Chain of events: a blog of Food Chain Intelligence

Two recent reports were released in the VEIL’s website, discussing the effect of food freight in Australia.

The first work entitled “Understanding Victoria’s Fruit and Vegetable Freight Movements” maps out Victoria’s fruit and vegetable freight movements from production to fork and analyses the greenhouse gas emissions produced through these movements. The analysis is focused only on transport (including refrigeration within transport where required), but it is not an entire LCA.

Some results from this report highlight the following:

1) The overall performance of the Victorian fruit and vegetable distribution resulted in around 133.8 kg of CO2 emissions produced per tonne of fruit transported, and 134.5 kg of CO2 emissions per tonne of vegetable transported. Overall, the supply chain was estimated to produce 134.3 kg of CO2 emissions per tonne of F&V moved.

2) The overall transport emissions for processed F&V were estimated at 190 kg CO2 per tonne, and exceed that for unprocessed F&V. This can be attributed to the additional transport legs to and from the processing centres.

3) Taking uncertainties into account, the carbon footprint from farm-to-fork distribution of fresh F&V consumed in Victoria and sold through greengrocers and supermarkets is likely to fall within 82,214 and 318,976 tonnes CO2 per annum. These results reflect a large data uncertainty –and the extent to which changes in the variables selected for testing in the sensitivity analysis affected the resulting emissions.

4) In the farm-to-fork analysis, the most significant factor in transport GHG emissions for fruit and vegetables was found to be the consumer travel necessary to purchase these goods.

5) The significance of the consumer trips is largely driven by the households located at distances over 5.5 km, despite the fact that these are a minority (less than 20% of the total Victorian households analysed). If the travel distance (or number of trips) of this
minority of households were decreased, this would lead to a substantial decrease in the total F&V carbon footprint.

The authors of this report were Dr Leorey Marquez (CSIRO), Dr Andrew Higgins (CSIRO) and Dr Silvia Estrada-Flores (Food Chain Intelligence). Two scientific publications are being prepared as a result of this report.

The second report is entitled “Best Practice Food Distribution Systems” and discusses measures to drive GHG emissions out of food supply chains by the following players:

· Farmer and consumer led initiatives (e.g. farmers’ markets; coops; online hubs etc);
· Food retailers;
· Food manufacturers and marketers;
· Third party logistics providers; and
· Local councils, State and Federal Governments.

Thirty eight different initiatives were studied and results were extracted for each category, regarding:
· Drivers and motivations;
· Innovative aspects and opportunities;
· Obstacles and challenges; and
· Lessons learned - applicability to future initiatives.

This report highlights a wide range of alternatives that can help to decrease GHG emissions derived from food distribution systems. Rather than advocating for a unique approach to be used to drive emissions out of food supply chains, this report shows that each player in the chain can have a significant role in developing sustainable food distribution systems in a local, national and international level. The opportunities for abatement are significant.

The authors of this report were Silvia Estrada-Flores (FCI) and Kirsten Larsen (VEIL).

The projects received funding support from the Victorian Department of Planning and Community Development, Sustainability Victoria and Regional Development Victoria, CSIRO and in-kind support from the Department of Transport.

Croakey has an interesting post on the debate about how inclusive the National Food Policy Working Group is. While the CEO of Choice is part of the group, it has been justly pointed out that the group does not have representatives concerned with public health (e.g. obesity, healthy diets). The disconnection of the newly formed group with the Preventative Health Task Force and the Prime Minister’s Science, Engineering and Innovation Council (PMSEIC) were also pointed out.

The PMSEIC in particular released a report entitled “Australia and Food Security in a Changing World“. If you type the title and search for a link, the first link where you can download the report is not the Chief Scientist office, by the way. I found the link through “the funneled web“, a website that contains notes of interest to Australia’s Higher Education sector. Clearly, they have a better website ranking than the Chief Scientist office (note to Penny Sackett: must invest in social media and search engine tools ).

In any case, I want to make sure than in this debate we do listen to what the PMSEIC has to say about food security in Australia.

I found the report to be a well thought, well structured position paper. Just what you would expect from a Chief Scientist advising the Prime Minister.

Contrary to the opinions expressed by the Public Commission and to some extent Ross Gittins, in that we should decrease agriculture R&D funding and that we don’t really have to worry about food security in Australia, the PMSEIC report indicates the contrary. Emerging food security challenges mentioned in the report include:

a) Vulnerability to climate change and climate variability.
b) Slowing productivity growth in primary industries observed over the last decade.
c) Increasing land degradation and soil fertility decline coupled with loss of productive land in peri-urban regions due to urban encroachment.
d) Increasing reliance on imports of food and food production inputs (such as fertilisers) and the susceptibility of these supplies to pressures outside our control.
e) A finely tuned and ‘just in time’ food transport and distribution system that presents risks of rapid spread of contaminated food and is vulnerable to events such as pandemics.
f) Poor nutritional intake leading to an increasing burden of diet-related diseases in the population.
g) Conflict in our region and elsewhere.

What do you know? I have the same in my list, made in 2009.

In the report, it is said that Australia’s strengths are:

-Australian agriculture has maintained its leading position in despite of itself. That is, we produce food on the driest populated continent, on low quality soils and in the face of continual climate variability (and I would add, in despite of the lack of leadership in food policies and R&D funding).

-Australia has strong links and capabilities in delivering technological development to developing countries in our region.
-Australia has a strong R&D base and our agricultural R&D capability ranks among the best in the world. Note: we should not confuse “strong R&D base” with “strong R&D funding”. The same report indicates that global investment in agricultural R&D has decreased over the past 20 years and that similar trends are observed in Australia, where agri-food R&D investment has progressively fallen from
a peak of 5% of gross value of agricultural production in the 1970s to just above 3% in 2007. John McMullen, adjunct professor of Charles Sturt University, links decreases in agricultural R&D with losses in Australian agricultural productivity beautifully. Listen to his views here
-Australia has a strong capability in climate change research including impacts, adaptation and mitigation.
-We have expertise in human health and nutrition research.

The report also states that a national and coordinated approach to food is needed. This includes not only the supply chain partners (i.e. farmers, manufacturers, retailers and service providers). It also includes policy makers, regulatory agencies and research organisations. This is a position I argued in my submission to the Cutler innovation review. And inclusion is now the issue discussed by Franca Marine the PHAA and Prof. Lawrence.

Key recommendations out of the report:

a) The establishment of an Australian Food
Security Agency, which coordinates the development and implementation of
policies and programs targeted to improving Australia’s food security.

b) Australia should increase its investment in agricultural R&D, to harness national expertise and take a leading role in national and international programs targeted to improving low input farming systems (hear that, Productivity Commission??)

c) Development of incentives to recruit and nurture future generations of innovative and adaptive farmers, researchers and associated professionals for the Australian food production and processing sectors.

d) Improve engagement with the community and partner organisations to elevate the status of food in Australia and build cooperative commitment to an improved food value chain.

The report establishes a time frame of three years to achieve these recommendations.

This report provides an excellent review of the issues confronting Australia’s food system in the next years. This includes water availability, fertiliser and energy availability, climate change, competition for arable land, and the effect of international conflict on food security.

I also liked the assessment of food distribution as an issue: the report says: “In Australia, we have had an abundance of food. We can produce more food than we need and we
have the resources to import food if necessary. However, we have faced crises for specific foods, such as the banana shortage after Tropical Cyclone Larry in 2006. Further, our food transport, distribution and storage systems are vulnerable to disruption. For example, a major epidemic could restrict movement of people and materials resulting in food shortages in some urban centres”. These are examples that we use in two publications: 1) ” Food distribution systems in a climate-challenged future: fruit and vegetables as a case study.” 2) “Food Security in Pandemic Scenarios”.

You will be glad to know that there has been some research done in regards to the vulnerability of food transport, the carbon footprint of food transportation and distribution initiatives to decrease emissions from food transportation. Two reports just finished (to be available through VEIL) discuss a) the impact of food distribution systems; and b) the carbon footprint of food distribution of fruit and vegetables in Victoria. Stay tunned to this blog for further information about these two studies.

Overall, I highly commend the PMSEIC report and I look forward to the implementation of the recommendations.

Stuart St Clair is the CEO of the Australian Trucking Association (ATA). His address at the National Press Club today provided some interesting information about the trucking industry.

For example, Mr. St Clair mentioned that nearly 3/4 of Australian domestic freight (including the items that we buy in our nearest supermarket) is transported by road and that 50% of the kilometers travelled by freight trucks occur within capital cities.

I believe Mr. St Clair because I see this fact every time I go to my local Woolworth’s, where trucks maneuvering to park in the delivery area block the entire access to the supermarket’s parking lot.

The entire car park goes into a standstill until the truck achieves the almost impossible task of parking in a single space that looks smaller than the truck and it is placed in a corner. The truck then delivers a range of goods that sit in a tiny dock, thus slowing unloading activities.

After that truck, there is always another waiting its turn, so that congestion is a usual sight in that shop. I am sure this scene is repeated in several supermarkets across Sydney, Melbourne, Brisbane and other major cities.

I have always imagined a system where deliveries to shops located in busy urban settings are done by vans, as opposed to 40 foot trucks. But of course, we have another problem that was raised by a representative of the Transport Workers Union: trucks are often seen as mobile warehouses, where product can sit up to 24 hrs waiting in distribution centres, before being delivered.

I can think of several reasons why this seems like a good idea for the DC owners: (a) it is a good way to decrease the need for storage volume, thus lowering inventories and costs associated. (b) in busy times and for refrigerated loads, trucks do become an extension of refrigerated warehouses so products don’t sit on the dock unrefrigerated for several hours. Although this is good for the DC owners, these costs are absorbed by the truck operators.

Therefore, the news about Kenwood trucks now spending between 20 and 25% less diesel are welcomed, particularly by food supply chain operators. My rough calculations in the April 2008 ‘Chain of Thought’ newsletter indicated that food transport in Australia accounted for 5.7 megatonnes of CO2 equivalents in 2007, excluding the use of diesel for refrigeration purposes. The ATA estimates that in 2005, net greenhouse gas emissions from trucks totalled 14.4 mega tonnes of CO2 -e. So food transport represents about 40% of the total GHG emissions from road freight.

There are about 17,000 refrigerated trucks circulating in Australia. Diesel used for refrigeration from these trucks contributes with about 0.5 megatonnes of CO2 –e, bringing the estimate for food transportation to 6.2 megatonnes of CO2 –e. To add some context to this number, this amount is the equivalent of approximately 1.4 million cars circulating in Australian roads each year. So, any technology that brings this number down and that is reasonably priced is great news.

Clearly, rail will not replace road transport in urban settings. In fact, rail can’t really fulfill the Australian interstate freight demands in most cases. This problem was illustrated by Mr. St Clair when he stated that there is no rail freight system that connects the Gold Coast to either Brisbane or Sydney (rail infrastructure is for passenger transport only). Therefore, intermodal systems would require a significant spending to bring infrastructure up to a point where rail or ports can accommodate larger domestic trade rates. Innovation in truck systems for both unrefrigerated and refrigerated cargo may be a simpler and less expensive solution.

Reduction of diesel for cooling purposes could be achieved by: (a) more efficient insulation (e.g. vacuum panels); (b) refrigeration transport systems powered by cleaner energy alternatives than diesel (e.g. solar panels, electric, CO2 cycles); (c) increased insulation thickness. The latter may be the push needed to change current Australian road legislation that limits truck’s width to 2.5 m, as opposed to the 2.6 m width limit used in Europe, Canada and the U.S.

The Logistics Association of Australia’s breakfast meeting yesterday was a great opportunity to meet and talk with several colleagues in the supply chain sector. I appreciated the introduction and kind words of George Balis (VP Sales and Services, CHEP) and Brad Harrison (LAA President) and I thoroughly enjoyed the Questions and Answers session after my talk.

The outlook for the US logistics industry is not pretty: over the course of 2007, total logistics costs were up 7% from the 2006 baseline. All this, against a backdrop of the slowest growth in the US economy since 2002. Inventory carrying costs rose faster than transportation costs, with a growth of 9% with respect to 2006 costs. Nearly 47 hundred trucking firms left the market in 2007 and in the first three quarters of 2008. The demise of 6.5% of the US trucking capacity existent in 2006 raises concerns over the levels of response of US road transport providers when the financial downturn is over.

We discussed how some US trends could affect the Australian logistics sector. One key message was that strategic decisions made today on the basis of current financial challenges also need to account for the need to maintain levels of service when the good times come back (because they will!).

We also discussed the prominent role of 3rd party logistics and the global trends described in the 13th Annual 3PL Report. Key issues addressed were the users views about how 3PL adds value to their companies, the use of integrated logistics (as opposed to individual outsourcing), the role of 3PLs in achieving green supply chains and the issues of concern in supply chain security.

The entire presentation can be found here.

On February 18 2009 I will be talking about some US trends that emerged from the 19th Annual State of Logistics report , presented by Rosalyn Wilson in the Council of Supply Chain Management Professionals conference in Denver last year. The talk is one of the 2009 breakfast events organised by the Logistics Association of Australia. The start time is 7 am at the Rydges Hotel in Rosehill.

Some highlights of the 2008 logistics report were:

• Over the course of 2007, total logistics costs reached $1.4 trillion, up 7% from 2006 costs and representing 10.1% of GDP. This is against a backdrop of a 2.2% growth of the US economy, the weakest performance in the last five years.

• Inventory carrying costs outpaced transportation costs, rising 9% in 2007.

• In the first three quarters of 2008, 2,690 trucking firms left the market, as compared to 2,000 in all 2007. This represents a loss of 172,000 trucks or 6.5% of the US capacity.

• In contrast, third party logistics are flourishing, with revenues up 7.2% in 2007. 3PLs will play an even more critical role in the future and this is expected to be a long-term phenomenon, not just a crisis-driven event.

• The operating costs of the trucking industry have increased by 6 %, mostly due to fuel costs.

• The cost of rail transportation rose 7.4% as the rails posted their second-best year on record. The robustness of the rail industry is also reflected on the rising freight revenues per ton-mile, which was up in 2007 to 2.99 cents, from 2.84 cents a year ago.

• Maritime and domestic water transport had a slight increase in costs (3.4%). However, US East Coast ports benefited from increased US exports.

• Air freight revenue increased by US$3 billion during 2007, mostly due to gains in international cargo.

The applicability to the Australian logistics marketplace of such emerging trends will be discussed.

To attend this event, book now through the Logistics Association of Australia.

See you there!