AMB303 Assessment 1 - Industry Report - Final PDF

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QUEENSLAND UNIVERSITY OF TECHNOLOGYFaculty of Business and LawSchool of Advertising, Marketing and Public RelationsAMB303 International LogisticsSemester 2, 2021Assessment Item 1: Industry Report – Global Level – Fresh Seafood(Weighting Total – 40%)Due: 2nd SeptemberStudent: Benjamin ConnollyStudent...

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QUEENSLAND UNIVERSITY OF TECHNOLOGY Faculty of Business and Law School of Advertising, Marketing and Public Relations AMB303 International Logistics Semester 2, 2021 Assessment Item 1: Industry Report – Global Level – Fresh Seafood (Weighting Total – 40%) Due: 2nd September Student: Benjamin Connolly Student No.: 10779728 Tutor: Christine Moody Campus: Gardens Point Word Count: 1050

Contents Introduction ........................................................................................................................................ 2 Supply Chain Management ................................................................................................................. 2 Inventory management ...................................................................................................................... 3 Transportation Management.............................................................................................................. 3 Regulatory Requirements ................................................................................................................... 4 Conclusion ........................................................................................................................................... 4 Reference ............................................................................................................................................ 5

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Introduction With increasing consumer demands and the expansion of global trade, the importance of an effective logistics operation can spell the growth, or inevitable death of a company (Murphy, 2017). The air freight fresh seafood industry is made up of high value, low shelf-life products that must be delivered quickly and safely to ensure the highest value with minimal waste (Reuters, 2016). This industry is primarily characterised by just-in-time retailers due to the fast moving nature of perishable goods (Murphy, 2017). This report will delve into what a typical supply chain looks like for a fresh sea food air freighter, related inventory management, transportation management and the related challenges facing most perishable goods.

Supply Chain Management

Figure 1: General Airfreight Seafood Supply Chain

A Seafood Airfreight supply chain involves three main elements, the producers, transporters and consumers. Initially, the producer section has the fishermen who provide the goods to be sold. These come in two forms, either farmed, or fished. Farming has the benefits of a guaranteed supply and faster processing speed as it’s close to shore, this often includes abalone, oysters, and others. Whilst ocean fishing would harvest a wider variety of high value produce, is slower due to distance and weather limitations. (Spence, 2020). Generally this seafood is of high value but has a very short shelf-life. The seafood can either be kept live or shipped freshly processed, however, live exports often present an ethical dilemma in regards to animal welfare (Sinclair, 2018). Assuming the seafood is processed, these are kept in temperature regulated containers to maintain freshness (Commonwealth of Australia, 2018). From there they are to be transported, this will require several steps including third party logistics (Murphy, 2017). The produce is loaded on trucks and taken to the airport, possibly stored in an intermediary warehouse. Then are then loaded to be air freighted and driven to their destination. This is often either to a warehouse, like the Sydney Fish market, or retailers for sale. As illustrated, there are many links to this chain and many opportunities for the process to be hindered by external factors.

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Inventory management Inventory management is key, especially in the perishable goods market. Fresh seafood can only be kept for 3-14 days maximum under typical conditions, thus mistakes in inventory ordering can lead to significant write off costs (Gordon Brother, 2020). Finding a proper balance is crucial yet challenging. The warehousing costs related to storing fresh seafood are incredibly high, thus encouraging a lean logistics process. Many reputable restaurants using fresh fish receive new deliveries daily, also referred to as cycle stock (Murphy, 2017). Assuming there are sufficient consumers, this daily sale of stock reduces the related carrying cost for each item of seafood prior to reaching the customer, essentially creating a just-in-time system (Sales, 2017). Yet, this will only work if the input is relatively the same as demand. Both supply and demand for seafood are seasonal, with supply additionally being affected by weather and even just the luck whilst fishing that day (Sales, 2017). A seasonal stockout of seafood, such as what often occurs in Australia before Christmas, increases reliance on farmed fish, as maintaining safety stock reduces the quality of the product when it eventually does go on sale (Anderson, 2011).

Transportation Management Time utility is the ability to have products available when the customer wants it (Murphy, 2017). To have the freshest seafood ready for sale as quickly as possible results in higher consumer satisfaction. It takes two days to reach some Asian countries from Australia by plane as opposed to two weeks by boat (Lefort, 2016). As the Asian market for seafood is the largest, it is critical to ensure Australia is exporting the freshest seafood, as quickly as possible which is only achievable with Airfreighting. World seafood consumption is predicted to increase by 21 percent between 2018-2025, with Asia accounting for 73 percent of this increase. The ability for businesses to engage in this massively growing market presents an enormous opportunity for growth (Nair, 2018). Hence the importance for effective transportation management. However, it comes at a cost. The primary hindrance to airfreighting viability is the cost per kilogram of stock (Smith, 2020). It is around 4-5 times more expensive than road transport, 10-15 times more expensive than sea transport and depending on many variables, costs between US$1.50-4.50 per kilogram. The processes require at a minimum eight legs, simplified into three modes of transportation. This includes boats, motor vehicles and planes. Initially boats would need to be used to collect the produce from either the ocean or farming locations. It would then be loaded onto trucks to transport the goods to be processed. They are then transported again by trucks to be airfreighted to their final destination. However, this process can be hindered by natural disasters and weather events. For example, the air space between Australia and China most used for airfreighting, has around 25 tropical strength cyclones per year, causing an enormous break in the supply chain, likely leading to a stockout in areas(AIR, 2018). There are also potentially logistical issues as the boats collecting the produce can be largely impacted by the weather.

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Regulatory Requirements Like many perishable goods, seafood is a highly regulated industry. This is done through specific packaging systems, temperature control, shipping rules and documentation (APEC, 1999). These regulations create barriers for swift transport as there are sometimes more than 20 documents required at different stages of the air freight transportation process (Sales, 2017). Consequently, there is a trend pushing for the reduction of paperwork necessary to ensure a freeflowing logistics operation. This will assist in reducing the logistical wait times and consequently may increase freshness and the quality of the product.

Conclusion In summary, airfreighting is the most timely and efficient mode of transport for a perishable good such as seafood. The process is highly dependent on all legs of the logistical chain cooperating to avoid expensive holding costs which decrease product value. Inventory management is crucial as the product has such a short lifespan, essentially removing the possibility of a fresh safety stock. Transportation via air freight is highly dependent on the connecting ground transportation methods and their timeliness. Finally, the entire process is currently slowed by regulatory requirements however it is hoped these are streamlined in the future.

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Reference AIR. (2018). AIR Typhoon Models for Southeast Asia. https://www.airworldwide.com/siteassets/Publications/Brochures/documents/AIR-Typhoon-Models-forSoutheast-Asia Anderson, C. (2011). Dealing with fresh fish shortages in winter. https://www.seafoodsource.com/news/foodservice-retail/dealing-with-fresh-fish-shortagesin-winter APEC. (1999). AIR SHIPMENt OF LIVE AND FRESH FISH & SEAFOOD GUIDELINES: A Manual on Preparing, Packaging and Packing Live and Fresh Fish & Seafood Air Shipments along with Customs and Inspection Guidelines for Six APEC Member Economies. First Coastal Corporation. Dwyer, A., Hudson, N., Paflioti, D. P., Mellor, R., Anderson, D., & El-Tarifi, H. (2019). 2019 INTERNATIONAL AIRFREIGHT INDICATOR DATA AND MEASUREMENT SERIES. https://infrastructure.org.au/wp-content/uploads/2019/03/2019-International-AirfreightIndicator-digital.pdf Eurofish-Magazine. (2021). Freshness and quality versus environmental and climate impact. Eurofish Magazine. https://www.eurofishmagazine.com/sections/trade-andmarkets/item/173-freshness-and-quality-versus-environmental-and-climate-impact GB. (2020). EFFECTS OF THE CORONAVIRUS ON THE SEAFOOD INDUSTRY. https://www.gordonbrothers.com/insights/industry-insights/commercial-and-industrialseafood Inquiry into National Freight and Supply Chain Priorities, Supporting paper No. 1, Air freight, March 2018. (2018). Lefort, C. (2016). Australia air freight crunch hits flights of fancy foods. https://www.reuters.com/article/us-australia-aircargo-idUSKCN12J0BQ Murphy, P., Jr., & Knemeyer, A. (2017). Contemporary Logistics, EBook, Global Edition. Pearson Education, Limited. http://ebookcentral.proquest.com/lib/qut/detail.action?docID=5187907 Nair, S. (2018). Seafood demand adds more flavour to global air cargo industry. Retrieved 2021 from https://www.stattimes.com/news/seafood-demand-adds-more-flavour-to-global-air-cargoindustry/ NPF. (2021). Northern Prawn Fishery: Prawn Seasons. http://npfindustry.com.au/about-us/ Sales, M. (2017). Air Cargo management : air freight and the global supply chain (Second edition. ed.). RoutledgeTaylor & Francis Group. Sinclair, M., Derkley, T., Fryer, C., & Phillips, C. J. C. (2018). Australian Public Opinions Regarding the Live Export Trade before and after an Animal Welfare Media Exposé. Animals (Basel), 8(7), 106. https://doi.org/10.3390/ani8070106 Smith, M. (2020). Australian exporters to China face soaring air freight costs. Retrieved 02/09/2021 from https://www.afr.com/world/asia/australian-exporters-to-china-face-soaring-airfreight-costs-20200330-p54fa7 Spence, A. (2020). Air freight deal opens up Australian seafood exports to Asia. https://theleadsouthaustralia.com.au/industries/primary-industries/air-freight-deal-opensup-australian-seafood-exports-to-asia/

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