The holidays are about many things, including gathering with family and friends for holiday meals. Since produce and fresh ingredients are typically key for holiday meals, safely transporting these temperature-sensitive items, delivering them on time and in full, and keeping them freshly stocked on store shelves is vitally important for food retailers. This, combined with holiday deadlines, present unique challenges. What are some of those challenges? How do they impact transportation and logistics operations? What capabilities will separate the leaders from the laggards?
Those are some of the key questions I discussed with Mark Petersen, VP of Temperature Controlled Transportation at C.H. Robinson, and Gina Garven, VP of Commercial Development & Analytics at Robinson Fresh, a division of C.H. Robinson, during a recent episode of Talking Logistics.
Food & Beverage Holiday Trends
I began our discussions by asking Gina to recap some of the trends in the industry for the upcoming holiday season. Gina notes that American households are expected to spend $1,500 on average this holiday season, with the largest retail category being food and beverage. She says what people are buying is shifting, though, as the trend is toward smaller, more frequent meals with smaller portions and more snacks. She also says that healthier lifestyles have become a year-round trend, not just a New Year’s resolution, and fresh and perishable food is a big part of that. “It really increases the variety of foods people are buying, especially as they want to bring new and interesting dishes to share with friends and family,” Gina explains.
Gina also points out that how people shop changes during the holidays. “Shoppers are looking for specific ingredients for their holiday recipes that can’t be substituted. For example, the demand for cranberries goes up 1,800% during the holidays and there is really no substitute for those. The same is true for sweet potatoes or yams,” she says. “If food retailers don’t have those items available front and center on shelves, they could lose shoppers year-round.”
Impact on Transportation & Logistics
Marks states that nobody likes the holidays less than transportation providers because they are faced with increased demand while capacity is reduced because truck drivers want to stay home with their families like everyone else. “Shippers are using incentives to keep drivers on the road and to improve compliance with their route guides,” says Mark. He points out that things are a little better this year than last because there is some excess capacity compared to the tight market last year. He points out that in the temperature-controlled market for food and perishables, 91% of the carriers have less than 5 tractors (99% have less than 50), so it is very fragmented.
Mark comments that the need to have holiday items fresh and available on shelves requires inventory to be held closer to markets and requires more frequent replenishments. “LTL-based shipment consolidation can help in this area by having fewer trucks at the grocer’s dock to unload with everything they need,” he says.
The Impact of Omnichannel
There are multiple ways that consumers shop for their food today, whether it’s walking the aisles of a grocery store themselves, or shopping online and getting their order delivered at home, or click-and-collect. What impact is this diversity in shopping and delivery models having?
Gina notes that online and mobile food shopping is expected to triple over the next five years, meaning 70% of grocery shopping will be done online. “That will have a significant impact on supply chains,” she comments. “Considering 72% of food consumption is decided upon within one hour of eating, this is a massive challenge for our industry. It puts extreme pressure on supply chains to be flexible and nimble. Micro-supply chains with high-speed inventory turns, rapid replenishments, and just-in-time deliveries using data insights and analytics to make those decisions will be necessary.”
Mark adds that visibility to inventory and shipments is especially important during the holidays with the increased demand, compressed timeframes and frequent weather issues. “It’s also essential that you have qualified people involved who can make the right decisions, since most of the deliveries happen at night,” he says.
I closed our discussion by asking Gina and Mark what actions companies should take to prepare for the holidays, and what will separate the leaders from the laggards. I encourage you to watch the full episode for their insights and advice on those questions and more. Then post a comment and share your own thoughts and experiences.