Freight Forwarders’ Cold Chain Pain Points

In general, forwarders are facing challenging times. Tight margins are considered the biggest pain point for freight forwarders and while most of the forwarders surveyed indicated they plan to invest in technology to differentiate them, almost 40% of the forwarders noted they plan to enter new trade lanes and new services.

Indeed, among the top new services many plan to offer, or expand offerings into, are those in cold chain. In 2011 and 2012, Kuehne + Nagel invested in several cold-chain acquisitions including Canada’s Perishables International Transportation and South America’s Translago S.A.S., Agencia de Aduanas Excelsia and Mastertransport SA Ecuador. Not to be outdone, other forwarders made acquisitions including Panalpina’s 2015 acquisition of Airflo, a specialized forwarder for flowers based in Kenya and while not 100% cold chain related, UPS’ acquisitions of Polar Speed, Ortie, Cemelog and Pieffe further expanded its European healthcare network including temperature-controlled warehousing and handling as well as transportation.

Apparently it’s not as simple as making an acquisition in order to be successful in managing cold chain logistics. In our weekly Twitter survey, we asked what freight forwarders most difficult task is in managing this specialized service. Maintaining required temperatures and transport/warehousing costs each received 13% of the total vote. Indeed, the investments in both of these activities and the management of each can be hefty but the majority of survey respondents, 75%, indicated that the regulatory environment was the most challenging task.

The cold chain is no longer confined to just one geographic but has become a global phenomenon. Chinese consumers seek out fruits and vegetables from the Americas and elsewhere outside of China while the Middle East imports over half of its food including the UAE which imports 85% of its food. Meanwhile, the pharmaceutical industry has expanded beyond its traditional confines of Europe and North America to emerging markets such as Africa, Asia and South America for clinical trials and manufacturing as well as to meet growing middle-classes’ need for healthcare. However, with these expansions comes individual government regulations that includes among other things, requirements for sourcing, manufacturing, handling, packaging, storage and temperature management  of cold chain perishables and pharmaceuticals. In its annual Pain in the Chain Survey, UPS found that among pharmaceutical executives, 39% indicated that the European Union Good Distribution Practice was the one regulation that caused the most pain followed by Brazil’s Serialization requirement at 24%.

While there is great opportunity in cold chain logistics, it is also a specialized service that freight forwarders need to understand and demonstrate in order to be successful.

2017-03-31T11:18:37+00:00 March 4th, 2017|Ask the Experts|