Dirk Winkelmann, president of Vanguard Direct, gives an update on the industry and its ongoing supply chain challenges. According to Winkelmann, there has been improvement in areas such as North America and Europe. However, Asia and Mexico are still experiencing many challenges.
"Moving from the COVID years, we've seen a general improvement in terms of congestion in the ports. However, we are still seeing major issues in service levels," says Winkelmann. Service level issues typically include vessels being rerouted by carriers for various reasons, containers being put on different ships, and poor follow-up communications from carriers--all of which lead to questions such as "Where are our containers and when are they going to be discharged?"
These service level issues are challenging and negatively affecting the business along with the returns to growers. While the reasons for some of the problems are clear, many are not. We can assume that a combination of staffing and equipment issues, along with a need for better monitoring and communication protocols, are contributing to these problems.
"Moving from the COVID years, we've seen a general improvement in terms of congestion in the ports. However, we are still seeing major issues in service levels," says Winkelmann.
Cold treatment failures
Winkelmann says another issue is a very high rate of cold treatment failures when importing goods into the United States. Container cooling units have probes attached to temperature sensors that are inserted into grapes to ensure proper temperature control according to the cold treatment protocols. The challenges with the process have ranged from the container's cold units failing to probes being placed incorrectly, all of which are service issues.
When containers arrive with cold treatment failures, they can sometimes restart the cold treatment protocol. However, there are other cases where containers must be shipped to a different port from that of the original destination to redo the treatment. This has led to delays of several weeks for containers to arrive once again at the final destination port.
While many of the issues are outside of Vanguard's control, Winkelmann notes that from a customer's perspective, "Any failure in the process is our failure." To minimize disruption, Vanguard is taking extra steps in the export process, including reviewing carrier challenges and breakdown points and playing a more active role in probe placement and communication protocols with the carriers. "We are also going through some port realignment, some of which will be customer-driven," he says.
Winkelmann says this problem is not specific to the produce industry, as "shippers of perishable/frozen commodities worldwide are struggling with service. We have very good visibility on the flow into North America, pretty good visibility on the flow into Europe, and everything falls apart in Asia." Following the last update, it's evident progress has been made. However, there is still work to be done.