DP World: The Hidden Value of Perishables Logistics

Global food loss and waste is a significant problem, with much of it being caused by logistics failures and supply-demand issues.

Addressing this food waste concern requires streamlined coordination and improved planning, particularly before it reaches the retailer.

DP World has released a report, detailing the hidden value of perishables logistics, exploring how supply chains can undergo transformation in order to limit food waste.

The cost of food waste in supply chains

Total global food loss and waste is estimated at US$1tn, but the UN FAO states that approximately US$400bn of this is before the food even makes it to the shelves. A significant amount of this happens in transit, with higher numbers in hotter countries, as a result of temperatures affecting food in storage and transit. 

Logistics failures - such as a lack of cold-chain solutions or temperature-controlled storage - overproduction, demand mismatch and inconsistent grading standards all contribute to this high number of food waste. To address this, end-to-end logistics needs to be improved, with more data sharing and improved market access to perishables. 

This high amount of food waste is an economic problem, a social problem and an environmental one. According to the UN Environment Programme, food waste is estimated to generate 8-10% of global greenhouse gas emissions, most of which is embedded within supply chains. Moreover, 2.8bn people are estimated as unable to afford a healthy diet and hundreds of millions of people are affected by global hunger.

The waste in perishable supply chains calls for a transformation of logistics. More reliable supply chains need to be built, with an understanding of what cargo owners need in order to avoid disruption and to better transport these products.

"If we are to address it, getting the logistics right couldn't be more important, especially in the Global South, where cold chain infrastructure requires more sustained investment," says Alfred Whitman, Global Vice President, Perishables & Agriculture at DP World.

"That's why this report serious, Without Logistics, matters. To build more reliable supply chains, we must know the price of disruption. And to improve logistics quickly, we need to know what cargo owners are prioritising or failing to prioritse."

Disruption to logistics

DP World has conducted its report using survey data from cargo owners across the perishables good sector. Data about frequency of logistics disruptions and financial impacts were discussed and examined.

Geopolitical disruption has been a persistent factor for disruption over the last few years. 93% of respondents report climate-related disruption as a key operational variable. Temperature extremes, flooding and droughts are now regular occurrences.

Many cargo owners have been hit by big events of the last three years:

• 76% have been affected by climate-related crop shortages
• 35% by the Panama Canal drought
• 27% have been affected by the low water levels in the Rhine
• 91% are facing strain from the effects of Covid-19
• 71% say global port congestion is an issue
• 66% are impacted by the Russia-Ukraine conflict
• 54% have been affected by shifting tariffs
• 41% state waterway crises, like the Red Sea shipping disruption, have been an impact

Costs and rewards

According to research from King's College London, growing climate shocks could cause up to US$25tn in global supply chain losses by 2060. Companies which are experiencing constant shocks and therefore higher costs, have reported a decline in customer satisfaction. The financial and reputational risks of supply chain shocks and inefficient logistics systems are significant.

72% of leaders say that more customer complaints occur after disruption. Moreover, 65% report having lost business or contracts through these issues. As a result of disruption, 60% say their brand image has suffered, whereas 58% explain that reputational harm among partners has occurred. 

Capability gaps remain, meaning that businesses are at risk of further disruption to their chains unless they make investments into the appropriate infrastructure. 88% of cargo owners have said technology or systems failure has been a major disruption to their operations, showing that poor infrastructure is actively harming supply chains.

During disruption, 53% of respondents say they used contract logistics, 51% used land transportation services, supply chain technology was used by 49% of cargo owners and 47% used freight forwarding services. Though 86% of cargo owners are confident that their current logistics partners are meeting their needs and helping them handle disruption, 94% say that limited visibility is an issue.

This shows that, though partners are good at solving disruption, they lack the data and predictive insights to help businesses foresee disruption and prevent it before it can impact the business.

"The scale of spending on resilience infrastructure matters, but only if it's targeted on developing reliable capabilities across the chain - and importantly, ensuring they actually work together," adds Alfred. 

DP World points to five actions to strengthen resilience and work to address food waste. Through tracking avoided waste and carbon intensity across the cold chain, reliability is implemented as a sustainability measure and the visibility shows where issues occur. Investing in predictive data and AI helps spot issues early in order to prevent spoilage, rather than paying the cost of the loss.

By building regional cold-chain networks, freshness and control can be improved, therefore preventing spoilage. Through balancing cost-saving and protection, major losses can be avoided. Finally, logistics should be measured by product quality, as freshness builds trust in the partner and builds resilience.

Through prioritising capable logistics networks and investing in cold-chain solutions, perishable waste will decrease significantly. This will lessen emissions and extra strain on the supply chain.