UK food suppliers have seen the most challenging market conditions in the last 12 months that the industry has ever faced, says the managing director of one of the country’s leading food logistics specialists.
Malcolm Johnstone, managing director of ACS&T, said a “perfect storm” of factors had combined to produce a turbulent market sector in 2015.
Industry leaders, such as ACS&T, a leading provider of ambient, chilled and frozen integrated services to food manufacturers, wholesalers and speciality producers of all sizes, have had to be light on their feet and quick to react, he commented.
“For players in the food supply chain market, the last 12 months has seen the growth of small frequent deliveries to reduce inventory costs, the reduction of commitments in forecasts and the fulfilment of orders, and the compression of timelines of orders to furnish sustained planned and assured solutions – all compounding to create a difficult service environment,” he said.
Pressure from retailers has seen a general passing of cost reduction through the supply chain to producers and their service agents.
Within the temperature control sector, this has led to shortage of equipment and space at key seasonal times and the challenge of continual cost management allied to service changes which have increased costs.
“For ACS&T, Christmas seasonal bookings have moved to being confirmed earlier in the spring and this year we have turned away producers who had planned too late,” said Mr Johnstone.
“The growth of small drops has been managed through our less-than-truckload (LTL) fleet based at Wolverhampton, but costs of such a change in distribution offsets inventory savings.”
He warned that distribution conditions are challenging with traffic congestion allied to longer days through multiple drops, compounded by an industry shortage of drivers.
“ACS&T has mitigated this through the dispersal of fleet through wider satellite geography and moved stem mileage to night operation. The key is to ensure maximum service availability is possible in the delivery window in the geographic area,” he said.
“Multiple skus with case picking to ensure consolidated smaller deliveries of wide ranges requires a complex and demanding operation, one that ACS&T is in a fortunate position to provide.
“ACS&T can provide variable storage mediums with the flexibility of smaller chambers and varied racking, as we see many customers who cannot find their unique requirements from large crane cold stores,” he pointed out.
And he cautioned: “It is likely that this demand will not abate and this creates a continuing demanding service environment.”