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Food Logistics is a part of supply chain management, which plans, implements, and controls the forward and reverse flow and storage of goods, services, and related information to meet requirements requested by customers and by stakeholders such as the government (new rules and regulations such as the General Food Law) and the retail community.
It coordinates and optimizes activities such as transportation, inventory management, storage and warehousing, materials handling, packaging, information processing, demand forecasting, procurement, facility location, planning, customer service, packing, and loading, etc.
Logistics is the detailed flow of the products from the point of origin to the point of consumption to meet the requirements of corporations and consumers. It aids in planning, controlling as well as implementing the storage and flow of goods and services.
It also helps to maintain a continuous supply of non-durable and durable products from various distributors and suppliers. Owing to this, logistics plays a crucial role in the food industry. Transportation and logistics providers use different equipment, expertise and technologies to control and improve the supply chain operations.
The growth of the global food logistics market is majorly driven by a rapid rise in the prevalence of e-retail in the food and retail sector. As logistics forms a significant part of the storing, transporting and delivery of the goods purchased online, this has provided a positive thrust to the market growth.
Apart from this, the advent of artificial intelligence (AI) has enabled logistics companies to increase delivery efficiency.
For instance, United Parcel Service (UPS), an American multinational package delivery and supply chain management company, utilizes AI algorithms for intelligent route planning. This helps in reducing delivery times without damaging perishable food products.
Some of the other factors which are positively influencing the market include improving distribution networks and infrastructure in developing regions, and the adoption of new technologies by logistics providers for enhancing their business processes.
The need to feed an ever-increasing world population makes it obligatory to reduce the millions of tons of avoidable perishable waste along the food supply chain. A considerable share of these losses is caused by non-optimal cold chain processes and management.
From the point of food logistics, the increasing world population along with the growth of international food trade necessitates attention to avoidable product waste in Food Supply Chains.
According to the estimation of the Food and Agriculture Organization of the United Nations, 32% of all food produced in the world was lost or wasted in 2009. Food logistics is a vital element of the food supply chain.
It is an important aspect of fulfilling consumer demands by providing the right product and quantity at low cost and on-time delivery with minimum or no food waste since the majority of food products have a very short shelf-life.
Logistics activities, especially transportation, are significant sources of air pollution affecting human health and greenhouse gas emissions that are responsible for global warming. About food logistics, food transport is growing due to increasing global food consumption and distances between production and consumption and is, therefore, an important source of CO2 emissions.
Logistics systems in different sectors currently face the challenge of improving their sustainability performance induced by the increasing environmental and social concerns such as population growth, climate change, environmental pollution, resource scarcity, and food safety. The trend towards being more sustainable has caused the fact that companies have to meet the challenges that sustainability brings to their business.
In the ocean cargo industry refer containers are specifically used to carry the food products as the temperature can be regulated in the refer containers, some companies charter reefer ships to carry the food items, like dole bananas are shipped from south American countries to Europe and North American this way.
Air shipments of food are a very limited market, as temperature-controlled containers in the air cargo industry are rarely used for food products, specific types of shrimps are transported this way. Rail and Road are the most widely used for inland transport of food material.
Countries like India are focusing more on building rail infrastructure to transport the food materials, the recent move to induct kisan rail to transport the cold stored products from Northern India to JNPT port in Mumbai asserts the government of India’s strong intent for this.
Online grocery and e-retail play a key role in propelling the food logistics markets. Most large e-commerce players have ventured into this segment and the coronavirus pandemic has accelerated the growth of the market.
Some players in the industrializing nations have ventured into this space, other players include food delivery players like Zomato, but most of these players play in the ambient market and very few have ventured into the cold chain space.
Companies are leveraging technologies like Internet of things (IoT) to improve their yield, one of the prime challenges in the industry is perishability, to tackle these newer digital technologies help optimise the operating costs and improve the yield.
With smarter sales forecasting techniques companies are making their supply chains more efficient and responsive, smart forecasting coupled with cloud technologies are helping to reduce the IT related costs. Companies like SAP are specifically designing modules to address their food logistics players.
Governments across the globe are investing in the development of cold chain infrastructure needed, many of the African nations have invested in their cold chain infrastructure by the help of Chinese investment through Belt and Road Initiative (BRI). Indian government is also pushing for more food grain storage infrastructure and cold chain facilities.
The COVID-19 pandemic introduced unexpected stresses on food systems, creating many immediate challenges. COVID-19 has imposed shocks on all segments of food supply chains, simultaneously affecting farm production, food processing, transport and logistics, and final demand. Not all sectors and products have been equally affected, and different products have experienced disruptions at different stages of the supply chain.
COVID-19 has led to disruptions in food processing industries, which have been affected by rules on social distancing, by labour shortages due to sickness, and by lockdown measures to contain the spread of the virus.
In confined spaces such as packing plants for fruits and vegetables or meat processing facilities, necessary social distancing measures may reduce the efficiency of operations and there is a need to ensure adequate protections for employees. Many firms have also reported high rates of worker absences.
Bottlenecks in transport and logistics have disrupted the movement of products along supply chains. Broadly speaking, agricultural and food products are transported using three main modes of transport: bulk (ships and barges); containers (by boat, rail or truck) and other road transport; and air freight.
Different products use different modes of transport: cereals and oilseeds, for example, are typically shipped in bulk; meat and dairy products are often shipped in refrigerated containers and trucks; and perishable products with a high value-to-weight ratio are transported by air in the “bellies” of passenger planes.
The impact of COVID-19 on these transport modes varies considerably. Bulk shipments have not seen any major disruptions, and prices for bulk freight are actually near multi-year lows. However, air freight has been severely disrupted.
Global air cargo capacity in the week of 10 to 16 May was 26% lower than during the same period last year, with the largest decline in capacity on routes between Europe and Latin America (with declines of more than 80%).
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