Food crisis: A problem of logistics, not production

We are living in times when food crisis is a concern for all countries. It might seem unbelievable, but the fact is that 45 percent of all fresh fruit and vegetables are wasted or lost every year.

About 20 percent of pulses, dairy products and meat are also wasted, along with 30 percent of cereals. These numbers are frightening. Thus, the concern is not so much over shortfall in food production, but over the extent of food loss.

A few days back, I met Altaf Hussain who is a Dubai-based fruit and vegetable trader. He is one of the largest importers of mangoes and oranges to the UAE.

Raised on land, lost at sea

This year alone, he faced losses to the tune of over $122,000 (15 million Pakistani rupees) because of a consignment delay.

“This is not a one-time incident,” he told me. “I face such situations at least 3-4 times every season,” said the Pakistani trader, who has been importing fruit from Pakistan to the UAE for over 39 years.

Hussain imports at least 1-1.5 million mango cartons to Dubai every year during the summer months. His consignments come from sea and usually take 50-60 hours to reach their destination. Each carton carries around 7 kg mangoes. Can you imagine, how the loss of fruit affects not only the importer, but also the farmer and the consumer?

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So when I ask him the cause of this problem, his one line response is that it is due to the “unpredictable nexus of logistics”.

Hussain said once his consignment [read fresh fruits and vegetables] are loaded on ships and he is left to the mercy of shipping companies.

A worker jockeys frozen food on a forklift inside the New Orleans Cold Storage facility in North Charleston, S.C., on Jan. 20, 2016. (AP)

“Once my consignment is loaded on to a ship, I become dependent on the freight company. I have no idea about what route they will take and how many hours they will spend. I cannot trace what is happening to my million-dollar consignment during the journey. This year, 12 of my containers got delayed for 12 days. You can only imagine how much damage it would have caused my business,” said Hussain.

Cargo companies do not like sharing their routes with us, he said. “We don’t know whether they are coming to Dubai directly or are having stopovers. Sometimes, they change their routes without informing the clients, which is very frustrating and leads to immense losses,” said Hussain who pays large sums to freight and cargo companies for transporting fresh fruit.

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Hussain said he has no means for tracing and following up on these consignments when they are at sea. “In addition, there is no insurance. All damage to my goods because of travel delays is borne by me,” he says.

Hussain is not alone. Hundreds of fresh fruit importers across the world face the same challenge. “No one can understand the anxiety of traders whose consignments coming through ships and who have no idea what is taking place during the journey.”

In the palm of our hands

The shipping industry needs a digitalized information hub. There is inefficient coordination and absence of reliable logistics. These shortcomings skew the supply chain services leading to immense losses for this industry.

Perhaps, big multinational companies are able to withstand such losses but they are unbearable for small and medium sized trading companies.

Today, global logistic market is worth of $7.85 trillion, which has the potential to grow to $11.12 trillion by 2020. The Gulf market is itself expected to expand to $73 billion by 2021. Despite involving such huge numbers there is no unified marketplace that may connect demand and supply under one roof.

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What is the solution? My answer is technology. No logistics company can expect to employ outdated standards of service for the shipments of today.

There is a need to take a holistic and integrated perspective of one’s supply chain. This has always been important, but it’s even more critical today as customer expectations on cost, quality and service have increased dramatically.

Global logistics industry needs a one-stop-shop for all such challenges. Like other industries, logistics in supply chain has to find a solution in technology. Developing an IT strategy is critical to any business strategy, and logistics providers can no longer be an exception to this new rule.

When Ubers and Airbnbs of this world bring services to the palm of our hands, logistics can no longer work on ledgers tucked away in dusty drawers. Time has come to revolutionize the logistics industry.
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Sarfaraz Alam is the Co-Founder & CEO of HashMove. He is also the Chairman of TEXPO, a renowned IT company based in Dubai.