What Are the Top 5 Challenges in Wine Logistics?

When it comes to logistics and supply chain management, the two biggest challenges that are consistently brought up are optimization and risk management.  Finding the balance between reducing costs, time and inventory to gain competitive advantage while still protecting business from inevitable supply chain disruptions is no easy feat.  Add in multifaceted regulations, a fragile high-value product, and an international transport carrier environment constantly in flux, and you have the complex world of wine logistics.

We can’t talk about this topic without featuring the particular challenges for wine supply chains involving the US.  Now the largest wine consuming country, US beat out France and Italy, with 779 million gallons in 2015 according to the Wine Institute.  It’s easy to see why this is an attractive target market for both foreign and domestic wine producers.

To explore this topic further, we turned to JF Hillebrand, an international logistics provider specialized in beer, wines and spirits to provide industry insight on the key challenges and recommendations for the wine supply chain.

Getting the Most from Each Shipment

Wine by nature is a heavy commodity, 1 kilo to 1 liter, and when you add in wine bottles, packaging and pallets in standard ocean equipment, you have two common scenarios.  The available space in a twenty foot container will limit the load tonnage, and in a forty foot container the road weight allowances in the USA will limit the payload.

So how about shipping just the wine instead?  Bulk shipping has permitted wine shippers around the world to do just that, shifting the bottles and packaging out of the shipping container and to the destination markets.

Innovation in flexitank technology provided shippers a new bulk shipment method, more cost-effective and flexible than existing ISO tanks, which require strict cleaning standards to be met along with unit repositioning to balance the import and export demand.

JF Hillebrand’s VinBulk system more than doubles the capacity of a single twenty foot ocean container, safely transporting up to 24,000 liters of bulk wine compared to 10,584 liters of bottled wine.  It essentially transforms a twenty foot standard container into a bulk liquid transportation device or a bulk wine storage unit in the case of JF Hillebrand’s VinStore.

Reducing Temperature Risk to Product

To state it simply, wine is a temperature sensitive product.  Exposure to daily thermal fluctuations, extreme heat, cold and humidity in transport affects wine in transit, impacting bottled wines and packing or labels the most.  Given the factors of geography and seasonality in the supply chain, owners have had to determine for themselves what level of risk to take on shipping in dry containers or opting for the additional cost of operating refrigerated containers.

Taking the industry lead for temperature risk assessment on beer, wine and spirits, JF Hillebrand developed VinRoute, a predictive risk management tool.  The internal database of shipping routes and historical temperature and humidity data allows shippers to make informed decisions on container equipment selection.

Wine Logistics

Taking it a step further, the company developed VinLiner, a protective liner foil system designed for the alcoholic beverage industry that fits in dry containers, or over individual pallets, to reduce the effect of thermal shocks, extreme temperatures and humidity within a container.  It delivers that sweet spot between optimization and risk mitigation, providing cost savings compared with a traditional operating refrigerated shipping container without the load capacity reduction required in a refrigerated unit.

Keeping Product Safe in the Process  

Smart supply chain strategy should include standard processes and procedures to mitigate risk when possible, as well as insurance against claims and transport liability.

Some precautions are basic, bottled wine shipments require appropriate export packaging as well as container cargo loading, both for product protection and for load weight distribution.

For bulk wine shipments in flexitanks, container selection is a critical component for transport safety.  JF Hillebrand’s on-site technical assistance for container inspection, equipment fitting and loading or discharge operations ensures that product is professionally handled and compliant with local and international transport regulations.

For product protection beyond the supplier’s premises, businesses need to be aware of transport carriers’ limited liability clauses and terms of use.  For any international logistics operation, involving multiple modes of transportation and a sensitive or high-value product, a comprehensive cargo transport insurance policy such as JF Hillebrand’s VInsurance contracts reduce overall exposure in the event something does go wrong.

Staying up to Code

Keeping on top of the latest governmental regulations, including recent directives for USA food safety or maritime law amendments and protocols, is a daunting task for business owners.  Failure to meet deadlines or exact requirements can delay orders in the pipeline, and any loaded container stuck in a port terminal can rack up terminal fines in demurrage or container detention charges, and lead to additional fines or penalties for non-compliance.

Sometimes even the rules themselves can be unclear when new regulation comes into force without a clear and global statement as to its application or enforcement.  One such recent example was the verified gross mass mandate of the International Convention for the Safety of Life at Sea.  The international maritime law amendment required shipments beyond 200 nautical miles offshore to provide the verified gross mass to the vessel and terminal operators prior to vessel loading.  How the weight was to be calculated, verified, transmitted to various ocean shipping carriers and container terminals, and enforced was left to the over 170 member countries that were part of that international convention.

JF Hillebrand took the lead in communicating the latest information to shippers as it took shape in the various countries through its local and global networks, then simply adjusted systems and processes to adapt to the new requirement.  As a result, the compliance deadline came and went without a hitch.

Adapting for the Exceptions  

With a category so broad as wine, which encompasses everyday sips to high-value one-of-a-kind bottles, information and supply chain visibility requirements are going to likewise need to be tailored to individual companies and their business models.

Investing and developing in-house information platforms for logistics and specific products can be cost-prohibitive and not always scalable in the case of acquisitions or changing industry requirements.  Outsourcing those activities with a logistics partner with strong IT platforms and experience in global wine markets has clear advantages.

JF Hillebrand pioneered AXIS, a custom order management systems specifically for beer, wine and spirits logistics, tailored to the appropriate level per client.  Owners of niche wine brands have real-time visibility to order flows, documentation, automated daily reporting and lead time analysis, while large-scale global brands owners participate in collaborative supply chain solutions that include advanced inventory management and full-scale forecasting, orders and stock control.

The Takeaway

Complex, demand-sensitive wine supply networks need both smart strategies and safety nets to stay efficient, adaptable and deliver results.  Thanks to technology and data that make predictive analysis a reality, third-party logistics providers can work in partnership with wine shippers to deliver sophisticated and customized solutions.  If winemaking is an art, then wine supply chain logistics is definitely a science.

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