The supply chain for agricultural products is one of the most critical in the world…and it’s changing. Many countries with traditionally-agrarian economies are seeing an increasing percentage of their labor force move into service jobs. Labor costs associated with food production are rising, which means that food prices must either increase, or production must shift to new locales where costs are lower.
Within the next two decades, in order to meet the demands of the growing world population, the world must increase agricultural production by some 70%. By 2025, consumption of staple agricultural products—cereals, oilseeds, sugar, and cotton—among developing nations is projected to grow by 15% to 50%. New markets will emerge in response to this changing global agricultural landscape. Nations that have traditionally exported food are now becoming importers. This impacts the logistics industry, because it means that there are likely to be demand shifts on commodity shipping routes. Some will see less volume, while others will increase in popularity.
Adapt to New Realities
Let’s look at a specific example: the European Union is replacing the US as the leading exporter of agricultural goods. This will inevitably affect the entire global logistics supply chain, as established trade routes change in response to the new realities of supply and demand.
Commodity producers of the future will need to respond quickly to shifting market demand in any part of the world…and that requires that adaptability be built into the supply chain. If you’re a food or agricultural commodity shipper, this means that the transportation and freight forwarding providers you’ve historically used may no longer be the right strategic partners to help you expand into burgeoning new markets.
Perhaps your most-established longtime customers are located in South America and now, because of the shift in demand, the most lucrative opportunities are emerging in Asia. As a shipper, you need to identify partners who can service the new routes you need, delivering the product to your customers reliably, at affordable prices, and in such a way that the risk of spoilage is low and delivery windows are optimal.
Shippers who want to build the foundation for a nimble supply chain capable of weathering shifting market conditions with ease should prioritize rapid response time and minimum price volatility from transportation partners. For many food and agricultural commodity producers, margins are low, and freight is the largest variable cost. Reducing the cost of freight – or, at a minimum, making it predictable – enables agricultural producers to reclaim margin.
Solving the Logistics Puzzle
This is where technology comes into play. At Haven, we optimize the entire logistics process, by enabling direct contact between agricultural producers and logistics providers.
We understand that our agricultural customers are moving seasonal or perishable goods, which means that they need a short, precise delivery window so we’ve built tools to reduce risk for agricultural customers in a few different ways.
First, agriculture producers can lower some of the risks associated with perishables shipping by spreading their shipments across vendors. Haven’s automated platform enables customers to reach hundreds of vendors instantly. You have access to the full provider market, and the ability to explore and compare quotes, which will lead to increased confidence that the providers you choose are the best possible partners for your business.
Timing is particularly critical when an agricultural producer has to explore dozens of shipping rate quotes and ink a transportation contract before finalizing a deal with a prospective buyer. Haven’s platform can help with market intelligence, providing a rate that acts as a “backstop.” There is no longer a need to manually obtain dozens of quotes before feeling confident enough in the cost of your transportation before finalizing a deal with a prospective buyer
The companies that feed the world need a reliable, affordable, de-risked transportation supply chain. Technology platforms can help to introduce and maintain flexibility, transparency and data-driven necessary to address the challenges posed by rapidly-evolving markets.
NO.2 November 2016
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