Food freight costs continue to climb in response to market demand. Regardless of what the economy does, food will always be an in-demand item. However, the costs of moving food are increasing, and those costs will only wax as companies look to improve the convenience factor. Convenient meal delivery solutions, such as meal kits, add more touchpoints to food shipping and have specific sell-by dates. Moreover, each stage increases the risk of higher costs. As explained by Supply Chain Beyond, the stages of food supply chains greatly increase the risk of damage and higher costs of shipping food. These include “sourcing of raw materials, production, processing and packaging, storage, wholesale distribution, and retail redistribution to consumers. If anyone of these stages is compromised, a variety of issues will arise and the whole supply chain will be in jeopardy.”
The Problems Contributing to Higher Food Freight Costs
- Energy and fuel costs. Energy and fuel costs are in a continuance flux, and while current fuel costs might be at historic lows, the next upswing is around the corner. As a result, carriers are more likely to continue adding fuel surcharges and costs to every invoice regardless of what happens in the market.
- Logistics and freight mismanagement. Logistics in freight management incurs costs as well. The simplest of IT resources and operations that do not utilize a transportation management system (TMS) have inefficient supply chains adding to total costs which will add to food freight costs.
- Lack of labor resources. As with any economic instability, a lack of talent and labor resources will increase food freight costs as wages increase.
- Poor use of available technology. Lackluster use of available technology, such as using a TMS light solution instead of a comprehensive, responsive, and adaptive TMS, will lead to an increased risk of higher food freight costs.
- Unethical actions within the supply chain. The risk of cargo theft will always remain an issue for food supply chains. Unethical actions within the supply chain could lead to a risk of foodborne illness and other added expenses.
Reigning in Traditionally High Costs Requires Data
The simplest solution to reigning in rising food freight costs is by increasing visibility and exacting every ounce of efficiency from all systems and processes. Improvements must be made to labor management, the dock schedule, replenishment practices, outbound freight management, and every other process. Only through an approach to managing costs of shipping food can shippers and LSPs achieve lower cost margins on food.
Ways to Avoid Excess Costs With Unnecessary, Inefficient Processes
- Track the temperature of food while in transit.
- Avoid bottlenecks at the dock with the right software.
- Integrate your systems to avoid overlooking shipments or scheduling conflicts.
- Centralize communications with all carriers.
- Improve optimization by letting artificial intelligence powered by machine learning handle decision-making with self-optimizing systems.
- Use active sensors to automatically track the food location and status.
- Consolidate items based on temperature-sensitivity.
- Use the right packaging and shipping solution.