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Best Practise Export Cold Chain Management

:
Is this enough to stay competitive?
It is a pleasure to address the Cold Chain 2003 Australian annual perishables
logistics conference on:

“Best Practice” Cold Chain Logistics Management: Is this enough to
stay competitive?

In considering the question we will cover:
• Global pressures that are re-defining the cold chain
• Results of the Australian Quality Logistics Pilot Project
• Integrating cold chain quality logistics with safety, security and
sustainability to gain a competitive edge

To set the scene, a quote from Benjamin Franklin (1706 - 1790) is worth
considering. He said:

“Drive thy business or it will drive thee”.

That certainly applies to Cold Chain management and put in modern day
parlance, it’s worth asking, “Do You Know Who is Running Your Cold
Chain?” It is amazing how many people do and don’t.

Global pressures that are re-defining the cold chain

With the global pressures forcing Cold Chain “sea-change” there are times
when we wonder how we can keep up, let alone cope. Change however is not
new and business and the logistics industry has faced it for eons. So what is
different today?

The key difference, according to Professor Davies, is that “we are now
experiencing accelerating rates of multi-dimensional change …No one factor
is changing on its own [making] for an increasingly complex scenario.”1 In
other words we are facing simultaneous and fast change on a wide range of
fronts.

We see this occurring globally as food supply chains compete aggressively
with each other and buyers source products whenever and wherever it gives
them advantage. If chain transportation and cold chain management isn’t up
to it then they will switch to a better performing supply chain. To manage the
cold chain effectively we need to be aware of what the drivers for change are
along the food supply chain and be able to adapt to them. So what are the
drivers for change? Professor Davies lists the drivers of change as:
•“Consumer Tastes and behaviour
•Competition and production efficiency
•Advances in technology

1
“Drivers For Change in Modern Food Supply” p7, Prof W Paul Davies, August 2003, Global Food
Safety Seminar Series, AFFA/NFIS

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•Institutional pressures and regulatory requirements
•Environmental considerations
•International and globalisation influences
•Political influences”2

Understanding the consumer is the major issue for food retailers and one
might even suggest for consumers themselves. Much has been written on this
subject and we won’t repeat it here. We do need to understand, however, that
consumers are becoming increasingly aware of their power and are
consciously and subconsciously rolling in their “life values” with their
purchases. This can have major impacts on the food supply chain and even
flow through to freight transport. In this regard it will be interesting to see what
market fallout results from the rejected live sheep bound for Saudi and if it
impacts on Australia’s Kuwaiti lamb meat sales and on sales in other markets.

Competition and production efficiency includes cold chain management
and freight logistics. This helps explain why governments around the world
are recognising the significance of logistics to their economies and societies.
This is certainly the case in countries such as Singapore and in more recent
times Australia with the development of the Australian Logistics Industry
Strategy and action plan. In a survey of Asian Food Importers3 conducted in
2000, the buyers rated USA and New Zealand as having the most capable
cold chain logistics systems in place followed by Europe and then Australia.
While other countries such as South Africa, Chile, Vietnam and China didn’t
rank as high -the warning was loud and clear: “They’re catching up fast and if
Australia doesn’t improve it will be overtaken”.

Technology improvements in data capture and processing, product tracking
and tracing, temperature control, freight transport transit times coupled with
communication, the media and the web have brought us closer to each other,
closer to the customer and closer to the consumer. It has also time-
compressed cold chain logistics supply chains and made them more
transparent, particularly when part of the chain fails. This is a real driver of
change.

Institutional pressures and regulatory requirements are also driving
change. Food scares, death and outbreaks of disease around the world in the
1990’s have triggered major revisions to food safety arrangements. In
Australia we have seen new food safety regulations introduced nationally
through Food Standards Australia/New Zealand (FSANZ) and the various
State based Food Safety Acts. These new measures now apply to most of the
food transport chain, with food transport operators being classified as a food
handling business.

In the future we are likely to see more regulation, not less, as food safety
arrangements are developed on an industry sector-by-sector basis. Of course
2
“Drivers For Change in Modern Food Supply” ,p8, Prof W Paul Davies, August 2003, Global Food
Safety Seminar Series, AFFA/NFIS
3
Freight Trade Logistics Stage 2 Report, Integrated Logistics Network, 2000

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the logistics cold chain will need to adapt to meet these changes. These
changes are not just happening in Australia and New Zealand they are also
strong in Europe and the USA and gaining ground in Asia. For example a
recent announcement suggests that by 2005 food manufacturers in Singapore
will need to be HACCP accredited and this can be expected to flow through to
transport and cold chain management. In fact if one looks at the Technical
Reference on Dairy4 produced in Singapore it is already happening.

Consumers that now pick and choose to buy say canned tuna that is “Dolphin
Safe” are driving environmental considerations. In Europe in particular and
more generally amongst the world supermarket chain giants, sometimes
referred to as “gatekeepers” environmental standards are being set that
suppliers have to meet. This ranges from production methods that do not
harm the eco-system to insistence by some that suppliers have ISO 14001 in
place to demonstrate they have an auditable Environmental Management
System.

International and globalisation influences are becoming more pervasive as
we see 110 buying desks in Europe acting as gatekeepers between 3.2 M
farmers and 250 Million consumers [Lang 2003]5. In international shipping and
airfreight we are also seeing a concentration of service providers and in
Australian land transport we are seeing an ever-increasing concentration and
vertical integration of shipping, stevedoring, road and rail businesses. As this
occurs supply chain power shifts as does the disbursement of profits in the
chain.

Finally, politics remains an ever-present change driver as it struggles to
manage the impacts of globalisation, trans-national corporations, regional
trade agreements and selective freer trade.

So what are these change drivers doing to cold chain logistics management
and is best practice logistics cold chain management enough to stay
competitive?

In the past food safety, quality control and cold chain logistics were viewed as
distinct and separate items. In fact today if you talk to food safety regulators
they concede that food has to be safe and suitable but they steer clear of
quality - as if it is a point of no return. Then you talk to the quality systems
experts wedded to ISO, SQF or other systems and they seek to integrate
enterprise based quality systems with HACCP and food safety. Then you talk
to the members of the Logistics Cold Chain, particularly the shippers and find
that they pragmatically recognise that the freight transport cold chain is littered
with certain “unavoidable” risks that others are paid to manage.

Like the food supply chain, the logistics cold chain is long and involved. For
an airfreight shipment of broccoli from “tree to table” to say Singapore there

4
TR2:2000 Cold Chain Management: Milk and Dairy products Singapore Productivity and
Standards Board (SPRING)
5
In the UK 95% of consumers buy food and groceries from Supermarket chains

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are 39 steps, 23 players and 21 cold chain breaks. This is shown in the
following diagram.

THE THIRTY-NINE STEPS

c c

c

c

c c c

$
c

c c

(Suns represent breaks in the Cold Chain, Crossed Suns breaks if refrigeration does not occur.)

You might think the 39 steps are high but in many instances the product is
actually moved more, particularly if you tranship through say Melbourne or
Sydney. In any event what it means is that in maintaining our product quality
and integrity, we need to manage the export logistics cold chain, the 23
players involved and the 21 cold chain breaks. Unless you have set and
agreed performance standards that apply throughout the chain you are going
to face difficulties of product out-turn on arrival overseas. Recognising this,
the Integrated Logistics Network [ILN], made up of Commonwealth and
State/Territory officials, in conjunction with the Australian Freight Councils

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have been working with industry on the Australian Quality Logistics Project,
known as AQL1.

Results of the Australian Quality Logistics Pilot Project [AQL1]

For those of you not familiar with this project a bit of background may be
helpful. In 1999 we advanced the need for industry to have a through chain
performance based quality cold chain logistics management system in order
for our food exports to gain and maintain access to the quality end of the
overseas food market. We advanced the hypothesis that “best practice” cold
chain logistics should not cost more, that no through chain cold chain logistics
system currently exists and that adoption of the systems would provide
advantage not only to exporters, to quality of product out turn but also to
customers who would in turn reduce their shrinkage rates. We tested this
through a series of studies commissioned by the ILN.

The Best Practice Logistics Study demonstrated that best practice logistics
did not cost more and in reality provided benefits that outweighed costs.

The Codes of Practice, Quality Assurance and Guidelines study confirmed
that no through chain cold chain quality system exists and significant gaps
needed to be filled. In addition it identified over 80 different systems were
being used and our overseas customers were confused.

A follow on study focused on Singapore showed that use of an Australian
Quality Logistics system [AQL1] would provide significant advantage to our
exporters to secure and increase their business to the quality end of the
market and reduce shrinkage in supermarkets by at least 5%. It also
emphasized the need for us to do this by comparing our shrinkage rates with
those of other overseas competitors.

This body of compelling evidence has led us to where we are today and that
is to the pilot stage of AQL1.

The Australian Quality Logistics Pilot Program, funded by the Integrated
Logistics Network and the Australian Freight Council network, is a trial of a full
cold chain performance based quality logistics system. Managed by South
Australia, the project consists of:
• 16 Export Companies
• With exports going to 6 Markets (Japan, HK, Taiwan, Singapore,
Malaysia, USA)
• Covering products including
-Dairy: Milk, Cream, Yoghurt, Drinking Yoghurt
-Meat : Pork, Beef,
-Seafood: Prawns, Smoked Salmon, Live Mud Crabs, Salmon/Ocean
Trout, Tuna
-Fruit and Vegetables: Apples, Oranges, Table Grapes, Asparagus,
Broccoli
- Flowers

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The companies taking part in the pilot program are well respected for their
export quality and include:

• Australian Farmlink – Apples [SA]
• Clements & Marshall - Apples [TAS]
• Koala Baby – Table Grapes [SA/VIC]
• Lochert Brothers – Oranges [SA]
• Momack – Asparagus [Vic]

• IHM – Flowers [NSW]

• GWF - Pork – [SA & WA]
• Homebush Meats – Beef [NSW]

• Bulla – Dairy [VIC]
• National Foods – Dairy [WA]
• Peters & Brownes – Dairy [WA]

• Darwin Seafoods – Seafood [NT]
• Indian Ocean Fresh – Seafood [WA]
• Petuna Seafoods – Seafood [TAS]
• Raptis – Seafood [QLD]
• Springs – Seafood [SA]

Each pilot company has or is having developed for it a performance based
through chain company manual. This integrates existing cold chain logistics
quality standards from the exporter through to the supermarket. It involves all
members in the supply chain and includes:
Work instructions
Quality systems
HACCP plans
Supplier requirements
Supply Chain List, and description of what takes place at each point.
Product/Quality specification for each distinct product

Exporters map their chain and processes, and these are transformed into
standards that each member of the chain is asked to commit to achieving.
The manual is then reviewed by the AQL1 Technical Committee and
comments fed back to the company. Technical Committee membership is
made up of representatives from:
•The South Australian Government’s Department of Transport & Urban
Planning
•The Australian Government’s Department of Agriculture, Fisheries and
Forests
•The Australian Quarantine Inspection Service [AQIS]
•The South Australian Research and Development Institute
•PIL [shipping line]
•South Australian Cold Stores

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•Australian Air Express and other experts as required

When the Company Manual is completed, commercially sensitive components
are removed; the manual is edited for conformity and a generic manual
produced. This has logistics performance standards for both the Australian
and overseas components of the chain right through to the
supermarket/customer.

The key elements in the generic manual are:
The Product Specification: This defines the composition, method of
preservation, packaging, labelling, storage conditions/temperature and
shelf life of the product. It sets standards that all other members of the
supply chain must follow.

The Quality Specification: This Lists all the quality parameters that must be
maintained, both at the processor / packhouse / producer and through the
rest of the supply chain.

Time and Temperature charts: These stipulate where temperature
recordings are required and times for events in the cargo chain, such as
loading product from the packhouse to a reefer. The chart below illustrates
part of this chain.

(Com pany Nam e) Dom estic Supply Chain Tem perature
and Tim e Chart— Chilled Bigeye Tuna

Process Type Process Nam e Tem perature Tim e Tim e From Harvest

Seafood Ambient 0 Hours Time From Harvest
Harvested 0 Hours

Transport to Target Range 2 Hours* Time From Harvest
Processing facility -1ºC to +4ºC 2 Hours

Chill, Gut & Pack Target Range 6 Hours Time From Harvest
T -1ºC to +4ºC 8 Hours

Transport to Target Range 5 Hours* Time From Harvest
Freight Forwarder -1ºC to +4ºC 13 Hours

Unload at FF, Target Range ¼ Hour Time From Harvest
T cold storage -1ºC to +4ºC 13¼ Hours

Pack into ULD Target Range 1 Hour Time From Harvest
-1ºC to +4ºC 14¼ Hours

Cold Storage at Target Range 2 Hours Time From Harvest
T Freight Fwder -1ºC to +4ºC 16¼ Hours

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2003.doc to CTO Target Range
Page 7 of 20 ¼ Hour Time From Harvest
-1ºC to +4ºC 17½ Hours
[T= Temperature recording, Arrow= Transport movement Circle=Operation Triangle=Storage]

Supply Chain Quality Performance Standards: These sections outline the
specific requirements for each member of the chain, including any unique
QA systems, logistics requirements, product requirements, documentation
requirements, time and temperature requirements and evidence of
compliance.

The Supply Chain Performance Agreement: This is where all members
indicate their acceptance of the standards within the manual, and agree to
allow third party audits.

Supply Chain Position Company Name Position
Signature Telephone
No.
Exporter
Primary production
Transport to processing plant
Processing, packaging and consignment
Transport to Freight Fdr.
International Freight Forwarding
Transport to airport
Export documentation
Airport Operations [CTO]
Airline
Airport Operations Japan
Import Agent
Transport to Client
Distribution Centre
Distribution to Retailers
Key Customers

Other components in the manual include:
-Quality Policy Statement
-Supply Chain Participants Chart
-Supply Chain Quality Systems and Relationships Chart
-Key Performance Indicator and Quality Monitoring Tables
-The Exporter’s HACCP Plan

To date company manuals have been produced for 14 companies and
generic manuals produced for the following products and markets.

AQL1 Generic manuals already produced
Product Market Mode
Navel Oranges Singapore Sea
Chilled Milk Singapore Sea
Table Grapes Hong Kong Sea
Ice cream Malaysia Sea

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Asparagus Singapore Air
Frozen Seafood Singapore Air
Live Seafood Singapore Air
Smoked Salmon Singapore Air
Pork & Pork Meat Products Singapore Air
Chilled Dairy Hong Kong Air
Chilled Ocean Trout and Atlantic Salmon USA/Japan Air
Big Eye Tuna Japan Air

Based on the company and generic manuals, a number of pilot companies
are taking part in a temperature-monitoring program to check the cold chain
performance over a number of shipments, [preferably 10+].

The South Australian Research and Development Institute is assisting these
companies by advising on correct placement of data loggers, providing the
means of identifying where the cargo physically is over the time of the journey
and matching this with data logger temperatures. Each company receives a
technical report on each shipment, and a Company Monitoring Report
analysing all results. This identifies “hot” spots and suggests solutions.

Results to date support the need for AQL1 time-temperature standards to be
adhered to – some products have got so hot or so cold that product quality is
in danger of being compromised.

The generic manual for apples to Taiwan and to Singapore is almost complete
and new entrants to the program are expected shortly for Barramundi from the
NT to the USA and Broccoli from Southern Australia to Singapore and
Malaysia.

Mapping of the supply chain in all the overseas markets has been undertaken
by a number of specialists conducting an on-ground walk-through of the
logistics cold chain up to the key buyers. Information gathered has then been
documented, reviewed and signed off by key overseas supply chain
participants, [including a number of shipping lines and airlines]. Of equal
significance, work developed by the project has resulted in our participation in
the Singapore Technical Reference Working Group involved in setting
standards for chilled meat, focusing initially on airfreight chilled pork. As with
the technical reference on dairy, the standard once produced is used for two
years and then becomes “law”. Our participation in Singapore’s chilled meat
group means that cold chain logistics performance standards developed
should be “Australian friendly”, provided exporters adopt quality logistics
performance standards.

The time-temperature chart on the next page shows the agreed performance
standards in Singapore for chilled pork. From the picture you can readily see
that the standards stipulated are quite reasonable, the trick is to make them
happen.

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(Company Name) Supply Chain Temperature and
Time Chart—Pork and Pork meat products
Process Type Process Name Temperature Time Time From Arrival

Aircraft Lands Target Temp. 0 Hours Time From Arrival
0ºC to +4ºC 0 Hours

Doors opened, Target Temp. ½ Hour Time From Arrival
Unload Aircraft 0 to +4ºC ½ Hour

Transport to Cold Target Temp. ½ Hour Time From Arrival
Store 0 to +4ºC 1 Hour

Place in Airport Target Temp. ½ Hour Time From Arrival
T Cold Store 0 to +4ºC 1½ Hours

ULD unloaded Target Temp. ¼ Hour Time From Arrival
T 0 to +4ºC 1¾ Hours

Loading into refrig- Target Temp. ¼ Hour Time From Arrival
T erated vehicle 0 to +4ºC 2 Hours

Transport to Client Target Temp. 2 Hours* Time From Arrival
Premises 0 to +4ºC 4 Hours

Unloaded, Stored Target Temp. 4 Hours Time From Arrival
T in Chiller 0 to +4ºC 8 Hours

Processing if Target Temp. 6 Hours Time From Arrival
T Required*** 0 to +4ºC 12 Hours

Loaded into Target Temp. ½ Hour Time From Arrival
T refrigerated van 0 to +4ºC 12½ Hours

Delivered to Target Temp. 2 Hours* Time From Arrival
retailer 0 to +4ºC 14½ Hours

Unload Truck, Target Temp. 1 Hour** Time From Arrival
T Placed in storage 0 to +4ºC 15½ Hours

* Transport Time to Client and Retailer will depend on locations
** ½ hr for unloading and movement to chiller, ½ hr for movement to display case
***Procesing may not be required, depending on retailer requirements and what pre-flight
processing has been undertaken
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Some of the comments on the AQL1 pilot program are worth sharing.

“Working on the AQL1 pilot program has enabled us to solve a major
problem in the Hong Kong market” – Dairy exporter

“As a result of the AQL1 pilot program we have reviewed the number of
steps in our supply chain and removed 4 steps, enabling significant
product integrity improvement” – Seafood Exporter

“AQL1 was an opportunity to review our temperature monitoring regime for
the export of frozen product. We received astounding results as product
leaving us at -23°C was arriving unbeknown to us at the overseas
market at -6 °C. Since then we have rectified the situation.” – Seafood
Exporter

“The AQL1 program is invaluable. We have:
-Improved our understanding of what is occurring along the entire
export chain
-Gained agreement from our chain partners to abide by performance
standards
-Improved our relationships and influence in the Japanese market as
an Aust. Exporter with a strong focus on quality and product integrity” -
Horticultural Exporter

“We have generated new business by taking the AQL1 standards and
applying them to land-air transport and getting all parties to sign off on
them. This has allowed us to innovate and we and other clients are better
off” – Road operator

Reaction to the AQL1 performance based standards project has been positive
from key buyers who want to see it implemented..

“We want your AQL1 accredited supplier list so we can buy from
them” - Supermarket

“We want to be the first to use AQL1 as it will reinforce our quality
image” - Supermarket

Currently the project is moving towards the end of the monitoring phase, and
we hope to have the entire pilot program finished by early next year. Some
important learning’s have already come out of the project, and I would like to
share these with you today.

General Observations

In a few instances cold chain management has been poor at the exporter’s
premises with chilled product being held at too low a temperature. In a very
few cases product is insufficiently pre-cooled prior to loading.

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Instances of delays between unloading the product and putting it into the
forwarders cold store have been identified in both Australia and overseas.

Part of the AQL1 monitoring program involves the customer filling in a product
out turn report, to give the exporter an idea of the impact of various carrying
conditions identified during temperature monitoring. Interestingly only one
company has reported that the out turn was poor, and this was not a
temperature-based issue. It was caused by pallet wrappings being put on too
tight by the loading dock staff in Australia, causing damage to cartons with
product leaking into the base of the container.

As not all damage to product can be seen immediately during unloading, if the
overseas customer had received information on the temperature product
journey profile then things would most likely be quite different with a number
of product rejections. For example: one product that should never be warmer
than +4 degrees was held at +20 degrees for over 3 hrs on arrival overseas.

Airfreight

Airfreight is a highly effective means of moving cold chain freight to export
markets. This said we all realise that cold chain breaks do occur along the
airfreight supply chain, particularly for goods held on tarmac prior to loading to
the aircraft. So far the program has identified incidents related to the following
areas:
• In Australia, waiting periods between receiving cargo and loading onto
the aircraft can be longer than desirable and result in product
temperature increases.
• The time from aircraft arrival overseas to when the product is in a
temperature controlled environment at the terminal or when picked up
has in a number of instances resulted in high product heat gain.
• Overseas transport from the airport to the importer’s designated cold
store has been recorded in some instances to be 4 or 5 times higher
than AQL-1 specified temperatures for some products. In some of
these cases it is obvious that no chilling has taken place after the
product has been unloaded, and that refrigerated trucks have not been
used to transport the product.

Sea freight

The AQL1 program shows products shipped by sea freight have generally
been within the desired temperature range. Exceptions have shown up during
the monitoring program and include:
• Poor pre-cooling of containers leading to higher than specified
temperatures during road transport to the port.
• Loading operations taking too long
• Products are not being transported to the importer or client in
refrigerated trucks or reefers with the power turned on.

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The Future for AQL1

With the end of the monitoring program rapidly approaching, we are holding
forums around Australia to inform stakeholders about the results of the
project, to gauge their reactions and to determine the extent of industry
support for the establishment of AQL1 as a system that is:
• Voluntary
• National
• Government Endorsed
• Industry Owned
• Internationally recognised

Following these forums we are also providing companies with the opportunity
to take part in a D.I.Y. AQL1 manual preparation workshop. They prepare
their own draft AQL1 performance manual and can then choose to send it to
us to “tidy up” [based on our existing templates] and have it reviewed by our
technical working group.

Before concluding on the AQL1 update let me anticipate a few questions.

Q1. We already have a host of QA systems in place and don’t want another
one, how does AQL1 overcome this?

A1. AQL1 does not duplicate what you have but provides cold chain logistics
performance based standards that replicate what you have and fills in gaps
where they exist.

Q2. What does AQL1 cost?

A2. If you already have QA/HACCP systems in place, which you need anyway
to supply Australian supermarkets, then the cost is minimal to produce your
own manual, bearing in mind the work already done by this project. Estimated
total time of one of your staff to undertake the task is two days.

Q3. If I implement AQL1, how much more expensive will my freight costs be?

A3. If you already monitor some of your shipments using data loggers and use
quality service providers there should be no additional cost.

Q4. AQL1 relies on all chain partners signing-off on the performance
standards. Who gets them to sign up?

A4. The exporter is responsible for this but assistance is available to achieve
this if required.

Q5. What happens if one of my supply chain partners won’t sign up?

A5. Find out why and if the problem is that they don’t have the means to
provide a quality service, look for another supplier. Once a critical mass of

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AQL1 endorsed companies exists suppliers will need to sign up or risk losing
business.

Q6. How will we get “accredited” and how will performance be audited?

A6. We are finalising these arrangements based on industry input. At this
stage we see the process as relatively straight forward. Once you have the
AQL1 performance standards agreed to by your partners, the AQL1
Secretariat will ask you and your partners to indicate what systems you and
they have in place that demonstrates their capability. This information is
reviewed by the AQL1 technical group and accreditation issued.

Audits are proposed to be time-temperature-location based using the AQL1
data-logger and goods location system for a range of your shipments.
Information will be sent directly to an independent data-logging processing
centre such as the South Australian Research and Development Institute that
will report back to the exporter on a shipment by shipment basis and highlight
problem areas that need to be attended to. It is then up to the exporter
working with the AQL1 Secretariat to fix the problem. In essence what you get
is an independent cold chain monitoring process. The service is expected to
be delivered at a minimal cost.

Q7. Who will own and control AQL1?

A7. It is expected that industry will own AQL1 and that Governments will
endorse it. In its start up phase we expect that AQL1 may be delivered
through the Cold Chain Centre, part of the South Australian Freight Council,
and have national coverage. This is because we don’t want to lose the
existing expertise gained from development of the AQL1 project. However
alternative arrangements may emerge as we go through our industry
consultation phase.

Integrating Cold Chain Quality Logistics with safety, security, and
sustainability to maintain a competitive edge.

To remain competitive exporters of perishable food products from Australia
and all parties along the cold chain need to ensure that they have the means
to keep up with the drivers of change.

A framework that may be useful in seeing what needs to be addressed is one
that encompasses:

•Food Safety
•Food Security
•Food Quality
•Cold Chain Logistics
•Environmental Sustainability
•Social Acceptability

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Food Safety

The first item, Food Safety, is a non-negotiable item. However for exports
different overseas markets apply different standards. This means companies
face a number of choices. They can comply with the minimum standard
required by each importing country - but this means you have to adjust your
product for each market. In doing this you need to be sure the cost of variation
does not exceed the cost of applying a universal standard. The other
approach is to produce to the highest standard required and apply it to all
markets – using it as a market position statement. Alternatively you can use a
hybrid approach. Nevertheless as most export companies supply the
domestic market, meeting Australian Food Safety standards must be the bare
minimum benchmark.

For the transport sector, legislation brought in last year means that, in South
Australia, vehicles and associated businesses used for the transport of food
must protect the food and meet cold chain requirements. Food transporters
are now classified as food businesses and must be registered and comply
with the Food Act 2001. Significantly, the supermarket, deli or business
receiving the food can expect it to be delivered in good condition - not
contaminated, packaging or covering not damaged etc. If the food is
potentially hazardous the transport company must see that it arrives at the
correct temperature (+5C or below or +60C or above, or if frozen, not partly
thawed), or has not been outside of temperature control for longer than safe
time limits. The consignee can also require food transporters to demonstrate
that the temperature of the food6 will not adversely affect the microbiological
safety of the food - having regard to the time taken to transport the food.7

Supply chain logistics businesses qualified as a “food business” are also
required to meet the skills and knowledge requirements (staff who handle
food, or who supervise this work must have the skills and knowledge they
need to handle food safely), health and hygiene requirements (food handlers
not to contaminate food, food handlers suffering from a food-borne disease to
notify their supervisor etc.),8

When we consider food for export, it is important to ensure systems
integration related to Food Safety legislation in Australia with that of the
overseas country and AQIS. Further legislation is on the near horizon aimed
at primary produce and that is likely to provide the food safety legislative
framework for the development of product/industry sector food safety
arrangements. For those involved in the cold chain they need to ensure they
can adapt their services to difference required by each separate arrangement.
This runs the risk of adding another level of complexity.

6
Potentially hazardous food means foods like raw and cooked meats, dairy products such as
milk and soft cheeses, seafood, processed fruits and vegetables. It does not include fresh
produce.
7
Food Safety Newsletter – Transport, DHS, Adelaide 2003
8
op cit

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Moving from food safety to security there are two areas that one needs to be
mindful of. The first is maritime and aviation security requirements and the
second security against bio-terrorism.

Food Security

In the wake of the terrorism activities over the last two years, security fears
about the movement of Freight have heightened. The new Australian Air and
Australian Marine Transport Bill are aimed at improving Australia’s security
capability.

Increased security will increase costs that will flow through the food export
supply chain. Nevertheless if we are able to provide a secure export supply
chain that is more effective than our competitors, it may “add value” to our
food export market access, particularly to the United State and The European
Union.

The Responsibility for security is principally the Australian Government’s
working in conjunction with the States and Territories. The challenge is to
ensure that new security measures facilitate market access and deliver
outcomes commensurate with risk. Both the Commonwealth and the
States/Territories are addressing this.

A variety of international activities have implications for Australian food
exports, namely:
• Current discussions between the United States and the EU regarding
container security measures
• The development by the EU of an Intermodal Security Directive later this
year that is expected to apply to the whole supply chain and cover third
country trade outside the Union
• The requirement for the introduction of Unique Consignment Reference
numbers by the World Customs Organisation; and
• The flow on impact of initiatives to achieve internationally recognised
security standards for their export supply chains

To meet the “24 hour manifest rule” shipping lines are requiring exporters to
lodge correctly completed documentation 5 days before the ship arrives in
Port.

The U.S. Bioterrorism Act comes into effect from December 12. Exporters to
the U S must meet strict new guidelines in registration, record keeping and
advance notification of exports, including:

• Australian food production site registration with the Food & Drug
Administration (FDA)
• US importers to notify FDA of each separate article being imported
(maximum 5 days before minimum noon day prior to arrival) –
Exporters may need to have this info available
• Producers & exporters to keep complete records for two years,
including source of product, method of transport between source and

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facility, method of transport out of facility, next destination after leaving
facility, source list for each ingredient used. Records must be available
within 4 hrs if within business hours, 8 if not within business hours

Exporters face the possibility of delays if they are slow to comply with new
laws and regulations coming into effect later this year. Industry associations
are warning that all export businesses will have to undergo some sort of
change in operations before December 1, 2003

New IT systems and Technologies, such as digital certificates, will force some
of the changes but new export rules and processes, mostly exacted by the
United States, will cause the most significant upheaval

It is important that exporters re-organise their operations now to ensure that
they are prepared when the new regulations come into effect

Food exporters need to be aware of the impact of new security requirements
such as when cargo/documents must lodged, documentation accuracy and
record keeping requirements and additional security charges. Food exporters
to the US are advised to:
• Ask their International Freight Forwarder and air or shipping line what
is required and to be advised when changes occur
• Put in place risk management plans for possible extended cargo
clearance delays in the US
• Check the airport/port of entry is authorised to clear their product
• Recognise that the aircraft or ship their cargo is on may not be allowed
in - if one piece of cargo on-board has not been pre-notified to the US
authorities [4 hours before aircraft arrival and 24 hours before vessel
arrival]

Food Quality

Food Quality is becoming a “given” if you want to compete in the product
rather than commodity end of the market. There are a number of vendor
supply management programs being applied or being developed in key
overseas markets as well as Australia. The trend is to underpin any quality
program with a HACCP plan. Dr Richard Barnes from the Royal Agricultural
College in the UK has conducted a benchmarking study that identifies the
evolution of food safety risk management in quality assurance systems for
primary production. He lists the stages as:
•Self-assessment checklists [eg United Fresh Fruit and Vegetable Vendor
Declaration Program]
•HACCP based codes of practice [eg EUREP-GAP, Fresh Care, NZ VegFed]
•Full HACCP systems [eg SQF codes]9

Dr Barnes concludes that “..those wishing to secure quality and premium
markets will benefit from aligning their quality assurance and quality

9
“Benchmarking Global Quality Assurance Schemes in the Fresh Produce Sector” Dr Richard Barnes,
2002 Asia Pacific Food Safety & Quality Conference, Sept 2002, Kuala Lumpur, Qantam Foodlink

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management with systems operating (and accepted as preferred systems) by
those at the end of the supply chains or those operating in quality niche
markets.”10

Cold Chain Logistics

Cold Chain logistics has been extensively discussed in the section on AQL1 in
this paper. Clearly much remains to be done by exporters and cold chain
partners to manage the chain effectively, competitively and efficiently.
Australia must advance its capability in this area or risk becoming
marginalized by competing supply chains. Key buyers suggest that effective
cold chain management will become a minimal requirement for suppliers to
meet within 5 years and will become a non-negotiable item.

Environmental Sustainability & Social Acceptability

Environmental sustainability is an increasingly important issue, largely driven
by buyers and consumers. The Eurep-Gap 2004 protocol for Fruit and
Vegetables applied to farms has 210 control points, divided into 47 Major
Musts, 98 Minor Musts and 65 recommends. It goes from seed/nursery to
transport to environment, waste and pollution, operator health, safety and
welfare.

This is a good example of things to come. It is suggested that over time
suppliers of product will need to demonstrate that their cold chain logistics
partners, not just the exporter, are environmentally and socially responsible.

We may well see the buyer preferring suppliers that use sea or rail transport
over road or air because of the modes’ relative impact on the environment.
Transport companies that do not pay an acceptable wage to their staff or lack
sound health and safety arrangements may be precluded in the future.

Time does not permit me to go into further detail but I recommend you look
closely at EUREPGAP requirements. Equally it is important to assess the
suitability of ISO 14001 to your business. It is a means of demonstrating to
your customers that you have an environmentally sustainable business.
Potential benefits of the system include:
• Improvements in overall environmental performance and compliance
• A framework for using pollution prevention practices to meet EMS
objectives
• Increased efficiency and potential cost savings when managing
environmental obligations
• Improved predictability and consistency in managing environmental
obligations
• Effective targeting of scarce environmental management resources
• Improved public position with outside stakeholders11

10
op cit
11
http://www.epa.gov/owm/iso14001/isofaq.htm

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Given the above elements how do we go about integrating and managing
them? The following table sets out the basic framework.

Integration Framework
Key Area System 1 System 2 System 3
Food Safety National & State Industry Codes of HACCP
Food Safety Acts Practise
Security Australian Transport US Bioterrorism Act Other US and
Security Bill European
Requirements
Quality ISO 9001 SQF2000 EUREPGAP
Cold Chain Importing Country Individual Company AQL1
Logistics Requirements eg Supply Chain
Singapore Standards agreements
& AQIS regulations
Environment ISO 14001 EUREPGAP and EPA Regulations
other Good
Agricultural Practise
systems
Social Tesco and other “Freedom Food” Industry based eg
Responsibility Supermarket based (RSPCA UK) and free range eggs
systems similar

The above table shows the 6 key areas that need to be addressed and
integrated in order to demonstrate product safety, security, quality, effective
cold chain logistics and environmental and social responsibility. As you will
note the framework gives you the opportunity to be as macro or micro as you
need to be. Most importantly by producing this tailored to your business needs
it gives you the capability to see the whole picture and provide an integrated
management solution.

If you address the 6 areas then your premium market customers are likely to
be impressed, particularly if you have recognised systems in place. AQL1 as
a performance based system can also be used as a linking mechanism
between other systems and fill in the gaps where no system exists.

Conclusion – Is it all too hard?

Today we have touched on:
• Key factors driving change
• How through chain performance standards can improve cold chain
logistics
• The need to integrate with food safety, security, quality and
sustainability

So Best Practise Cold Chain Logistics – is it enough?

If best practise cold chain logistics management is inclusive, anticipates and
responds to change, has a through chain approach with all its partners and

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addresses safety, security and sustainability then the answer is Yes. If it
doesn’t then the answer is No.

In closing we need to recognise that keeping up with changes occurring on
many fronts, finding like-minded quality supply chain partners and quality
focussed customers can be hard. Equally integrating the 6 pillars of Safety,
Security, Quality, Cold Chain Logistics, Environmental Sustainability and
Social Acceptability can be complex. But as a former Prime Minister said “Life
wasn’t meant to be easy”

Is it all too hard?

Yes if you only rely on others and don’t know how each element of the cold
chain works. No if you manage the cold chain well and look ahead.

So I’ll leave you with this thought –

Are you driving your business by looking forward,
Or are you driving by only looking through your rear view mirror?

Thankyou.

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