In the U.S., 30%-40% of food produced is wasted, according to the EPA. Food waste can occur on farms, in the supply chain, at stores and in homes.
How much of that spoilage occurs in supply chains? A lot — about one-third, according to Shipwell. The carbon footprint of food waste in the U.S. is larger than that of the airline industry, Jason Traff, co-founder and president at Shipwell, told FreightWaves.
Unreliable predictions of demand, shipment delays, volatility in trucking markets, too much inventory and imprecise temperatures all contribute to food waste in supply chains.
Besides hindering efforts to feed the world’s growing population, food waste:
Costs retailers and supply chains lots of money.
Squanders the resources such as land, water and fertilizers used to produce food.
Can release methane, a super-potent greenhouse gas (GHG).
Wastes the costs and emissions of food-related labor and transportation.
Here’s where Shipwell’s technology comes in
Shipwell’s vertically integrated shipping technology is built on business analytics, and “anything that goes through the platform can later be measured and monitored,” Traff said. At just 5 years old, Shipwell has the youngest transportation management system (TMS) to make its way into the Gartner Magic Quadrant for TMS, Traff said.
This technology has built-in capabilities that can help prevent food spoilage in supply chains.
The TMS can alert companies about out-of-bounds temperatures or shipment delays in real time, according to their rule set. If there are any issues, the system can automatically flag a shipment, send an internal email to the appropriate worker, or even call the truck driver using natural language processing technology, according to Traff. He said this allows companies to proactively address problems instead of having to constantly respond after the majority of the damage is done.
“Being proactive means less food wastage, more efficient routes for carriers and saving money, which companies tend to like,” Traff said.
Simultaneously saving food and money
Many of Shipwell’s customers are food and beverage companies, and Traff noted that they often operate on very slim margins. Because of this, wasted food can make a big impact on the bottom line. Traff said that many sustainability efforts also result in overall cost savings.
A large meal-kit company using Shipwell’s technology saw a 75% return on investment in the first year due to lower transportation rates and a decrease in spoilage and loss of goods sold. By optimizing routes and consolidating loads, the company also saved 1.7 million land miles of transportation, the equivalent of preventing 5.6 million pounds of CO2 emissions from entering the atmosphere.
Traff shared an example in which workers and multiple ingredients could be waiting in a warehouse for 40,000 pounds of lobster to show up to put meal kits together. But if the lobster doesn’t arrive on time and there’s no data showing where it is, the company might end up buying more lobster nearby to avoid wasting the rest of the resources.
This would cost the company lots of money and could potentially waste the 40,000 pounds of lobster that is somewhere in transit. “Every trailer you can save full of lobsters is helpful,” Traff said.
Automation and analytics can be used to reduce food waste, improve the accuracy of estimated times of arrival, increase on-time shipment rates, consolidate loads, optimize routes and reduce inefficiencies in supply chains, according to Traff.
“Those are very practical ways that companies can not only provide a much better impact for the global climate and [be] a better global citizen, but to save a lot more money,” Traff said.
Impact of volatile reefer markets
Food and refrigerated products have not been immune to the uncertainty of available capacity in the trucking industry over the past year.
This FreightWaves SONAR chart shows the Reefer Outbound Tender Rejection rate (white) and the spot rates (green) for the past year. To learn more about FreightWaves SONAR, click here.
The white line in the SONAR chart above shows the national average reefer tender rejection rates. The green line shows the Truckstop.com national average reefer spot rates. The chart shows that both metrics increased drastically from July 2020 to December 2020 and have remained relatively high.
Higher tender rejection rates means carriers are rejecting more refrigerated loads of goods, making it more difficult and costly for retailers to get their refrigerated foods to stores and in the hands of consumers.
If shippers can’t get their goods moved, food products could sit in warehouses for longer periods before getting to their destinations. Messing with the supply chain timeline for time-sensitive items such as produce and other refrigerated or frozen foods could result in more food being wasted.
In an effort to be ethical global citizens with a positive impact on the climate, Traff said, “today’s consumer actually cares about the companies they support.” He said consumers are increasingly paying attention to various sustainability impacts of a business, such as food waste, GHG emissions and costs.
Advancements in technology and tracking have the potential to help shippers and carriers address those and other issues in the trucking industry, including on-time deliveries, tight margins and more.