The Actual Enterprise Value of Broken Packages in Meals Logistics

As complicated as supply chains already are, food supply chains can be even more so as they involve condition management across the cold chain. The demand for timely and reliable food & beverage (F&B) shipping options is high because the need for edibles never stops; even during a pandemic; the consumer cannot cease to search for fresh produce and food items. When transporting food & beverages, the items being shipped are not just time-sensitive, but also condition-sensitive. Manufacturers and shippers responsible for transporting food items are responsible to ensure quality and authenticity to meet food safety guidelines. Meeting such quality standards needs strict supervision at every stage, while at warehouses or at vendor facilities and in transit.
Every time your consignment does not reach its destination in the right condition, you’re not just losing a truckload, you’re also incurring a lot of additional costs, some of which are easily visible, but most of which are hidden.
What Are the Costs Associated with Damaged Packages?
1. Product Replacement Costs:
Such costs occur when the product arrives in a damaged condition, mostly due to temperature and other condition excursions. The cost of replacement includes re-packaging and return freight costs as well. In addition to this, the time and effort spent on filling out insurance claims, repackaging, and reshipping the replacements add lost productivity.
For example, imagine shipping a consignment of aerated drinks worth $1 million out of which packages worth $100,000 are spoiled due to temperature excursion. The cost of replacement could include the costs of re-packaging and re-shipping for an FTL shipment, the financial impact of which totals to a lot more than the original value of the spoiled packages.
2. Freight Claim Co-Pays:
Even if you claim insurance, you will typically pay about 10% in co-pays amounting to $10,000 in the above example, which could be as much as or even more than the shipping cost. Further, the more such claims arise, the higher the insurance premiums get over time.
3. Replenishment Freight Costs:
Of course, there is the cost of re-shipping, but things such as inventory shortfall or the urgent need for new packaging material custom to your shipment could increase the cost you would normally pay to re-produce, re-package, and re-ship. When you add the cost of inspecting returned packages, the storage or disposal of the returned units, warehouse space and other utilities, the opportunity cost of the warehouse space, and the cost for expedited transportation (typically done by air or by booking a FTL for an LTL consignment), you may even end up paying twice or thrice the standard shipment amount for that lane.

1. Customer Dissatisfaction:
If your brand is constantly out of stock, your customers would rather fulfill their requirements with a competitor’s product than stay loyal and wait for your brand to be available. Receiving damaged products, especially when that means receiving spoiled food products and risking the health hazards that it can cause, ultimately affects your customers’ future buying decisions permanently.
2. Lost Dealer Loyalty:
When a dealer discovers that your package arrives damaged, they’ll try and restock competitors’ products on the shelf to meet short-term market demand than facing a stockout and losing their revenues. Worse still, with such cases happening more frequently, your dealers may lose faith in your commitments and strengthen their business with a competitor.
3. Lost Sales/Restocking:
As an obvious result of damaged customer relationships and dealer loyalty, your future sales could be hit if some quick damage control isn’t done.For example, a large chocolate manufacturer in Asia faced a drastic fall in its sales volume during that year’s festive season. The underlying reason was found out to be improper packaging. It took the company 6 months to rebuild the brand image and restore customer, dealer, and even employee faith, which cost a lot more than the actual logistics and product cost.Imagine that happening to your brand; a damage repair plan can be a lot more expensive in the long run than better packaging and a precautionary approach.
4. Administration Costs:
If a shipment arrives on time but not in full, a lot is spent to have it rectified, dealing with an angry dealer, coordinating from which place to move the additional inventory to satisfy the dealer, coordinating transportation, and getting approvals to expedite the re-shipment. Lost productivity makes for a big part of administration costs.Lost Productivity — Imagine that a logistics personnel’s hourly cost is approximately $38 per hour. You lose $304 a day (hourly cost x daily workhours assumed to be 8 hours) per person involved. Not just this, you also have them defocused from their primary work for damage control. Imagine having 20 such escalations in a week. You lose $6,080 every week, $24,320 every month, and $291,840, that is much more than a quarter-million dollars a year just to handle damaged packages!
In Summary…
If you’re a food and beverage supply chain professional, most of your in-transit damage could cost you much more than you would realize. That’s because you can’t possibly account for every cost in monetary terms, especially the loss of customer relationships, dealer loyalty, and cascading delays. While most of the visible losses get covered by insurance, the ripple effect of the hidden costs can result in further monetary losses as well as long-term business impact that might take very long to resolve.The best, and often the only way to wade through both the visible and hidden business costs of in-transit damage is to package right, and to keep track of your shipments from door to door with the help of an on-demand F&B monitoring solution.

Leveraging Chilly Chain Logistics Visibility for COVID-19 Vaccines

Let’s explore the logistics case study of one of the world’s largest pharma companies, the story of how this US-headquartered, globally present pharma giant improved teamwork in their logistics and is now confidently shipping COVID-19 vaccines using cold chain logistics visibility.

Empowering Recent Produce Logistics with Actual-Time Information | Roambee

Dealing with fresh produce logistics means dealing with supply chains that are more prone to risk. The risk of spoilage is an additional risk to consider beyond delay and theft. When working with fresh produce supply chains, reliable condition and location tracking data is vital to prevent the risk of spoilage that can contribute to cost in the form of replacement and reshipping — increasing the overall financial loss. Let’s explore how real-time data can help keep the fresh produce supply chain lean and reduce financial losses.

Why You Ought to Care about Finish-to-Finish Provide Chain Visibility

Just as COVID-19 vaccine distribution efforts began helping the global economy emerge from the economic impact of the pandemic, the Suez Canal disruption hit. Now that the Canal is open again, the global supply chain is adjusting to yet another “black swan” event – and recognizing the need for end-to-end supply chain visibility.

The Journey of a Vaccine in Pharma Chilly Chain from Manufacturing to Syringe

The ultimate goal of any pharma company is patient well-being, which it cannot achieve without a tight, lean, and reliable pharma cold chain. When dealing with vaccines for epidemics like the Coronavirus, the pharma cold chain logistics must be planned to maintain a balance between the vaccine reaching safely and on time.Now that the COVID-19 vaccine is here, the objective is to keep it safe and intact through the last mile of its journey and incorporate these best practices to gain control over general vaccine supply chains for human and animal health. Let’s look at how a vaccine travels in the pharma cold chain and how vaccine cold chain monitoring helps make this journey successful.
A vaccine’s journey is more complicated than other pharma products because it is very susceptible to temperature changes, heat and light exposure, and breakage. The COVID-19 vaccine needs an exceptionally reliable cold chain — transport and storage in specific cold temperatures, ambiance control, and impact control to protect from damage — since any deviation may drastically affect the vaccine efficacy and deter on-time, in-full (OTIF) deliveries.

Finish-to-Finish Intermodal Cargo Monitoring Answer | The way it Works

Multimodal shipping is clearly the future of logistics, especially in a world where shipping distances are increasing, and it’s mostly good news if you can efficiently run your intermodal shipment operations.As per the Global Multimodal Freight Transportation Market report (2020 – 2025), “multimodal transport can improve transportation efficiency by 30%, reduce cargo damage by 10%, reduce transportation costs by 20%, reduce highway congestion by more than 50%, and promote energy savings and emissions reduction by more than one third.”
But this kind of exponential growth also requires the intermodal shipment tracking systems to grow at the same pace in terms of technology and efficiency.
The non-linear flow of intermodal cargo has to rely on scheduled and unscheduled transportation by road, rail, air, and ocean. In such cases, just knowing the whereabouts of the shipment at an order level isn’t enough. One also needs to know the exact shipment location and package condition. Not just this, accurate ETA prediction and cold chain compliance are two of the most important aspects when dealing with intermodal shipments, and most shipments these days involve multiple modes. All this is not possible without a well-implemented intermodal shipment tracking system.
Thanks to technology advancements, you can track its journey today. But is it really that easy?
Let’s begin by understanding how complex an intermodal shipping operation is by following a shipment.
The Journey of an Intermodal Shipment
Let’s visualize the steps in an LCL (Less Than Container Load) ocean shipment from Kuala Lumpur in Malaysia to Chicago in the United States.
1. Picked up from the consignor in Kuala Lumpur city.
2. Hauled to the nearby consolidation warehouse in Kuala Lumpur; combined with other LCLs.
3. Hauled to another consolidation location for containerization.
4. Container is then hauled to Port Klang, the nearest seaport.
5. Container is checked-in and export customs clearance at Port Klang in Malaysia.
6. Container is placed in the right bay awaiting its vessel journey.
7. Once the vessel arrives, it is loaded onto the vessel and reaches the New York port in USA.
8. Between Kuala Lumpur and New York, the container could possibly undergo transshipment at another port.
9. Upon reaching New York, the container is unloaded and placed in the right bay to await import clearance processes.
10. Within port operations, it may move locations multiple times to complete the clearance checklist.
11. Upon successful clearance, the container is hauled for deconsolidation.
12. After deconsolidation, it undertakes its last-mile journey to Chicago and within Chicago for delivery to the consignee.
You will notice that the intermodal shipment in this example is touched (physically handled) at least ten times in the process by different actors in the chain of custody. It travels through 3 different modes, is checked in/out through at least 5 transshipment points, and is consolidated and deconsolidated at least twice.
In an intermodal shipment, i.e., one that involves many of these transporters, transshipment points, and touchpoints, it is often hard to get end-to-end visibility. It is even harder to know if the shipment reached its destination on time and in good condition, especially if the container requires active cooling.
Therefore, let us look at the approaches to getting visibility on a multimodal shipment, how they work, and which one would best suit a multimodal shipment.
1. Carrier Data Aggregation Approach for Intermodal Shipment Tracking
Real-time transportation visibility platforms (RTTVPs) collect data from the carrier or transporter telematics, ships, flights, and other crowdsourced feeds to offer visibility. Telematics hardware (for the first and last mile) is usually owned by the carriers or transporters and integrated with the visibility platform (if they are present).
Users typically pay a small fee just to access the aggregation platform; there is no cost associated with the hardware. Data from multiple touchpoints are collated and presented on a portal or accessed using APIs.
This is the easiest route to visibility, but it comes with several drawbacks. These systems don’t solve the challenge of verifiability, data cohesiveness, and actionability as it relies on these numerous actors in the supply chain for supplying data.
Here are a few examples of the challenges that multimodal/intermodal shipments face when it comes to aggregating data as an approach to getting end-to-end visibility:
1. Visibility is not real-time — The ELD or telematics data is aggregated through APIs, and not always is the visibility data instant or a reflection of the present.
2. No definitive first & last mile visibility — The information you get from your multimodal transport operators (MTOs) is mostly incomplete and unverifiable. Sometimes this information is manually gathered or not available at all, making it even more unreliable.
3. Order-level visibility at best — If you are shipping LCL cargo or need item-level information, these platforms cannot always verify it as most vessels and airlines share data at an order level.
4. Lack of condition monitoring data — The data is at an order, truck, ship, or flight level. Without knowledge of condition excursion on the way, you wouldn’t be able to prevent the contamination or damage before the consignment reaches the destination.
5. Approximate ETA predictions at best — With multiple data streams coming in without verifiability, it is impossible to get accurate ETAs. Such erroneous shipment location renders this data worthless for decision-making or logistics automation.
6. Hurdles during Black Swan events — Failures in communication and collaboration could result in significant limitations for multimodal shipping management. During times of disruption, like the recent pandemic or the Ever Given traffic pile up at the Suez Canal, these failures become even more conspicuous and cause additional delays.
Carrier data aggregation platforms may be a good place to start, but it offers only a certain amount of value. Furthermore, not all carriers will have the same quality standards for collecting data; some would have different approaches, and some might not even have a proper visibility system. This makes the data unverifiable.
To break this chain of scattered visibility and non-uniform data quality, an approach that relies on firsthand data, with sensors, and without relying on the actors in the supply chain is used.
2. IoT Sensor Approach for Intermodal Shipment Tracking
Cargo logistics tracking & monitoring solutions offer directly collected IoT-enabled sensor information from end to end.
1As per Gartner’s 2021 ‘Gartner Tracking and Monitoring Business Process Context: Magic Quadrant for Real-Time Transportation Visibility Platforms’ report, “In real-time transportation visibility platforms (RTTVPs), the data is collected from the carrier rather than from independent IoT devices as in the case of tracking and monitoring solutions.” The report further states, “It can also extend the visibility beyond the delivery of the product and is often used to track the location and condition of the product in the yard or the warehouse.”
Data is more verifiable as an IoT sensor captures it without relying on the actors in the chain of custody. You also get end-to-end item-level tracking and condition in real-time through most of the journey.
Today, there is also technology to log condition data when connectivity doesn’t exist (such as over air or ocean) and automatically upload it to the cloud when connectivity resumes.
However, using a pure sensor-data approach cannot always help with intermodal shipment tracking actionably, not offering ease of visibility access.
1. Not all sensors are purpose-built for multimodal — Air shipments require a certain battery life, reporting interval, and IATA/airline compliances, especially when it comes to sensitive pharma goods. Ocean shipments need batteries that last months or alternate charging options. The sensors must be able to cater to these use-cases purposefully.
2. Sensor ownership & management — Sensors are purchased or rented, but if you invest in sensors, you will need to manage the sensor inventory, utilize the sensors effectively, handle its reverse logistics, or pay a CapEx.
3. Lack of visibility context makes it unactionable — Most sensor portals offer the location and condition trail but cannot verifiably predict in seconds if it will arrive on time, whether you need to act on a temperature rise or if the security of the shipment is intact.
For example, knowing that a shipment is at the right airport is only half the story. Has it been shifted to the right bay? Has it boarded the right flight? Knowing these data points ahead of time can save hours or days in re-planning and re-routing cargo.
Therefore, sensor data plug much of the gaps of carrier data aggregation, but it alone cannot enable decision-making, that too instantly and verifiably, which is where the blended approach comes in.
3. Blended ‘Sensor + Non-Sensor’ Platform Approach
This approach combines purpose-built IoT sensors (the “physical”) with non-sensor intelligence (the “digital”) — blended on a real-time location-aware platform. It offers better context to sensor data and makes it more verifiable and actionable, enabling prompt decisions and logistics automation.
This approach offers better supply chain visibility than the carrier-based or pure sensor-based approach. The key to a verifiably better supply chain is to carefully pick the quality of the non-sensor digital streams to blend with the physical, often captured directly from the source.
If done right, blended sensor-driven signals offer end-to-end trust with:
1. Verifiable visibility — To implement quick decisions, improve operational efficiency, and elevate the customer experience.
For example, blending the digital aspect of port operations with verifiable sensor location and condition tells you if an FCL/LCL got loaded onto the right vessel, if it’s traveling in agreeable temperature/humidity, if it is secure, or if it is stuck in the customs clearance queue.
2. Contextual visibility — SLAs (Service-Level Agreements) throughout the shipment’s journey can be assessed in real-time verifiably across routes, airport operations, port operations, delivery timelines, shipment condition, documentation, past performance, current conditions, and chain of custody.
3. Accurate signals — ETA calculations built on blended platform data can be verifiably better, and cold chain compliance of over 80% can be achieved.
In Summary…
Real-time intermodal shipment monitoring is like virtually traveling with your shipment everywhere it goes, by truck, by rail, by air, or by ocean, with minimal reliance on data from actors involved in the supply chain.
In view of the advantages and disadvantages of the various approaches in cargo logistics tracking, especially for intermodal shipments, Roambee opted for a blended approach through its immersive location-aware platform and purpose-built, award-winning sensors.
Blended sensor + non-sensor visibility & intelligence helps in strategic decision-making, ultimately meaning better supply chain visibility and better ROI. The system makes sure that the shipper doesn’t have to rely on unverifiable data from carriers nor spend time stitching together sensor data points to tell the entire story.