Logistics Risks in the Food Supply Chains
Techane Bosona, Swedish University of Agricultural Sciences-SLU, Uppsala
FARMD (January 2013) | Worldwide, the distance and tonnage of food shipment have increased during the past decades. For example, the distance food travelled at the beginning of 21st century had increased by 50% in UK and by 25% in USA from what it travelled in the 1980s (Halweil, 2002). The increase in food transport not only has negative impact on logistics cost and environment but also has increased risk for food quality, safety, security, and traceability.
In this discussion, logistics refers to the movement (forward and reverse) and storage of goods (food, food producing animals and other agricultural goods) and the associated financial and information flows. Since logistics is an important activity that requires extensive use of human and material resources affecting a national economy, developed countries like UK and USA have given attention to improving the technology and management of logistics activities and costs as percentage of gross domestic product. This focus by the USA and UK has rendered them with the least costly logistics activities when compared to other countries (Rushton et al., 2006). However, in countries like USA, the increasing quantity of food transported, shortage of skilled truck drivers, ensuring safety of food, and satisfying customers’ demands remain as the main challenges (Ackerley et al., 2010).
In developing countries, on the other hand, the available transport infrastructures are relatively poor and physical destructions are common due to flooding, local and regional conflicts, and lack of appropriate maintenances. Inadequate logistics services are associated not only with product loss but also with food contamination, and spread of disease at different stages of food supply chain. Although logistics risks in agriculture cover wider scope, this paper focuses on major logistics risks in food and food animal supply chains.
Risk is associated with exposure to events that cause losses (Jaffee et al., 2010). Logistics risk is one of many categories of risks that face agricultural supply chains. Poor logistics technology and management are major sources of this category of risk. Logistics risks also can be caused by changes in supply and price of energy, changes in transport service, physical destruction of infrastructures (roads, railways, bridges, stores, market centers), inappropriate truck loading, and inadequate and/or interrupted communication service. The logistics risk is usually not stagnant at the location of its creation. It can propagate in both backward and forward directions in the supply chain. Logistics related risks in food supply chain lead to food loss, food contamination, spread of disease (both animal and human), and environmental damage.
Risk of food loss
In many countries, especially poor countries, there is considerable food loss through spoilage at the farms due to lack of storage capacity as well as lack of capacity to transport the produce to processing plants or markets immediately after harvesting. In some cases, the available transport services may be interrupted due to damages on roads caused by flooding or armed conflicts leading to product loss due to spoilage, theft or total damage. For example in Uganda, dairy farmers were forced to interrupt marketing their milk because of flooding in 2007 (Choudhary, 2011).
Logistics related food loss is high in low income countries while comparatively it is food loss at the consumption level that is higher in high income countries. In Sub-Saharan Africa, around 8% of cereal production, 15% of dairy production, and more than 35% of fruits and vegetables products are lost due to logistics related problems (Gustavsson et al., 2011). Only in Industrialized Asian countries (Japan, China and South Korea) around 15% (142 million tonnes per year) of fruit and vegetables are lost due to logistics related problems. For example, injuries from punctures (due to inappropriate containers and packaging), impacts (due to bad roads and driving behavior), compression (due to overfilling of containers and inappropriate loading), and vibration (due to rough roads and bad driving behavior) as well as exposure to high or low temperature, moisture, chemical contaminants and insects are main causes of logistics related damages to fruits and vegetable produces. Figure 1 shows losses during loading vegetables.
Figure 1: Losses of vegetables due to inappropriate loading and transporting. Source: Gebresenbet and Oodally (2005).
According to information obtained from the Food and Agriculture Organization of the United Nations (FAO), global fish loss caused by spoilage is significant, totaling around 10-12 million tonnes per year. In Latin America, South and Southeast Asia approximately 25% of fish and seafood products are lost due to logistics related problems, because high levels of deterioration occurs during distribution of fresh fish and seafood. Similarly, the logistics related loss in dairy products is significant (more than 10%) in developing countries. Inability to market milk products during rainy season, lack of proper transportation and cold chain during hot season, erratic power supply to milk processors and coolers are some of causes of losses in dairy products.
The logistics related risks also occur in the transportation of food producing animals. Transport of livestock is known to be stressful and injurious, which leads to production loss and poor animal welfare. For example, in the USA about 80,000 pigs die per year during the transportation process (Greger, 2007). A case study in Ghana indicated that more than 16% of expected income is lost due to occurrence of death and sickness or injuries of cattle during transport from farm to cattle market and abattoir (Frimpong et al., 2012). A similar case study in central Ethiopia (Bulitta et al., 2012) indicated that during cattle transport from farm to central market over 45% of animals were affected (either stolen, died or injured). Figure 2 presents example of logistics risk on animals during inappropriate cattle transport from farm to abattoir.
Figure 2: A non-ambulatory cattle drawn by cart to abattoir from nearby cattle market. It became non-ambulatory during transport from farm to central cattle market. Source: Frimpong (2009).
Lack of effective communication infrastructure and information flow also causes logistics risks in the food supply chain. Farmers can save their products from damage if they have continuous access to information concerning market price, regional stability, road safety, weather condition, forest fire ignition etc. For example, the weather breakdown can cause logistics risks in the food supply chain at different levels and different transport modes. Heavy rain and flooding prevent local farmers from taking their produce to market or packaging house by human or animal transport; disrupt transport from local market to central market by rail or road vehicles; and causes flight delays which have further negative consequences when air freight is planned for food transport.
Risks of food contamination
The food supply chain without an effective and efficient traceability system is easily exposed to contamination (Cavinato, 2004). Logistics risks related to food contamination includes the potential infection (including bioterrorism) and spread of disease due to increasing long distance of food and animal transport. According to Greger (2007) an infection (terrorist attack) at a single point in the USA cattle production sector could result in a loss of around 23 million cattle within 8 days after attack. Increase in duration of transport and lairaging of cattle and poultry increases the risk of contamination with pathogenic bacteria. Stress factors associated with the transport-lairaging process facilitate favorable conditions for increased occurrence of pathogenic microorganisms in animals (Buncic and Sofos, 2012).
An accident on nuclear reactors also causes a high risk of food contamination, in this case with radioactive materials. A study in Finland (Orre, 2005) has indicated that improving emergency preparedness is important and this needs effective training on food logistics including cleaning warehouses and retails, controlling and transporting non-contaminated food items to retail storage facilities after the radioactive materials have passed over a region. After the radioactive incidence caused by a large earthquake in Japan in 2011, many countries have implemented intensive food control measures concerning their food trade relationship with Japan (WHO, 2011). Some countries required documentation verifying the safety of food products and the exact origin of the food while other countries suspended transporting food from Japan altogether, in order to avoid the burden of food control activities due to the high risk of contamination in production place and/or during packaging and transporting.
Risk of environmental damage
The increase (in quantity, travel distance and travel time) in transportation of food and food producing animals increases environmental impact of agriculture through increases in air pollution, resource depletion, impact on landscape, congestion, noise and traffic accidents. The increase in emission from food transport aggravates the impact on environment as the increasing CO2 emission from transport sector worries the entire world. For example, about 20% of green house gas emissions in food supply chain in UK are from food logistics (packaging and transport) activities (Garnett, 2011)
Measures to counteract logistics risks
Some of potential measures to reduce logistics risks in the food and animal supply chains are:
- improving infrastructures (in-farm and off-farm) for road, energy, communication and marketing sectors
- improving food containers, storage and cold food chains
- reducing transport time and distance
- designing appropriate packing house at optimal location
- providing training and improving packaging activities
- improving loading and unloading (food containers and animals) activities
- ensuring the ventilation of environment at all stages of food logistics chain (packing house and storage, within packages, in the vehicles).
- labeling the food appropriately at the time of packaging
- separating cooked (ready-to-eat) food from raw food during transportation to avoid cross-contamination of food
- sanitizing the food packaging area, packaging machinery, and food transport vehicles
- controlling the temperature properly, especially during food transport
- promoting coordination and integration in food logistics management
- providing appropriate training to drivers of food and/or animal transporting trucks
- effective planning of optimal food transport routes
- increasing the accessibility of information communication in rural areas
- developing effective food traceability systems in which food chain operators are trained to produce, store, handle and transport food in accordance with food safety standards.
The increased shipment of food in quantity and distance is associated with logistics risks caused mainly by poor logistics technology and inefficient logistics management. These risks cause great damage in the agriculture sector as they lead to food loss, food contamination, spread of disease (both animal and human), and environmental damage. In order to counteract the logistics risks, more attention should be given to develop effective logistics technologies and efficient logistics management (supplemented with training) in the food supply system, with an emphasis on developing countries.
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