Best Practise Export Cold Chain Management

C:\Documents and Settings\ranfords\Local Settings\Temporary Internet Files\OLKA\Cold Chain Speech 2003.doc Page 1 of 20

Best Practise Export Cold Chain Management:Is this enough to stay competitive?

It is a pleasure to address the Cold Chain 2003 Australian annual perishables logistics conference on:

“Best Practice” Cold Chain Logistics Management: Is this enough to stay competitive?

In considering the question we will cover: • Global pressures that are re-defining the cold chain • Results of the Australian Quality Logistics Pilot Project• Integrating cold chain quality logistics with safety, security and

sustainability to gain a competitive edge

To set the scene, a quote from Benjamin Franklin (1706 - 1790) is worth considering. He said:

“Drive thy business or it will drive thee”.

That certainly applies to Cold Chain management and put in modern day parlance, it’s worth asking, “Do You Know Who is Running Your Cold Chain?” It is amazing how many people do and don’t.

Global pressures that are re-defining the cold chain

With the global pressures forcing Cold Chain “sea-change” there are times when we wonder how we can keep up, let alone cope. Change however is not new and business and the logistics industry has faced it for eons. So what is different today?

The key difference, according to Professor Davies, is that “we are now experiencing accelerating rates of multi-dimensional change …No one factor is changing on its own [making] for an increasingly complex scenario.”1 In other words we are facing simultaneous and fast change on a wide range of fronts.

We see this occurring globally as food supply chains compete aggressively with each other and buyers source products whenever and wherever it gives them advantage. If chain transportation and cold chain management isn’t up to it then they will switch to a better performing supply chain. To manage the cold chain effectively we need to be aware of what the drivers for change are along the food supply chain and be able to adapt to them. So what are the drivers for change? Professor Davies lists the drivers of change as: •“Consumer Tastes and behaviour •Competition and production efficiency •Advances in technology

1 “Drivers For Change in Modern Food Supply” p7, Prof W Paul Davies, August 2003, Global Food Safety Seminar Series, AFFA/NFIS


•Institutional pressures and regulatory requirements •Environmental considerations •International and globalisation influences •Political influences”2 Understanding the consumer is the major issue for food retailers and one might even suggest for consumers themselves. Much has been written on this subject and we won’t repeat it here. We do need to understand, however, that consumers are becoming increasingly aware of their power and are consciously and subconsciously rolling in their “life values” with their purchases. This can have major impacts on the food supply chain and even flow through to freight transport. In this regard it will be interesting to see what market fallout results from the rejected live sheep bound for Saudi and if it impacts on Australia’s Kuwaiti lamb meat sales and on sales in other markets. Competition and production efficiency includes cold chain management and freight logistics. This helps explain why governments around the world are recognising the significance of logistics to their economies and societies. This is certainly the case in countries such as Singapore and in more recent times Australia with the development of the Australian Logistics Industry Strategy and action plan. In a survey of Asian Food Importers3 conducted in 2000, the buyers rated USA and New Zealand as having the most capable cold chain logistics systems in place followed by Europe and then Australia. While other countries such as South Africa, Chile, Vietnam and China didn’t rank as high -the warning was loud and clear: “They’re catching up fast and if Australia doesn’t improve it will be overtaken”. Technology improvements in data capture and processing, product tracking and tracing, temperature control, freight transport transit times coupled with communication, the media and the web have brought us closer to each other, closer to the customer and closer to the consumer. It has also time-compressed cold chain logistics supply chains and made them more transparent, particularly when part of the chain fails. This is a real driver of change. Institutional pressures and regulatory requirements are also driving change. Food scares, death and outbreaks of disease around the world in the 1990’s have triggered major revisions to food safety arrangements. In Australia we have seen new food safety regulations introduced nationally through Food Standards Australia/New Zealand (FSANZ) and the various State based Food Safety Acts. These new measures now apply to most of the food transport chain, with food transport operators being classified as a food handling business. In the future we are likely to see more regulation, not less, as food safety arrangements are developed on an industry sector-by-sector basis. Of course 2 “Drivers For Change in Modern Food Supply” ,p8, Prof W Paul Davies, August 2003, Global Food Safety Seminar Series, AFFA/NFIS 3 Freight Trade Logistics Stage 2 Report, Integrated Logistics Network, 2000


the logistics cold chain will need to adapt to meet these changes. These changes are not just happening in Australia and New Zealand they are also strong in Europe and the USA and gaining ground in Asia. For example a recent announcement suggests that by 2005 food manufacturers in Singapore will need to be HACCP accredited and this can be expected to flow through to transport and cold chain management. In fact if one looks at the Technical Reference on Dairy4 produced in Singapore it is already happening. Consumers that now pick and choose to buy say canned tuna that is “Dolphin Safe” are driving environmental considerations. In Europe in particular and more generally amongst the world supermarket chain giants, sometimes referred to as “gatekeepers” environmental standards are being set that suppliers have to meet. This ranges from production methods that do not harm the eco-system to insistence by some that suppliers have ISO 14001 in place to demonstrate they have an auditable Environmental Management System. International and globalisation influences are becoming more pervasive as we see 110 buying desks in Europe acting as gatekeepers between 3.2 M farmers and 250 Million consumers [Lang 2003]5. In international shipping and airfreight we are also seeing a concentration of service providers and in Australian land transport we are seeing an ever-increasing concentration and vertical integration of shipping, stevedoring, road and rail businesses. As this occurs supply chain power shifts as does the disbursement of profits in the chain. Finally, politics remains an ever-present change driver as it struggles to manage the impacts of globalisation, trans-national corporations, regional trade agreements and selective freer trade. So what are these change drivers doing to cold chain logistics management and is best practice logistics cold chain management enough to stay competitive? In the past food safety, quality control and cold chain logistics were viewed as distinct and separate items. In fact today if you talk to food safety regulators they concede that food has to be safe and suitable but they steer clear of quality - as if it is a point of no return. Then you talk to the quality systems experts wedded to ISO, SQF or other systems and they seek to integrate enterprise based quality systems with HACCP and food safety. Then you talk to the members of the Logistics Cold Chain, particularly the shippers and find that they pragmatically recognise that the freight transport cold chain is littered with certain “unavoidable” risks that others are paid to manage. Like the food supply chain, the logistics cold chain is long and involved. For an airfreight shipment of broccoli from “tree to table” to say Singapore there

4 TR2:2000 Cold Chain Management: Milk and Dairy products Singapore Productivity and Standards Board (SPRING) 5 In the UK 95% of consumers buy food and groceries from Supermarket chains


are 39 steps, 23 players and 21 cold chain breaks. This is shown in the following diagram. THE THIRTY-NINE STEPS

c c

c

c

c c c

c c

c$

(Suns represent breaks in the Cold Chain, Crossed Suns breaks if refrigeration does not occur.) You might think the 39 steps are high but in many instances the product is actually moved more, particularly if you tranship through say Melbourne or Sydney. In any event what it means is that in maintaining our product quality and integrity, we need to manage the export logistics cold chain, the 23 players involved and the 21 cold chain breaks. Unless you have set and agreed performance standards that apply throughout the chain you are going to face difficulties of product out-turn on arrival overseas. Recognising this, the Integrated Logistics Network [ILN], made up of Commonwealth and State/Territory officials, in conjunction with the Australian Freight Councils


have been working with industry on the Australian Quality Logistics Project, known as AQL1. Results of the Australian Quality Logistics Pilot Project [AQL1] For those of you not familiar with this project a bit of background may be helpful. In 1999 we advanced the need for industry to have a through chain performance based quality cold chain logistics management system in order for our food exports to gain and maintain access to the quality end of the overseas food market. We advanced the hypothesis that “best practice” cold chain logistics should not cost more, that no through chain cold chain logistics system currently exists and that adoption of the systems would provide advantage not only to exporters, to quality of product out turn but also to customers who would in turn reduce their shrinkage rates. We tested this through a series of studies commissioned by the ILN. The Best Practice Logistics Study demonstrated that best practice logistics did not cost more and in reality provided benefits that outweighed costs. The Codes of Practice, Quality Assurance and Guidelines study confirmed that no through chain cold chain quality system exists and significant gaps needed to be filled. In addition it identified over 80 different systems were being used and our overseas customers were confused. A follow on study focused on Singapore showed that use of an Australian Quality Logistics system [AQL1] would provide significant advantage to our exporters to secure and increase their business to the quality end of the market and reduce shrinkage in supermarkets by at least 5%. It also emphasized the need for us to do this by comparing our shrinkage rates with those of other overseas competitors. This body of compelling evidence has led us to where we are today and that is to the pilot stage of AQL1. The Australian Quality Logistics Pilot Program, funded by the Integrated Logistics Network and the Australian Freight Council network, is a trial of a full cold chain performance based quality logistics system. Managed by South Australia, the project consists of:

• 16 Export Companies • With exports going to 6 Markets (Japan, HK, Taiwan, Singapore,

Malaysia, USA) • Covering products including

-Dairy: Milk, Cream, Yoghurt, Drinking Yoghurt -Meat : Pork, Beef, -Seafood: Prawns, Smoked Salmon, Live Mud Crabs, Salmon/Ocean Trout, Tuna -Fruit and Vegetables: Apples, Oranges, Table Grapes, Asparagus, Broccoli - Flowers


The companies taking part in the pilot program are well respected for their export quality and include:

• Australian Farmlink – Apples [SA] • Clements & Marshall - Apples [TAS] • Koala Baby – Table Grapes [SA/VIC] • Lochert Brothers – Oranges [SA] • Momack – Asparagus [Vic]

• IHM – Flowers [NSW]

• GWF - Pork – [SA & WA] • Homebush Meats – Beef [NSW]

• Bulla – Dairy [VIC] • National Foods – Dairy [WA] • Peters & Brownes – Dairy [WA]

• Darwin Seafoods – Seafood [NT] • Indian Ocean Fresh – Seafood [WA] • Petuna Seafoods – Seafood [TAS] • Raptis – Seafood [QLD] • Springs – Seafood [SA]

Each pilot company has or is having developed for it a performance based through chain company manual. This integrates existing cold chain logistics quality standards from the exporter through to the supermarket. It involves all members in the supply chain and includes: Work instructions Quality systems HACCP plans Supplier requirements Supply Chain List, and description of what takes place at each point. Product/Quality specification for each distinct product

Exporters map their chain and processes, and these are transformed into standards that each member of the chain is asked to commit to achieving. The manual is then reviewed by the AQL1 Technical Committee and comments fed back to the company. Technical Committee membership is made up of representatives from: •The South Australian Government’s Department of Transport & Urban Planning •The Australian Government’s Department of Agriculture, Fisheries and Forests •The Australian Quarantine Inspection Service [AQIS] •The South Australian Research and Development Institute •PIL [shipping line] •South Australian Cold Stores


•Australian Air Express and other experts as required When the Company Manual is completed, commercially sensitive components are removed; the manual is edited for conformity and a generic manual produced. This has logistics performance standards for both the Australian and overseas components of the chain right through to the supermarket/customer. The key elements in the generic manual are:

The Product Specification: This defines the composition, method of preservation, packaging, labelling, storage conditions/temperature and shelf life of the product. It sets standards that all other members of the supply chain must follow. The Quality Specification: This Lists all the quality parameters that must be maintained, both at the processor / packhouse / producer and through the rest of the supply chain.

Time and Temperature charts: These stipulate where temperature recordings are required and times for events in the cargo chain, such as loading product from the packhouse to a reefer. The chart below illustrates part of this chain.

Time From Harvest 2 Hours

Target Range -1ºC to +4ºC

2 Hours* Transport to Processing facility

(Company Name) Domestic Supply Chain Temperature and Time Chart— Chilled Bigeye Tuna

Process Type Temperature Time Time From Harvest Process Name


Seafood Harvested

Ambient 0 Hours



6 Hours Chill, Gut & Pack T

Time From Harvest 14¼ Hours


1 Hour Pack into ULD



¼ Hour Unload at FF, cold storage T



5 Hours* Transport to Freight Forwarder

Time From Harvest 17½ Hours


¼ Hour Transport to CTO



2 Hours Cold Storage at Freight Fwder T


[T= Temperature recording, Arrow= Transport movement Circle=Operation Triangle=Storage]

Supply Chain Quality Performance Standards: These sections outline the specific requirements for each member of the chain, including any unique QA systems, logistics requirements, product requirements, documentation requirements, time and temperature requirements and evidence of compliance. The Supply Chain Performance Agreement: This is where all members indicate their acceptance of the standards within the manual, and agree to allow third party audits.

Supply Chain Position Company Name Position Signature Telephone No. Exporter Primary production Transport to processing plant Processing, packaging and consignment Transport to Freight Fdr. International Freight Forwarding Transport to airport Export documentation Airport Operations [CTO] Airline Airport Operations Japan Import Agent Transport to Client Distribution Centre Distribution to Retailers Key Customers

Other components in the manual include: -Quality Policy Statement -Supply Chain Participants Chart -Supply Chain Quality Systems and Relationships Chart -Key Performance Indicator and Quality Monitoring Tables -The Exporter’s HACCP Plan

To date company manuals have been produced for 14 companies and generic manuals produced for the following products and markets. AQL1 Generic manuals already produced

Product Market Mode Navel Oranges Singapore Sea Chilled Milk Singapore Sea Table Grapes Hong Kong Sea Ice cream Malaysia Sea


Asparagus Singapore Air Frozen Seafood Singapore Air Live Seafood Singapore Air Smoked Salmon Singapore Air Pork & Pork Meat Products Singapore Air Chilled Dairy Hong Kong Air Chilled Ocean Trout and Atlantic Salmon USA/Japan Air Big Eye Tuna Japan Air

Based on the company and generic manuals, a number of pilot companies are taking part in a temperature-monitoring program to check the cold chain performance over a number of shipments, [preferably 10+]. The South Australian Research and Development Institute is assisting these companies by advising on correct placement of data loggers, providing the means of identifying where the cargo physically is over the time of the journey and matching this with data logger temperatures. Each company receives a technical report on each shipment, and a Company Monitoring Report analysing all results. This identifies “hot” spots and suggests solutions. Results to date support the need for AQL1 time-temperature standards to be adhered to – some products have got so hot or so cold that product quality is in danger of being compromised. The generic manual for apples to Taiwan and to Singapore is almost complete and new entrants to the program are expected shortly for Barramundi from the NT to the USA and Broccoli from Southern Australia to Singapore and Malaysia. Mapping of the supply chain in all the overseas markets has been undertaken by a number of specialists conducting an on-ground walk-through of the logistics cold chain up to the key buyers. Information gathered has then been documented, reviewed and signed off by key overseas supply chain participants, [including a number of shipping lines and airlines]. Of equal significance, work developed by the project has resulted in our participation in the Singapore Technical Reference Working Group involved in setting standards for chilled meat, focusing initially on airfreight chilled pork. As with the technical reference on dairy, the standard once produced is used for two years and then becomes “law”. Our participation in Singapore’s chilled meat group means that cold chain logistics performance standards developed should be “Australian friendly”, provided exporters adopt quality logistics performance standards. The time-temperature chart on the next page shows the agreed performance standards in Singapore for chilled pork. From the picture you can readily see that the standards stipulated are quite reasonable, the trick is to make them happen.


(Company Name) Supply Chain Temperature and Time Chart—Pork and Pork meat products

Process Type Temperature Time Time From Arrival Process Name

Time From Arrival ½ Hour

Target Temp. 0 to +4ºC

½ Hour Doors opened, Unload Aircraft

Time From Arrival 0 Hours

Target Temp. 0ºC to +4ºC

0 Hours Aircraft Lands

Time From Arrival 1½ Hours


½ Hour Place in Airport Cold Store

Time From Arrival 1 Hour


½ Hour Transport to Cold Store

Time From Arrival 1¾ Hours


¼ Hour ULD unloaded

T

T

* Transport Time to Client and Retailer will depend on locations ** ½ hr for unloading and movement to chiller, ½ hr for movement to display case ***Procesing may not be required, depending on retailer requirements and what pre-flight processing has been undertaken



2 Hours* Transport to Client Premises


Processing if Required***


6 Hours



2 Hours* Delivered to retailer


Unload Truck, Placed in storage


1 Hour**



¼ Hour Loading into refrig-erated vehicle



4 Hours Unloaded, Stored in Chiller


Loaded into refrigerated van


½ Hour

T

T

T

T

T


Some of the comments on the AQL1 pilot program are worth sharing. “Working on the AQL1 pilot program has enabled us to solve a major problem in the Hong Kong market” – Dairy exporter

“As a result of the AQL1 pilot program we have reviewed the number of steps in our supply chain and removed 4 steps, enabling significant product integrity improvement” – Seafood Exporter

“AQL1 was an opportunity to review our temperature monitoring regime for the export of frozen product. We received astounding results as product leaving us at -23°C was arriving unbeknown to us at the overseas market at -6 °C. Since then we have rectified the situation.” – Seafood Exporter “The AQL1 program is invaluable. We have:

-Improved our understanding of what is occurring along the entire export chain -Gained agreement from our chain partners to abide by performance standards -Improved our relationships and influence in the Japanese market as an Aust. Exporter with a strong focus on quality and product integrity” - Horticultural Exporter

“We have generated new business by taking the AQL1 standards and applying them to land-air transport and getting all parties to sign off on them. This has allowed us to innovate and we and other clients are better off” – Road operator

Reaction to the AQL1 performance based standards project has been positive from key buyers who want to see it implemented..

“We want your AQL1 accredited supplier list so we can buy from them” - Supermarket

“We want to be the first to use AQL1 as it will reinforce our quality image” - Supermarket

Currently the project is moving towards the end of the monitoring phase, and we hope to have the entire pilot program finished by early next year. Some important learning’s have already come out of the project, and I would like to share these with you today. General Observations In a few instances cold chain management has been poor at the exporter’s premises with chilled product being held at too low a temperature. In a very few cases product is insufficiently pre-cooled prior to loading.


Instances of delays between unloading the product and putting it into the forwarders cold store have been identified in both Australia and overseas. Part of the AQL1 monitoring program involves the customer filling in a product out turn report, to give the exporter an idea of the impact of various carrying conditions identified during temperature monitoring. Interestingly only one company has reported that the out turn was poor, and this was not a temperature-based issue. It was caused by pallet wrappings being put on too tight by the loading dock staff in Australia, causing damage to cartons with product leaking into the base of the container. As not all damage to product can be seen immediately during unloading, if the overseas customer had received information on the temperature product journey profile then things would most likely be quite different with a number of product rejections. For example: one product that should never be warmer than +4 degrees was held at +20 degrees for over 3 hrs on arrival overseas. Airfreight Airfreight is a highly effective means of moving cold chain freight to export markets. This said we all realise that cold chain breaks do occur along the airfreight supply chain, particularly for goods held on tarmac prior to loading to the aircraft. So far the program has identified incidents related to the following areas:

• In Australia, waiting periods between receiving cargo and loading onto the aircraft can be longer than desirable and result in product temperature increases.

• The time from aircraft arrival overseas to when the product is in a temperature controlled environment at the terminal or when picked up has in a number of instances resulted in high product heat gain.

• Overseas transport from the airport to the importer’s designated cold store has been recorded in some instances to be 4 or 5 times higher than AQL-1 specified temperatures for some products. In some of these cases it is obvious that no chilling has taken place after the product has been unloaded, and that refrigerated trucks have not been used to transport the product.

Sea freight The AQL1 program shows products shipped by sea freight have generally been within the desired temperature range. Exceptions have shown up during the monitoring program and include:

• Poor pre-cooling of containers leading to higher than specified temperatures during road transport to the port.

• Loading operations taking too long • Products are not being transported to the importer or client in

refrigerated trucks or reefers with the power turned on.


The Future for AQL1 With the end of the monitoring program rapidly approaching, we are holding forums around Australia to inform stakeholders about the results of the project, to gauge their reactions and to determine the extent of industry support for the establishment of AQL1 as a system that is:

• Voluntary • National • Government Endorsed • Industry Owned • Internationally recognised

Following these forums we are also providing companies with the opportunity to take part in a D.I.Y. AQL1 manual preparation workshop. They prepare their own draft AQL1 performance manual and can then choose to send it to us to “tidy up” [based on our existing templates] and have it reviewed by our technical working group. Before concluding on the AQL1 update let me anticipate a few questions. Q1. We already have a host of QA systems in place and don’t want another one, how does AQL1 overcome this? A1. AQL1 does not duplicate what you have but provides cold chain logistics performance based standards that replicate what you have and fills in gaps where they exist. Q2. What does AQL1 cost? A2. If you already have QA/HACCP systems in place, which you need anyway to supply Australian supermarkets, then the cost is minimal to produce your own manual, bearing in mind the work already done by this project. Estimated total time of one of your staff to undertake the task is two days. Q3. If I implement AQL1, how much more expensive will my freight costs be? A3. If you already monitor some of your shipments using data loggers and use quality service providers there should be no additional cost. Q4. AQL1 relies on all chain partners signing-off on the performance standards. Who gets them to sign up? A4. The exporter is responsible for this but assistance is available to achieve this if required. Q5. What happens if one of my supply chain partners won’t sign up? A5. Find out why and if the problem is that they don’t have the means to provide a quality service, look for another supplier. Once a critical mass of


AQL1 endorsed companies exists suppliers will need to sign up or risk losing business. Q6. How will we get “accredited” and how will performance be audited? A6. We are finalising these arrangements based on industry input. At this stage we see the process as relatively straight forward. Once you have the AQL1 performance standards agreed to by your partners, the AQL1 Secretariat will ask you and your partners to indicate what systems you and they have in place that demonstrates their capability. This information is reviewed by the AQL1 technical group and accreditation issued. Audits are proposed to be time-temperature-location based using the AQL1 data-logger and goods location system for a range of your shipments. Information will be sent directly to an independent data-logging processing centre such as the South Australian Research and Development Institute that will report back to the exporter on a shipment by shipment basis and highlight problem areas that need to be attended to. It is then up to the exporter working with the AQL1 Secretariat to fix the problem. In essence what you get is an independent cold chain monitoring process. The service is expected to be delivered at a minimal cost. Q7. Who will own and control AQL1? A7. It is expected that industry will own AQL1 and that Governments will endorse it. In its start up phase we expect that AQL1 may be delivered through the Cold Chain Centre, part of the South Australian Freight Council, and have national coverage. This is because we don’t want to lose the existing expertise gained from development of the AQL1 project. However alternative arrangements may emerge as we go through our industry consultation phase.

Integrating Cold Chain Quality Logistics with safety, security, and sustainability to maintain a competitive edge.

To remain competitive exporters of perishable food products from Australia and all parties along the cold chain need to ensure that they have the means to keep up with the drivers of change. A framework that may be useful in seeing what needs to be addressed is one that encompasses: •Food Safety •Food Security •Food Quality •Cold Chain Logistics •Environmental Sustainability •Social Acceptability


Food Safety The first item, Food Safety, is a non-negotiable item. However for exports different overseas markets apply different standards. This means companies face a number of choices. They can comply with the minimum standard required by each importing country - but this means you have to adjust your product for each market. In doing this you need to be sure the cost of variation does not exceed the cost of applying a universal standard. The other approach is to produce to the highest standard required and apply it to all markets – using it as a market position statement. Alternatively you can use a hybrid approach. Nevertheless as most export companies supply the domestic market, meeting Australian Food Safety standards must be the bare minimum benchmark. For the transport sector, legislation brought in last year means that, in South Australia, vehicles and associated businesses used for the transport of food must protect the food and meet cold chain requirements. Food transporters are now classified as food businesses and must be registered and comply with the Food Act 2001. Significantly, the supermarket, deli or business receiving the food can expect it to be delivered in good condition - not contaminated, packaging or covering not damaged etc. If the food is potentially hazardous the transport company must see that it arrives at the correct temperature (+5C or below or +60C or above, or if frozen, not partly thawed), or has not been outside of temperature control for longer than safe time limits. The consignee can also require food transporters to demonstrate that the temperature of the food6 will not adversely affect the microbiological safety of the food - having regard to the time taken to transport the food.7 Supply chain logistics businesses qualified as a “food business” are also required to meet the skills and knowledge requirements (staff who handle food, or who supervise this work must have the skills and knowledge they need to handle food safely), health and hygiene requirements (food handlers not to contaminate food, food handlers suffering from a food-borne disease to notify their supervisor etc.),8 When we consider food for export, it is important to ensure systems integration related to Food Safety legislation in Australia with that of the overseas country and AQIS. Further legislation is on the near horizon aimed at primary produce and that is likely to provide the food safety legislative framework for the development of product/industry sector food safety arrangements. For those involved in the cold chain they need to ensure they can adapt their services to difference required by each separate arrangement. This runs the risk of adding another level of complexity.

6 Potentially hazardous food means foods like raw and cooked meats, dairy products such as milk and soft cheeses, seafood, processed fruits and vegetables. It does not include fresh produce. 7 Food Safety Newsletter – Transport, DHS, Adelaide 2003 8 op cit


Moving from food safety to security there are two areas that one needs to be mindful of. The first is maritime and aviation security requirements and the second security against bio-terrorism. Food Security In the wake of the terrorism activities over the last two years, security fears about the movement of Freight have heightened. The new Australian Air and Australian Marine Transport Bill are aimed at improving Australia’s security capability. Increased security will increase costs that will flow through the food export supply chain. Nevertheless if we are able to provide a secure export supply chain that is more effective than our competitors, it may “add value” to our food export market access, particularly to the United State and The European Union. The Responsibility for security is principally the Australian Government’s working in conjunction with the States and Territories. The challenge is to ensure that new security measures facilitate market access and deliver outcomes commensurate with risk. Both the Commonwealth and the States/Territories are addressing this. A variety of international activities have implications for Australian food exports, namely: • Current discussions between the United States and the EU regarding

container security measures • The development by the EU of an Intermodal Security Directive later this

year that is expected to apply to the whole supply chain and cover third country trade outside the Union

• The requirement for the introduction of Unique Consignment Reference numbers by the World Customs Organisation; and

• The flow on impact of initiatives to achieve internationally recognised security standards for their export supply chains

To meet the “24 hour manifest rule” shipping lines are requiring exporters to lodge correctly completed documentation 5 days before the ship arrives in Port.

The U.S. Bioterrorism Act comes into effect from December 12. Exporters to the U S must meet strict new guidelines in registration, record keeping and advance notification of exports, including:

• Australian food production site registration with the Food & Drug Administration (FDA)

• US importers to notify FDA of each separate article being imported (maximum 5 days before minimum noon day prior to arrival) – Exporters may need to have this info available

• Producers & exporters to keep complete records for two years, including source of product, method of transport between source and


facility, method of transport out of facility, next destination after leaving facility, source list for each ingredient used. Records must be available within 4 hrs if within business hours, 8 if not within business hours

Exporters face the possibility of delays if they are slow to comply with new laws and regulations coming into effect later this year. Industry associations are warning that all export businesses will have to undergo some sort of change in operations before December 1, 2003 New IT systems and Technologies, such as digital certificates, will force some of the changes but new export rules and processes, mostly exacted by the United States, will cause the most significant upheaval It is important that exporters re-organise their operations now to ensure that they are prepared when the new regulations come into effect Food exporters need to be aware of the impact of new security requirements such as when cargo/documents must lodged, documentation accuracy and record keeping requirements and additional security charges. Food exporters to the US are advised to:

• Ask their International Freight Forwarder and air or shipping line what is required and to be advised when changes occur

• Put in place risk management plans for possible extended cargo clearance delays in the US

• Check the airport/port of entry is authorised to clear their product • Recognise that the aircraft or ship their cargo is on may not be allowed

in - if one piece of cargo on-board has not been pre-notified to the US authorities [4 hours before aircraft arrival and 24 hours before vessel arrival]

Food Quality Food Quality is becoming a “given” if you want to compete in the product rather than commodity end of the market. There are a number of vendor supply management programs being applied or being developed in key overseas markets as well as Australia. The trend is to underpin any quality program with a HACCP plan. Dr Richard Barnes from the Royal Agricultural College in the UK has conducted a benchmarking study that identifies the evolution of food safety risk management in quality assurance systems for primary production. He lists the stages as: •Self-assessment checklists [eg United Fresh Fruit and Vegetable Vendor Declaration Program] •HACCP based codes of practice [eg EUREP-GAP, Fresh Care, NZ VegFed] •Full HACCP systems [eg SQF codes]9 Dr Barnes concludes that “..those wishing to secure quality and premium markets will benefit from aligning their quality assurance and quality

9 “Benchmarking Global Quality Assurance Schemes in the Fresh Produce Sector” Dr Richard Barnes, 2002 Asia Pacific Food Safety & Quality Conference, Sept 2002, Kuala Lumpur, Qantam Foodlink


management with systems operating (and accepted as preferred systems) by those at the end of the supply chains or those operating in quality niche markets.”10 Cold Chain Logistics Cold Chain logistics has been extensively discussed in the section on AQL1 in this paper. Clearly much remains to be done by exporters and cold chain partners to manage the chain effectively, competitively and efficiently. Australia must advance its capability in this area or risk becoming marginalized by competing supply chains. Key buyers suggest that effective cold chain management will become a minimal requirement for suppliers to meet within 5 years and will become a non-negotiable item. Environmental Sustainability & Social Acceptability Environmental sustainability is an increasingly important issue, largely driven by buyers and consumers. The Eurep-Gap 2004 protocol for Fruit and Vegetables applied to farms has 210 control points, divided into 47 Major Musts, 98 Minor Musts and 65 recommends. It goes from seed/nursery to transport to environment, waste and pollution, operator health, safety and welfare. This is a good example of things to come. It is suggested that over time suppliers of product will need to demonstrate that their cold chain logistics partners, not just the exporter, are environmentally and socially responsible. We may well see the buyer preferring suppliers that use sea or rail transport over road or air because of the modes’ relative impact on the environment. Transport companies that do not pay an acceptable wage to their staff or lack sound health and safety arrangements may be precluded in the future. Time does not permit me to go into further detail but I recommend you look closely at EUREPGAP requirements. Equally it is important to assess the suitability of ISO 14001 to your business. It is a means of demonstrating to your customers that you have an environmentally sustainable business. Potential benefits of the system include:

• Improvements in overall environmental performance and compliance • A framework for using pollution prevention practices to meet EMS

objectives • Increased efficiency and potential cost savings when managing

environmental obligations • Improved predictability and consistency in managing environmental

obligations • Effective targeting of scarce environmental management resources • Improved public position with outside stakeholders11

10 op cit 11 http://www.epa.gov/owm/iso14001/isofaq.htm


Given the above elements how do we go about integrating and managing them? The following table sets out the basic framework.

Integration Framework Key Area System 1 System 2 System 3 Food Safety National & State

Food Safety Acts Industry Codes of Practise

HACCP

Security Australian Transport Security Bill

US Bioterrorism Act Other US and European Requirements

Quality ISO 9001 SQF2000 EUREPGAP Cold Chain Logistics

Importing Country Requirements eg Singapore Standards & AQIS regulations

Individual Company Supply Chain agreements

AQL1

Environment ISO 14001 EUREPGAP and other Good Agricultural Practise systems

EPA Regulations

Social Responsibility

Tesco and other Supermarket based systems

“Freedom Food” (RSPCA UK) and similar

Industry based eg free range eggs

The above table shows the 6 key areas that need to be addressed and integrated in order to demonstrate product safety, security, quality, effective cold chain logistics and environmental and social responsibility. As you will note the framework gives you the opportunity to be as macro or micro as you need to be. Most importantly by producing this tailored to your business needs it gives you the capability to see the whole picture and provide an integrated management solution. If you address the 6 areas then your premium market customers are likely to be impressed, particularly if you have recognised systems in place. AQL1 as a performance based system can also be used as a linking mechanism between other systems and fill in the gaps where no system exists.

Conclusion – Is it all too hard? Today we have touched on:

• Key factors driving change • How through chain performance standards can improve cold chain

logistics • The need to integrate with food safety, security, quality and

sustainability So Best Practise Cold Chain Logistics – is it enough? If best practise cold chain logistics management is inclusive, anticipates and responds to change, has a through chain approach with all its partners and


addresses safety, security and sustainability then the answer is Yes. If it doesn’t then the answer is No. In closing we need to recognise that keeping up with changes occurring on many fronts, finding like-minded quality supply chain partners and quality focussed customers can be hard. Equally integrating the 6 pillars of Safety, Security, Quality, Cold Chain Logistics, Environmental Sustainability and Social Acceptability can be complex. But as a former Prime Minister said “Life wasn’t meant to be easy” Is it all too hard? Yes if you only rely on others and don’t know how each element of the cold chain works. No if you manage the cold chain well and look ahead. So I’ll leave you with this thought –

Are you driving your business by looking forward, Or are you driving by only looking through your rear view mirror?

Thankyou.

Date post:	13-Nov-2014
Category:	Documents
Upload:	pramod329
View:	1,692 times
Download:	4 times