chris catto-smith, freshport asia - improving logistic efficiencies in south east asia

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Rapid Implementation Case Study Chris Catto-Smith

Choosing the right Distribution Networks Adding Value – cold chain case study

Challenges and the unexpected

Pack Ship Sell Pick

The “Simple” Fresh Produce Supply Chain

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Lower logistics cost per kg:

Increased Shelf Life on arrival

Reduction in Damage Claims / Shrink

Reduction in Transportation costs

Load Optimization & Consolidation

Value that Retailers support:

Pre-conditioning / Pre-cooling of produce prior to Shipping

Thermal Protection & Monitoring (Every Step)

Compliance with General Food Laws

Improved Transport Handling & Thermal protection (2-8°C, 8-15°C)

Environmental Benefits:

Lower Carbon Footprint (elimination of gel pack & Foam packaging landfill)

Lower energy consumed at each stage of handling

Reduction in single use packaging / A pallet sized solution that can be returned folded and flat

Product Freshness & Food safety

Driving Change: Cost vs Quality in a Responsible Manner

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Shipper

Packing Staging

Current Method 35°C

60 Mins

35°C

120 Mins

15°C

60 Mins

10°C

60 Mins

35°C

60 Mins

24°C

20 Mins

28°C

10 Mins

Just in Time

Staging

Dry Ice added to hot container

Hand

unloading

Product

hot on tarmac

No

protection airborne

Perishable

Packing (Data logging)

Warm build-

up product temp 17C

Pallets kept

on truck

Hand loading

Broken cold-

chain

Product

hot on arrival

What started the project – broken cold chain / huge wastage

Thai Fresh Produce exporters had become logistically uncompetitive

Loading Temperature 24ºC

25% wastage

Unknown Post-

Harvest care

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Immediate Improvement 2°C

10 Mins

2°C

20 Mins

2°C

90 Mins

2°C

60 Mins

2°C

90 Mins

2°C

10 Mins

2°C

10 Mins

Shipper

Packing Pre-cooling

Pallet return to packhouse

Pre-

Cooling

2°C (or as reqd)

Rapid Dock

Receiving

using trolley

jack or tail

gate

unloading

Thermal

Protection at Ramp <17°C

ULD

Protection airborne

Perishable

Packing

Using liner plate

on base

Of pallet – lift side

ETV Cold

Storage 10-12°C

All through

pallet usage

Rapid Dock

Loading

using forklift

or tailgate

PMC

Build & Weight Pallet cover

Development of Thermal Covers to cover the breaks

Good Post-Harvest

Intervention, Pre-cooling

& Shelf ready packaging

Loading Temperature 1ºC

ZERO claims or wastage

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Refrigerated Delivery Vehicles

(minus 20ºC – 5ºC)

Problematic temperature control

Ambient Delivery Vehicles

can be run at 20- 35ºC

Cream tests successful with truck temp at 48C

No cold chain breaks during loading

Trip Cost

~30-50% lower

Fuel & Energy

~5-10% less

Replacing Refrigerated Transport

with Ambient Transport with lower cost / less fuel usage

Insulated Ambient truck temp 27c

Pallet starting temp 5-7c

Pallet arrival temp 6-7c

Chiller truck temp average 8c

Pallet starting temp 4-5c

Pallet arrival temp 5.5-6c

Cream Transport using Ambient Truck & Thermal Covers - 6 hours

Cream Transport using Normal Chilled Truck – 7 hours

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Polystyrene waste is a huge environmental problem in Asia resulting in significant pollution

of waterways & energy waste – it cannot be recycled – but often un-hygienically reused.

South East Asia’s Retail Logistics Curse

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Expanded polystyrene is an

irresponsible packaging material

that cannot be recycled and

which is often discarded or

thrown away

Example of expanded polystyrene foam cartons – not popular with consignees

Objective to remove polystyrene from the Fish Supply Chain

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Elimination of single use polystyrene cartons

A solution was developed for reusable / returnable / foldable thermal

eco-friendly packaging (solution developed with a Regional retailer)

Eco box

Eco Box (Dairy, Fresh Cut Produce, Frozen)

Design Concept

Foldable / washable / re-useable

100cm long x 60cm wide x 30cm high

Avoids use of oversize polystyrene cartons / reduced wet ice

Reduces requirement for refrigerated transport (<36 hours)

Prevents damaging oversize products in standard size crates

Target Performance:

Target produce weight 30-50kg, including wet ice / eutectics

Light weight chilled produce Pre-cooled 2-5C /

Fish transport in minimal wet ice 0-2C, Whipping Cream 2-5C

Stackable 4 layers high / 2 boxes per pallet layer - folds flat for return

Additional insulated transportation inside thermal pallet cover

Eco-Box (Loose Load or pre-packed less than Palletized Product)

Collapsible, nestable, returnable. Supports Chilled (Frozen version in development)

Two sizes developed

Oversize Pallet Box

100/107cm x 60cm x 30cm

Delivery Box (frozen)

60cm x 40cm x 20cm

Can be used in conjunction with

Eutectic cold bricks or stand-

alone.

Uses an inner plastic liner to

contain wet ice.

Vacuum insulated panels to be

used for frozen box

Project Benefits:

Maintains cold chain integrity for multi modal and long distance transport (2- 3 days)

Lower energy cost using ambient transportation in lieu of refrigerated transport.

80% reduction of wet ice used in transportation of fish (reducing product damage)

Improved quality / shelf life and reduced waste for chilled & highly perishable products

Prevention of chilling injury during transportation for certain products

Lower environmental impact by using reusable thermal packaging in lieu of polystyrene

Lower in-store infrastructure costs (reduction in use of back room refrigeration)

Cover folds up for lower cost return transportation, must be washed on each cycle of use

Thermal Covers – Benefits

Thermal Covers – Test Results

Testing

A number of tests were carried out to confirm that thermal covers could perform with the different

products / handling requirements of Metro, they involved Fish and F&V. These tests met or exceeded

expectations. Test Summaries are as follows:

Fish

Maintained 2 – 5 kg wet ice in plastic crates for a period of 3 days @ 1- 2C

Improved quality of fish received in store (less damage)

Dairy & Cream

Transportation from manufacturer to distributor warehouse 5 hours 2-5C

Ice Cream

Transport from manufacturer to retail DC 5 hours <18C

F&V

Maintained temperature of pre-chilled apples at 4C for 3 days at 8 -15C

Maintained pre-chilled apples <8C exposed to 30C ambient for 3 days

Prevented chilling injury with sensitive produce for 3 days in 2-5C environment

Ambient

Ambient

Ambient

Temperature

10mm cover &

No cooling block

10mm cover &

3 Cooling blocks

10mm cover &

3 Cooling blocks

Result: 3 pallets of apples,

with temperature maintained

<5C for 52 hours

Trial 1: Chilled Apples in Low Ambient temperatures 3 days

Whipping Cream between 2 & 5C to maintain efficacy

Average ambient temperature inside the truck. 32c

Under thermal cover

temperature readings Average temp 5c

Temperature Inside 1 gallon cream tub

Product temperature

increased 1 degree in 5 hours

2-5ºC

Trial 2: Chilled whipping Cream – Ambient Truck Transportation 6 hours

Palletized Ice-cream <minus 18C,

Average ambient temperature inside the truck. 17C

Product temperature increased 2 degrees in 6 hours

Under thermal cover

temperature readings Average temp 5c

Trial 3: Ice Cream – Ambient Truck Transportation 6-12 hours Metro Delivery

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Normal

transportation

method of

Mackerel:

Using undersized

plastic crates

No standard

polystyrene box

was available- so

traditional method

is to use second

hand (not clean)

poly boxes or

recut standard

boxes with

contamination

from cut

polystyrene.

Trial 4: Mackerel Shipment with Wet Ice

Test 4: Fresh Mackerel Shipment with Wet Ice

Testing using 25kg of fresh

mackerel - average length

90cm

48 hours – delivery from

CanTho fish platform to Anh

Phu Store

Result: all wet ice intact

Maintained temperature

Trial 4: Fish on Wet ice - 3 days only with refrigerated transport

Ambient Truck & Platform

Temperature

Logger inside

body of fish

Temperature Logger on

top of fish

Trial 5: Protection from Chilling Injury

(Herbs, Bananas, Tropical Fruits)

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Average temperature differential 15C 18 hours

Ambient Pomelos. Exposed to potential chilling injury

Product core temperature decreased 5C / 15 hours.

1C temperature decrease / 3hours.

The thermal cover showed it can provide protection for sensitive produce from chilling injury during

transportation.

Cold room temperature

Logger inside centre of pallet

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New Product Offering – Low temp frozen in situ cold room

1. Frozen, deep-frozen and refrigerated commodities.

2. Inner temperature can be kept to -20C even in a midsummer.

4. Various types of cooling containers are available

Thermal Engine from Japan

Can Tho Fish Platform

as part of an overall Fresh produce

Implementation project

Rapid Implementation Case

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In just 18 months: End to End Fresh Supply Chains

.

.

Suppliers Inbound

Transport

Consolidated Value Added Tier 1

Value Add

Consolidated

Delivery

Stores

. . . . .

North

Centre

Greater HCMC

MKD

South

Local Seafood

Freshwater QA & Cross Dock CanTho Fish

collection

Cool & Pick Stage / Xdock

Local & Import

meat Central Stock

Dalat

Fruit & Veg Contract F&V

F&V Import / Local

Stage / Xdock

Central Stock

Dairy & Frozen Stage / Xdock

HCM &

HAN

sourcing

Project Vision

Offer Vietnamese consumers good quality fresh fish which is produced

in a sustainable way and processed under international hygiene, cold

chain and food safety standards

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Through the introduction of innovative & practical supply chain practices that

deliver end to end cost savings & increased farmer revenue.

METRO Cash & Carry Vietnam commits to implement the First

Fresh Fish Value-Chain in Vietnam by:

• Investing in the relevant farmer extension program to support:

• The development of the Good Aquaculture Practices (GAP)

• The training & certification of over 250 fresh water fish farmers on GAP standards

• Increasing farm-gate revenue through long term collaborative sourcing programs

• The sourcing of the seafood products in priority from the GAP certified farmers

• Reduce the current risk of food safety issues with traditional trading and wet markets

• Innovative supply chain solutions that deliver value and scalability

Why we undertook this project

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Metro Can Tho Collecting center

Metro Stores

Horeca - Retailers

Consumers

Collectors 1

Farmers

METRO

Supervision

METRO

Requirement

Standard

The aim was not to beat traders or compete with wet markets on price at their lower

quality standards – but to exploit the higher end HORECA market that is willing to pay

for properly marketed higher quality products . Volume sales will then drive cost

efficiencies.

The New METRO Fresh Fish chain

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Photo taken prior to the fish platform implementation at the Can-

Tho Fish market of fish being purchased for Metro

We can’t control quality / food safety with our current collectors

It’s a matter of hygiene / food safety

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Photo of the Can Tho Fish market collector

Traders that sell fish to Wet markets often rely on corrupt

trading practices & illegal transportation methods

Basic Fish Processing in deplorable conditions.

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Metro had trained 300 Trained Fish Farmers in the Mekong

The Problem

Can Tho fish collecting center location

Can Tho as a central cross road in Mekong delta with airport facilities.

(Possibility to use available land nearby the Can Tho Store

• Available empty land

• Existing licenses for fish

processing

• Existing waste water

treatment to be upgraded

• Reinforce the image of

METRO in Mekong delta

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Impression of container facility:

17 modular-containers are used to support Fish Platform work

flow from goods receiving to dispatch.

800K USD – 5 months

400K USD – 4.5 months

1M USD – 6

months

Initial Designs – Too expensive / long delays

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Site for

Interim

Facility

Car park slab

Water treatment

Use an existing store facility

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Fish Platform: Layout

Using standard shipping containers: quick to

make. Whole solution is portable ,

Containers & Civil works – 150K USD

Fit-out & Equipment ~ 56K USD

From car park to completion 20 days

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1. Receiving & QA

2. Cooling

3. Put away buffer

4. Ice /delivery

5. Processing

6. Packing

7. Staging / Storage

8. Loading

9. Crates

10. Waste disposal

11. Dry Storage

12. Administration

13. Changing Rooms

14. Rest / eating area

Simple layout / One way flow

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Facility Start up – simple and efficient

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Easily cleaned – vastly improved hygiene

• Mekong Delta sourced fish represents 60% of volumes of METRO fish assortment

• Handling of over 80 species: 50% are farmed fish and 50% are captured sea fish species

• Serve Nationwide stores

– As result, in 2011, around 300 farmers and 50 collectors have been trained in the

METRO requirement standard for Aquaculture and Fisheries

actual Forecast Stage 1 Stage 2.1 Stage 2.2

>3T per day

4-5T per day

+ processing

>5T per day

Scalable design to manage volume growth

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UNUSED LAND

CRUSHED GRAVEL

Step 1: Completed <end Aug

Rapid Implementation (20 days)

Scalable Design (no building permit)

Re-locatable containers

Recycled Materials – low

environmental impact

HACCP design principles

Worker & Hygiene Friendly

Uses store infrastructure (water

treatment, electric, utilities)

Ultra Low cost construction

17 Containers 660 sqm

Stage 1 – completed in 20 working days

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Logistics Area

Crates Allocation

Receiving

Loading

19 Containers 1000sqm

Stage 2 – completed 3 months (with Ice machine)

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Ice Making Machine

Cooling

Logistics Area

Crates

Receiving washing

QA

Staging

Doubling the platform are ~1,200 sqm

23 containers 1200sqm

Crates

Loading Logistics Area

Stage 3 – limited expansion based on volumes

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Ice Making Machine

Cooling

Logistics Area

Crates

Allocation

Loading

Receiving washing

QA

Staging

23 containers 1548sqm

Full expansion

Thermal pallet covers improve cold chain integrity and provide a suitable solution to reduce the

volume / weight of wet ice required for shipment from Cantho to the cross dock platforms and

selected stores.

Using covers will allow improved protection of fish in transit, reduced ice consumption, and potential

reduction in refrigerated transport costs.

Additionally Foldable returnable insulated boxes will be introduced for deliveries where store receive

loose loads (not palletised).

Thermal Covers are being

Thermal Covers – to reduce wet ice

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Containerized flake ice machine with automated dispenser & leveling rake… -10C storage

First in Vietnam / Asia. 5 ton / day capacity, (pre-fitted capacity upgrade of 20% )

Produces correct specification of hygienic flake ice (same as a store) for fresh fish

100% re-locatable to another site. Uses store processed water.

Budget estimate 60K USD containers, Installation & Civil works (subject to validation)

Electricity / Water / depreciation costs more competitive to commercial ice supply

A Design First for Vietnam & Asia

Portable Flake Ice machine – 5 ton / day

75% of all freshwater farmed fish is sourced from MKD. Metro commenced with 200

certified farmers. Remaining 10% of fish is untraceable, lacks hygiene standards &

purchased directly by stores.

Product is not

certified safe & is

untraceable.

Many shortcuts

taken by farmers

& traders to cut

cost & food

safety.

Fish Sourcing in Vietnam for Metro

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J10

Hai Phong / Vinh

Hue

Nha Trang

Vung Tau

Potential Additional

Collecting Centers

Set up simple fish platforms across Vietnam

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A company can only generate profitable growth

over the long term if it acts responsibly towards

society and the environment.

That is why METRO GROUP had declared

sustainability to be an integral component of

the Company’s strategy in developing these

cold chain solutions.

The project involved implementing a range of

innovative SCM solutions (including covers). It t

was successful in meeting both social &

environmental needs were considered as

essential business case inputs. Sustainability

was considered at an early stage in project,

business and processes decisions.

Sustainability & Environmental Responsibility

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Chris Catto-Smith

cattoc@freshport.asia

www.freshport.asia

+ 66 81 735 7617

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