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    Andrew Lynch
    Stocked up on merchandise in response to red-hot consumer demand throughout the COVID-19 pandemic, big box retailers are drowning in insane amounts of overstock as demand for goods like electronics and home goods has dropped significantly. Consumers are reverting back to their pre-pandemic buying patterns, leaving retail giants buried in merchandise and declining sales. Fused with U.S. inflation rates at their highest since 1981 and the price of diesel reaching record prices, retailers have been forced to get creative to offset the costs.
    Cut to new pickup, fuel, and late fees.
    The Increasing Cost of CPU
    Suppliers in business with big box retailers are now at the mercy of paying more for pickup, fuel, and late fees. Shipments will be fined if they are subpar, like defective or miscounted products, and received late. Vendors are also being charged a fuel surcharge based on daily fuel price changes that are matched against the location and shipment, and a “collect pickup charge” calculated as a percentage of the cost of goods received. Now, manufacturers and brands who have already entered into product order agreements must shift their own budget to account for these unforeseen charges.
    But is a customer pickup (CPU) service the only option for shippers? No. Nor is it the best.
    Suppliers opt into a CPU service initially thinking they’ve escaped the headache that comes with coordinating shipping and logistics. However, that’s not the case. CPU arrangements mean brands surrender control over logistics operations, lose visibility over freight that can cause service failures and incur extra fines and fees. These partnerships that are supposed to help alleviate stressors can actually tank a brand’s gross profit.
    Why CPU Arrangements Don’t Benefit CPG Brands
    In a CPU arrangement with big retailers, service is bound to fail. Pickups are scheduled according to the convenience of their own transportation network, not necessarily what works for the brand. Without brands being able to set the appointment themselves, they lose the ability to set and monitor when a truck will arrive for their order. This can cause a chain of unfortunate events: not having enough lead time to prepare a smooth delivery could force the carrier to leave the product and require a reschedule, resulting in missed appointment times. These appointment misfires are always the vendor’s responsibility when working with a distributor, even in CPU arrangements. Companies will be fined by the distributor as well as tasked with finding a delivery alternative.
    Consistently missing appointments, even as a result of poorly coordinated customer pickups, can also jeopardize a brand’s shelf space on store shelves. Consider the direct hit a brand’s gross margin takes when their product is out-of-stock and replaced by a competitor.
    On top of that, brands will need to pay for warehousing space while waiting for a new pickup. This can sometimes take weeks or even months before a new pickup is arranged, which can throw production facilities and supply chain flow into misalignment.
    How to Preserve and Improve Relationships With Retail Partners
    It’s important to strategize for the inevitable: fees upon fees will continue to increase as long as big box retailers have the upper hand. To set your brand up for success and avoid ruining retail relationships and losing contracts, consider the following options to own your logistics efforts and get your product on the shelves efficiently:
    ·       Work with a third-party logistics (3PL) provider that specializes in retail logistics solutions and consumer packaged goods (CPG) brand shipping exclusively
    ·       Deliver on schedule for must-arrive-by-dates (MABDs) and appointments
    ·       Over-communicate with any partners in your supply chain of command
    ·       Meet retail compliance expectations
    Why a 3PL?
    In today’s world, forward-thinking retailers and brands need to look at optimizing their supply chains differently. No longer can logistics be looked at as an expense. Vendors that view logistics as an investment, on which they can eventually see a return, stand to fare better. They can expect to improve organizational performance and subsequently their retail relationships, which can be vital in unlocking untapped growth.
    Brands need to consider logistics providers that take a consultative approach to service. This looks like locating improvement areas and making suggestions that can increase performance, lowering costs in the process. With a deep understanding of complex supply chain functions and specialized industry knowledge, the best providers can help enterprises better understand how their operation needs to perform to meet customer demand and cut costs in the process.
    A logistics provider equipped with the latest shipping technology can make distribution network suggestions that can reduce overall spending and improve on-time percentages, like consolidation programs or warehouse reconfigurations.
    As the retail industry continues to evolve and react to economic issues, it’s important that brands and manufacturers evolve and react alongside it. Taking ownership of logistics means companies can eliminate unnecessary fines, lost shelf space and sweeping reactionary changes, and shift their focus to continue driving results and accelerating growth.
    Dominate Your Category with Zipline Logistics
    Looking for a logistics partner to help you do that? Look no further. Zipline is here to help you take your logistics strategy to the next level.
    Our stats:
    ·       15 years exclusively serving CPG brands
    ·       95 percent on-time in-full (OTIF) average for appointment
    ·       97 percent of our shipments are destined to land on a retail shelf
    ·       Customer satisfaction score ranking 5x the industry average
    ·       Top shipping locations: Walmart, Costco, Bath & Body Works, Whole Foods, and Best Buy
    This article was originally published on Supply & Demand Chain Executive.
    GIVE ZIPLINE A TRY
    Andrew Lynch is President and co-founder of Zipline Logistics, an award-winning North American 3PL that specializes exclusively in the transportation of retail consumer goods. He works alongside clients ranging from some of the largest food and beverage businesses in the world to the brightest up-and-coming CPG brands in North America. Lynch and his team leverage data intelligence and strong industry relationships to help clients uncover transportation savings, build scalable supply chain strategies, and ace retailer compliance programs. Starting his career in carrier procurement and management within a Fortune 100 logistics company, Lynch has held positions of responsibility in all areas of third party logistics. 
    George Hajjar
    Specialty Food makers and buyers have had to navigate dramatic changes in the specialty food industry and the U.S. economy while continuing to produce and sell products. We interviewed several industry professionals as part of the recently released annual research, State of the Specialty Food Industry + 10-Year Category Tracking and Forecasts. You can find full video interviews when purchasing this year’s report.
    Following is advice from makers and buyers to help members of the specialty food industry stay afloat and thrive.
    · “People’s  budgets are going to get tight. So, [brands] need to make sure they have an offering for those folks that might be looking for a more economical choice.”—Beth Haley, VP of vendor relations, DPI
    · “There is a real opportunity to rethink how you’re differentiated… You can look at that from a whole new lens now in terms of behaviors [and] new normals.”—Patti Doyle, CEO, Rumi Spice
    · “There are important things that are becoming table stakes like sustainability [and] making sure that products aren’t doing more harm than good for the environment. I do think that’s important as people develop products and take them to market. It’s just an expectation for certain generations.”—Cassy Kehoe, senior fresh category manager, KeHE
    · “I joke to people all the time that food people are the best people. We’re reasonable and understanding, and the instinct is to be helpful. If we can lean in on that, we’ll get through the nonsense.”—Kate Harper, chief brand curator, Hive Brands
    · “Consumers are looking for brands that resonate with them and their core values… Make sure that you are connecting with your consumer base in a way that is authentic to you.”—Jeremy Adams, senior center store category manager, KeHE
    Andrew Lynch
    What a whirlwind the 2022 Freight Market was – we saw inflation, fuel prices, and freight rates hit record highs. As we begin the first quarter of the new year, the market is softening and offering shippers relief.
    Economic Factors
    Inflation
    According to Forbes, many inflated costs finally began declining in November 2022 like the price of energy, medical costs, airfares, and used cars. The U.S. inflation rate is sitting at 7.1 percent as we close out Q4 — which is quite an improvement from the peak 9.1% we faced in June of 2022.
    Fuel Prices
    Prices were up and down throughout Q4, peaking at $5.341 towards the end of October. As of December 26, 2022, the average price of diesel is $4.537, the lowest since February 2022.
    COVID-19
    Following November protests against strict COVID-19 policies, the Chinese government relaxed many of its restrictions like mass testing, quarantining in state-sanctioned facilities, and electronic contact tracing and surveillance. 
    Now there is a giant wave of a COVID subvariant sweeping China. Experts predict hundreds of millions are infected and more than one million have died.
    China is the world’s largest producer and exporter of consumer goods. Disruptions across the Chinese manufacturing sector are likely to impact the global supply chain of goods and the world’s economy.
    Russian-Ukrainian War
    The Russian-Ukrainian War continues to rage on 10 months later. 
    American businesses depend on Russia and Ukraine for a plethora of commodities. According to data from the Observatory of Economic Complexity, four critical commodities — neon gas, palladium, platinum, and pig iron — are in short supply.
    An analysis by SupplyChainBrain estimates these shortages will have a direct impact on approximately 12% of the U.S. economy.
    Freight Market
    California’s AB5
    AB5 has the potential to destabilize the trucking market in California, which can create a variety of issues for shippers moving freight in and out of the state. Capacity could suffer a blow if a significant number of truckers decide to leave California. Rates could also rise if carrier expenses increase to compensate drivers as full-time employees. 
    Most recently, a federal district court in California announced it won’t hold a hearing to block AB5 until May. In other words, enforcement of AB5 will remain in effect until then.
    Learn more.
    NMFC Changes
    The NMFTA issued several NMFC changes in August 2022. It’s super important to communicate NMFC updates with your organization and prepare accordingly, as these changes affect your shipping class and therefore, your less-than-truckload (LTL) rates. 
    Learn more.
    Railroad Strike
    For the last several months, large railroad labor unions were poised to go on strike in order to be granted better quality of life conditions, mainly more time off. Some railroads use a points-based attendance system that puts workers on call for 12 hours a day and penalizes them for sick or vacation days. 
    A rail strike could have frozen almost 30% of U.S. cargo shipments by weight, stoked already surging inflation, cost the American economy as much as $2 billion per day, and stranded millions of rail passengers. On December 2, 2022, President Biden signed a bill that blocked a strike from happening.
    Ports
    Ocean shipping rates have cooled from record highs hit during the pandemic. At its peak in mid-September 2021, the average rate to secure a container on a ship from Asia to the U.S. West Coast reached $20,586. By contrast, the average price for a freight container in mid-December 2022 was $2,127.
    LTL
    Carriers will be soon be releasing their first general rate increases (GRIs) of the year. This means they will apply an even percentage uplift to blanket rates to match their increased operating costs. Zipline experts predict GRIs will not be significant as last year’s increases due to the market softening.
    Volumes, Rejections, and Rates
    As volumes decline leading up to the holidays, carriers are rejecting less tenders in order to keep freight moving before much of the industry shuts their doors for Christmas and the New Year.


     
    The charts above depict national average outbound tender volumes and rejections in the United States. Derived from FreightWaves SONAR.
    Both dry van spot rates and contract rates seem to have stabilized after a turbulent year. Closing out 2022, dry van spot rates are sitting right below $2.50 per mile and contract rates are just above $3.00 per mile.

    The chart above depicts national average line haul rates and fuel surcharges for vans in the past 13 months. Derived from DAT RateView.
    We’re seeing a similar story with reefer rates. Closing out 2022, reefer spot rates are sitting right below $3.00 per mile and contract rates are just above $3.00 per mile.

    The chart above depicts national average line haul rates and fuel surcharges for reefers in the past 13 months. Derived from DAT RateView.
    Retailers
    Out-of-Stocks
    Based on IRI data, the beverage industry was out-of-stock on average 11 percent in December 2022. In just one category – we’ll use juice as an example – that equates to $52.76 Million in revenue opportunity cost left on the shelf in just ONE week.  
    Similarly, the packaged food industry was out-of-stock on average 18% in December 2022. In just one category – we’ll use candy as an example – that equates to $618.58 Million in revenue opportunity cost left on the shelf in just ONE week.  
    Learn more. 
    Retail Buyer Data
    Even in a soft freight market, retailers are being picky with the brands they choose to work with. In a survey of retail buyers, 90 percent said a supplier’s ability to deliver on time impacts their purchasing behavior of that brand and 66 percent have ended relationships with suppliers over delivery issues.
    Learn more.  
    Navigating the Freight Market
    Regardless of an always changing freight market, CPG suppliers focused on logistics partnerships rather than freight transactions will be the real winners in 2023. Believe it or not, there are still many aspects of your supply chain that you can control with industry experts on your side.   
    At Zipline Logistics, we care about each CPG brand’s unique business needs and tailor strategies to reduce overall logistics spend, optimize retail performance, and beat out the competition for shelf space. Zipline processes were built specifically to resolve the most critical logistics challenges faced by consumer goods brands shipping into retail.  
    We tailor strategies to reduce overall transportation spend, optimize retail performance, and beat out the competition for shelf space. 97 percent of our orders end up on retailer’s shelves such as Walmart, Costco, Bath & Body Works, Whole Foods, and Best Buy.  
    Don’t Miss the Next Freight Market Update  
    Want the inside scoop on breaking news and trends? Sign up for Zipline’s monthly e-newsletter so you don’t miss the next freight market update!  
    SIGN UP NOW
    Andrew Lynch is President and co-founder of Zipline Logistics, an award-winning North American 3PL that specializes exclusively in the transportation of retail consumer goods. He works alongside clients ranging from some of the largest food and beverage businesses in the world to the brightest up-and-coming CPG brands in North America. Lynch and his team leverage data intelligence and strong industry relationships to help clients uncover transportation savings, build scalable supply chain strategies, and ace retailer compliance programs. Starting his career in carrier procurement and management within a Fortune 100 logistics company, Lynch has held positions of responsibility in all areas of third party logistics. 
    George Hajjar
    Specialty food makers have recently seen many opportunities to innovate their products or operations, and buyers continue to capitalize on innovative trends. We interviewed several industry professionals as part of the recently released annual research, State of the Specialty Food Industry + 10-Year Category Tracking and Forecasts. You can find full video interviews when purchasing this year’s report.
    Following are responses from makers and buyers regarding innovations businesses seek to explore and capitalize on.
    · “We’re really focused on tapping into the new usage occasions when we think of consumer behavior and consumer needs.”—Patti Doyle, CEO, Rumi Spice
    · “From a category management perspective, innovation is a top priority…[One example] is blurred diet lines. Two or three years ago, it was specifically vegan or paleo or keto, but now it has become consumers generally trying to eat healthier. There are so many different ways to do that now.”—Jeremy Adams, senior center store category manager, KeHE
    · “I am curious to see how [innovation] will look in light of what’s going on with the economy. Are people going to start trading down a little bit and will that have an impact on innovation or is that just going to create a different type of innovation?”—Beth Haley, VP vendor relations, DPI
    · “There’s a lot of innovation in food right now around form and format, and how people are consuming. When I think about alternative meat, we are seeing so many new things hitting the marketplace, like chicken. There are so many opportunities to be eating a plant-based product that feels like a chicken nugget, or feels like a patty.”—Cassy Kehoe, senior fresh category manager, KeHE
    · “People are really leaning in, and more open-minded to the innovation in the hemp side than I thought they would be. And buyers love it… Our innovation right now outside of product innovation is how do we get creative about communicating it to the customer, and really deepening relationships with the customer so that we can find out what flavors they want.”—Tonia Farman, co-founder/CEO, Queen of Hearts
    George Hajjar
    The most popular articles with SFA News Daily readers in December focused on store openings, forward-looking trends, and retrospective consumer behavior reports. In case you missed it, the following were the top five most read stories in December:
    1. Whole Foods Plans NYC Opening
    The store is located in New York City’s Financial District and will feature more than 1,000 local items from the city and surrounding area.
    2. KeHE Releases 2023 Trend Report
    The company identified a shift toward consumers seeking a sustainable lifestyle, finding that 68 percent of consumers agree that taking measures to help the environment makes them feel happy. They also found that consumers are becoming more conscious of what they put in their bodies.
    3. FreshDirect Shares 2023 Food Trends
    The company has found that DIY experiences have resonated with consumers and will continue to do so into the new year. Social media has increased the popularity of do-it-yourself items such as butter boards, which have given way to artistically decorated breakfast and dessert boards.
    4. The Fresh Market Unveils 2023 Food Trends
    The company spotted food trends involved with the following: new global flavors, plant-based eating, natural and functional foods, Mexican cuisine, and climatarian eating.
    5. Grubhub Reveals Ordering Trends
    Burritos were the most ordered item on the platform, jumping from the eighth most ordered in 2021. Over four million orders including burritos were filled throughout the year. They were followed in popularity by cheeseburgers, cheese pizzas, pad Thai, chicken quesadillas, California rolls, fried chicken sandwiches, Caesar salads, chicken tikka masala, and boneless wings.
    Andrew Lynch
    It’s the most wonderful time of the year!
    . . . But maybe not always for shippers.
    During the holiday season, we usually see tighter capacity and slightly higher rates as shipping volumes increase. This can lead to service failures, lost sales, and retailer chargebacks.
    Service Failures Abound During Holiday Shipping
    Heading into this holiday season, consumer demand has softened and inventory levels are higher than they’ve been in years. However, many consumers have cash to spend and are eager to splurge, despite their concerns about inflation. McKinsey’s latest Consumer Pulse Survey indicates 55 percent of Americans are excited to shop for the holidays and that 56 percent already started shopping in October.
    Many consumer-packaged goods (CPG) brands rely on the holiday season for a decent chunk of their revenue. In turn, most ramp up their production and supply efforts during this time of year, meaning more freight orders will need to be fulfilled.
    Because carriers limit their hours to accommodate drivers and families around the holidays, they must complete more hauls with less available service days. Most are also closed for Thanksgiving and operate on reduced hours the day before and after. The same goes for Christmas, which noticeably shrinks available capacity for your freight.  To complicate the situation further, increased demand for freight services and increased orders during peak means carriers often overcommit.
    This can lead to service failures as they scramble to cover the increased volume, which equals freight left on the dock, missed deliveries, lost sales, and retailer chargebacks. This is rather problematic when it comes to fulfilling POs, particularly during the busiest shopping season of the year.
    Prepare Your Supply Chain for the Holidays
    To combat peak disruption, we’ve put together six ways to prepare your supply chain for peak holiday disruption.
    1. Overcommunicate
    This is a major key to thriving during the holiday season. Understand your freight needs and determine the amount of freight you plan to ship. Then share that information with your transportation partners far in advance. This will allow you to lock in capacity and properly schedule freight pickups and deliveries.
    2. Build in Extra Time
    Waiting until the last minute is never a sound decision in the world of logistics, but it’s an even worse one during a holiday season facing limited capacity, weather delays, carrier issues, and other unforeseen seasonal events.
    There’s nothing worse than having empty shelves leading up to Christmas. Zipline’s less-than-truckload experts recommend building in an additional two days of transit around your key dates in the holiday season. This provides an adequate buffer for problem-solving, if needed. 
    Additionally, if you fail to give your transportation partner ample lead time, you are bound to pay for it. Urgent holiday deliveries come with a substantial spike in rates and scarce capacity. Working ahead is one of the most important things you can do to keep costs down and hit delivery standards.
    3. Know Carrier Holiday Service Schedules
    Every carrier sets their own holiday schedule. Don’t get caught assuming a carrier is up and running when they may be taking time off. Many have limited operations leading up to and following a major holiday, meaning they may perform minimal line-haul services and very limited pickup and delivery services. A 3PL partner should help gather and share these operational deadlines on your behalf.
    4. Prepare for Known Holiday Surcharges
    Because of increased volumes and demand for quick turnaround, many parcel carriers automatically increase their rates during the holidays. This is particularly true for UPS and FedEx, who add peak charges from October to January. Budget for slightly higher parcel shipping costs to match the influx of holiday demand. Or like many shippers choose to do, move your larger volumes prior to the holiday peak.
    If you have enough volume, you can also opt to move your parcel shipments over to LTL during holiday peak and surpass the increase in rates. Depending on your minimum order quantities, this could help you lock in savings.
    5. Ensure Order Visibility
    Track your shipments so you always know where your orders are during the hectic holiday shipping season.
    Luckily, in today’s technology rich freight environment, you have numerous options:
    ·       Add a pallet tracker to your shipments and follow along with updates.
    ·       Request that drivers use GPS tracking.
    ·       Ask your 3PL partner what visibility tools they have available. Zipline Logistics’ Summit platform shows you real-time updates from GPS trackers and communication with carriers.
    6. Work with Retail Logistics Experts
    Partnering with a logistics firm that understands the complex, nuanced world of retail shipping will drastically improve your chances of success during the holidays. A retail-specialized transportation partner can pair your freight with a vast network of preferred carriers that understand the delivery needs of the nation’s most challenging receivers.
    Trusting Zipline Logistics = Holiday Shipping Success
    Zipline Logistics is comprised of retail logistics experts who help CPG shippers master transportation into retail locations during the holidays. Our retail-trained operations teams and people-first culture help CPG shippers hit on-time delivery standards and achieve optimal outcomes.
    Need help with your holiday shipping?
    Win The Holidays With Zipline 🎁
    Andrew Lynch is President and co-founder of Zipline Logistics, an award-winning North American 3PL that specializes exclusively in the transportation of retail consumer goods. He works alongside clients ranging from some of the largest food and beverage businesses in the world to the brightest up-and-coming CPG brands in North America. Lynch and his team leverage data intelligence and strong industry relationships to help clients uncover transportation savings, build scalable supply chain strategies, and ace retailer compliance programs. Starting his career in carrier procurement and management within a Fortune 100 logistics company, Lynch has held positions of responsibility in all areas of third party logistics. 
    George Hajjar
    SFA’s Spill & Dish: A Specialty Food Association podcast features the stories of SFA members: the entrepreneurs, makers, and buyers behind specialty foods and beverages. Listeners can discover the inspiration, recipe, craft, culture, ingredients, and production methods that make specialty food special and get a deeper understanding of the people and motivation behind the products.
    During the podcast, the SFA asks its guests how the SFA helps benefit their business. Following are some replies.
    “The ability to connect with other brands, with suppliers, with customers. We were really struggling during COVID…[the SFA] facilitates those connections and its invaluable for growing our brand.”—Henry Kasindorf, co-founder, Remedy Organics
    “My favorite thing has to be the food shows…We have met some really great retailers and other founders here. I am super excited to continue doing Fancy Food Shows.”—Lin Jiang, founder, Yishi Foods
    “There are so many benefits. Even just displaying products at the Fancy Food Show, you get so much exposure, and we get a lot of support from Specialty Food [Association] as well. Specialty Food [Association] has built this community, basically, so we are very thankful to be a part of it.”—Chitra Agrawal, founder, Brooklyn Delhi
    “Making connections. We made a connection at the Winter Fancy Food Show that ended up [leading to] a wonderful connection with a retailer that is now starting to bring in our products. It’s an opportunity to meet with other like-minded businesses and help each other out.”—Kristie Middleton, founder, Rebellyous
    “The resources that the SFA provides. There is a lot more than there used to be, which we really appreciate as manufacturers.”—Alexandra Groezinger, president, Alexian Pate
    “I like the opportunity to network. It seems like an endless opportunity.”—Ray Dukes, co-founder, Rosella Bakes Goods
    “The SFA provided a platform for minority-owned businesses at their show, and we had a center platform. It was the opportunity of a lifetime because I got to meet hundreds and thousands of buyers. That’s not just something you get on a regular day."—Thereasa Black, founder, Bon Appésweet
    “The Specialty Food Association allows companies to post press releases. It’s been a really great way for us to get our brand out there and raise awareness about what we’re doing on a limited budget.”—Caroline Cotto, co-founder and COO, Renewal Mill
    Andrew Lynch
    Another dynamic quarter in the freight market has come and gone. In Q3, CPG brands and their supply chains have been impacted by an extremely inflated economy, newly implemented bills and freight regulations, and shifts in retailer requirements.
    Here’s a recap of the quarter broken down by these factors and what shippers should expect in the final quarter of 2022.
    Economic Factors
    Inflation
    The U.S. inflation rate is ever-so-slowly starting to fall after it reached a record high of 9.1 percent at the end of Q2. Now closing out Q3, the rate is sitting at 8.3 percent. The OECD predicts inflation may fall to as low as 4.4 percent by 2023.
    Fuel Prices
    The average price of diesel in the U.S. peaked in June 2022 at $5.750 per gallon. At the time of writing, it is sitting around $4.889/gal.
    COVID-19
    Experts estimate that nearly the entire U.S. population now has at least some immunity through vaccination, previous infection, or both. In turn, the CDC has ended social distancing and quarantine recommendations.
    Although we’ve said goodbye to these precautions (hopefully) for good, there are still lasting effects on the global supply chain. While there has certainly been improvement in each area, neither labor force shortages, nor port backlogs, nor inflation have returned to pre-pandemic levels.
    Russian-Ukrainian War
    As the war continues to rage on nearly 7 months in, the latest update is that Russia is losing heavily and unexpectedly. Ukrainian forces have recaptured 6,000 square kilometers in the country’s south and east. The big concern is that Russia recently threatened to use nuclear weapons in the fight.
    At the beginning of the war, the global economy suffered a knee-jerk reaction that impeded the flow of goods, fueling dramatic cost increases and product shortages. Today, those initial effects are subsiding greatly in the U.S.
    Freight Market
    California’s AB5  
    AB5 has the potential to destabilize the trucking market in California, which can create a variety of issues for shippers moving freight in and out of the state. Capacity could suffer a blow if a significant number of truckers decide to leave California. Rates could also rise if carrier expenses increase to compensate drivers as full-time employees.
    There were owner-operator protests against AB5 in early July, which halted operations at the ports of Los Angeles and Long Beach. There is a strong likelihood that protests of this nature will continue and cause additional supply chain disruptions in the future. 
    Some experts predict that the major, lasting effects of AB5 will become more apparent in early 2023.
    Learn more.
    NMFC Changes
    The NMFTA has issued several NMFC changes that went into effect on August 13, 2022. It’s super important to communicate NMFC updates with your organization and prepare accordingly, as these changes affect your shipping class and therefore, your less-than-truckload (LTL) rates.
    Learn more.
    Railroad Strike
    Large railroad labor unions were poised to go on strike in order to be granted better quality of life conditions, mainly more time off. Some railroads use a points-based attendance system that puts workers on call for 12 hours a day and penalizes them for sick or vacation days.
    A strike would have shut down 7,000 daily trains and cause shortages, shutdowns, and price hikes across sectors. This would ultimately cost the economy about $2 billion per day.
    At the time of writing, the strike has been held at bay after a five-year deal was announced. Under these terms, which is retroactive to 2020, workers will receive a 24 percent pay increase and $5,000 in bonuses. Railroads also promised to ease scheduling policies, but have not offered paid sick leave or more time off.
    Ports
    Ocean shipping rates on major trade routes have fallen by more than half since the beginning of 2022. This is a potential sign of easing inflation pressures and alleviated supply chain backlogs.
    Hurricane Season
    Hurricanes are another thing that can affect your supply chain this quarter, especially now as we enter peak months of the Atlantic Hurricane Season. 
    Although the season was originally off to a slow start, major hurricanes are now beginning to roll in. Hurricane Fiona recently wreaked havoc in the Caribbean, namely in Puerto Rico and the Dominican Republic. Not long after, Hurricane Ian hit Cuba and mandatory evacuations took place in Florida.
     
    Regardless of what happens next, it’s critical to explore how you can prepare your supply chain to brace for incoming hurricanes.
    Learn more.
    Volumes, Rejections, and Rates

     
    Volumes and rejections are both down year over year. Dry van spot rates are flat month over month but down 22 percent year over year. Volumes are near 2018 levels, which is the lowest they have been since they shot up in 2020 due to the pandemic. Due to strong inventories and a lack of demand, volume is predicted to fall another 5-10 percent in Q4.

    The average rate per mile (RPM) peaked in early 2022 and has been steadily declining since. Heading into Q4, the dry van RPM is sitting around $2.62 and the reefer RPM is about $3.06.
    Hot markets include SoCal, the Northeast, and Central Ohio. As Christmas tree season approaches, inbound rates in Washington and Oregon will likely go down as outbound rates go up.
    Retailers
    Out-of-Stocks
    Based on IRI data, the beverage industry was out of stock an average of 12 percent in August 2022. In just one category– we’ll use carbonated beverages as an example–that equates to $340.41 Million in revenue opportunity cost left on the shelf in just ONE week. 
    Similarly, the packaged food industry was out of stock an average of 10 percent in August. In just one category–we’ll use candy as an example–that equates to $343.65 Million in revenue opportunity cost left on the shelf in just ONE week. 
    Learn more.
    New Walmart Customer Pick-Up (CPU) Fees
    Walmart recently began charging some suppliers new pickup and fuel fees, starting August 1, 2022.
    Some shippers who already have product order agreements in place with Walmart are frustrated by this change. However, the good news is that CPU is not the only (nor the best) option for shippers anyway. Switching to delivered pricing will be the lowest effort and highest return adjustment you make in 2022.
    Learn more.
    Retail Buyers & Holiday Shopping
    Especially as the holiday season is approaching, retailers are being picky with the brands they choose to work with. In a survey of retail buyers, 90 percent said a supplier’s ability to deliver on time impacts their purchasing behavior of that brand and 66 percent have ended relationships with suppliers over delivery issues.
    Learn more.
    Navigate the Freight Market with the Best in the Biz
    Regardless of an always changing freight market, CPG suppliers focused on logistics partnerships rather than freight transactions will be the real winners in 2022. Believe it or not, there are still many aspects of your supply chain that you can control with industry experts on your side.  
    At Zipline Logistics, we care about each CPG brand’s unique business needs and tailor strategies to reduce overall logistics spend, optimize retail performance, and beat out the competition for shelf space. Zipline processes were built specifically to resolve the most critical logistics challenges faced by consumer goods brands shipping into retail. 
    We tailor strategies to reduce overall transportation spend, optimize retail performance, and beat out the competition for shelf space. 97 percent of our orders end up on retailer’s shelves such as Walmart, Costco, Bath & Body Works, Whole Foods, and Best Buy. 
    Don’t Miss the Next Freight Market Update 
    Want the inside scoop on breaking news and trends? Sign up for Zipline’s monthly e-newsletter so you don’t miss the next freight market update! 
    SIGN UP NOW
    Andrew Lynch is President and co-founder of Zipline Logistics, an award-winning North American 3PL that specializes exclusively in the transportation of retail consumer goods. He works alongside clients ranging from some of the largest food and beverage businesses in the world to the brightest up-and-coming CPG brands in North America. Lynch and his team leverage data intelligence and strong industry relationships to help clients uncover transportation savings, build scalable supply chain strategies, and ace retailer compliance programs. Starting his career in carrier procurement and management within a Fortune 100 logistics company, Lynch has held positions of responsibility in all areas of third party logistics. 
    George Hajjar
    The most popular articles with SFA News Daily readers in October focused on consumer trends, inflation, and the Kroger-Albertsons merger. In case you missed it, the following were the top five most read stories in October:
    1. Slideshow: Whole Foods Forecasts 2023 Trends
    Whole Foods Market unveiled anticipated food trends for 2023. The company is also making a Trends Discovery Box available, featuring 10 items that allow consumers to sample the trends.
    2. SFA Trendspotters Name 2023 Specialty Food Trends
    Alternative seafood, nuanced heat, and naturally occurring sweeteners are among next year’s specialty food trends, according to the Specialty Food Association’s Trendspotter Panel.
    3. Perceived Food Inflation Rate Outpaces Reality
    Americans believe inflation for food-at-home has hit 22.8 percent, 9.7 points higher than the U.S. Bureau of Labor Statistics annual rate of 13.1 percent.
    4. Regulators Seen Studying Kroger-Albertsons Merger
    Cincinnati-based Kroger Co. will likely face market-by-market scrutiny from federal regulators in its proposed merger with Boise-based Albertsons Cos., as the two companies have significant overlap and would gain considerable clout in the market.
    5. Vongerichten Brings Global Influences to NYC Food Hall
    Chef Jean-Georges Vongerichten has opened a multi-restaurant culinary marketplace/food hall at the Seaport on Pier 17 in Manhattan, the former home of the Fulton Fish Market.
    George Hajjar
    Attorney, naval officer, and founder of Bon Appésweet Thereasa Black created the brand for her toddler daughter who fell in love with dessert while Black was deployed. Since many sweets contain allergens that Black’s daughter needed to avoid, she set out to create a better-for-you chocolate bar and brand. In this episode, George Hajjar, associate editor at SFA, talks with Black about her journey as a Black, veteran, specialty food business owner and her recent successes.
    George Hajjar
    Specialty food makers and buyers are uniquely positioned to notice and understand shifting consumer behavior elicited by the COVID pandemic. We interviewed several industry professionals as part of the recently released annual research, State of the Specialty Food Industry + 10-Year Category Tracking and Forecasts. You can find full video interviews when purchasing this year’s report.
    Following is a list of responses from makers and buyers regarding the effects that the pandemic has had on consumer behavior and purchasing patterns.
    “People have definitely started looking at food as medicine more.”—Tonia Farman, co-founder/CEO, Queen of Hearts
    “It has opened the door for natural organic specialty products…we’re seeing much more educated shoppers from that perspective. Beyond health, they’re looking for more personalized choices. If you think about taste, lifestyle convenience, there are so many things going on since COVID that are driving some of that consumer behavior.”—Jeremy Adams, senior center store category manager, KeHE
    “What we’re seeing is a high comfort level with experimentation [in the kitchen], whether it comes to techniques, flavors, and even maybe types of food they may have not had. We are seeing that theme of experimentation as a big trend in consumer behavior.”—Patti Doyle, CEO, Rumi Spice
    “I look at center store as wanting to create a destination that brings people back to the table, so…we build our curated offering around that. There are certain impulse categories—snacks, beverages, bars, yogurt—that tie into that shopping experience. Those areas are all starting to come back up.”—Dwight Richard, director of center store, Town & Country
    “Indulgence is king. It’s one of those things that’s pandemic-proof and inflation-proof. People are always going to want to be surprised and delighted…So I think meeting that need is very important for us. There’s just a lot more curiosity coming from consumers when it comes to food or ingredients.”—Pierre Jamet, chief sales officer, Petit Pot
    “Charcuterie and entertaining will come back on the scene pretty strong because it obviously took a little bit of a dip as people weren’t entertaining as much….We’re also seeing a lot of spices and worldly kind of recipes where people are trying and tapping into different ethnic types of foods.”—Cassy Kehoe, senior fresh category manager, KeHE
    “We want what we want and we want it now, and we don’t want to have to go out and get it, so services like DoorDash and grocery delivery we find to be very convenient and we want to continue doing those things.”—Alexandra Groezinger, president, Alexian Pate
    Julie Gallagher
    Learn more about the people and products in these Q&As with Specialty Food Association member companies.
    What does your company produce? 
    We manufacture Mediterranean condiments with a focus on savory, zesty, and ethnic flavors. We offer savory olive relish, spicy olive medley, lemon & herbs dried black olives, savory berry compote, plant-based Italianaise (a mayonnaise), Taste of Tuscany (dried herbs), puttanesca, and more under development. 
    Did you have a food background before launching your company? 
    No preparation other than learning from my mother and taking various hobby classes. I spent 30 years in public and private K-12 and university education, was a governor's appointee to the State Board of Education, and have a doctorate in leadership. That knowledge will now be used to help me in my business. 
    How did the idea for your product/company come about? 
    It evolved after my retirement from education. 
    Why did you get involved in specialty foods? 
    I’m passionate about food, preparation, entertaining, and the creativity of developing recipes. 
    What is your favorite thing about the specialty food industry? 
    Like-minded people striving hard to create their dreams, sharing similar problems, and having people who walked the walk at my fingertips through the Specialty Food Association. 
    What’s the one piece of advice you’d give a new specialty food business? 
    Never give up! Have perseverance, determination, go beyond expectations, and surround yourself with positive people. Be kind to yourself in your words and actions. Celebrate even the smaller accomplishment. 
    If you weren’t running a food business, what would you be doing? 
    Creating artistic textile quilts ... that I still do in the wee hours of the night. 
    What does specialty mean to you? 
    I see specialty food as dreams of entrepreneurs who created unique foods and beverages that will bring unusual flavors, textures, combinations, immersions, and these products make life deliciously entertaining, just like Calizo. 
     
    Andrew Lynch
    Scored a purchased order from Aldi? Congratulations!
    You must be super excited. But you may also be wondering how you’ll get the shipment there, what you can expect along the way, or how to maximize your success at this retailer.
    Don’t worry. We’ve outlined everything you need to know about shipping to Aldi below.
    Aldi is Not Your Traditional Retailer
    You might be enticed to shop at Aldi if you don’t mind cheaper prices, non-name brand products, and a smaller selection of goods. In order to offer savings to its customers, Aldi uses strategy and innovation to control costs. This approach also applies to its  transportation and supply chain network.
    Whereas most retailers leave it up to suppliers to coordinate transportation with carriers, Aldi is completely different. It actually owns the relationship with third-party logistics (3PL) companies entirely and use the 3PLs in a customer pick-up (CPU) model to collect its suppliers’ shipments for them.
    Aldi has found this to be a cost-effective set up that ultimately gives it the most control of its supply chain. Whereas we would normally discourage a CPU arrangement with a retailer, Aldi suppliers really aren’t given a choice. 
    Purchase Orders
    If Aldi decides it wants your product in its stores, they will send both you and their 3PL of choice a PO. While you’re preparing the order, the 3PL will reach out to your transportation manager (or whoever coordinates shipping) to schedule all the details of a pick-up.
    Aldi will usually send the PO three to five days before its preferred delivery date. We say “preferred” because it really is just a preferred date and is not set in stone. Aldi is super lenient when it comes to meeting due dates and is willing to reschedule if shippers simply cannot meet the date requested.
    This is extremely different from most big-box retailers who will penalize shippers for not meeting on-time in-full requirements and even cut off the relationship when suppliers can’t meet expectations.
    Communication With Aldi
    On the logistics side of things, Aldi’s 3PL partners will handle most communication with the receiver before, during, and after pickup. During transit, any issues or delays will be communicated between the 3PL and Aldi Distribution Center Coordinator.
    On the Aldi side of things, your brand will be given a DC Retail Buyer contact. This will be the person you can direct your non-logistics Aldi questions to. 
    Incorrect Packaging
    Your Aldi contact should go over packaging expectations for your specific product when you first get an order.
    Whereas other retailers may not even accept freight that is damaged, late, or incorrectly packaged, Aldi will. This is not to say shippers won’t be charged for incorrectly packaged freight or pallets that need to be restacked. We’ve seen fines such as $40 per restacked pallet, but charges will vary depending on the offence. 
    Aldi heavily relies on its 3PL partners and their carriers to make sure freight is packaged correctly upon pick-up. If it is not, the 3PL has the right to refuse pick-up or delay transit until the problem has been rectified. 
    If it continues to be an issue and you can’t follow packaging requirements, the 3PL will inform Aldi what’s going on so they don’t take the fall for your errors. After a certain point it won’t be worth it for Aldi to work with you anymore and you will mess up your chances of getting another PO.
    Packaging is arguably the one thing shippers have control over when shipping to Aldi, so make sure you get this step down.
    All in all, Aldi has it set up so that most logistics coordination is totally not your responsibility. That’s a pretty sweet set up if you ask us. It also sounds familiar…
    Why Choose Zipline as Your 3PL?
    Most retailers do not function like Aldi does in any way, especially when it comes to logistics. If you enjoy the hands-off approach they offer shippers, you’re going to love using a 3PL for all your retail shipments.
    If you expand to other retailers after your start at Aldi, consider choosing Zipline Logistics as your transportation partner.
    You might be wondering how we know so much about retailers and how they operate. It’s because we pride ourselves in being a retail-specialized 3PL. While most logistics brokers move everything from scrap metal to machinery, we exclusively ship finished retail goods that need to meet strict delivery requirements. 
    Like we said, other retailers aren’t as forgiving as Aldi. But don’t worry, partnering with a retail-specialized 3PL makes everything easier, way less stressful, and positions you brand to succeed. 
    It’s like the difference between a flashlight and a laser beam. Our specialization allows us to strategically elevate and empower CPG brands to dominate their categories.
    Interested?
    LEARN MORE
     
    Andrew Lynch is President and co-founder of Zipline Logistics, an award-winning North American 3PL that specializes exclusively in the transportation of retail consumer goods. He works alongside clients ranging from some of the largest food and beverage businesses in the world to the brightest up-and-coming CPG brands in North America. Lynch and his team leverage data intelligence and strong industry relationships to help clients uncover transportation savings, build scalable supply chain strategies, and ace retailer compliance programs. Starting his career in carrier procurement and management within a Fortune 100 logistics company, Lynch has held positions of responsibility in all areas of third party logistics. 
     
    Denise Purcell
    The specialty food industry remains resilient despite three years of upheaval, according to the SFA’s just-released research, Today’s Specialty Food Consumer. Consumers reporting specialty food purchase likelihood hit a record-breaking 76 percent. People continue to care more about what they eat, how it is made, where it comes from, who is making it, and how it impacts local and global communities and the environment. 
    Here, we outline the highlights of the report—the who, what, where, when, and why you need to know about specialty food consumers, their drivers, and motivations.
    Who are they? Millennials and Gen-Xs are the core generations, in part because they have the largest family households. Millennials have seen the biggest gains in specialty food purchase likelihood since 2018. Gen-Z is a rising generation and with most now ages 18+, is equal to Gen-X in specialty food purchase likelihood, at 78 percent. Baby boomers are still engaged but show the least purchase likelihood as they ease out of the workforce.
    What do they buy? Last year’s report noted that the supply chain has growth opportunities with specialty beverages, and the sector could be a gateway for consumers, especially Gen-Zs, to broader usage of specialty products. In 2022, we see this happening in beverages and now in the rise of fresh foods (sandwiches, salads, meals) also. The 10 beverage categories saw an increase in in-store purchase likelihood of 4.2 percent during 2020-2022. That’s compared to 0 percent in the 28 food categories. Gen-Zs and Millennials led the charge here. Fresh foods sold in grocery outlets continue to see big gains. People buying these products in-store rose 10 percent during 2020-2022 to 33 percent of SFCs, while the number of online purchasers doubled to 21 percent of SFCs.
    Where do they shop? We know from SFA’s The State of the Specialty Food Industry report, released in June, that about 86 percent of specialty foods are sold in mainstream outlets, such as grocery stores, mass, club, and discounters. The main change in 2022 is that more of the business has shifted away from grocery stores and natural food stores and towards mass, club, and convenience stores. Online shopping continues to soar. Shopping for groceries online flipped from 33 percent of all consumers in January 2020 to 66 percent in July 2022.
    When do they use specialty foods? Use of specialty foods for dinner peaked in 2019 and fell each year to 2022. Breakfast and lunch usage rebounded in 2022 to equal or exceed the 2019 highs. The fact that there is a net decline in usage at the three major mealtimes while purchases overall have grown substantially is evidence that snacks and treats or “non meals” are picking up the slack. Lifestyle changes are driving the shift and innovations in fresh and convenience products are spurring it on.
    Why do they purchase? The top-five purchase motivators remain consistent over the years: superior quality, superior flavor, interesting/unusual flavors, simple ingredients, and authentic global flavors. An additional one—better for the environment—gained the most ground in recent years and is now bumping up against the top five. SFCs care about attributes like organic, sustainable, and upcycled.
    For more highlights, takeaways, and insights from this year’s report, see the Fall issue of Specialty Food magazine. You can also purchase the full report in the Learning Center on specialtyfood.com.

    George Hajjar
    The most popular articles with SFA News Daily readers in September focused on grocery and consumer trends, private label strategies, and breakout talent that is blazing a trail in the specialty food industry. Following are the top five most read stories in September: 
    1. Kroger Debuts Low-Priced Private Label Line
    The Kroger Co. has launched Smart Way, a new opening price point store brand line that the retailer says brings together 16 legacy brands into a single, easy-to-find identity.
    2. SFA's 12 Under 35: Breakout Talent to Watch
    The list includes young food professionals dedicated to social justice and philanthropic endeavors, food makers who are reducing waste, providing fair wages, and even reinventing a mature category, and specialty grocers who are bringing foods with which they closely identify, to the masses.
    3. Online Grocery Sales Decline, Use Remains High
    Total sales in online grocery have decreased by 1 percent compared to last year, to $8.5 billion in August. Despite the dip, digital grocery sales have remained elevated following the increase elicited by the pandemic.
    4. Study: Consumers Will Pay Premium For Healthy Food
    Although prices have a considerable effect when grocery shoppers are choosing what to put into their basket, 55 percent of consumers are willing to pay a premium for food that contributes to their health and wellness. 
    5. Marketers Weigh in on Plant-Based vs. Vegan
    The recent Plant Based Food Expo 2022, which took place in New York, featured both emerging and mature brands marketed under plant-based and vegan designations.
    Andrew Lynch
    Zipline Logistics' trophy shelf is getting heavy. Most recently, the retail-specialized North American 3PL was honored by Inc. magazine, Food Logistics, and Inbound Logistics as a rapidly growing, top 3PL.
    This is Zipline’s 11th time making the Inc. 5000 list of fastest-growing private companies in America in its 15-year history. The list represents a unique look at the most successful independent small businesses in the American economy.
    “It is an honor to be ranked by the Inc. 5000 for the 11th time,” said Walter Lynch, CEO and co-founder of Zipline Logistics, “The rapid growth we continue to see year over year is a testament to our outstanding team members and their dedication to Zipline’s mission: improving the lives of our clients. It’s exciting to reap the great success Zipline has found in turn.”
    Zipline has also been named a 2022 Top 3PL & Cold Storage Provider by Food Logistics for the seventh time and a 2022 Top 100 3PL by Inbound Logistics for the first time! These awards recognize leading and top third-party logistics providers in the industry.
    “These honors recognize Zipline’s leadership in cultivating true supply chain excellence in 2022,” said Lynch, “We’ve always delivered so much more than a rate and a truck to our clients. As these prestigious awards have recognized, that value will only increase as we climb higher.”
    Still waiting for several other industry award winners to be announced, Zipline’s impressive accomplishments thus far in 2022 may only just be the beginning.
    About Zipline Logistics
    Headquartered in Columbus, Ohio, Zipline Logistics has a 15-year history of being a consistently recognized, rapidly growing, and reliable 3PL that exclusively services the consumer-packaged goods sector. Their uniquely qualified carrier network, world-class team of retail transportation experts, and state-of-the-art shipper intelligence tools maximizes client revenue and gross margin by eliminating out-of-stocks through optimized, on-time in-full performance.
    Zipline’s processes were built specifically to resolve the most critical logistics challenges faced by consumer goods brands shipping into retail. Ninety-seven percent of Zipline orders are destined to land on a retail shelf in stores like Walmart, Costco, Bath & Body Works, Whole Foods, and Best Buy.
    Learn More
    Andrew Lynch is President and co-founder of Zipline Logistics, an award-winning North American 3PL that specializes exclusively in the transportation of retail consumer goods. He works alongside clients ranging from some of the largest food and beverage businesses in the world to the brightest up-and-coming CPG brands in North America. Lynch and his team leverage data intelligence and strong industry relationships to help clients uncover transportation savings, build scalable supply chain strategies, and ace retailer compliance programs. Starting his career in carrier procurement and management within a Fortune 100 logistics company, Lynch has held positions of responsibility in all areas of third party logistics. 
     
    George Hajjar
    Specialty food makers and buyers surmounted the challenges presented by the COVID-19 pandemic, including those related to stock management, supply chain, staffing, and more. This unprecedented period of time also provided an opening for many within the industry to triumph. SFA interviewed industry professionals as part of its State of the Specialty Food Industry Report, 2022-2023 edition. You can find full video interviews when purchasing this year’s report.
    Following is a list of responses from makers and buyers regarding the opportunities that have precipitated from the pandemic:
    “We actually saw such increased sales when COVID first started, we didn’t even know what to do with ourselves because we were seeing Christmas volumes on steroids.”—Alexandra Groezinger, President, Alexian Pate
    “Fresh really saw the boom when everyone was cooking at home. Specifically in categories like cheese, proteins, and alternative meat because people were seeking out different center-of-the-plate options. Alternative meats have been through the roof in terms of year-over-year growth and just month-over-month growth...It’s going to be interesting to see what happens now that people are going back out to eat.”—Cassy Kehoe, Senior Fresh Category Manager, KeHE
    “Consumers have really formed new behaviors, attitudes, values, what they are looking for out of their foods…it’s really opened the door for natural, organic, and specialty products.”—Jeremy Adams, Senior Center Store Category Manager, KeHE
    “We’ve seen a tremendous amount of innovation in distribution. And we’re seeing this across food service and retail. With the COVID pressures, a lot of smaller guys got squeezed in terms of supply chain and it continues to happen. So, we are seeing disruptive distribution methods…that are filling in those gaps and making sure that the independents and the small guys get reliable ongoing service when it comes to demand, and these players are being very smart with how they leverage technology.”—Julia Stamberger, Co-founder/CEO, Planting Hope Company
    “As a brand, we benefited from COVID by providing a dessert, something that’s indulgent. I think that definitely served us well, especially the online grocery channel.”—Pierre Jamet, Chief Sales Officer, Petit Pot
    Julie Gallagher
    Sandra Archer joined the Specialty Food Association in 1997 as a temp working in the membership department where she showcased new applicants’ products to the admission committee and processed membership applications. Shortly after, she became full time staff working in the finance department as an accounts receivable specialist and now serves as manager of accounts receivable.
    What is your favorite memory, experience, or story from your time with SFA?
    I can say that my favorite experience from my time with the SFA has been fulfilling my obligation volunteering during “Embrace Hunger Relief Months”. I recall volunteering in October 2019 at a Mobile Market in Washington Heights, where we distributed fresh produce to market-goers. The line was so long and as we started to distribute the food, the rain came pouring down on us. We did not allow the rain to stop us from doing what we do best as an association—-helping.
    Where were you born?
    I was born in Jamaica, West Indies.
    What is your fondest food memory?
    My fondest food memory happened to be here at SFA. It was my first time trying stuffed grape leaves at a Lebanese restaurant with my co-workers.
    Do you prefer to eat in or go out?
    Although I am seen as an extrovert by family and friends, the introverted half gets the better of me at times and I prefer eating in.
    Best piece of advice that you’ve been given that serves you well?
    Laughter is the best medicine.
    What is one of the strangest things you’ve ever eaten?
    I’m not known to be a picky eater, however I did find eating cow brain to be interesting.
    What is your favorite food city?
    My favorite city to enjoy food in is the Big Apple! With so much to choose from and the inclusion of so many dishes from different countries, I could never be bored.
     
    Andrew Lynch
    On June 30, 2022, the Supreme Court denied the California Trucking Association’s appeal of California’s AB5. Therefore, the two-year-long injunction will be lifted and AB5 will be law in California retroactive to January 1, 2020.
    What is AB5?
    California’s AB5 requires companies using independent contractors in California to reclassify those workers as employees. 
    This bill was originally designed to regulate companies that hire “gig workers” in large numbers, such as Uber, Lyft, and DoorDash. The bill aims to ensure these types of workers are offered protections and benefits such as workers comp, unemployment insurance, paid sick and family leave, and health insurance.
    In order to be considered a true independent contractor, a worker must satisfy all three requirements of AB5’s “ABC” test:
    A.      The person is free from the control and direction of the hiring entity, both in contract and in fact.
    B.      The person performs work that is outside the usual course of the hiring entity’s business.
    C.       The person is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
    With few exceptions, the relationship between independent truckers and their carriers, brokers, and shippers will be governed by the “ABC” test.
    What Does AB5 Mean for Truckers?
    An estimated 70,000 owner-operators will fail this test and be reclassified as employees instead of independent contractors. This means trucking companies may have to begin paying a base salary and benefits to employees who fail the test, rather than compensating drivers on a per load or contract basis.
    Keep in mind, most truck drivers are independent owner-operators who contract with trucking companies to make deliveries. They individually own their trucks, have flexibility in setting their own schedules, and function as small-business owners rather than large-business employees.
    Paying base salaries, benefits, and payroll tax in order to employ owner-operators is a huge cost that many businesses simply cannot afford. As for owner-operators, this set-up takes away their decision-making power over when and how often they work and the rates they will accept. 
    Alternatives include moving their operations from California to another state or opening their own company.  As most business owners know, the latter comes with much more responsibility and time dedication, which some drivers will not be willing or able to take on.
    A recent FreightWaves survey of carriers found some respondents view the bill as an existential threat to the way American supply chains currently function, while others feel it is a necessary legislative step to prevent companies from taking advantage of workers.
    Although AB5 is currently in effect, not all companies are taking necessary steps to comply with the law. Until the state begins enforcing it or misclassified employees take legal action, not much will change.
    How Will AB5 Affect the Freight Market?
    The timing of this law going into effect is not fantastic.  
    “Gasoline has been poured on the fire that is our ongoing supply chain crisis,” said the California Trucking Association in a statement on June 30, 2022, “The impact of taking tens of thousands of truck drivers off the road will have devastating repercussions on an already fragile supply chain, increasing costs and worsening inflation.”
    Only a few months into AB5 going into effect, we are seeing a driver shortage in California. Long term, the effects may be much greater.
    AB5 may destabilize the trucking market in California, which can create a variety of issues for shippers moving freight in and out of the state. Capacity could suffer a blow if a significant number of truckers decide to leave California. Rates could also rise if carrier expenses increase to compensate drivers as full-time employees.
    California’s giant portion of the logistics industry means the entire country will likely feel its effects.
    There have also been owner-operator protests against AB5 in early July, which halted operations at the ports of Los Angeles and Long Beach. There is a strong likelihood that protests of this nature will continue and cause additional supply chain disruptions in the future.
    Some experts predict that the major, lasting effects of AB5 will become more apparent in early 2023.
    Keep Tabs on AB5 With Zipline
    While it’s currently unclear just how deeply AB5 will affect truckers, shippers, and the supply chain as we know it, Zipline Logistics experts will continue to monitor the market for real time updates and insights.
    We will also continue to put our best foot forward to help shippers navigate the ever-evolving supply chain. Partnering with Zipline means you’ll receive:
    ·       Consistent market updates and insights
    ·       Creative retail logistics solutions
    ·       A dedicated account team available to answer your questions 24/7
    KEEP UP WITH MARKET CHANGES
     
    Andrew Lynch is President and co-founder of Zipline Logistics, an award-winning North American 3PL that specializes exclusively in the transportation of retail consumer goods. He works alongside clients ranging from some of the largest food and beverage businesses in the world to the brightest up-and-coming CPG brands in North America. Lynch and his team leverage data intelligence and strong industry relationships to help clients uncover transportation savings, build scalable supply chain strategies, and ace retailer compliance programs. Starting his career in carrier procurement and management within a Fortune 100 logistics company, Lynch has held positions of responsibility in all areas of third party logistics. 

     
    George Hajjar
    SFA News Daily readers enjoyed content focused on supermarket industry leaders: Trader Joe’s, Walmart, Wegmans, and Whole Foods over the past month. Following are the top five most read stories in August:
    1. Trader Joe’s Workers Vote to Unionize
    Trader Joe’s workers in Hadley, Massachusetts, voted 45-31 to unionize, making it the first group at the company to successfully form a union, according to the National Labor Relations Board.
    2. Wegmans Staffs Manhattan Store
    Full-time hiring and training ramped up at the market’s second NYC location; most of the 500+ positions will be hired locally.
    3. Whole Foods Announces Inaugural Accelerator Cohort
    The five brands boast a diverse selection of products and will undergo a program providing mentorship, education, and financial support opportunities.
    4. Cold-Brew Coffee, Functional Tea Highlight RTD Category
    The popularity of cold-brew coffee, functional ingredients, and new flavor formulations have driven growth in the specialty ready-to-drink coffee and tea category, according to the SFA’s State of the Specialty Food Industry report, 2022-2023 edition.
    5. Walmart Consolidation Center to Help Smaller Suppliers
    “The Lebanon facility will provide even more opportunities for small to medium sized suppliers who do not ship nationwide [including] the ability to provide product to all 4,700 Walmart stores,” said Mike Gray, senior vice president, supply chain operations at Walmart, in a statement.
    Janet DeCarlo
    Please join the Specialty Food Association’s Membership Team in welcoming the new members listed below who have joined our community in the month of August. We thank these members for their innovation and commitment to the specialty food industry and look forward to getting to know them. 
    Prima Pavé
    Blue Moon Bakery
    Comvita USA
    RENNA SRL
    Caspian Caviar LLC
    Mantis BBQ
    NONGSHIM AMERICA INC.
    T-West Inc.
    Smokin' Bettie's BBQ
    Tea People Ltd.
    NDC Exports (Pvt)Ltd.
    Aiello Italian Specialties
    Davis Mountains Nut Co.
    Fire in the Kitchen Spice Company
    Hampton Farms
    Japan Federation of Soy Sauce Manufacturers Cooperatives
    Lieng Tong Rice Vermicelli Co., Ltd.
    Diamond Bakery Co., Ltd.
    Henriott
    Tianyi International Trade Inc.
    Jindilli
    RCP Foods LLC
    Empty Bowl Queso
    NAIA Natural Products
    Meycov Food USA Ltd
    Sweet Jubilee
    The Denman Island Tea Co.
    Carolina Pickle Company
     
     
     
                                                                                                       
    George Hajjar
    Specialty food makers and buyers share many of the same challenges in today’s business environment, especially issues around staffing, supply chain, production, and inflation. We interviewed several industry professionals as part of the recently released annual research, State of the Specialty Food Industry + 10-Year Category Tracking and Forecasts. You can find full video interviews when purchasing this year’s report. 
    Following is a sampling of responses from makers and buyers regarding the challenges and bottlenecks that are causing the largest headaches. 
    “[With regards to supply chain] we’ve managed okay, but it just seems like at every corner we’re dealing with playing whack-a-mole with something not being available.”—Jon Pruden, CEO, Taste 
    “The high costs of everything are a challenge for us. We’re a small manufacturer, we’re not the Krafts and the Mondelez of the world, we’re Alexian Paté. The challenges of higher costs are tough, the command for higher wages, higher prices of raw materials and packaging, the availability and lead times … the biggest [issue] is lead times and being able to put through price increases. We are looking at 60- to 90-day windows where our customers will allow us to do a price increase. For a small company that’s very scary.”—Alexandra Groezinger, president, Alexian Paté 
    “We’re not going to increase price but we’re seeing our margin eroding right now. Our packaging cost is +30 percent, raw materials, on average is +10 percent, and in total that’s an increase of the cost of goods sold around 15 percent. Right now, that’s not being offset by anything.”—Pierre Jamet, chief sales officer, Petit Pot 
    “All the supply chain stuff that’s troubling for brands is absolutely hitting us on the buy side. And we work with a logistics partner for our warehousing, and they are certainly experiencing the labor crunch that the rest of our industry has.”—Kate Harper, chief brand curator, Hive Brands 
    “Our biggest challenge right now is understanding the next phase of product availability and how macro things will impact that. So, we are still seeing bottlenecks in the supply chain both from imported product and some domestic delays … a lot of our cheese suppliers are having to short product, and I think a lot of that is due to the war and the aftermath of COVID.”—Cassy Kehoe, senior fresh category manager, KeHE 
    Andrew Lynch
    Shipping to Amazon? You’ve come to the right place.
    We’ve broken down what working with Amazon looks like for both first-party and third-party sellers (more info below) and how sellers can most effectively optimize their Amazon supply chain, and in turn, profitability with Amazon overall.
    Are You a 1P or 3P Amazon Seller?
    It is almost a “must” for any business to sell on Amazon these days. In a world where consumers log on to Amazon to buy items that were out-of-stock at the store, selling on Amazon helps companies stay competitive and win market share.
    Firstly, shipping into Amazon looks a little bit different depending on if you are a first party (1P) or third-party (3P) seller.
    1P Sellers
    To be a 1P Seller, you need to be invited by Amazon directly. In this set up, Amazon acts as the retailer and the seller operates as a wholesale supplier. Sellers receive bulk purchase orders and pay a flat fee for Amazon to entirely take over the selling process. After the seller ships their product to Amazon, Amazon gains complete control of the product’s pricing and promotion. Overall, it’s a hands-off set up for the seller.
    1P sellers typically ship full truckload to an Amazon distribution center. Amazon also offers customer pick-up (CPU) for 1P sellers – but more on that later.
    3P Sellers
    3P sellers act as the retailer and have more control of their operation overall. The seller lists and sells products directly to consumers via the Amazon marketplace, with full control over pricing and promotion. 3P sellers have a few options for how they can ship to customers, but most often use Fulfillment By Amazon (FBA). FBA is an Amazon service that provides storage, packaging, and shipping assistance to sellers. 
    Technically, companies can act as both a 1P and 3P seller. We’ve had clients receive Amazon purchase orders (POs) for certain products while simultaneously acting as a 3P seller of their remaining inventory.
    Shipping to Amazon
    Amazon is notorious for being a challenging receiver to work with. Delivery appointments book up very quickly and can be cancelled within 24 hours of your designated delivery window, sometimes when trucks are already enroute. 
    For information on pallet requirements or how to prep Amazon shipments for delivery in general, Amazon has detailed shipment guidelines listed on Seller Central for both Amazon Distribution Centers and FBA centers. 
    Otherwise, here’s what you need to know about shipping to Amazon:
    1. Amazon appointments book up fast.
    Usually, you won’t be able to get an appointment closer than five days after the booking date. This means maximizing lead time is crucial.
    2. Amazon requires shippers to meet at least a 90 percent OTIF.
    Amazon keeps tabs on missed or late appointments. If sellers do not meet or exceed a 90 percent on-time in-full average (OTIF) rate, this gives Amazon grounds to give up their appointment to someone else or boot the seller off the portal altogether. 
    If a carrier misses their scheduled appointment by 30 minutes or more, the freight will be refused at no cost to Amazon. In most situations, the seller will be held responsible to eat that cost.
    3. Amazon charges a fine for shipments that don’t meet OTIF.
    For example, Amazon orders 20,000 cases of a 1P seller’s product but the seller only ships 18,000 cases. The seller will then be charged a fine for not arriving in-full. If the order shows up late or not at all, the seller will be charged an additional fine for not being on time.
    4. Amazon is known to cancel appointments less than 24 hours in advance.
    Amazon has cancelled appointments while our carriers is already enroute to their DC. If this happens, there are two possible routes of action.
    First, the carrier could hold the freight for a layover fee, which is usually between $150-$500 per day. The other option is that the carrier could drop the load at their hub and another carrier would be sourced to recover it. This means the seller would then be charged the cost of two separate carriers.
    Neither are fantastic options, especially if you need a shipment to arrive ASAP.
    5. Amazon is extremely difficult to contact.
    Amazon has grown into the giant that it is in a very short time. Somewhere along the way it’s become incredibly difficult to contact anyone working inside the distribution or fulfillment centers. This makes problem-solving very difficult when issues arise, which can lead to further delays and charges. 
    6. Amazon shipment numbers are important.
    When booking freight and making an appointment, sellers will receive an ASN (or PRO) number from their carrier and a confirmation number from Amazon. These numbers are what Amazon uses to track the shipment. Without them, Amazon can apply chargebacks to the shipment or even refuse to accept it once it arrives. Sellers must ensure they receive this number with each order so they can fight back against any unwarranted chargebacks.
    Sellers will also need to confirm this number ahead of time with Amazon. If this step is missed, it can cause inbound, processing, or stock issues, possibly resulting in extra fees sellers must pay or fight.
    Amazon CPU
    Amazon offers customer pick-up (CPU) for 1P sellers. A CPU arrangement means Amazon will pick up the seller’s freight instead of the seller outsourcing a third party.
    Sellers can book an Amazon-partnered carrier using Amazon’s seller portal, which will either be a truck from Amazon’s own fleet or another carrier depending on availability and pickup location. This all sounds well and good, except for one issue: Amazon-partnered carriers have been known to frequently miss pickups without any communication or warning.
    So, the seller’s freight is staged and ready to go, but nobody shows to pick it up. Since warehouses are already tight on space, they can’t afford to have the freight sit staged and untouched for very long. This means the shipment will have to be restacked and put back into storage – and the seller will get charged a penalty for all the extra fuss, not Amazon.
    This is a common theme with retailers who use CPU delivery models. At Zipline, we normally suggest avoiding these set-ups altogether for this reason.
    CPU arrangements sacrifice all control of shipments but still hold the seller responsible for anything that goes wrong. The outcome is usually extra fees, delays, and headaches in getting the freight moved. 
    Make Shipping to Amazon Seamless
    Since Amazon isn’t exactly easy to work with when it comes to transportation, it’s important to control the controllables of your supply chain wherever you can. The good news is, with a retail-specialized third-party like Zipline Logistics, that part is made easy.
    Our uniquely qualified carrier network, world-class team of retail transportation experts, and state-of-the-art shipper intelligence tools maximize client revenue by capturing market share through optimized, on-time in-full performance.
    Zipline processes were built specifically to resolve the most critical logistics challenges faced by consumer goods brands. We tailor strategies to reduce overall transportation spend, optimize logistics performance, and beat out the competition for market share.
    Shipping to Amazon?
    LET US TAKE YOU THERE
    Andrew Lynch is President and co-founder of Zipline Logistics, an award-winning North American 3PL that specializes exclusively in the transportation of retail consumer goods. He works alongside clients ranging from some of the largest food and beverage businesses in the world to the brightest up-and-coming CPG brands in North America. Lynch and his team leverage data intelligence and strong industry relationships to help clients uncover transportation savings, build scalable supply chain strategies, and ace retailer compliance programs. Starting his career in carrier procurement and management within a Fortune 100 logistics company, Lynch has held positions of responsibility in all areas of third party logistics. 

    Julie Gallagher
    Learn more about the people and products in these Q&As with Specialty Food Association member companies.
    What does your company produce?
    Handcrafted chutneys designed for hot and cold meats and cheeses.
    Did you have a food background before launching your company?
    I grew up in the 70s in an international home learning to cook dishes from all over the world. It was there that I was inspired to learn and share our deeper connection to culinary culture. After raising four children, I jumped into the food industry, learning from local chefs and entrepreneurs. In 2017, Locally Seasoned was launched, teaching cooking classes and providing personal chef services.
    How did the idea for your product/company come about?
    In March 2020, every business hit a brick wall and faced some of the biggest challenges of our time. We were catering at the time and all of our bookings were cancelled indefinitely. Locally Seasoned would have to pivot to succeed. It became clear that we needed to offer products for sale in local stores, markets and online to sustain our future. We focused in on those unique pantry items we always created for our clients, like chutneys, pickles, spice mixes, vinaigrettes, and marinades.
    Why did you get involved in specialty foods?
    It can be difficult in a rural area to find like-minded foodies. In searching online for gourmet pantry products and specialty foods, I found the SFA.
    What is your favorite thing about the specialty food industry?
    The textures. The flavors. The ingredients. The stories and cultures behind each dish. The energy of the food community.
    What’s the one piece of advice you’d give a new specialty food business?
    Breathe. Give yourself some grace. The entrepreneurial journey to success looks more like a preschooler’s angry scribble than an architectural drawing.
    If you weren’t running a food business, what would you be doing?
    Puttering in the garden, foraging, hiking, and cooking for friends and neighbors. I would be listening to loud music, personal development podcasts, and audiobooks.
    What does specialty mean to you?
    Specialty foods provide the recipe to help us discover our history, stir joy into the present, and finish with hope for the future. They remind us of just how strong and resilient we can be because life is worth tasting!
    Janet DeCarlo
    Please join the Specialty Food Association’s Membership Team in welcoming the new members listed below who have joined our community in the month of July. We thank these members for their innovation and commitment to the specialty food industry and look forward to getting to know them. 
    Kirlioglu Tarimsal Urun. Gida Ins. AS
    Knipschildt Chocolatier
    The Boneless Butcher, LLC
    True Natural Taste
    Ytc Studios
    Nettle Creek Foods, Inc.
    RL Food Testing Laboratory, Inc.
    Freeze Nums
    Chakalaka Brands
    Que 42
    Acetaia Malpighi
    African Bronze Honey Company
    Catalina Snacks Inc.
    Truffle Dog Company
    EHO FOOD
    Kobayashi Noodle Co., Ltd.
    MAGIC BITES- TASTE OF MEDITERRANEAN
    Veronica's Health Crunch, LLC
    CrimsonCup Coffee & Tea
    Gutsy Inc
    Brightland
    El Patio CPG, LLC
    Renegade Foods
    Simply Spanish
    Hanuman Chai,LLC
    Jinka
    Rooted Food Sales
    Sidari Artisan Brands
    The Southern Art Company, LLC
    Olyda
    KIN DEE TRADING Co., Ltd.
     
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