Out-of-the-box logistics thinking helps Ocean Spray cut 40% transportation costs & 20% in greenhouse gases
The multi-billion dollar co-operative opened a new distribution center in Florida, and partnered with a competing juice company to take advantage of the competitor’s New Jersey to Florida backhaul opportunity.
The improvements are revealed in a case study conducted by the Center for Transportation & Logistics at the Massachusetts Institute of Technology (MIT CTL).
This is not the first time that MIT has conducted studies in the food and beverage industry, with the emphasis on carbon footprint and not necessarily on cost savings. Indeed, a recent PhD thesis included work with Chiquita, and the Institute identified several carbon reduction opportunities across the banana supply chain (Craig, A.J., "Measuring Supply Chain Carbon Efficiency: A Carbon Label Framework", MIT Doctoral Thesis, June 2012.)
“We recognize the importance of managing our food and juice business in a way that advances our environmental sustainability performance. We needed a more efficient way to haul products south. Our competitor was spending money and energy moving empty railcars in that direction. It made good business sense for us to collaborate,” said Ken Romanzi, Ocean Spray’s Senior Vice President and Chief Operating Officer, North America.
“Ocean Spray has a history of innovative partnerships, and this case study shows how collaboration in freight operations can boost efficiency and identify opportunities for environmental benefits.”
A spokesperson for the co-operative told us that the cost savings will be reinvested to enhance the Ocean Spray business for its grower-owners and consumers.
Lessons for all of the industry
Jason Mathers, Senior Manager, Sustainable Logistics, Environmental Defense Fund, told FoodNavigator-USA that others food and beverage companies should take heed to reduce costs and greenhouse emissions from shipping operations.
“The food and beverage industry’s pressing need to deliver goods to market rapidly tends to favor speed over efficiency, and expedited shipping accounts for far more than its fair share of greenhouse gas emissions and consumption of non-renewable fuel sources,” heexplained.
“Ocean Spray has taken an out-of-the box approach other shippers should heed, moving a distribution center and, even more innovative, collaborating with a competitor to fill rail cars that would otherwise have traveled empty the length of the country.
“It shows that, even if you’re in a hurry, you can squeeze inefficiencies – and therefore dollars as well as greenhouse gas emissions – out of your freight operations. What’s needed, however, is a genuine willingness to think differently and, especially, think outside the operations of your company,” added Mathers.
Over the course of 12 months, Ocean Spray realized both financial savings and reduced greenhouse gas emissions by shifting 80% of its East Coast freight traffic to rail, saving approximately $200 per truckload in transportation costs and the equivalent of more than 100,000 gallons of fuel.