border intermodal services bypass border-crossing issues and congestion,” he continues. “We enhance the security of customers’ shipments while reducing overall transportation spend with our door-to-door intermodal services across Canada, Mexico and the U.S.”

The unique relationship Celtic has with its Class 1 Railways network offers customers competitive options in transportation that others cannot. Punzel points out two specific pros to working with Celtic that keep shipments moving and customers satisfied.

“We are strategically located near our customers and where rail ramps are located,” he says. “We can be more effective with short-haul moves within five to 800 miles because we are closer to rail ramps. And in case of derailment or tunnel outage or another type of outage, we leverage our relationships to remain in close communications with Class 1 Railways and be more collaborative to support our customers’ needs. We conduct network analysis to help customers identify modal conversions and scale up or down with volume. With well-integrated intermodal transportation, overall shipping costs are greatly reduced.”

Punzel goes on to explain that the simplicity of scheduling is a significant factor to promoting growth for the intermodal sector. It goes directly back to predictability and the constant need for progression within the industry. The relationships developed and utilized by Celtic provides added security for customers in case of the unpredictable. This is especially important in today’s “new normal,” where measures in safety and regulation seem to change without much notice. The supply chain does not have time to stop and companies such as Celtic present solutions for issues before they happen.

“Customers with over-the-road freight are open to conversion to intermodal only if the schedule is predictable,” Punzel explains. “Over the past three years, all railroads have improved service by maintaining reliable, scheduled, on-time performance, which is key to growth.”

So, what exactly needs to occur for progression and growth within the intermodal sector? In simple terms, the perfect mix consisting of the right technology that provides accurate and timely visibility, advanced predictions analytics, integrated communications, and removing inefficiencies that create unplanned costs. This perfect mix is not as hard to attain when customers are paired with the right partners for the job. As we learned with Celtic, strategic locations and competitive offerings make a significant difference in offering the best options and supporting the bottom line.

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Doug Punzel is the president of Celtic International, to which he brought more than three decades of transportation experience. He joined Celtic in 2014 and has been instrumental in the company’s growth. Throughout his tenure in the industry, he has served in a number of roles, including sales, customer service, operations and leadership. Prior to Celtic, he was a leader within the intermodal sales division at Schneider National.

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The Importance of the Dairy Industry in 2020 With Leading Experts in the Era of COVID-19

October 9th, 2020 Haylle Sok Leave a comment

Tell our readers about the reach of the dairy industry, what they might not be aware of in terms of populations served and livelihoods supported?

Donald Moore (Executive Director of the Global Dairy Platform, which works to promote the nutrient richness of dairy products, bring balance and research to the role of milk fat in the diet and provide clarity on how dairy is managing its relationship with the environment):

In 2015, Global Dairy Platform (GDP) worked with the Food and Agriculture Organization (FAO) of the United Nations to determine just how far the dairy sector reaches, the people’s lives we impact. We all knew it was a big industry, but we didn’t know just how big.

They [the FAO] determined that there were 133 million dairy farms in the world. That’s a big number and it also conveys a lot in terms of the families that rely on the industry and the importance behind the nutrition dairy provides.

However, beyond the numbers, let’s talk scale – Based here in the U.S., we tend to think of dairy farms as reasonably large-scale, but in reality, the average dairy farm around the world hosts about three cows. Dairy farms are located in virtually every country in the world, including some small island nations and countries in the Middle East where you would assume the conditions weren’t viable for dairy, yet there they are.

There are some 600 million people living on those dairy farms around the world and if you take into account people who work upstream and downstream from the dairy farm, there’s another 400 million people whose livelihoods depend upon dairy.

We often talk about dairy as being a ‘billion-person community’, so suffice it to say, we support the livelihoods of one billion people, plus.

There are some 240 million full time jobs created by the dairy sector; of those jobs, approximately 80 million are held by women, so it’s a sector that actually has quite a large gender population balance. Of the 133 million dairy farms, 37 million are led by women. One of the things that we like to talk about is the role that dairy can play in bringing gender equality to the global agriculture and livestock sectors.

Jay Waldvogel (Senior Vice President, Strategy- Dairy Farmers of America): Around the world, annually, there are some six billion people who consume dairy. Now obviously, some consume more than others, but six billion people from a consumer perspective are aware of, are touched by, or have some relationship with dairy when it comes to their nutritional intake.

Donald Moore: Roughly ten percent of the world’s protein comes from the dairy sector. In many parts of the world, people lack protein in their diets. One of the things about the dairy sector that I admire is that it provides high-quality protein as well as many other micronutrients that are essential for healthy growth.

Margaret Munene (Co-founder of Palmhouse Dairies and a founding trustee of the Palmhouse Foundation): The Global Dairy Platform ultimately brings the global dairy sector together on a pre-competitive basis, to build evidence on dairy’s impact in a sustainable food system and significant role in the future of food. GDP membership includes more than 95 leading corporations, companies, associations, scientific bodies and other partners. GDP’s members have operations in more than 150 countries around the world and it’s important to note also, that GDP members collectively produce a third of all the world’s milk.

In times of crisis, such as this ongoing COVID-19 pandemic, we often talk about maintaining security by maintaining supply. Tell me about the security of supply pertaining to the dairy industry and its commitment to sustainable food systems…

Donald Moore: Sustainable food systems is a term very much de rigueur at the moment. We’ve been promoting the idea that you need to think about a food system in its totality. Some people started maybe six, seven years ago talking about sustainable diets. Yet diet is just one piece of the food system puzzle.

If you think about agricultural land around the world, approximately 70 percent of agricultural land is regarded as marginal land. In other words, it’s not land where you can plough and plant beans, corn, wheat, or anything else. It’s land that only becomes part of a productive food system when it’s grazed. So, the way we make that a useful contributor to the food system is by grazing it, either with dairy cows or buffalo, goat, sheep, a herd of some form. Those animals then turn that land into nutritious food that humans can consume.

In many parts of the developing world, livestock ownership can be the difference between dietary security / nutritional security and nutritional insecurity. We as a sector remain concerned about some of the discussions that go on at the moment about plants versus animals. We need to leverage all the tools that are available to secure nutrition for future generations. That includes making sure that all of this marginal land is being used as optimally as possible. Food security requires both plants AND animals.

That doesn’t mean that we as a dairy sector have not got our challenges. We recognize our sustainability challenges and have done a lot of work to improve the sustainability performance and the sustainability credentials of the dairy sector.

What is the Global Daily Platform’s approach then to this commitment to sustainability?

Jay Waldvogel: Let’s start at the very beginning when the Global Dairy Platform was created nearly 15 years ago. At that point in time, we were, fairly, being criticized for our environmental footprint. There wasn’t a lot of attention globally on it and it wasn’t that dairy farming necessarily was consciously bad, we just weren’t being as consciously good as we could have been.

Donald Moore: Since GDP’s inception, we’ve been doing a lot of work on how we improve dairy’s sustainability performance.

Together with the global dairy sector, we developed the Dairy Sustainability Framework (DSF) to track 11 strategic criteria to report on the progress dairy is making in areas such as greenhouse gas emissions, animal care, water quality, soil nutrients, among others.

The really good news is that we are seeing continuous improvement in dairy’s sustainability performance. For instance, analysis conducted by FAO found dairy’s emission intensity, or the volume of greenhouse gas emitted per kilogram of product, declined 11% from 2005-2015.

GDP has also been tackling how best we can help the developing world improve similar to, or perhaps even more so than the so-called developed world. If you think about greenhouse gasses, from here in the U.S. or in Europe, we produce roughly 1.2 to 1.4 kilograms of greenhouse gas per kilogram of dairy product produced. In parts of Africa, that’s somewhere between 12 to 18 kilograms of greenhouse gas per kilogram of product produced. So we recognize the opportunity for us to enhance the practices in the developing world and in doing so, reduce the environmental impacts of the dairy sector as a whole while improving farmer livelihoods and farm outcomes.

Margaret Munene: The dairy industry is also truly committed to taking the United Nations Sustainable Development Goals (SDGs) from theory to reality.

Clearly, when farmers have cows, they have milk, which is nutritious and provides them with Vitamin A and protein, among other impactful nutrients. From the milk those farmers sell, they now have the capital to purchase other foods. A cow also, importantly, produces manure which farmers use to fertilize their land, to produce other crops.

So, dairy farmers are often not hungry farmers. I have seen it with the many farmers I work with; they have money in their pockets. They can do many, many things, and actually have better livelihoods. Because they have money, they can take their children to school. Then they have bank accounts and from them, can acquire micro-credit loans. They can improve their herds and therefore, their lives cyclically actually become much better.

I see dairy as a very important sector, driving sustainable development in the developing world and also in the developed world.

Jay Waldvogel: We have an incredible commitment to improving collectively as an industry across numerous metrics. I think if you were to talk to the people at the UN and other agencies about how dairy is pursuing this versus other sectors, you’ll find we’re quite ahead of the curve.

It doesn’t mean we’re perfect at it. It doesn’t mean we’ve got it all solved, but we know our challenges, we know what we need to do, and we’re really actively engaged in measuring and understanding how we can get better.

How has the COVID-19 (coronavirus) pandemic impacted the operations of the global dairy sector?

Donald Moore: In some of the more developed countries, there have been challenges to our value chain because of the amount of dairy product that was previously going into food service; in restaurants, hotels, schools, etc. So, in that channel, the impact has been significant.

On the other side of the coin, however, consumer buying at a retail level had increased quite markedly. It hasn’t made up for losses in the food service area, mind you.

It is difficult for the sector to transition quickly from making 25-kilogram boxes of shredded cheese intended for the foodservice channel, for example, to putting that cheese into consumer-friendly sized packages for retail shelves.

The developing world didn’t really feel the challenge in the same way that those in the more developed world markets did. In the developing world, their challenges were probably more around transporting milk to processing facilities and so on.

Jay Waldvogel: While we had this rather painful moment immediately after COVID-19 broke out here in the U.S., today, we’re actually seeing a forward trajectory that is in fact quite positive, as people are reintroduced to dairy, reintroduced to its flexibility and nutrition and are reintroduced to the fact that there’s an awful lot of dairy products that actually taste quite good!

Margaret Munene: I think for me, COVID-19 has shown us how fragile supply chains can be within the global food system. It has spotlighted that disruption in one link can hurt many other links of the supply chain. And this is not just relegated to the dairy industry. This is, I think, applicable to all sectors for food and nutrition, including meat, fruits, and vegetables.

We run a dairy processing company in rural Kenya, for example. There, we partner with 500 small-scale farmers. Notably, 85% of those farmers are women. We collect milk, process it to make yogurt, and send that yogurt to the very high-end markets of Nairobi. However, at the moment, Nairobi’s five-star hotels and major restaurants have almost come to a standstill. And therefore there has been market disruption throughout, especially for processing companies.

But all is not lost, because we remain adaptive and very innovative. The dairy sector is well-positioned for the future because we are dealing with a product with a high nutritional value and now, more than ever, we need nutritional products like milk to boost our immune systems.

Milk is safe, it is nutritious, it is affordable, and therefore, looking into the future and past COVID-19, though there has been a disruption today, tomorrow still looks bright for the dairy industry.

Where do you envision the global dairy sector in the future?

Donald Moore: I see the dairy sector becoming more effective, more efficient.

From an industry perspective, we really see a bright future for the role that dairy plays. Milk consumption around the world continues to grow at just under two percent per annum. When you consider the size of the dairy sector, two percent is enormous growth in terms of volume.

We’re also actively involved in an initiative we call, “Dairy Nourishes Africa (‘DNA’)”. The idea behind this initiative is to use the dairy sector in such a way that we can tackle the issues of childhood malnutrition.

About 30% of children under the age of five in certain African countries suffer from malnutrition and particularly stunting and wasting. Wasting you can recover from, with appropriate intervention, but stunting is something that has very long-term effects.

Making sure that a child under the age of five has adequate nutrition and high-quality protein in their diet is extremely important to alleviate stunting. We’re looking at how we can use the dairy sector to help tackle those kinds of issues of malnutrition.

We have a series of pilots, which we’ve just literally in the last few weeks signed off on, which will happen in Tanzania and those pilots are intended to enhance the productivity of the sector, make milk more available locally, and for it to then be directed into school nutrition programs.

[To Margaret’s previous point], we are focused on the United Nations Sustainable Development Goals (SDGs) and how the dairy sector can help to address those key challenges. With regard to our ongoing collaboration with FAO, we [GDP] developed a research paper in conjunction with them 18 months ago about the impact that the dairy sector has on reducing poverty, which is SDG-1. Earlier this year, GDP again collaborated with FAO to publish a paper on SDG-2, emphasizing dairy’s role in ending hunger. And we’re in the process at the moment of preparing a paper on the impact that dairy has on disadvantaged groups; in particular, women and youth, and the role that dairy can [and already] plays in reducing inequalities.

So, there’s quite an active role that we think the dairy sector can take in helping to deliver on some of the key issues that are affecting society at large.

Jay Waldvogel: Dairy will play a lead role going forward. The question is, how big a role?

If dairy continues to improve on its environmental footprint, and I believe it will, if we can help explain to people the holistic impact dairy provides, this food system approach where you take into account, not just the impact you have environmentally, not just the nutritional benefits you bring, but those greater, critical societal issues, those economic issues, then dairy has an opportunity to remain a vital part of society going forward.

Margaret Munene: When you consider all that dairy provides, the nutrition and its health benefits, serving as a driving force for social and economic development in the process and taking into account further the progress that the sector is making in terms of reducing its impact on the planet; for me, I see the future of dairy looking extremely positive.

Dairy is a critically important sector in many ways; I really can’t imagine a future without dairy.

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ALL HAIL ATL: THERE IS A LOT TO SEE AND EXPERIENCE FIRST-HAND IN ATLANTA

September 27th, 2020 Haylle Sok Leave a comment

If you are lucky enough to find some free time while visiting Atlanta for business, get ready for some memorable experiences. Because we understand that business trips have to be paired with a little bit of pleasure, we searched some of the local hot spots in Atlanta that have a reputation for offering a good time, great eats and even greater memories to share among colleagues.

Each place listed below offers something unique and beyond the typical wine-and-dine experience. There is a lot to see when visiting the great city of Atlanta, but even more to experience first-hand. So, without further delay, here are our latest picks for your business trip getaways.

LOCKER CLUB

Because, who does not appreciate a speakeasy, especially in a new space after a long day of networking? Just hope that you find yourself in Atlanta on a Thursday-Saturday evening because this hidden gem has limited hours for tours. Located in the Old Fourth Distillery on Old Fourth Ward’s Edgewood Avenue, Locker Club offers patrons a Prohibition-style touring experience while serving up some high-quality spirits and the ideal environment for your next business trip adventure. Locker Club provides a journey through history in the region back to a time when alcohol was not so easy to come by. The Old Fourth Distillery is the first distillery to be opened in Atlanta since 1906 and takes pride in its environmentally friendly methods in creating authentic and high-quality spirits from gin and vodka to straight bourbon whiskey. A team of three (yes, three) people start from fermentation all the way down to packaging all of their vodka and gin with the help of a customized, handmade CARL copper still. It goes without saying that the small-but-mighty team here likes to do things a bit differently and has no problem sharing their unique process with the locals and visitors.

RAY’S BY THE RIVER

Part of the Ray’s Restaurants, LLC trio, Ray’s by the River not only offers award-winning eats but pairs them with scenery and an experience you are sure to remember once you unpack your suitcase back at home. Choose to sit at the newly renovated riverside pavilion and take in the matchless views of the Chattahoochee River or dine inside and experience the balmy ambiance and colorful outdoor views. While enjoying some tasty menu options such as their hand-cut steaks and surf-and-turf specialties, be sure to give one of their signature, hand-crafted cocktails a try. Missed happy hour? Not to worry because Ray’s has two for you to take advantage of. If you miss their 3:30-7 p.m. happy hour, they start it up again from 9 p.m. to closing time during the week.

WORLD OF COCA-COLA

Even if you are not a Coca-Cola drinker or are a die-hard Pepsi fan, there is something for you at the World of Coca-Cola that you can appreciate, enjoy and take with you. Beyond its fascinating history and more than 200 international artifacts throughout the Loft, your taste buds are in for a treat at the Taste It! exhibit experience offering samples of what Coca-Cola is like around the world. Curious about the history of the coveted Coca-Cola recipe? Now you can get a close-up look at the history, myths and legends, and even the origins of the recipe at the Vault. This interactive experience gives guests a hands-on experience to see exactly what it takes to create that perfect recipe and flavor with the Virtual Taste Maker. Once your taste buds have had enough, head on over to the 3-D theater and give other senses an experience with the film In Search of the Secret Formula. On your way out, stop by Bottle Works to get a peek behind the curtain of what Coca-Cola’s bottling process looks like from equipment to processing.

DELTA FLIGHT MUSEUM

The Delta Flight Museum celebrated its 25th anniversary this past May. Along with that milestone, Delta celebrated 90 years of services in the Atlanta region. Regardless of your profession, visiting the Delta Flight Museum should absolutely be on your list when visiting Atlanta. Visitors are given a tour through Delta’s rich history through the museum’s two original 1940s-era aircraft hangars and its 747 Plaza full of exhibits and factoids. When visiting the hangars, guests are given an up-close and personal view of Delta’s aircraft and history beginning in the 1920s. Interactive exhibits offer visitors more than Delta’s history, however, with its one-of-a-kind full-motion flight simulation training session. This is an experience that is sure to make your friends back home jealous as this is the only full-motion simulation available for public use in the country. If you prefer to stay in the exhibit areas, be sure to stop by the restored 1940 Douglas DC-3 and the Waco 125 biplane–it will probably be the only time you will ever see aircraft like these in person. The museum’s Waco 125 is the only one like it remaining. Trust us on this one, you do not want to miss the Delta Flight Museum.

POUR TAPROOM

Known for its “beer and wine festival every week” theme, Atlanta’s Pour Taproom is every beer and wine lover’s dream. This local hot spot is quite literally a taproom perfect for anyone seeking a unique (and delicious) experience with local craft beers and wine on tap. If you consider yourself a beer connoisseur, Pour Taproom is sure to have something you will want some more of. With regularly rotating selections and the ability to purchase by the ounce instead of the glass in a self-serve approach, your visit to the Taproom is sure to be an experience you will not find back home. Pick from a variety of craft beers ranging from IPAs, sours, darks, ciders, lights and wine while. Taking in the local scene on the relaxing and contemporary patio. Hungry? There are food options that pair nicely with whatever you choose to satisfy your beer or wine cravings. Oh, and did we mention the “Beer Me” button?

Archives, Global Logistics, Global Trade Daily, Ocean Carriers

DON’T LOOK SOLELY AT THE LARGEST SHIPS IN GLOBAL SUPPLY CHAINS

September 23rd, 2020 Haylle Sok Leave a comment

When it comes to ocean transportation, some might automatically think of massive container vessels carrying loads upon loads of cargo with ease. Vessels such as the OOCL Hong Kong, COSCO Shipping Taurus or Madrid Maersk are on the list of the largest shipping vessels across the globe. Although these and other large-scale shipping vessels significantly contribute to the movement of goods in the supply chain, there are quite a few smaller vessels and ships that are just as important and continue contributing to the transportation of goods and fulfilling other purposes for those on the water.

Our goal is to give these smaller vessels credit where it is rightfully due, all while examining their position in the ocean transportation industry and where they are headed.

REEFER SHIPS (AND CONTAINERS)

Known for being smaller in size and scale, the reefer ship serves a special purpose in transporting goods, specifically perishable goods including food and other items requiring specific cooling capabilities. The major differentiator among these ships is their unique design exclusively for transporting cold items. These ships are typically equipped with specific access points and pallets capable of holding reefer containers (usually twenty-foot TEUs). Port Technology has appropriately referred to these reefer containers as “large fridges carried by containerships.”

Among the types of cargo commonly found on one of these reefer ships, bananas are considered the most important over fruits, meats, and even blood and other expensive types of cargoes, according to Port Technology. Other items include pharmaceuticals, flowers and other perishable food varieties. Without the capabilities of these reefer ships to ensure proper temperatures are maintained during transport, many parts of the supply chain would suffer.

The reefer ship does have its competition, however. The previously mentioned “large fridges” are becoming savvier and offering more in terms of temperature variations during transport. Port Technology reports that in 2018, only eight total reefer transport specialist companies existed out of the original 20+ back in 2000. These upgraded reefer containers are cited as the main culprit of this.

BARGE VESSELS

Known for its unique “raft” appearance and functions, the barge vessel stands out by offering much more than what meets the eye. This special type of transport method requires some powering from another source, meaning it does not have its own engine to keep it moving. Although there are some self-powered barges in the modern market, the classic barge in known for relying on a tugboat to move from point A to point B successfully. The barge maintains its position for inland transportation through its environmentally friendly benefits such as reduced fuel usage while transporting more in fewer miles compared to trucks.

According to a report from the American Maritime Partnership, more than 750 million tons of cargo are moved by the famous tug-and-barge combination every year, in addition the $30 billion economic impact in America. The barge industry is not exempt from disruptions, however. Last year proved to be a difficult time for the industry due to extreme flooding and trade tensions, directly impacting the agricultural sector. The Waterways Journal reported that 19.8 million acres went without planting in 2019 due to flooding.

“While some freight rates have appreciated, we still face downward pressure in agricultural and coal markets that need significant improvements in demand before the barge industry can realize a true recovery from what we have seen in the last three to four years,” commented Mark Knoy, president and CEO of American Commercial Barge Line (ACBL) in the report.

TUGS

Think of tugs (or tugboats) as a “part two” of the barge vessel. The tug holds its own in the maritime world, however, and is not solely confined to pulling the barge in its lifetime on the water. Whether it is an ocean, sea, rescue or harbor tug, these much smaller helpers on the water work alongside non-powered vessels or other watercraft, including some sizeable ships that needs assistance when in trouble.

These small-but-mighty supporters have a decent range of displacement anywhere from 300 to 1,000 tons, depending on which type (ocean, rescue, harbor). Large tugs are of great importance to global navies. One of the largest of these types of tugs is the Russian Navy’s Vsevolod Bobrov, which boasts a 9,700-ton displacement and the ability to break ice when needed.

CHEMICAL TANKERS

Think of these tankers as the hazmat vessels of the maritime shipping world. Ranging from S1, S2 and S3 rankings of ships, the chemical tankers on the ocean vary in degrees of safety measures based on the types of chemicals onboard and their requirements outlined by the International Bulk Chemical Code (IBC). These tankers vary in size but are typically anywhere from 5,000 dwt all the way up to 50,000 dwt, although the larger tankers are not as frequently seen. These ships come equipped with individual deep well pumps, pipelines and other systems to ensure minimum risk of exposure and potential contamination.

Chemical tankers are a different breed of ships as they come with an increased set of risks from the liquids they transport. Among common risks, cargo compatibility, cargo spillage, toxicity and flammability all pose potential problems for those onboard and the environment. Compliance simply cannot be subpar in efforts when it comes to transporting chemicals and leading chemical carriers such as Odfjell Tankers, Fairfield Chemical Carriers, and B+H Shipping continue to make waves in the transport of chemicals and other related liquids across the globe.

These are just a few of the various types of watercraft supporting the global supply chain. Without these ships guiding the way, many of the things needed to keep domestic and global economies afloat would not be as easily accessible, transportable, or available. As containerships and other mega-vessels continue to challenge the ocean shipping landscape, it is important to consider the ways these smaller ocean vessels and ships can transform to better meet market demands while supporting sustainable operations. At this point in time, these smaller players in ocean shipping are here to stay.

3pls, Archives, Global Logistics, Global Trade Daily

Automation Trends and Challenges in Transporting Dangerous Goods

September 11th, 2020 Haylle Sok Leave a comment

In just about every moving part of shipping logistics in the modern trading landscape, automation in some form or capacity is present or in the works to better support operations. From robotics to drones to autonomous vehicles, technology innovation is changing the way logistics operates, one bleep at a time. But when it comes to the transport of dangerous goods, there are factors present that create more of a danger when paired with innovation, creating more of a need for risk mitigation measures. The safety and compliance efforts going into transporting goods (particularly if they are dangerous goods) should always be just as important as the level of efficiency of the transportation process.

Drones, for example, continue making news headlines in logistics-focused transportation. Not only do drones provide an emissions-free, congestion-free and cost-effective alternative, but they also provide a new method of competitive positioning, according to Navigant Research. Pharmaceuticals have successfully been delivered utilizing this method of transportation in the last year. UPS is among the big names reinventing the way healthcare logistics is approached after the company announced its new drone logistics partnership with AmerisourceBergen, a pharmaceutical distributor.

“Delivery bots, RDVs and drones are set to displace millions of truck and van deliveries over the next decade, as they are far smaller, more flexible, lower in cost, and naturally suitable for automation and electrification,” says Ryan Citron, senior research analyst at Navigant Research, in a release earlier this year. “These technologies are expected to make last-mile logistics (LML) more efficient and sustainable, while also transforming local commerce and user experience through new business models such as on-demand store-hailing.”

While this is great news for some of the goods transported on a daily basis, drones are not exactly a realistic solution for the case of dangerous goods, at least for the time being in transportation and innovation regulation. That is when the conversation of autonomous vehicles comes in.

When transporting dangerous goods on wheels, what role does the autonomous vehicle fulfill? Let us start with what could go wrong with transporting dangerous goods. In an interesting evaluation of this process, Occupational Health and Safety released an in-depth article outlining the potential risks associated with ground transportation of dangerous goods. These risks included collisions and accidents, emergency response measures, loading and unloading, and the measures taken to properly secure such materials after loading for the ride. In all of these examples given by OHS, a physical driver is needed in some form or capacity, and not just any driver, but a trained hazmat employee. Without the properly trained employees or advances in technology to ensure compliance is met, a physical employee will need to be present for the majority of the “autonomous” vehicle experience, even if that employee isn’t the one doing the driving.

Another important thing to remember when merging technology and the transport of dangerous goods is their compatibility with other important–and vital–parts of the process. In a recent blog from Labelmaster, the concept of a solid data foundation is explained as a key part of a three-pillar system. The company’s VP of Software & Customer Success, Mario Sagastume, reiterates that when one of these pillars is off, the others follow suit.

Technology innovation does not always equal fancy robotics or massive automation takeovers. In some cases, it boils down to a clear set of data that provides a clear view of the big picture while identifying bottlenecks, risks and a lack of resources. It is important to consider the basics of technology before diving into complex solutions. After all, dangerous goods shipping is already a challenge. You want to simplify and support the process, not overcomplicate it. Solutions such as Labelmaster’s hazmat shipping software solution, DGIS, is an example of how data and technology work together for success in hazardous shipping processes.

Whether you’re transporting dangerous goods by sea, road, rail or air, one common element is ever-present: the human factor. This factor is identified in several studies as one of the main culprits of risk when evaluating potential issues in transporting dangerous goods. One specific study conducted by Jelizaveta Janno and Ott Koppel from Tallinn University of Technology, School of Engineering, Estonia, states that, “…the risk of DGT is strongly related to a human factor as all decisions, processes and procedures within a transportation chain are made by different parties involved.”

The authors explain that every part of the transportation process of these dangerous goods involve the human factor in some capacity, as seen with the previous point of autonomous vehicles and the required human presence for parts of the process.

This brings the conversation to the topic of adequate training. With all the technology, innovation and automation in the world, the human factor will almost always be present. This is not a bad thing, it is a wakeup call that technology cannot fix what thorough training, education and accountability can.

In another blog from Labelmaster, survey results from the annual Dangerous Goods Symposium revealed that the complex nature of hazmat and dangerous goods regulations, along with lack of robust education efforts, are causing headaches for a variety of shippers in the supply chain. One survey responder specifically cited the need for curriculum specific to the dangerous goods arena of supply-chain management.

Training and education (on regulations and operations) must be held to a higher standard for those filling positions in the supply chain, but especially for those handling dangerous goods at every level. Without this imperative part of the equation, technology and innovation efforts will be compromised. The investment must start with the employees and with leadership.

Before investing heavily in the next technology solution on the market, look carefully at the internal processes first. Take an honest inventory of how compliance is managed, how paperwork is processed, and the quality of employee communications. Recall the example from the experts at Labelmaster: Technology is a part of the bigger picture. When one pillar is impacted, they are all impacted.

3pls, Archives, Global Logistics, Global Trade Daily, News

Here’s How Dachser Peru Continues Operations Despite the Pandemic

August 24th, 2020 Haylle Sok Leave a comment

Dachser Peru recently announced the successful transportation of two 180-ton locomotives from the Port of Houston to the customer’s Lima facility, further supporting advancements in the region’s railroad infrastructure efforts. Amid the challenges presented by the heavy-lift cargo project, Dachser continues to demonstrate its methods of meticulous and successful planning to keeping customers satisfied while fostering economic growth across the globe. Global Trade had the opportunity to speak with Eduardo Rey, Managing Director at Dachser Peru, on this success and how Dachser is keeping operations going during a global pandemic through careful planning and the use of technology solutions.

Let’s talk about special measures that were taken to successfully transport the two 180-ton locomotives from Port of Houston to Lima, Peru. How did these measures differ from regular methods of transportation?

To move the two locomotives as we did was a special task, indeed. These special tasks require a very detailed plan if you want a successful story. What we did is we took not only one, but several measures in order to ensure success. First, it was the right selection of our service partners. That’s always a priority we require to perform our job well. We ensure to work with reliable companies that are not necessarily the cheapest one, but the ones who offer secure operations. For us, security, especially in these times, is most important.

Secondly, we executed a very detailed plan for the transport itself. We oversaw the big picture plan from the arrival of the locomotives into the port of Houston until the end delivery in a place in Lima, Peru. We were responsible for the whole service from start to finish. While executing this very detailed plan, we considered all the possible challenges that may occur in the process. We always have a plan B. For heavy cargos like this, logistics is not a paper issue. It requires in-depth involvement in the operations. Communication is key and coordination within the processes needs to be very well planned. That’s exactly what we did.

How about the role of technology in the transport of these locomotives? Do you see it changing future processes?

Well, technology in our times is something that needs to be on top of all our activities. Last generation’s equipment has been used for these transports, especially during the last phase of the loco transportation to the final destination in Callao in Peru. A last generation heavy hauler was used to move these units where they were directly discharged from the vessel into the units and transported through the streets of Callao.

There were a lot of air cables, electricity and phone cables by the streets that required us to take care of all the height concerns of the locomotives in order not to cross or to destroy it. Again, it was a very detailed plan. In the end, it arrived at the final destination and discharged over the railroad tracks using 400 cranes, last generation as well. Technology is always on top of our activities.

How is Dachser currently navigating logistics and limitations presented by the pandemic? Has anything really changed?

Dachser is one of the largest worldwide logistic providers. During the pandemic, we have been one of the most active companies around the world. Indeed, our own airfreight charters has been great support for several countries. In Peru, a clear demonstration has been the heavy cargos transport, of course. Despite the legal restrictions due to the pandemic and all the security and safety protocols we followed, we were able to proceed this way. Dachser is acting with full responsibility, following the security procedures and the country regulations in every country we operate in. We are in the logistics business and logistics never stops, even though most of us are working from home. Yes, there are indeed limitations, but nevertheless we are able to ensure a class A logistics service.

How is the company preparing to further support rail infrastructure projects in the future?

Well, having done this latest move demonstrates our full capabilities to organize logistics for appropriate cargoes. Dachser is ready for future opportunities, of course, not only in the rail industry, but for any other industry that supports the infrastructure development in Peru. In our country, we have an infrastructure deficit in roads, ports, airports, etc. Considering the worldwide Dachser network, we are fully prepared to support these developments. To give you an example, we got a call the other day from the ministry of health in Peru because they were trying to move some special equipment for oxygen production. There are so many hospitals that have a need for more oxygen. We are always alert for those kinds of requirements and opportunities.

Dachser is well known in the local market for the perishables export for all its logistics. For example, we have a very well-known and prepared staff of people giving 24/7 service for the exports of fruits and vegetables. In Peru, those products are the main non-traditional exports from the country. That means that our service portfolio is not only focused on one specific industry like projects or trains, but it is actively bringing the best quality for logistics services. Looking at what is most important for us which is our customers’ full satisfaction.

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Mr. Eduardo Rey was born in 1964 in Lima, Peru. He attended the University Ricardo Palma, where he studied architecture.

It was later, through his working experience, that he discovered his true vocation: the logistics industry.

He quickly understood that, in order to get a better sense of the work he was so passionate about, he needs to further his studies, so in 1987 he obtained a post-graduate degree in Foreign Trade and did other various courses related to air and cargo and in 1999 he completed an MBA.

Mr. Rey started his career within the industry as an Export Manager for a trading company that specialized in hydro-biological products. Ever since, he has been working in the forwarding business, for more than 27 years now and to today, he still feels as passionate about his work and the world of transportation, as he was when he started in this domain.

In 2003, he took on an offer to become the General Manager of a local Peruvian freight forwarder and soon was promoted to the role of Managing Director.

It was in 2016 when Mr. Rey was appointed as Managing Director for DACHSER Peru and he brought his extensive experience and deep knowledge of the industry both locally and globally to the company.

Mr. Rey appreciates his initial architectural studies and feels that they are helping him in his every day work and provide him with the organized mind of an architect, when dealing with the daily operations of the company and his team.

Archives, Global Logistics, Global Trade Daily, Stories

COVID-19 PANDEMIC FORCES INDUSTRIES TO RE-THINK GLOBAL SUPPLY CHAINS

August 10th, 2020 Haylle Sok Leave a comment

As COVID-19 continues to dominate news headlines, American cities and international businesses are showing their true colors. From innovation in recovery to redrawing the predictions model businesses have adhered to for years, the health and economic crisis has done much more than disrupt the supply chain and logistics sectors. Despite the challenges, the process of recovery has been maximized by thinking outside the box and utilizing resources available to extend a helping hand. Dozens upon dozens of alcohol distilleries across the nation have switched production to meet the demand for hand sanitizer—to the point that the Distilled Spirits Council of the United States created its COVID-19 Hand Sanitizer Connection Portal as a dedicated resource for American distillers looking to join the efforts. General Motors announced its participation in joining forces to combat COVID-19 in April by kickstarting the production of face masks at the auto giant’s Warren, Michigan, and China facilities, thanks to a joint venture through SAIC-GM-Wuling.

If this pandemic has taught us anything, it is the importance of adaptability and what the true definition of agility looks like. Although the above companies proved prepared and agile enough to weather the storm, other companies and the American economy were not.

“Though the concept of supply chain readiness is not new, that does not mean it always has been practiced correctly,” explains Ron Leibman, head of McCarter & English’s Transportation, Logistics & Supply Chain Management practice. “Companies must begin now, if they are not doing so already, to test their business continuity plans, with a goal of identifying and correcting weaknesses in the supply chain and updating their plans to avoid future out-of-stock situations.”

Leibman points to a recent Institute for Supply Management survey that showed 75 percent of the companies surveyed had been affected by COVID-19, yet 44 percent of those companies had no plan in place to deal with that type of disruption.

Supply and demand have also shifted, creating a new set of challenges for domestic and international supply chain players. Products such as toilet paper, medical supplies, and grocery meats have seen a spike in demand since the pandemic reached the United States. These and other consumer trends have defined a new wave of purchasing habits that have essentially redefined what effective production looks like.

“Few could have predicted the run on toilet paper that occurred early in the pandemic, or the meat shortage that seems to be occurring today,” Leibman says. “Regardless of how this demand plays out, manufacturers will certainly need to be able produce and modify production to meet the needs of the economy and support customers/consumers through the enhanced use of ecommerce platforms and automated processes to minimize turnaround time. Now, rather than having a business ecosystem that prizes vendor-managed inventory, the reduction of inventory holding costs, and just-in-time delivery, manufacturers may have to re-gauge their production cycles and capabilities to meet their customers’ new purchasing patterns, which could include the use of forward inventories and safety stocks and perhaps larger replenishment volumes.”

The COVID-19 pandemic has revealed a lot about the current state of the global supply chain to the same degree that it challenged traditional predictive risk models. The fact of the matter is that business continuity and risk assessment going forward will not be the same–at least for a while.

“Countless industries are saying that they used to be so good at prediction, and now all their prediction models are out the window,” explains Marc Busch, a Business Diplomacy professor at Georgetown University. “This will require learning, and the question is how long will that learning take and how much will businesses invest in it? One way or another, the ‘new normal’ is going to have to be diagnosed. Market factors need to be considered. The ability to digitally gain enough information and predictive power to handle demand or supply shocks is paramount in moving forward and recovering.”

New challenges will arise as global traders determine the next steps in sourcing and site selection as well. What will make sense in the near future to better predict disruption management is an inevitable conversation.

“In moments of crisis, there’s an opportunity for businesses to reevaluate how they’ve been operating,” Busch says. “New entrants into well-formed supply chains may find that this is precisely the moment to pitch themselves to those companies that want to diversify, but aren’t yet willing to start shuffling assets around the world (i.e. out of China). This was the case in the financial crisis and it’s likely to be an opportunity soon again. There’s going to be a lot of new discoveries and the question is: Who is going to be learning.”

As this story was being published, retail stores and restaurants had just started the process of reopening and allowing customers back into their establishments. For many, customers are still required to wear face masks and maintain social distancing while capacity limits are cut in half if not more. The relief is found through the restarting of local business operations; however, it’s a slow and steady process that requires the support of customers to kickstart our economy once again. This kickstarting means rehires for business owners and working again for the countless people who lost their only source of income amid COVID-19.

“There is no doubt that people are eager to return to usual practices,” Busch says. “Some of the ways in which we collect our goods are going to forever be different. Businesses will have to learn like the rest of us. The new etiquette in business—the way in which services and goods are sold—will depend on how quickly and how fully we all come to grips with the new normal, and there are bound to be surprises. It is going to be difficult to determine how businesses should best try to rejuvenate trust and coax people into something like their usual consumption patterns.”

Retailers, restaurants, and entertainment venues aren’t the only ones that experienced unprecedented shifts, however. Amid the COVID-19 pandemic and the economic chaos, crude oil prices plummeted to negative numbers spurred by the significant drop in global demand. Although the market is now back to what we are used to (for the most part), regulations remain a big part of the foreseeable future in navigating such disruptions.

“On the trade side, for now, the industry should expect status quo for the immediate future,” explains David McCullough, partner in the Energy & Infrastructure practice group at the New York office of Eversheds Sutherland (US) LLP. “If there is to be another price shock where physical crude oil prices go negative or very low, we will see a real push for measures such as the waiver of the Renewable Fuel Standard (RFS), the waiver of the Jones Act and imposing crude oil and potentially refined product import restrictions specifically on non-North American sources.”

Opposite of what brick-and-mortar retailers experienced, the oil industry was not nearly as caught off-guard. In fact, according to McCullough, the majority was prepared. “There were anticipations of crude prices going negative and there were negative pricing clauses built into contracts for this reason,” he explains. “When this instance occurred, several large players were prepared. The situation was largely focused on a few players that got squeezed in the market. On the refined product side of the market, there are a few sectors that still do not seem to fully appreciate the demand destruction that has occurred and the ramifications of this demand destruction. For example, there will be significantly less demand for environmental credits under the Renewable Fuel Standard and California Low Carbon Fuel Standard. Despite this, we are still seeing the environmental credits remaining relatively robust. The market may not be fully understanding that the massive drop-off in demand for gasoline and diesel will also result in a drop-off in demand for these environmental credits.”

It boils down to visibility while clearly understanding and predicting market disruptions. As mentioned previously, the ways in which business is conducted have been changed drastically (for any industry, really). This change does not have to be met with complete failure, but it must be met with resilience through the utilization of the tools already available to us. Unlike past pandemics, modern businesses have a robust technology toolbox readily deployable. Virus or no virus, technology provides more opportunity now than it has ever before for all of us impacted by COVID-19. Technology is the critical and obvious part of the equation. Technology can support all parts of the supply chain from production and distribution to consumers and the economy. Those that tap into its potential will undoubtedly be among those that recover successfully.

“When shippers, retailers and supply chain professionals fail to understand and embrace the importance of digitization in the supply chain, it shines a spotlight on the weak points of the industry,” states Glenn Jones, GVP Products at Blume Global. “This has been abundantly clear over the past several months and forced the accelerated digitization of the industry, which traditionally has been slow to adopt new technologies.”

Jones points to a recent survey in which 67 percent of shipping and freight professionals vowed to invest in new supply chain technologies due to the pandemic. “To remain competitive, organizations need digitally empowered logistics platforms that leverage data to make informed decisions quickly,” he says. “Companies need to expect the unexpected. We can anticipate a significant disruption to the supply chain almost every year, we just do not know what that disruption will be. What is critical is being prepared for that disruption, and a digitized supply chain operation is your best chance for responding quickly to what your customers need, when they need it.”

So, what have we learned? Are the lessons of COVID-19 rooted in the technology we already possess? For some, the answer will be yes while for others, proactivity and prediction will serve as major differentiators in recovery and rebuilding the nation’s economy.

“The impact of COVID-19 on the supply chain, and the world, underscores the importance of collaboration amongst colleagues, partners and with customers,” Jones concludes. “The on-demand needs of current supply chains will lead to an increase in digital supply chain platforms. These platforms will enable companies to scale up or down based on demand. This will be made possible by large networks of carrier partners across all modes of transportation providing intel in real time. A digitally empowered adaptive/flexible responsive logistics platform that leverages a global carrier network will enable companies to quickly move to alternate suppliers in other regions when needed and provide better data across multiple resources, ensuring companies can make informed decisions at every mode and along every mile—no matter the crisis.”

Each step of the recovery process will be a testament to our humanity and exactly how willing we are to support each other and the economy in times of crisis. COVID-19 continues to test our limits, our grit, and our tenacity on an international scale.

It is a testament to how much we appreciate those who protect us and continue to work on the frontlines for those who are sick, while others continue working to keep the supply chain moving. All of these workers are essential—farmers, supply chain managers, truckers, grocery workers, first responders, IT professionals, business owners, and beyond. We are all connected in some form or capacity and have been throughout this crisis. How we come out of this crisis will be the real determination of the economic future.

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David McCullough, a Partner at Eversheds Sutherland, counsels producers, refiners, commodity traders and distributors on the production, trade and movement of energy commodities, particularly crude oil, petroleum products and renewable fuels.

Glenn Jones, GVP Products at Blume Global, has a proven track record of growing businesses by building and leading product management/marketing and R&D organizations to define, develop, position, and sell highly innovative and high-value enterprise solutions delivered in the cloud. He was formerly the COO of Sweetbridge and the CTO of Steelwedge Software. He also held leadership positions at several other companies, including Elementum and E2Open.

Ron Leibman is head of McCarter & English’s Transportation, Logistics & Supply Chain Management practice. A respected leader in supply chain law with more than 40 years of experience, he brings valuable industry insights with prior experience as a senior logistics executive at Wakefern Food Corp. (ShopRite Supermarkets) and home-furnishing retailer Fortunoff’s. He is a member of Syracuse University’s Supply Chain Advisory Board at the Whitman School of Management.

Marc L. Busch is the Karl F. Landegger Professor of International Business Diplomacy at the Edmund A. Walsh School of Foreign Service at Georgetown University and a nonresident senior fellow in the Atlantic Council.

Archives, Global Trade Daily, International Trade

Taiwan Takes Business Back: Examining the Shifting Landscape and What it Means for International Trade

July 21st, 2020 Haylle Sok Leave a comment

In an exclusive Q&A with Dr. Richard Thurston – former Senior Vice President at Taiwan Semiconductor Manufacturing Company, Ltd, and “Of Counsel” with Duane Morris, LLP in New York, we take a closer look at the current international trade climate as Taiwan’s efforts to re-shore impact current trade relations while exposing a significant need for bilateral trade agreements and the need to improve opportunities in workforce development. Dr. Thurston walks us through what to expect in the near future as Taiwan takes businesses back from China.

What major advantages are gained by Taiwan reshoring? What risks are associated with this move?

Dr. Thurston: There are several main drivers behind Taiwan’s reshoring of Taiwan businesses from China. First, U.S. geopolitical issues, such as Taiwan companies avoiding US tariffs on China-originated products. Taiwan companies are facing a lot of pressure there.

Second, the protection of the supply chain, not just the supply chain for Taiwan’s consumer product companies, but that of other companies such as Apple, Google, and the whole range of high-tech companies. Thirdly, avoidance of both U.S. criticism, and, more importantly, of potential. U.S. penalties, fines, exclusion orders, etc., relating to possible export control violations. Finally, the Huawei issue. Overall, the challenges are much broader than trade secret protection, driven by U.S. desire to keep actual products incorporating certain advanced technologies from getting into the hands of China’s People’s Liberation Army.

Those factors, along with growing demands for international diversification, are complimented by Taiwan’s corporate concerns over ongoing health, safety, and welfare of their staff and managers working in China. One other motivation of Taiwan’s Government is to bring back to Taiwan experienced talent that had left over the last decade (which had created a great hollowing out of Taiwan’s technological and other capabilities).

On that last point, do you see a reverse effect happening in the workforce going back to Taiwan and aiming efforts on workforce development for the tech industry, or are you anticipating a completely different landscape overall?

Dr. Thurston: Previously, a much different environment existed, where there were two key drivers behind the movement to China that started when President Ma Ying-jeou took over the political reigns. One of the key factors he had in mind was to access the sizable but elusive China market. The Taiwan market of 24 million people is not large enough by itself, to sustain market growth driven by technological innovation. Second, access to talented human capital. A serious Taiwan problem exists because the STEM (science, technology, engineering, and math) talent pool has continued to dry up in Taiwan. This has been a huge issue faced by TSMC and other technology-driven companies. So, President Ma wanted to access a culturally comparable talent pool as well as to lower costs for land and raw material supply. Finally, the KMT wanted to use Taiwan’s trade and investment in China to neutralize China’s threat against Taiwan independence.

How can Taiwan continue dominating the IP (intellectual property) sector by reshoring? And does this have any impact on its current practice?

Dr. Thurston: Taiwan has had a lot of difficulties in the IP area, and part of it is related to what I just talked about, the significant decline in the STEM talent pool. If you look for other issues, a major one is that Taiwan (because of its political position arising from China’s position against them) is not a member of WIPO (World Intellectual Property Organization), and is not a participant in the Patent Cooperation Treaty (PCT) and therefore, there are significant barriers against becoming a predominant IP source.

But more importantly, with the exception of a few companies like TSMC, most Taiwan companies continue to operate in the mindset of OEM and ODM companies. That mindset focuses on a slim profit margin. Therefore, they do not truly incorporate intellectual property into their overall strategy because it is expensive to promote and protect IP.

This is very relevant for many companies, especially in some of the new sectors, such as biomedicine, aerospace, clean energy, Big Data and AI labs. For example, Taiwan companies are still reluctant to establish a robust trade secret program. Although the Taiwan government has done a lot for enacting trade secret laws and litigation in its courts, many companies take inadequate measures to protect this most important IP asset and thereby, diluting its IP leadership. While there has been improvement, it has been slow because IP is still not viewed as a key to profitability. The government has been trying to improve that attitude in its companies through its intellectual property laws, so we will see. For now, I think the lack of sufficient and sustainable STEM talent, which affects directly leading-edge creativity and innovation, is a core challenge.

Taiwan is extremely important to the U.S., both commercially, with respect to its supply chain, and defensively, with respect to maintain open and safe sea and air links. What is further of concern is that the U.S. still does not have a bilateral trade agreement with Taiwan. This limits the ability of the free flow of information, business, and protections to Taiwan businesses and U.S. businesses operating in and with Taiwan.

During 2019, Taiwan’s efforts to attract its businesses back to Taiwan, and the short-term assistance it is providing to respective land acquisition and operational subsidies, has generated 160 new projects. Companies have most definitely returned from China to Taiwan. But, the question remains: is that sustainable? That issue will hurt Taiwan along with the declining birth rate out there. The innovation advantage that Taiwan has had in the past may well be limited in the years ahead unless Taiwan shores up its bilateral trade and investment relations with the U.S.

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Richard L. Thurston, Ph.D. is Of Counsel at international law firm Duane Morris where he practices in the area of intellectual property law from its New York and Taipei offices. Prior to joining Duane Morris, Dr. Thurston was Senior Vice President and General Counsel of Taiwan Semiconductor Manufacturing Company, Ltd., where he was also Chief Proprietary Information Officer (Trade Secrets) and Corporate Compliance Officer.

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