Q: The produce industry is concerned about meeting the new anti-terrorist security regulations, requiring inspection of all cargo loading on passenger airlines. Large volumes of fresh produce travel on passenger airliners every day for both domestic and international destinations. When will the legal mandates go into effect?
A: Starting February 1, 2009, 50 percent of pieces of cargo must be inspected by TSA or a Certified Cargo Screening Facility (CCSF) prior to delivery to a freight forwarder or air carrier. As of August 1, 2010, 100 percent of the pieces of cargo must be inspected.
Q: When you say pieces of cargo, is this down to the individual unit or box?
A: Yes. Each package is going to have to be screened. Those terms are interchangeable. The 9/11 law mandates that. There are no exceptions to that. Current exemptions and alternate means of screening for shrink-wrapped, strapped, and banded shipper pallets will be eliminated. The first priority is security. No one is saying this won’t be a huge undertaking. Approximately 7,500 tons of cargo is loaded onto passenger planes each day.
Q: Because fresh produce is unitized on pallets, some industry executives say this will present a serious challenge to preserving product, maintaining the cold chain, and delivering product in a timely manner. Based on the volumes of highly perishable, high-value, fresh produce and food products that are moved out on a daily basis, there is angst that the requirement to screen and inspect each package could significantly disrupt trade throughout the industry.
A: We recognize obviously produce is a time-sensitive commodity and we want to make sure we don’t interrupt the supply chain when we implement the program. We’re trying to be open-minded and catch product as early in the supply chain as possible to minimize the impact on the items before they get into palletized position.
Q: Could you clarify who will be doing the actual screening? You say each piece of cargo must be inspected by TSA or a Certified Cargo Screening Facility (CCSF). How does that work?
A: Obviously, if screening is done at the airport, there will be massive congestion and bottlenecking, and we are looking at ways to avoid that. The Certified Cargo Screening Program (CCSP) allows aviation and cargo industries to conduct screening at manufacturing facilities, warehouses, factories, and distribution centers, if the facility directly tenders cargo to a freight forwarder or air carrier. Freight forwarders are also eligible. There are stringent requirements to become certified. [Editor’s note: You can read more details about CCSP here.]
Q: Have you talked to any produce executives at this point?
A: We’ve had people out in the field since January talking to stakeholders in affected industries. We’ve spoken to almost 1,400 individuals across different sectors, holding sessions in nine cities. I haven’t personally spoken to produce executives. In Boston, I’ve worked with people who have concerns about lobsters.
I was in Seattle this week talking to Alaska Airlines about the fish they handle. We are very sensitive to the issues involving perishable product and are trying to work with our partners, the forwarders and airlines to resolve potential problems before they occur. These are preemptive, advance meetings.
We have a group in California this week for three days, spending time in Los Angeles, San Jose, and Fresno. The trip is being sponsored by Commodity Forwarders, one of the largest handlers of fresh produce. The TSA group is going to look at the produce supply chain as a whole and try to identify the best places in the system where it could be most advantageous to screen the produce boxes.
We want feedback and suggestions of where these possible places could be before product gets unitized into pallets to alleviate some of the logistical difficulties and quality issues you raise. We don’t want to single out Commodity Forwarders. We have people out in the field talking to companies across the U.S. This is only a small piece of what is happening in one sector.
Q: What do produce industry executives need to do to get prepared for these impending requirements?
A: What produce industry executives should do is work closely with forwarders to make sure they are participating in the Certified Cargo Screening Program, or they can e-mail email@example.com with their questions and someone will get back to them.
We’re working with freight forwarders and shippers. We have looked to get shippers to join us in piloting this whole program. Those 1,300 or 1,400 people I mentioned earlier were shippers in different sectors.
Q: Are produce people involved in the pilot studies? Is there still an opportunity for those interested in participating?
A: TSA has met with a number of produce executives. People are still sending in applications to take part in the pilot program. We’re focused on key cities. We have to control the pilot and limit participation to some degree. At the same time, we are not singling out certain industries, but looking at a broad range of industries because operations and logistics will vary in different sectors. Clearly pharmaceutical companies won’t be facing the same issues as produce companies.
Q: Where and when will the pilots take place?
A: We are pursuing a phased rollout with limited groups of supply chain entities in nine cities through the first half of this year. Round 1 is San Francisco, Chicago, Philadelphia; Round 2 is Los Angeles, Dallas, New York/Newark; and Round 3 is Seattle, Atlanta and Miami.
Q: How do the new requirements compare to the current policies?
A: This significantly changes what is in place now because with the passage of the 9/11 bill into law every single piece of cargo needs to be inspected. Today, it’s a classified amount that has to be screened; a combination of random screening and targeting high risk products.
Q: The Department of Homeland Security’s inspector general released an audit report last July assessing TSA’s oversight of air carrier compliance with cargo screening requirements for passenger aircrafts. The report pointed to several areas of concern, questioning TSA’s oversight effectiveness.
“Shipments are not properly accepted, or lack documentation to support whether appropriate screening occurs,” the report concluded. These new more demanding standards will put an even greater burden on TSA. Could you comment further on the challenges of implementing this ambitious program to bolster our nation’s security?
A: TSA is increasing its number of compliance inspectors nationwide from approximately 300 to over 450 inspectors exclusively dedicated to the oversight of air cargo. Along with performing daily oversight of cargo operators, inspectors also conduct covert testing of the air cargo system and participate in “cargo strike” surge activities at our nation’s largest cargo airports.
Q: What kinds of costs are involved? And will the government compensate companies in any way?
A: We’re still working on the costs. When we look at this, if you’re a produce company and do your own screening, we expect you to screen cargo before you close the box; a physical inspection to insure no foreign objects are present, and then put a tamper evident seal on that box.
Q: How would a company qualify to do its own screening? What security measures will be in place to guarantee the integrity of the system?
A: Anybody who is going to screen product requires certification. This involves background checks, security checks, a whole list of standards you have to adhere to, and onsite validations and periodic inspections. You must be certified to do your own screening. The screening doesn’t have to involve complex technology; it can just be a physical inspection, but it must be done at the piece level.
Q: Could you clarify the definition of “screening” and “physical inspection”?
A: Physical inspection is one acceptable form of screening. Other acceptable methods include x-ray, canine inspection, trace detection (ETD), and explosives detection systems (EDS). ETD and EDS are two types of explosive screening technologies.
Q: You indicate that after a physical inspection, certified screeners should put a tamper-proof seal on the box. Many produce boxes have holes in them to allow the produce to breathe — obviously someone could slip a test tube of explosives or something in one of the holes. Is it required that all items be completely sealed boxes — no holes? Is there a maximum allowable size for a hole, etc.?
A: There’s no such requirement. The Certified Shipper Program includes the employment of a secure chain of custody methods to maintain the security of the screened cargo from beginning to end. This includes vetting of key personnel to ensure those with access to the cargo have clean backgrounds.
Q: Have there been any studies or analyses done on the costs of implementation?
A: TSA is rolling out the Certified Cargo Screening Program in a phased approach beginning in three major cities to allow TSA to receive feedback from the industry, including feedback on costs. Phase 1 will allow TSA and industry to work collaboratively to develop solutions that greatly increase security while permitting legitimate commerce to flow. Lessons learned during this phase will be implemented into later phases and rule-making.
Q: This is a big change for the industry and there are more than a few anxious executives. At the same time, many in the industry could be caught off guard by these upcoming regulations.
A: We’re anxious too. We want to make sure we get it right. We’re trying to communicate this as much as we can so people know what’s coming.
The gist is this: every single case put in the belly of a passenger jet will need to be inspected by a certified inspector. What are the implications of this?
Clearly the TSA will not have even a fraction of the manpower necessary to inspect all the cargo going into passenger jets. So the inspection has to be done away from the airport.
In some circumstances consolidators, freight forwarders or special facilities set up to certify product may be used. By and large, though, the cost of bringing trailers of fully palletized product into any of these facilities so they can be broken down, inspected and reassembled may be prohibitive. In addition, maintaining the cold chain while this inspection is undergone is going to be a problem.
The logical answer is to push the inspection back to the packer and, literally, as the product is packed, also have it certified to TSA requirements. This will basically require each packing facility to become a CCSF or Certified Cargo Screening Facility.
As with many of the changes related to food safety and food security, this sounds like a small change, but is really a revolution. Perhaps a few commodities that are heavily dependent on export and air shipments will see most packing facilities certified, but that would be the exception.
In fact, the procedures to become a CCSP facility seem sufficiently rigorous to dissuade many packers from the effort. For example, personnel must be screened. Presumably illegal aliens wouldn’t pass that screen.
An expected side effect of this rule would be a move to a more aligned supply chain in which overseas importers or U.S. exporters align with specific packers who agree to win accreditation as a CCSF. Spot buying for export would become far less common.
US exports would probably become somewhat less competitive. Although some exports are highly predictable, right now many depend on the vagaries of weather, currencies, etc. When the Pundit manned an export desk, it was not uncommon to get a call from a Dutch trader with news that the proverbial rain in Spain had created an opportunity and so we could export iceberg lettuce or peppers or some other item for a few weeks.
Although the new rules don’t preclude that, the packers may not have bothered to become certified as CCSF-compliant. This means the product will have to be taken to a third-party facility for inspection, which will add cost and make US exports less competitive.
Customer service may decline a bit as well. The Pundit Poppa was proud of never missing a boat in a lifetime in business. Then, one day, when there was a car accident, the trailer missed the boat. No problem. The Pundit Poppa had the product on the van transferred to LD-3s and flown to its destination. We swallowed the extra cost to avoid disappointing a customer.
That product, though, wouldn’t have been certified to fly by air in passenger jets. So under this rule, it would have to be brought somewhere and reprocessed. That is likely to degrade the product and certain to cost money and delay the shipment.
Of course, there is one “out”. These rules only apply to cargo placed on passenger jets. This means that the new rules will tilt the playing field toward dedicated cargo services. These range from FedEx, UPS and DHL to cargo airlines and charter planes. We can expect these services to boom since they will offer a competitive advantage. If you ship with cargo-only operations, you can buy from anyone and need not spend money on extra certifications. That could be a significant advantage.
So the downside effects of these rules are clear: 1) A less flexible industry, 2) US product less competitive on exports, and 3) Cargo business drawn away from already struggling passenger airlines.
Obviously this would all be worth it if it results in a safer citizenry. It is not clear that it does. This mania to inspect everything, whether each passenger or each box of freight, is a very expensive way of avoiding profiling.
So the Jr. Pundit, Primo aka William, age 6, was pulled aside to be wanded on a randomly selected security check. You could laugh, except resources get used on such silliness that could go to really helping to make us safer. One wonders if the money used to comply with these rules also couldn’t make us safer if used in another way.
Yet it seems to be past the time for that discussion. Congress passed the law, the President signed it and now TSA is going to enforce it.
Our challenge is to get ourselves prepared so that fresh produce and other perishable air cargo keep moving.
The associations obviously have to be up on this matter so that they can represent industry interests before the TSA, but basically the path is clear: Packers, processors and consolidators need to certainly consider getting into the Certified Cargo Screening Program. The more companies that are certified, the less of a problem this issue will pose for the trade.
We do have one idea that might really help resolve this problem. Why couldn’t USDA inspectors be deputized by the Transportation Security Administration to carry out these product screenings? The USDA inspectors are generally available at both shipping point and terminal markets and could charge a fee for their time as they do to perform a USDA inspection. They could screen the product then watch it be loaded into airplane containers or a truck which they would seal.
These inspectors are already government employees, and giving them this work would have two benefits: first, it would facilitate exports by making it easier to meet the screening requirements and, second, the additional revenue would help sustain the network of USDA inspectors around the country. Surely with a little extra training, this could be made to happen and it would provide a very valuable option for the industry.
Many thanks to Nick Kukulan and Paramount Export Company for making the industry aware of this important issue.
Steven Shore was the first sales manager for the Perishable Pundit’s sister publication, PRODUCE BUSINESS, when Steve was just out of college.
Barry Prevor is the Pundit brother. He worked in the family’s long established produce business headquartered on the Hunts Point Market.
The two of them together came to develop one of the world’s fastest growing retail operations, now with over 260 stores.
The brand has become well known for a series of alliances. Some are with athletes including: basketball players Stephon Marbury and Ben Wallace; tennis player Venus Williams; golfer Bubba Watson and, most recently, surfer Laird Hamilton.
Other alliances are with actresses, such as Sarah Jessica Parker and Amanda Bynes.
What ties all this together is that there is a mission that involves providing stylish, high quality clothes at insanely great prices.
The role of the athletes and celebrities is really to confirm the quality and style of the clothing. When Stephon Marbury, who plays for the New York Knicks, wears his Starbury line of sneakers on the court, it establishes that the shoes must be high performance shoes.
When a style icon, such as Sarah Jessica Parker, now starring in the new Sex and the City movie, associates herself with Steve and Barry’s and actually wears her line of clothing, known as Bitten, she is sending a signal to her fans that these are stylish clothes.
Now Nightline did a major story on Steve and Barry’s, and as we watched we realized that there are lessons for our industry in their success.
After confirming that Steve and Barry’s is less expensive than many competitors, including Wal-Mart, Steven Shore made a powerful point:
“There are a lot of things you can do if this is your mission, if this is what you deeply are passionate about.”
In this case, he was speaking of Steve and Barry’s mission to keep prices low. But the same point would apply if we were talking about food safety or about flavor.
In many cases when we “can’t” do things, it speaks to a lack of commitment, a lack of focus, more than a literal inability to make it happen.
The comment also made us think about how easy it is to experience “mission drift”. Maybe the reason Steve and Barry’s is less expensive than Wal-Mart is because Wal-Mart is no longer focused on driving costs out of the system. For a while, Wal-mart was focused on ads in Vogue, then it became environmentally focused. It simply may not be possible to serve two masters.
Even at Steve and Barry’s, the pull of mission drift is strong. Steve told an anecdote:
“There was a discussion in our office recently, and there were a number of employees saying, you know, you’re crazy. Let’s raise the price from $8.98 to $8.99. It’s only a penny and we’ll make more than a million dollars from this,” said Shore. “And we thought long and hard and we said, you know what, it’s a little worse for the customers. They’d rather pay $8.98 than $8.99.”
Barry seems clear on the mission: “We’re trying to figure out how to get to $8.96!”
It all reminds one of Herb Kellerer, one of the founders of Southwest Airlines. He was always getting letters from stockholders who would advise him to raise fares. They would point out that the next cheapest airline was often hundreds of dollars more expensive than Southwest on a particular city pair, so rates could be raised and competitive advantage maintained.
But Kellerer never thought of his competition as simply other airlines. He wanted to get the customer who was going to drive to fly instead, figuring that was a much larger market on the short range flights Southwest specialized in at that time.
Herb had to keep the focus on that driver, and Steve and Barry’s have to keep the focus on their customer. Do you have a clear focus on who our customer is?
You can watch the video from Nightline right here.
It doesn’t happen often but every once in awhile everything just clicks. So it goes with Sunkist’s “Take a Stand” promotion, now its fifth summer.
With this promotion Sunkist gives away free lemonade stands to children ages 7 -12 who pledge to raise money for their favorite charity.
It ties together youth, entrepreneurship, service, Americana and, yes, even selling more lemons.
Billy Dean, the Grammy Award-winning country artist, is the national spokesperson for “Take a Stand” and he put together a video last season regarding what this was all about:
Saturday, June 21, 2008, is official “Take a Stand Day” and that is the day Sunkist urges children to kick off their lemonade stand season.
It is not too late to participate, so if you have children between 7 and 12 who are looking for a chance to do some good in the world, have them get involved with the Take a Stand program right here.
We’ve been focusing extensively on Sustainability and Social Responsibility, and a recent in-depth interview brought this thoughtful response:
The Perishable Pundit article/Q&A about sustainability with Jeff Dlott, entitled Sustainability Expert Provides Insights To A Similar Industry, was very interesting. This is an issue that creates a lot of controversy at the moment. But this is likely due to the fact that it insinuates the necessity for change, innovation and proactive decisions.
Before continuing, I want to fully disclose that our FreshSense farmers have been working with Protected Harvest (now part of SureHarvest) for the past four years to develop and implement a certification program for stone fruit and citrus. They recognized the importance of sustainability and embraced the restrictions and requirements such certification would mean for their farming operations — because it is the right thing to do.
Mr. Dlott was at the forefront of the sustainability movement when most people were still arguing about the definition and viability of organics. He understood a measurable impact on our environment, and society must include a full-system approach that addresses all growing practices and the long-term sustainability of the farmer and the retailer as opposed to only looking at chemical usage.
Everything we do on a farm has an impact on our future, and we need to consider that impact as we make our farming decisions. Accordingly, as our industry tackles the issue of sustainability, information about what sustainability is really about and how our industry can address this in a proactive manner without totally confusing or frustrating our consumers is vital.
As we have found in our four-year effort to convert our farming operations to fully sustainable practices and now take this to the marketplace, this is not an easy process. As one of our salespeople recently noted, this is the only thing he has ever tried to sell to the retail trade that everyone loves but only a few are willing to try because they don’t understand how to present it to consumers or if it will confuse consumers.
We have found that many people believe consumers don’t understand the concept of “sustainability” and must be fully educated about it before they will act. Others feel it can only be marketed to consumers as a third alternative — conventional, organic and sustainable. And, there are some who think sustainable produce must compete with organic produce. In reality, this is just about providing consumers with what they want — a quality product that has been grown in a conscientious, eco-friendly manner.
A plum certified as being grown under a sustainable program does not need to be positioned to compete with an organic plum. There is a small percentage of consumers who have both the financial means and the philosophical beliefs necessary to buy organic products. If it is part of a retailer’s strategy to serve this consumer, there is no reason not to do so while also offering other consumers a product grown under sustainable practices.
Produce certified under a sustainable program can and will be appreciated by the vast majority of consumers who want to buy products grown in an environmentally and socially proactive manner but can’t or won’t pay 50% to 75% more to do so.
Moreover, it is naive of us “produce experts” to think most consumers need or even want to fully understand an official definition for “sustainable.” According to consumer research conducted by The Hartmann Group, 54% of consumers already claimed some understanding of “sustainability” as of last year, while most of us in the produce industry were arguing about the definition of the term.
Moreover, the 2006 Cone Millennial Cause Study found 89% of their respondents (age 13 to 25 — the trendsetters) were likely to switch from one brand to another if the second brand were associated with a good cause. Consumers are often much smarter than we are when it comes to knowing what they want…
At some point, we need to realize a definition in the Webster dictionary or an official definition agreed upon by PMA, United Fresh, Western Growers and others has nothing to do with consumer acceptance. Frankly, consumers want to feel good about what they are buying, and they want the knowledge that the peach or potato they are buying has been certified to meet strict environmental and social standards.
This provides consumers with the confidence they desire. Obviously, there must be substance behind the claim, or our consumers will be quick to revolt. This is why leaders such as SureHarvest/Protected Harvest will play such an important role in the future of produce.
It is time for our industry to embrace this issue and provide our consumers with what they are telling us they want.
— Blair R. Richardson
What makes sustainability distinctive from initiatives such as organics is that sustainability, properly considered, is not a mission in itself; it is a framework through which many missions can be achieved.
Being organic no more makes a company sustainable than growing conventionally makes it sustainable.
In fact, if it turns out, for example, that the dilemma of the next century is an urgent need to produce more food, then the organic community’s decision to reject, say, GMOs may turn out to be highly unsustainable.
If you turn to a product such as hamburger meat where, as we discussed here, Wegmans happily sells loads of irradiated burgers. If the beef industry can’t stop people from dying as a result of to E. coli 0157:H7 contamination, well, it may be highly unsustainable to reject irradiation.
It is, of course, understandable that growers who have invested in sustainability certifications might like to use that as a marketing tool. Sometimes it can work.
Yet a lot of our work with consumers has indicated that although consumers are quick to punish producers and retailers for ethical or environmental lapses, they are slow to reward companies for doing what consumers think they should be doing anyway.
The various retail initiatives focused on sustainability seem to be moving in this direction as well. It is not that some vendors get a gold seal for sustainable packaging, but, rather, that the retailer insists that all vendors work consciously to reduce unneeded packaging.
When we look at what FreshSense is doing, we think it is terrific that they are working with Jeff Dlott and Sure Harvest/Protected Harvest, and we wish Blair and FreshSense the best with its new Zeal brand, subtitled Fruit for a Healthy Future.
Yet we think its FlavorFirst Quality Management Program and especially its new program, “The Great Taste Guarantee,” in which it promises to “buy back” from the consumer any piece of Ripe ‘N Ready fruit that isn’t “great tasting” also speaks to sustainability.
For at its heart, sustainability is supposed to ensure that an organization or an industry can sustain itself into the future
The Great Taste Guarantee is a way to say that FreshSense and its Ripe ‘N Ready brand can’t sustain itself if it disappoints the consumer. We would argue the same is true of the broader trade.
Lately we’ve been running a series of pieces focusing on issues of flavor. These pieces include:
Yet it would be a terrible mistake for the industry to look at issues such as flavor and think they are in some separate silo from sustainability. Just as food safety isn’t separate and producing enough to feed the world isn’t separate.
There are a lot of people who would like to push the industry into their own parochial definition of sustainability. We would argue for a more inclusive vision, one built on continuous improvement.
Blair is, of course, correct to point to the consumer as our loadstar. And he is absolutely right when he points out consumers don’t walk through shopping aisles carrying their Webster’s to define all terms.
What will make consumers feel good about what they are buying varies, by consumer, by life phase, by economic cycle and much more. So sometimes it may be a brand with an overt appeal to environmentalism and sometimes it is a brand with a promise of taste and satisfaction. Both are ways of delighting consumers and both are aspects of sustainability.
Many thanks to Blair Richardson and FreshSense for helping us to think through such a complex issue.