By working with a competitor to boost transportation efficiency, Ocean Spray cut freight costs by 40 percent and greenhouse gases by 20 percent in one major lane.
You could call it a classic case of serendipity. Agricultural cooperative Ocean Spray had just hit a major milestone in its supply chain sustainability program when it received an unexpected proposal that promised to take its carbon reduction efforts to the next level.
As part of a network redesign, the Lakeville, Massachusetts (USA)-based producer of fruit juice and food—most notably its iconic cranberry juice—had recently opened a new distribution center (DC) in Lakeland, Florida, to serve customers in the southeastern United States. By centralizing supply closer to its customers, the company had already slashed millions of miles from its distribution network, cutting both freight costs and carbon emissions.
But soon after the Lakeland facility opened in 2011, Ocean Spray was approached by Wheels Clipper, a third-party logistics service provider (3PL) that specializes in intermodal, truckload, and refrigerated shipping. The 3PL had an intriguing business proposition for the cooperative. One of its clients, Tropicana, which is also one of Ocean Spray's competitors in the fruit juice business, was already shipping fresh fruit by boxcar on CSX Transportation trains from Florida to New Jersey—and sending empty boxcars back to Florida. Since much of Ocean Spray's Lakeland-bound freight originated in Bordentown, New Jersey, Wheels Clipper suggested that Ocean Spray could take advantage of that backhaul capacity. That would mean a substantial savings in both transportation costs and carbon emissions.
Both are significant goals for Ocean Spray. "For us, sustainability is an enterprisewide focus," says Kristine Young, who leads the cooperative's sustainability efforts. She works with growers and suppliers on a variety of sustainability efforts that encompass energy and water use, packaging, and transportation, among others.
Young believes that Ocean Spray's commitment to sustainability may be what attracted the attention of the third party. Ocean Spray has been a partner in the U.S. Environmental Protection Agency's (EPA) SmartWay program for several years, as are 95 percent of the company's carriers. Participants in the program commit to benchmarking their shipping operations and taking steps to reduce fuel use and emissions. "Our SmartWay participation was a clear indication we are interested in sustainability," she says.
Cost and emissions reductions
Ocean Spray decided Wheels Clipper's proposal was worth pursuing. After looking into the matter further, it determined it could indeed take advantage of the backhaul opportunity—though it would require a few minor adjustments in its shipping patterns.
"One thing we had to look at was our load planning," Young recalls. Each truckload shipment held 19 pallets of goods, but boxcars handle 38. "We had to take that into consideration in our order fulfillment planning," she says. "We had to do a little bit of work on the pallet size and the configuration of the pallets."
Delivery schedules also required some adjustment. Shipping goods by truck takes three days, while the journey by rail takes four to five days. That meant asking the Florida distribution center to carry more inventory than it might otherwise have done.
The payoff, however, promised to be enormous. The arrangement that eventually was put in place resulted in Ocean Spray's shifting 80 percent of the New Jersey-to-Florida shipments to rail over a 12-month period, yielding reductions in both shipping costs and emissions.
The emissions cuts attracted the attention of the nonprofit Environmental Defense Fund (EDF), which was putting together a series of case studies on companies that have cut freight costs and carbon emissions through improved logistics practices. EDF, in turn, approached the Massachusetts Institute of Technology's (MIT) Center for Transportation and Logistics (CTL) and asked it to conduct a study of the Ocean Spray program under EDF's sponsorship. In January, the CTL released its study on Ocean Spray and the results it achieved.
Among other findings, the report, Case Studies in Carbon-Efficient Logistics: Ocean Spray—Leveraging Distribution Network Redesign, showed that by shifting the traffic from truck to rail, Ocean Spray slashed transportation costs in the lane by 40 percent.
The emissions reductions in the lane were also impressive. According to the MIT analysis, the shift resulted in a savings of 1,300 metric tons of carbon dioxide—or CO2—a 68-percent reduction in the lane, meaning an overall emissions reduction in Ocean Spray's distribution network of 20 percent. The MIT study says that was the equivalent of cutting fuel use by 100,000 gallons.
Success factors
In addition to quantifying the savings, the CTL report looked at the factors that made the program successful. In Ocean Spray's case, the company had a number of things working in its favor, says Dr. Edgar A. Blanco, research director for the CTL and leader of the study.
First, Ocean Spray owned the facilities at each end of the lane. That was crucial, Blanco explains, because it meant the company could increase inventory at the Florida distribution center and not ask customers to adjust their own order patterns. "Without opening the Florida DC, they would not have had the flexibility to move that many goods by rail to Florida," he says.
Second, Ocean Spray had the right kind of freight profile. Rail shipping works well for products that move in fairly regular volumes. Although Ocean Spray had all kinds of shipments, Blanco says, much of its freight consisted of what he characterizes as "constant and continuous" shipments. "The warehouse still had to plan for some products that don't [fit this profile], and those still move by truck," he notes. "While that increased complexity, it was worth it from a cost perspective and an environmental perspective."
Third, the shift to rail proved workable because of the rail terminals' proximity to the Ocean Spray DCs at each end. The dray from the New Jersey distribution center to the CSX rail terminal is about 60 miles, and the dray from the Florida terminal to the Lakeland DC about 65 miles. "That's crucial for a couple of reasons," Blanco says. "One is simply the ability to coordinate shipping. But it is also crucial from a CO2 perspective." Longer drays would quickly have eroded the cost and emissions savings, he explains.
The success of the project has led Ocean Spray to begin evaluating other lanes for possible conversion to rail. "It took us a little while to work through [the program]," Young says, "but it has been a huge success. Internally, we talk about how we can [identify] other high-volume lanes where we might be able to find rail opportunities.
"This whole project shows there are real savings in both cost and carbon," she adds. "It just makes good business sense for us to collaborate."
Editor's note: The report Case Studies in Carbon-Efficient Logistics: Ocean Spray—Leveraging Distribution Network Redesign can be downloaded here.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The U.S. manufacturing sector has become an engine of new job creation over the past four years, thanks to a combination of federal incentives and mega-trends like nearshoring and the clean energy boom, according to the industrial real estate firm Savills.
While those manufacturing announcements have softened slightly from their 2022 high point, they remain historically elevated. And the sector’s growth outlook remains strong, regardless of the results of the November U.S. presidential election, the company said in its September “Savills Manufacturing Report.”
From 2021 to 2024, over 995,000 new U.S. manufacturing jobs were announced, with two thirds in advanced sectors like electric vehicles (EVs) and batteries, semiconductors, clean energy, and biomanufacturing. After peaking at 350,000 news jobs in 2022, the growth pace has slowed, with 2024 expected to see just over half that number.
But the ingredients are in place to sustain the hot temperature of American manufacturing expansion in 2025 and beyond, the company said. According to Savills, that’s because the U.S. manufacturing revival is fueled by $910 billion in federal incentives—including the Inflation Reduction Act, CHIPS and Science Act, and Infrastructure Investment and Jobs Act—much of which has not yet been spent. Domestic production is also expected to be boosted by new tariffs, including a planned rise in semiconductor tariffs to 50% in 2025 and an increase in tariffs on Chinese EVs from 25% to 100%.
Certain geographical regions will see greater manufacturing growth than others, since just eight states account for 47% of new manufacturing jobs and over 6.3 billion square feet of industrial space, with 197 million more square feet under development. They are: Arizona, Georgia, Michigan, Ohio, North Carolina, South Carolina, Texas, and Tennessee.
Across the border, Mexico’s manufacturing sector has also seen “revolutionary” growth driven by nearshoring strategies targeting U.S. markets and offering lower-cost labor, with a workforce that is now even cheaper than in China. Over the past four years, that country has launched 27 new plants, each creating over 500 jobs. Unlike the U.S. focus on tech manufacturing, Mexico focuses on traditional sectors such as automative parts, appliances, and consumer goods.
Looking at the future, the U.S. manufacturing sector’s growth outlook remains strong, regardless of the results of November’s presidential election, Savills said. That’s because both candidates favor protectionist trade policies, and since significant change to federal incentives would require a single party to control both the legislative and executive branches. Rather than relying on changes in political leadership, future growth of U.S. manufacturing now hinges on finding affordable, reliable power amid increasing competition between manufacturing sites and data centers, Savills said.
The number of container ships waiting outside U.S. East and Gulf Coast ports has swelled from just three vessels on Sunday to 54 on Thursday as a dockworker strike has swiftly halted bustling container traffic at some of the nation’s business facilities, according to analysis by Everstream Analytics.
As of Thursday morning, the two ports with the biggest traffic jams are Savannah (15 ships) and New York (14), followed by single-digit numbers at Mobile, Charleston, Houston, Philadelphia, Norfolk, Baltimore, and Miami, Everstream said.
The impact of that clogged flow of goods will depend on how long the strike lasts, analysts with Moody’s said. The firm’s Moody’s Analytics division estimates the strike will cause a daily hit to the U.S. economy of at least $500 million in the coming days. But that impact will jump to $2 billion per day if the strike persists for several weeks.
The immediate cost of the strike can be seen in rising surcharges and rerouting delays, which can be absorbed by most enterprise-scale companies but hit small and medium-sized businesses particularly hard, a report from Container xChange says.
“The timing of this strike is especially challenging as we are in our traditional peak season. While many pulled forward shipments earlier this year to mitigate risks, stockpiled inventories will only cushion businesses for so long. If the strike continues for an extended period, we could see significant strain on container availability and shipping schedules,” Christian Roeloffs, cofounder and CEO of Container xChange, said in a release.
“For small and medium-sized container traders, this could result in skyrocketing logistics costs and delays, making it harder to secure containers. The longer the disruption lasts, the more difficult it will be for these businesses to keep pace with market demands,” Roeloffs said.
Jason Kra kicked off his presentation at the Council of Supply Chain Management Professionals (CSCMP) EDGE Conference on Tuesday morning with a question: “How do we use data in assessing what countries we should be investing in for future supply chain decisions?” As president of Li & Fung where he oversees the supply chain solutions company’s wholesale and distribution business in the U.S., Kra understands that many companies are looking for ways to assess risk in their supply chains and diversify their operations beyond China. To properly assess risk, however, you need quality data and a decision model, he said.
In January 2024, in addition to his full-time job, Kra joined American University’s Kogod School of Business as an adjunct professor of the school’s master’s program where he decided to find some answers to his above question about data.
For his research, he created the following situation: “How can data be used to assess the attractiveness of scalable apparel-producing countries for planning based on stability and predictability, and what factors should be considered in the decision-making process to de-risk country diversification decisions?”
Since diversification and resilience have been hot topics in the supply chain space since the U.S.’s 2017 trade war with China, Kra sought to find a way to apply a scientific method to assess supply chain risk. He specifically wanted to answer the following questions:
1.Which methodology is most appropriate to investigate when selecting a country to produce apparel in based on weighted criteria?
2.What criteria should be used to evaluate a production country’s suitability for scalable manufacturing as a future investment?
3.What are the weights (relative importance) of each criterion?
4.How can this methodology be utilized to assess the suitability of production countries for scalable apparel manufacturing and to create a country ranking?
5.Will the criteria and methodology apply to other industries?
After creating a list of criteria and weight rankings based on importance, Kra reached out to 70 senior managers with 20+ years of experience and C-suite executives to get their feedback. What he found was a big difference in criteria/weight rankings between the C-suite and senior managers.
“That huge gap is a good area for future research,” said Kra. “If you don’t have alignment between your C-suite and your senior managers who are doing a lot of the execution, you’re never going to achieve the goals you set as a company.”
With the research results, Kra created a decision model for country selection that can be applied to any industry and customized based on a company’s unique needs. That model includes discussing the data findings, creating a list of diversification countries, and finally, looking at future trends to factor in (like exponential technology, speed, types of supply chains and geopolitics, and sustainability).
After showcasing his research data to the EDGE audience, Kra ended his presentation by sharing some key takeaways from his research:
China diversification strategies alone are not enough. The world will continue to be volatile and disruptive. Country and region diversification is the only protection.
Managers need to balance trade-offs between what is optimal and what is acceptable regarding supply chain decisions. Decision-makers need to find the best country at the lowest price, with the most dependability.
There is a disconnect or misalignment between C-suite executives and senior managers who execute the strategy. So further education and alignment is critical.
Data-driven decision-making for your company/industry: This can be done for any industry—the data is customizable, and there are many “free” sources you can access to put together regional and country data. Utilizing data helps eliminate path dependency (for example, relying on a lean or just-in-time inventory) and keeps executives and managers aligned.
“Look at the business you envision in the future,” said Kra, “and make that your model for today.”
Turning around a failing warehouse operation demands a similar methodology to how emergency room doctors triage troubled patients at the hospital, a speaker said today in a session at the Council of Supply Chain Management Professionals (CSCMP)’s EDGE Conference in Nashville.
There are many reasons that a warehouse might start to miss its targets, such as a sudden volume increase or a new IT system implementation gone wrong, said Adri McCaskill, general manager for iPlan’s Warehouse Management business unit. But whatever the cause, the basic rescue strategy is the same: “Just like medicine, you do triage,” she said. “The most life-threatening problem we try to solve first. And only then, once we’ve stopped the bleeding, we can move on.”
In McCaskill’s comparison, just as a doctor might have to break some ribs through energetic CPR to get a patient’s heart beating again, a failing warehouse might need to recover by “breaking some ribs” in a business sense, such as making management changes or stock write-downs.
Once the business has made some stopgap solutions to “stop the bleeding,” it can proceed to a disciplined recovery, she said. And to reach their final goal, managers can use the classic tools of people, process, and technology to improve what she called the three most important key performance indicators (KPIs): on time in full (OTIF), inventory accuracy, and staff turnover.