INCORPORATING COLD CHAIN
NEWS
Supply chain planning for unexpected changes By Maersk
Shifts in demand and supply is no new trend . Fluctuations are likely to happen with changes realigning over periods of time .
Given that , however , sometimes , these shifts can result in a skewed supply and demand situation , leaving companies reeling with surplus supply , pricing insecurity and instability . But what can companies , especially those dealing with perishable produce that must be transported in climatecontrolled conditions , do ? Produce such as this cannot just be stored for when the market shifts again , resulting in waste and loss of profits .
A SURPLUS OF BANANAS Over the last 10 years , the banana market has started to develop a surplus of produce . Whilst markets such as Eastern Europe and the Middle East have been expanding the demand for bananas and have increased consumption overall , the current geopolitical situation in Eastern Europe has resulted in a large quantity of bananas no longer reaching a market .
Much of the excess fruit comes from Ecuador , Costa Rica and Colombia .
Action to mitigate this surplus has been sought ; new markets were explored through seeing if the excess could be unloaded to markets in North America , but despite lowering prices on the produce , logistics cost still outweighed the cost of fruit from Central America and Mexico .
According to data from the Association of Banana Exporters of Ecuador ( AEBE ), during the first five weeks of the conflict in Eastern Europe , losses totalled around USD27.52-million .
Maersk
Solutions may not be where they are expected and innovation and knowledge of innovation is needed in problem solving , such as oversupply in global markets .
Due to the situation , banana growers in El Oro , Guayas and Los Rios in Ecuador blocked roads in April to draw attention to the depressions in banana pricing , with many not seeing a solution in sight for the excess .
SLICING THE PORK Across the pond , the UK faced its “ biggest crisis ” in at least 25 years in February of this year . The national farmers union stated that 40 000 pigs had been culled and discarded due to a lack of butchers .
Due to that shortage of skills in the country , with approximately 10 000 butchers down , much of the livestock was not able to be butchered and prepped as expected , and farmers were left with the choice of either continuing to feed the surplus livestock or cull it .
Neither were favourable options for farmers .
The problem was partially linked to the pandemic , which had caused markets with high pork consumption like China , to dry up temporarily . This led to many butchers being laid off , with many of those opting to return to their home countries . When butchers were once again needed , bureaucracy resulted in long wait times and heavy paperwork , and butchers were not able to arrive in the UK as hoped .
AVOCADO MOUNDS In Queensland , Australia , avocado farmers are having to dump perfectly fine and ripe avocados , despite the highest food price inflation in years , to avoid losing profits .
Reasonings for discarding the fruit include demand plummeting during pandemic lockdowns , floods in Queensland and New South Wales resulting in disruption in the market and overproduction in response to avocado trends .
While the solution may seem to be hiking prices up , farmers say that won ’ t change the situation . The cost of packing and moving the fruit outweighs “ reasonable ” price increases , and as such , just isn ’ t worth it to producers .
SUPPLY CHAIN PLANNING AND SOLUTIONS
While no one can foretell the future , there are ways to create further resilience and agility in supply chains . Working with an integrated endto-end logistics partner that has full overview of the global market means they can guide and share knowledge on developments in other fields , as well as help open routes to markets that previously weren ’ t accessible .
Technology advancement can also ensure that produce that is transported in reefer containers is ripened to fit the market it arrives to , such as in the case of bananas being sent to new markets , where costs can be higher and profits can indeed be found .
Often , solutions may not be where we expect them , and innovation is needed for problem solving . Having end-to-end visibility is important , allowing you to build and accommodate possible issues early on , so you can react quicker , making decision based on data versus time .
An integrated provider today can connect unexpected partners , bring about innovation and act as a necessary link in the chain in the ever-changing landscapes . With business growth top of mind companies are now being forced to rethink and reassess their methods , habits and overall systems . You have to ask yourself - what does your next step look like ? CLA
COLD LINK AFRICA • July / August 2022 www . coldlinkafrica . co . za 9