Managing the Complexity of Beverage Logistics

By David L Buss, CEO of DB Schenker USA

Moving fine beverages from the port of origin to the destination requires care and attention. With the pandemic continuing to disrupt supply chains, port congestion worsening, and an ocean container shortage, the challenges in shipping and delivering beverages are augmented.

Despite complications, the demand for wine and spirits only grows. No matter the time of year or climate, beverage logistics doesn't slow. These beverages require special attention and handling, monitoring temperature changes and other potentially problematic issues that can impact the final product.

Logistics providers with an in-depth knowledge of the complexity of beverage logistics are a necessary part of managing the process and ensuring safe, on-time deliveries. For example, transporting beverages on direct routes to avoid transshipments and waiting times in ports.

Importing or exporting wine and spirits has historically been a sound and lucrative option. Now, the ongoing supply chain disruptions that have been impacting virtually every industry are creating bigger challenges for these businesses.

Manufacturers and suppliers have products sitting, fully bottled and ready for shipment, stuck for weeks or months. Importing wine, shipping spirits, finding warehouse storage, accessing glass or label materials – all are significant and costly for the industry.

Supply chain disruptions aren't likely to end anytime soon, even if small improvements are reported. Most industry experts don't expect a return to normal until at least 2023, if not later.

For large distributors, the disruption is even worse. There's a snowball effect – if suppliers can't get the materials, there are product shortages for distributors and customers. The shortage of trucks and drivers, port congestion, and poor rail service all delay the availability further.

In addition, the cost of transportation could be as much as 300% higher than the norm. Booking containers takes weeks of planning, on top of the normal lead time, and warehouse space is difficult to find and secure.

For producers, one of the biggest strains has been obtaining a steady supply of glass bottles. The lack of bottles forces producers to choose whether to bottle spirits immediately or store them for future use with potentially more profitable products.

For bars and restaurants, shortages are creating customer frustration. If the supply of certain spirits or wines gets low, cocktails, specials, or house beverages can be removed from the menu. While the public may be aware and understanding, it's an ongoing problem for these businesses.

The supply chain disruptions are having widespread impact throughout the beverage industry. But some suppliers and producers are mitigating the effects with the help of third-party logistics providers.

Less-than-truckload shipments, stocking more inventory, or building time into schedules to provide some "cushion" for shipping delays can help producers manage the disruptions. In particular, carrying more inventory and adding weeks to lead times allow for more flexibility in the face of supply chain delays.

Some producers have created new positions to exclusively handle supply chain disruptions. With issues arising from shipping and trucking, warehousing, deliveries, raw materials sourcing, and more, having one staff member to handle it all relieves a lot of the burden on producers but raises the internal costs. Outsourcing to a third-party logistics provider puts the disruptions in the hands of an expert team without the need for hiring, training, and managing an internal employee.

Other producers are exploring options to set up third-party warehouses in key transit areas to alleviate the pressure with scarce warehouse space and the need for increased inventory. Again, this problem can be alleviated with a third-party logistics provider and distributed, temperature-controlled warehouses.

Another challenge that producers face is the changing import and export regulations and tariffs. A simple mistake could create a significant problem, but logistics providers stay current on the changes in regulations and tariffs to ensure that shipments are compliant.

For large companies, third-party logistics providers are the only viable solution. These companies need more robust options, and building strong partnerships with a third-party logistics provider can mitigate the effects of product delays, shipment delays, and warehouse or container space.

Less-than-truckload freight shipping (LTL) can be used for small freight or sample deliveries from multiple parties for cost efficiencies in the midst of rising fuel and shipping costs. Producers can ship smaller amounts of product without tying up funds for nonessential inventory.

Self-managing the movement of small batches or samples along with running the day-to-day business and navigating the overwhelmed supply chain is often too demanding on a producer's time and resources. Outsourcing this process puts it in the hands of experienced logistics providers, freeing time to focus on other responsibilities.

The beverage industry is complex, and producers and suppliers need third-party logistics providers that offer customized solutions. Third-party logistics providers can utilize specialized teams across the globe with an in-depth understanding of customized logistics solutions for all types of beverages, including beer, wine, juices, liquors, and more.

Wine and other fine beverages require special attention from the logistics provider. Beverages may pass through multiple climate zones before reaching their destination. Careful planning is necessary to minimize external influences, such as nearby heat sources, transshipments, and delays at ports.

The logistics industry also provides cutting-edge technology to monitor humidity, temperature, and other environmental factors in Flexi-bags or ISO tank containers to preserve the integrity of liquid freight. The controlled storage facilities and delivery ensure that inventory is always optimally stored.

Real-time visibility is a necessity in the modern supply chain, no matter the industry. With the sensitivity of fine beverages, real-time visibility is essential to navigating the disruptions and ensuring a quality final product that reaches its destination.

GPS tracking is used to track and trace the movement of beverages that ship from the manufacturer to the delivery to the end customer in real time, allowing opportunities to plan, schedule, and monitor logistics processes across any point.

From disposable temperature loggers to wireless temperature monitoring devices that project real-time problem signals, the choices are extensive. Real-time visibility for trailer temperatures in transit and during loading and unloading provide careful control and care with temperature-sensitive products.

Because the technology investment in monitoring and control is spread across many customers and shipments, working with third-party logistics providers provides access to sophisticated temperature tracking capabilities in a more economical way. Carrier partnerships with high cold-chain performance can be an asset for protecting a valued product.

Navigating the complexity of beverage logistics can be difficult for small producers or suppliers. Industry-leading logistics providers in beverage logistics have knowledge of the specific import and export conditions and can manage formalities like customs documents, certificates, and labeling. They have access to the EMCS procedure for shipping in the EU and can handle clearance and tax returns on your behalf.

The beverage industry has specific needs, which have been hit a little harder by supply chain disruptions compared to other industries. On top of rising fuel costs, increased demand, shortages, and special storage and transport needs, the beverage industry has unique formalities and tariffs that are difficult to navigate. Third-party logistics partners stay up to date on the changing conditions in the supply chain and regulations to ensure shipments are safe, compliant, and on time.

David is CEO of DB Schenker USA, a 150 year old leading global freight forwarder and 3PL provider. David Buss is responsible for all P&L aspects in the United States, which is made up of over 7,000 employees located throughout 39 forwarding locations and 55 logistics centers.