“Fresh” Transportation Planning Needed for Frozen Foods Producers

Posted by UltraShipTMS on Jul 15, 2014 in Blog | 1 comment

“Fresh” Transportation Planning Needed for Frozen Foods Producers

Forget about the supply chain headaches caused by endless regulatory mandates, fuel price volatility and the perennial driver-shortage-fueled capacity crunch.  There is a much more fundamental shift afoot that could impact the food shipping industry and their transportation planning strategies in far more significant ways.  

From new HOS rules to rising fuel costs to the ELD mandate, most of the challenges facing transportation managers in recent years have been rooted in regulatory and economic factors that impact negatively on transportation operations.  But the unseen threat to the best laid transportation planning comes from seismic shifts in consumer behavior.  Like an earthquake, these shifts often occur after prolonged periods of stasis, jarring the collective consciousness of the industry which, without warning, is left to pick up the pieces in the aftermath.

Blame it on the proliferation of cooking shows, health advocacy groups’ campaigns to promote better nutrition, the rise of fast casual chains like Chipotle (known for sustainable ingredients sourcing policies) or simply a populace more in tune with healthy lifestyles.   Taken all together, these trends have led to a precipitous drop in the consumption of frozen, packaged foods.  So pronounced is the decline that, according to the Wall Street Journal, market leaders like ConAgra and Nestle have begun discontinuing entire lines of frozen dinners, once seen as a staple of American grocery.

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We  may begin to sound like a broken record, but this is yet another example of the kind of market disrupting event or trend that perfectly underscores the utility and –really – the necessity of having a TMS in order to minimize the effects of flexing to meet new business realities.

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The Journal says, “Frozen-food sales, by dollars, have lagged behind the rate of inflation the past four years, and sales by number of units have fallen. Dollar sales of frozen juice, chicken and pizza all are down since 2009, according to market-research company Nielsen. And sales of frozen meals fell 3% to $8.92 billion from 2009 through 2013, according to Euromonitor International.”

What does this mean to supply chain practitioners?  Considering that the production, packaging and transportation of fresh foods differs greatly from the processes used to produce frozen foods, it means serious modifications to the transportation network and transportation planning must occur for food companies seeking to ride the waves of changing consumer habits. This in turn means significant changes to production including new/different plants in new/different locations.  It means shorter delivery windows for fresh product with shorter shelf life; both inbound and outbound as freezing is no longer an option.

We may begin to sound like a broken record, but this is yet another example of the kind of market disrupting event or trend that perfectly underscores the utility and –really – the necessity of having a TMS in order to minimize the effects of flexing to meet new business realities.

One Comment

  1. “So pronounced is the decline that, according to the Wall Street Journal, market leaders like ConAgra and Nestle have begun discontinuing entire lines of frozen dinners, once seen as a staple of American grocery.”

    When customer buying patterns change the supply chain has to change with it. If customers are demanding more fresh produce than grocery chains are going to look for more local providers. They might even add new providers into the mix to keep products in stock.

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