The future of food logistics

By air, land and sea, transportation innovations and developments are creating new opportunities
for the global food supply chain.

As we near end of 2014, the price of oil has fallen to a four-year low at roughly $ 66 per barrel.
Ironic, because the rising cost of oil in recent years is largely responsible for driving transportation
innovation aimed at reducing fuel costs for supply chains.

But considering the U.S. Energy Information Administration estimates that diesel prices will fall
from an average of $ 3.82 per gallon this year to $ 3.38 per gallon in 2015, it´s unlikely the fossil
fuel party will last forever.

Fortunately, numerous transportation innovations and developments are in the works and
promise to transform the way cargo is transported. Whether by air, land or sea, the goal is
improved fuel efficiency and lower emissions.

But, that´s not all. New equipment, technologies, infrastructure projects and more are opening up
new possibilities for transportation providers and shippers in the food and beverage supply chain.

Igor Pastermak, Aeroscraft´s founder and CEO, wants to build 24 airships and lease them to
companies and governments. Aeroscraft has signed memorandums of understanding with several
interests, including Singapore-based Pacific Airlift, global aircraft charter company Air Charter
Service, and Bertling Logistics ( part of Germany´s Berling Group).

The company is now in fleet devolpment for the 66- ton configuration Aeroscraft (ML 866), which
will be folloed by a largest 250-ton pay

Look, up in the sky

Helium-filled airships have been used since the 1960s, mostly for advertising, aerial observation
and tourism. However, Aeroscraft Corp, believes its new design and engineering advancements
will revitalize interest in airships, particularly for cargo applications.

John Kichle, the company´s director of communications, explains that, “Cargo airship utility has
been historically hindered by external ballast exchange requirements as well as lack of VTOL (
vertical takeoff and landing) flight capability, slow speed, and non rigid structural design that has
limited payload capacity, aerodynamic loading (speed) and propulsion flexibility.

The Aeroscraft´s validated, self- ballasting design addresses these limitations, while combining
many of the flight attributes and benefits of Fixed-wing, rotary and traditional lighter-than-air
(LTA) vehicles to move cargo directly or flexibly to new destinations independent from
infrastructure.
Both Aeroscraft configurations (models) will move faster than conventional airships (100 knot
cruise / 120 max) at about 185 kph, outracing boats, trains and trucks.”

The Aeroscraft´s rigid structure is reminiscent of the Zeppeling era, states Kiehle, “ but is now of
the Zeppeling era, states Kiehle, but is now built with lighter and stronger carbon fiber and other
advanced materials”

A $ 60 million grant from the U.S. Department of defense helped fund development of Aeroscraft
in the early stages, although private investors are required to support the next goal- creating a
fleet of Aeroscrafts.

Igor Pastermak, Aeroscraft´s founder and CEO, wants to build 24 airships and lease them to
companies and governments. Aeroscraft has signed memorandums of understanding with several
interests, including Singapore-based Pacific Airlift, global aircraft charter company Air Charter
Service, and Bertling Logistics ( part of Germany´s Berling Group).

The company is now in fleet devolpment for the 66- ton configuration Aeroscraft (ML 866), which
will be folloed by a largest 250-ton pay load version (ML868). Aeroscraft also expects to begin
Type Certification (a certification process that identifies the tyoe of aircraft) with th U.S. Federal
Aviation Administration (FAA) in approximately three years.

Kiehle says Aerocraft sees unique transportation options emerging in the food sector.

“Aeros shares many bullish industry assessments for the global reefer marker and growth
prospects for the global food supply chain we believe the Aeroscraft will soon fill importan nicges
within the global transport landscape, especially with respect to cold chain logistics where the
vehicle fleet´s insfrastructure independence, landing site flexibility and overall speed/ cost
intermediary status between air and ground alternatives foretells significant strategic and
financial opportunities

Eventually, the Aeroscraft could transport cargoes virtually anywhere in the world quickly and
directly, he says, operating in a cost- effective and ecologically conscious manner to provide
expedited delivery of large payloads, palletized or containerized cargo.

“Lower density, higher value cargoes and perishables will be particularly well aligned to the
benefits of transport by the Aeroscraft”, adds Kiehle.

“The vehicle is an ideal solution for perishables and other products that require controlled-
temperature monitoring, and will be capable of transporting 20 –foot, 40-foot and 53-foot
containers without requiring ground support equipment,”. He says.

Meanwhile, Amazon´s much- publicized drones remain grounded, pending regulatory hurdles.
Last year, CEO Jeff Bezos announced the company´s Prime Air service would use drones to delivery
customer packages in 30 minutes or less. The technology appears ready to go, but the FAA´S
proposed rules for drones, which specify that commercial drone operators must be certified pilots
of manned aircraft and must remain below 400 feet and in view of the operator, could make it
extremely difficult to get Prime Air “up in the air” anytime soon.
Global logistics provider DHL is having better luch. In September, the company launched a pilot
project on the North Sea island of Juist to test its DHL parcelcopter drones for delivering
medications.

“This research project represents the first and only time in Europe that a flight by an unmanned
aircraft will be operated outside of the pilot´s field of vision in a real-life mission. By taking this
step, DHL Parcel has moved to the next phase of the parcelcopter research project it launched in
December 2013”, the company stated in a press release.

Ocean carriers support a growing cold chain

With imports/exports of fresh and frozen foods increasing worldwide, containerized and
specialized reeder carriers are ramping up investments to keep pace with growing demand.

As example, South American reefer exports to North American rose 10 percent during the first half
of 2014; one of the busiest trade lanes.

Containerized carriers are updating and adding to their reefer equipment fleet. United Arab
Shipping Corp (UASC) announced a partner-ship with Hamburg Sub to gain access to the South
American trade lane and plans to make “significant investments” in new management at UASC,
remarked at WOP 2014, the Middle East´s international perishables expo, that, “ Through
partnerships with leading operators, investment in some of the largest and most eco-efficient
container vessels ever built, and a commitment to expanding reefer services, UASC is moving up
the rankings of the global container liner shipping industry in a way that reflects our strategic
growth plans. We are continuously investing in our container fleet to meet customer demand and
to comply with the most up-to-date specifications. Expanding our reefer fleet will ensure that we
continue to offer our customers the most cutting-edge, energy-efficient solutions for the carriage
of frozen and chilled cargoes.”

UASC´s reefer fleet is one of the youngest in the industry with equipment averaging three years
old age.

In June, CMA CGM´s Danube set sail on her maiden voyage. The 9,400- TEU vessel is the first of a
series of 28 ships in this size that will be delivered through the third quarter of 2016.

The Danube boasts a capacity of 1,458 reefer plugs-the largest so far on such a ship- and provides
direct service between Asia, Turkey and the Black Sea.

Seatrade, the world´s largest specialized reefer ship operator, is also making sizeable investments,
with orders placed for two new 2, 200- TEU vessels that will be deployed on its “Fast, Direct and
Dedicated” reefer service. China´s Yangfan Group is the shipbuilder and plans to deliver the vessels
in January 2016.

According to Seatrade, the vessels “ are of an eco design and are equipped with a high reefer
capacity that equates to approximately 12, 000 pallets,” or approximately 600 standard 40-foot
reefer containers per vessel.

Reefer vessel designs are also changing to adapt to new marketplace requirements. Denmark´s
naval architecture firm Knud E. Hansen A/S recently released version II of its new Reefer RoRo ship
design, which targets the banana trade. The vessel design allows for quick loading and discharge in
port, which offsets lost time due to slow steaming (the “new normal” for the shipping industry).

In the meantime, the Panama Canal expansion project and new Nicaragua Canal will alter the
future of the global food supply chain as well, providing all- water routes for bigger vessels with
more reefer capacity.
“Those vessels are going to be everywhere when a widened Panama Canal opens.” Said Hamburg
Sud´s Poil Hestbaek, senior vice president for Latin America West Coast and Caribean, in a recent
interview referring to the new access that containerized carriers will have once the expansion
project is completed.

At the same time, specialized reefer carriers are expected to continue losing market share to
containerized carrier, despite efforts to maintain their niche business. Their share of the 100
million ton perishable trade is forecast to fall to 20 percent by 2018 (from 28 percent in 2013).

Construction on the Nicaragua Canal, the largest infrastructure project in Latin America´s history,
is set to break ground by the end of the year. The $ 5o billion, 173 mile long waterway will be
designed, built and operated by the Hong Kong Nicaragua Canal Development Group, headed by
Chinese entrepreneur Wang Jing, Providing the project sees completion, it would add yet another
all –water, east west trade lane- and direct competition to Panama Canal.