Logistics Matters with DC VELOCITY

Guest: Craig Hoskins from IFDA on pandemic challenges with food service distribution; Predictions for new technologies for trucking; Cargo theft shifts during the pandemic.

• AGiLE Business Media • Season 2 • Episode 8

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In this episode, guest Craig Hoskins, chair of the International Foodservice Distributors Association (IFDA) discusses the challenges that the food delivery industry has endured during restaurant, schools, and institutional facility closures  during the Covid-19 pandemic. What will it take to get back to normal? He also suggests ways to address the truck driver shortages that affect food deliveries and the need for greater support for our restaurants.

New research from IBM looks at digitalization and how it will affect the trucking industry. New technologies are coming to our nation's trucks. How long will it take before these become standards in the industry?

And the logistics industry has seen its share of cargo thefts during the pandemic , But where and how those thefts are occurring has shifted from previous years and it varies by commodity and region of the world.

Articles and resources mentioned in this episode:

Podcast sponsored byAptean

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David Maloney, Editorial Director, DC Velocity  00:00

The Covid-19 pandemic has been particularly rough on foodservice distribution. What's next for them? New predictions from IBM on technologies for tomorrow's trucks. And cargo theft is always a problem, but has it been worse during the pandemic?

Pull up a chair and join us as the editors of DC Velocity discuss these stories, as well as news and supply chain trends, on this week's Logistics Matters podcast. Hi, I'm Dave Maloney. I'm the editorial director at DC Velocity. Welcome.

Logistics Matters is sponsored by Aptean. Aptean is a global provider of mission-critical, industry-specific logistics and transportation management solutions. Aptean routing and scheduling delivers the most advanced transportation management systems to world leading brands, helping to drive operational success, reduce transportation costs by up to 30%, while optimizing delivery routes to meet rising customer expectations. For more information, visit Aptean.com.

As usual, our DC Velocity senior editors Ben Ames and Victoria Kickham will be along to provide their insight into the top stories of this week. But to begin today: This past year was especially hard on foodservice distributors. What did they do to survive this difficult year, and what's the outlook for getting back to normal? To answer those questions, here's Victoria with today's guest. Victoria. 

Victoria Kickham, Senior Editor, DC Velocity  01:26

Thanks, Dave. Yes, our guest today is Craig Hoskins. Craig is executive vice president at Performance Food Group, and president and CEO of the company's foodservice division. Craig is also chairman of the International Foodservice Distributors Association, or IFDA, as it's known. Craig is here to talk to us about a range of logistics trends in the foodservice industry, including demand for truck drivers and the industry's many challenges caused by the pandemic. Welcome, Craig.

Craig Hoskins, Chair, International Foodservice Distributors Association  01:55

Thank you.

Victoria Kickham, Senior Editor, DC Velocity  01:56

So can you start by telling us a bit about Performance Food Group and the work of IFDA?

Craig Hoskins, Chair, International Foodservice Distributors Association  02:01

Victoria, Performance Food Group is a publicly traded company employing more than 20,000 people throughout the country. We're involved in foodservice distribution through our foodservice division, and in specialty and convenience distribution through our Vistar division. Pat Hagerty leads our Vistar Division, and I'm responsible for our foodservice business. Today, however, I'll be speaking as the chairman of IFDA, our industry's trade association, with numerous members, including large private and publicly traded companies, specialty companies, and proud regional and local independent distributors throughout the country and abroad.

Victoria Kickham, Senior Editor, DC Velocity  02:38

The foodservice industry has been hit hard by the pandemic, to say the least. What were some of the biggest challenges early on, and have conditions improved?

Craig Hoskins, Chair, International Foodservice Distributors Association  02:47

Well, thanks for recognizing that. You know, since the original shelter-in-place orders were implemented mid-March, our customers, distributors throughout the foodservice supply chain were impacted. It's hard to think of another industry that's been impacted as much as ours, but we keep plugging away. You know, we're a $300 billion industry, we're bigger than even the airlines, and the crisis hit us, again, virtually overnight. You know, starting in late spring and early summer, restrictions on restaurants began to ease up a little bit. Business started to increase, in part due to those reduced restrictions, but also, you know, our customers are just so creative and resourceful. Curbside, takeout, delivery, outdoor dining, a bunch of other ways that our customers figured out how to serve America's diners. That said, [the] recent round of restaurant closures and restrictions, especially in California, the upper Midwest, and the Northeast really impacted our industry, We were starting to rebound, and yet again, with cold weather and some impacts on outdoor dining, we've retracted a little bit as an industry, But again, our customers, our operators, are just so smart, and they're so tied into their local communities, they've figured out ways to begin to rebound again, despite those challenges. That said, restaurants need support now, which is why passing the Restaurants Act is so important.

Victoria Kickham, Senior Editor, DC Velocity  04:23

So, Craig, what are some of the things companies like yours, and the industry as a whole did to help with these conditions you're talking about?

Craig Hoskins, Chair, International Foodservice Distributors Association  04:31

Well, despite the pandemic, the potential of this industry is substantial. We flexed as an industry to support the retail supply chain, again, to help our customers and to help food banks and others who needed our ability to source and deliver food throughout the country. Our distributors have shown they're extremely flexible, and really out there and available to our country when we're needed,

Victoria Kickham, Senior Editor, DC Velocity  05:03

That's for sure, and I know that we noticed that as we were doing reporting all through since, you know, the last year. I wanted to ask, also, about some personnel or associate issues. You know, we've reported quite a bit on the logistics and transportation industry's demand for truck drivers. Many refer to the problem as a driver shortage. I was wondering, how's that affecting your industry in particular, given the challenges we were talking about? How has that played out, and is it tough to find drivers now?

Craig Hoskins, Chair, International Foodservice Distributors Association  05:34

Well, you know, the growing driver shortage is well documented, Victoria, and it's a difficult issue for our industry, for sure. I think last week was some of the really big snowstorms and ice storms throughout the country. The supply chain is highlighted in terms of the need for drivers, the need for trucks. According to a recent estimate, the shortage is expected to grow to over 174,000 drivers by 2026. We have an aging fleet of drivers as well, you know, and behind this issue, the Bureau of Labor Statistics estimates the average age of a truck driver in the U.S. is 55 years old. The average age of a driver entering CDL school is almost 35. So, from our perspective, the solution's clear. The trucking industry and foodservice distributors and others badly need to bring younger drivers safely into the industry.

Victoria Kickham, Senior Editor, DC Velocity  06:31

Yeah, thank you for that. That leads right into what I was going to ask you next, in your role as chairman of IFDA. Can you talk a little bit about what steps the group has taken to help the industry through these difficult times as it relates to the driver issue, or just talking about, as well as the broader challenges, you know, what sort of specific programs or issues that you are putting out there?

Craig Hoskins, Chair, International Foodservice Distributors Association  06:52

Well, we've really been working hard on something called the DRIVE-Safe Act. Fortunately, a forward-thinking group of bipartisan lawmakers in the Senate and the House introduced some legislation in the last Congress to address this shortage. The Drive-Safe Act, really what it does is it modernizes the federal law to empower the trucking industry and distributors such as our companies to fill these gaps with good, highly trained, and young drivers, and we expect legislation be reintroduced into Congress here shortly.

Victoria Kickham, Senior Editor, DC Velocity  07:28

Can you give us some more specifics about the Drive-Safe Act and what you hope it will accomplish?

Craig Hoskins, Chair, International Foodservice Distributors Association  07:34

Happy to. You know, the Drive-Safe Act focuses on one of the primary obstacles to bringing younger drivers into the industry. You know, the requirement is that they need to be at least 21 years old to drive in interstate commerce. Now, the tough thing about that is, somebody could start driving in Alexandria, Virginia, drive all the way to Bristol [Virginia] as an 18-year-old commercial truck driver, and then not be able to drive across the street into Bristol, Tennessee. That 82-year-old legislation couldn't be updated, it's keeping qualified candidates from kickstarting their careers in the trucking industry, and it's preventing the industry from filling hundreds and thousands of open jobs. You know, there are some specific things that would be required for someone to get that commercial driver's license at that age—everything from completing at least 400 hours of on duty time and 240 hours of driving time in the cab with an experienced driver. Every driver will train on trucks equipped with new safety technology that includes active braking, collision mitigation systems, video capture, and speed governors that will be governed down to 65 miles per hour or less.

Victoria Kickham, Senior Editor, DC Velocity  08:52

Thank you, yes, I know, and I think part of what you're referring to is a there's a an intensive apprenticeship program, I believe, as part of the whole Act, and we've done some reporting on that as well.

Craig Hoskins, Chair, International Foodservice Distributors Association  09:02

Absolutely.

Victoria Kickham, Senior Editor, DC Velocity  09:03

I know that that's something that a lot of people are watching and waiting for a timeline on, so thanks for providing some insight on that. I wanted to sort of finish up by referring back to something you mentioned a little while ago. You mentioned the Restaurants Act. Can you tell us a little bit more about that, and what it does, and IFDA's support of it.

Craig Hoskins, Chair, International Foodservice Distributors Association  09:20

Since the closures in March, our industry has been committed to supporting our restaurant customers through the crisis. So, everything from advocating for legislation to also, you know, providing services and ideas to help them through the crisis. You know, we've advocated for PPP funds, providing our customers with tools to help them bridge this gap, but really, we feel that Congress has to pass this Restaurants Act—Real Economic Support That Acknowledges Unique Restaurant Assistance Needed to Survive Act. That's bipartisan legislation that establishes a $120 billion revitalization fund to support independent restaurants, and small franchisees, as they deal with these long term structural challenges that are thrown in front of them. Now, this bill provides real relief for any small restaurant that can demonstrate they lost revenue in 2020. Federal grants under the bill can be used for everything from retaining workers to operational expenses, like inventory and rent.

Victoria Kickham, Senior Editor, DC Velocity  10:23

We all know our local restaurants, large and small, have had to do a lot of work to deal with the changes and challenges of the last year, so thank you for talking about that. And thank you again, Craig, for being our guest today. It was nice to have you. Thank you.

Craig Hoskins, Chair, International Foodservice Distributors Association  10:39

Victoria, thank you, really appreciate it. You know, we've all worked hard to lobby on behalf of our customers and our members, and an opportunity to talk to you through DC Velocity is important. Get the word out there about what we're working on, our optimism about the future, and also what we've done to help out during this time. Thanks so much for the opportunity.

Victoria Kickham, Senior Editor, DC Velocity  11:04

You're welcome. And thank you again. We've been talking with Craig Hoskins of Performance Food Group and IFDA. Dave, back to you.

David Maloney, Editorial Director, DC Velocity  11:13

Thank you, Craig and Victoria. Now let's take a look at some of the other supply chain news from the week. Ben, you reported this week on an IBM study predicting a new wave of technology improvements for trucking. What did you find out?

Ben Ames, Senior News Editor, DC Velocity  11:28

That's right, Dave. If you follow the trucking sector, there's been a lot of talk in recent years about driverless cars and autonomous trucks, when they'll be commercially available, whether they'll take jobs from truck drivers, but an IBM study released this week said that a whole array of other technologies will probably be applied through truck fleets first. IBM said that by 2030, less than a decade from now, of course, the trucking industry will see innovations like capacity as a service; crowd-sourced delivery; truck platooning; optimized predictive maintenance; driver-, truck-, and road-specific routing; smart cargo; and automated driver assist. Those true—tools I'm sorry—will be enabled by trends like cloud computing, artificial intelligence, internet of things, advanced analytics, and machine learning. So, a lot of familiar terms that we've been hearing about, as well, in recent years, but what IBM is saying is that they're really going to start to gain traction on making some real-world tools that drivers are going to see very soon in the cab. IBM got this information from a survey of executives of both commercial vehicle manufacturers and also ancillary equipment manufacturers who make bodies and trailers and engines and things. It spanned a total of some 1,300 executives from about 1,100 companies.

David Maloney, Editorial Director, DC Velocity  12:49

When did IBM say if these technologies would be available to the whole industry at once?

Ben Ames, Senior News Editor, DC Velocity  12:56

Well, the survey showed that various companies will ride this wave of what a lot of people call digitalization, at their own speeds, tot too surprisingly. In the survey, IBM said that 64% of trucking fleet executives said that their organization's future success depends on that digital reinvention that we've been talking about, but the respondents also said that they're just in the early stages of that digital reinvention, and the total estimated that they were only about 36% complete. Another factor that might slow that process down for certain companies is the need to train their employees how to use those new tools. IBM said they estimated some $118 billion worth of spending will likely be needed by truck companies to, as they say, continuously reskill their employees by 2030, and that just means that, confronted with these new tools, empowered by them, workers just need to learn something new every year, and that's that "reskilling" term. But in the meantime, market forces are still pushing these digitalization changes forward quickly—things like the growing importance of sustainability, the adoption of electric power trains, and virtual shopping experiences to cope with the rising e-commerce volumes that we've often been talking about. So, as truck executives deal with those changes, they'll face three main questions, IBM said, about the digitalization process. First, how can a truck organization reinvent itself to become more like a high-tech company that centers its business on digital and data? Second, what role will truck companies play in goods mobility beyond their traditional role of simply moving freight? And lastly, how will truck companies attract and retain, and, as we were saying, continuously reskill their workforce to deliver on those cool new tools.

David Maloney, Editorial Director, DC Velocity  14:52

Yeah, it will be interesting to see how companies manage that transition, as well as to see how many of those predictions pan out. Thanks, Ben.

Ben Ames, Senior News Editor, DC Velocity  15:00

Absolutely, we'll be watching it closely.

David Maloney, Editorial Director, DC Velocity  15:02

And Victoria, you wrote this week about cargo theft. Can you share about that report?

Victoria Kickham, Senior Editor, DC Velocity  15:08

Sure, absolutely. Yeah. So, an annual report from logistics insurance company TT Club and supply chain intelligence firm BSI revealed some interesting trends about cargo theft this week. The group found—the groups, I should say—found that in-transit theft decreased globally last year, while thefts from warehouses and other storage facilities increased. Now, this is interesting for a couple of reasons. In-transit theft is always—you know, always comprises the most recorded incidents, and these include things like hijackings and direct thefts from vehicles and other modes of transportation. But interestingly, last year, it accounted for 71% of incidents worldwide, compared to 87%, the year before. On the other hand, warehouse and storage facility theft rose to 25% of all incidents, up from 10% in 2019. So, it's the shift in where that thefts occurred that the companies found most interesting. I should say this, as I said, it's a global report, and the trends vary regionally. Looking at just a couple regions, Europe saw the biggest shift. Thefts from warehouses and production facilities across Europe rose to 48% of all incidents, compared to something like 18% in 2019. In Asia, storage facility thefts remained at about 50% of all incidents. Here in North America is a little different. In-transit theft is still the biggest, the primary problem here, with cargo theft occurring almost exclusively from things like hijackings and thefts directly from parked vehicles, but there are differences according to country. So, thieves in the United States and Canada tend to most frequently steal things from, by targeting cargo trucks parked in insecure locations, whereas south of the border in Mexico, it's more likely to be hijacking. So, that's a little bit of the lay of the land and where the shift is coming from. 

David Maloney, Editorial Director, DC Velocity  17:04

Victoria, did the report indicate any reasons for this shift?

Victoria Kickham, Senior Editor, DC Velocity  17:09

Well, like we've been hearing on just about every issue, it's the pandemic. So, they attribute it to this shift in consumer buying behavior that we've been tracking and reporting on, and the resulting supply chain ships and disruptions that we've seen as a result of that. Specifically, they point to things like the growing stockpile of products. You know, we see, you know, products being stored more and more of them, all around the world, high-value targets, like personal protective equipment, and also the potential for vaccine supply chains—or the vaccine supply chain—to come under threat. So, these are all things they contributed to the change last year and are expected to shape trends this year as well. I wanted to point out just something interesting, they mentioned about the vaccine supply chain: The researchers said there'd been no incidents of vaccine theft noted to date, but they said it could happen in the coming months as the vaccine rollout continues, and, hopefully, intensifies, and the point they made was that companies will need to, in the medical supply chain, will have to adhere to strict existing distribution and security protocols to really keep those supply chains safe. And that's another part of the report. They talk about mitigation efforts and strategies for both manufacturing and transportation organizations to take to sort of minimize their risk around all of these issues. In our story on DC Velocity, we include a link for readers to download the report—the full report, I should say—if they're interested.

David Maloney, Editorial Director, DC Velocity  18:34

Thanks, Victoria. Yeah, that is very interesting, and something we'll continue to track as we move along.

Victoria Kickham, Senior Editor, DC Velocity  18:39

You're welcome.  We encourage listeners to go to DCVelocity.com for more on these and other supply chain stories, and also check out the podcast Notes section for some direct links on the topics that we discussed today. Thanks, Ben and Victoria, for sharing highlights of the news this week.

Ben Ames, Senior News Editor, DC Velocity  18:56

Thanks, Dave. Glad to be here.

Victoria Kickham, Senior Editor, DC Velocity  18:58

Yes, you're welcome. 

David Maloney, Editorial Director, DC Velocity  19:00

And again, our thanks to Craig Hoskins of IFDA for being with us today. We encourage your comments on this topic and or other stories. You can email us, if you like, at podcasts@dcvelocity.com.

And we also encourage you to rate this podcast if your podcast platform allows for that. We do appreciate your feedback, and it really does help people to find us.

And a reminder that Logistics Matters is sponsored by Aptean. Forged from decades of industry experience, Aptean routing and scheduling supports logistics and delivery fulfillment operations with the tools needed to master supply chain challenges, optimize route plans, and reduce fleet costs. Learn more about how Aptean can help you get ready to deliver operational success at Aptean.com.

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And we'll be back again next week with another edition of Logistics Matters, when we will talk about some of the distribution problems with getting Covid vaccines where they need to go very quickly, so be sure to join us. Until then, please stay safe and have a great week.