Commodity Protection in the Global Supply Chain
Authors: QProducts & Services Team, Under the Direction of Paul Yadron, Sr. VP of Sales
In our global supply chain, consumable items require specialized forms of transportation and storage. Consumer tastes, legislative change, transit, deterioration, and physical damage are all factors that impact how commodities are protected and transported. In the pharmaceutical industry specifically, certain controlled room-temperature (CRT) drugs require stricter regulations and review due to the sensitive nature of the product. On the other hand, the food and beverage sector requires increased temperature protection due to consumer demand and shifting consumer tastes.
What is a Consumable Commodity?
In the logistics space, a consumable commodity is a product that is intended to be consumed. These could be defined as coffee, dairy, or certain drugs and medicines.
Legislative Policy on Food Commodities in the Supply Chain
Government regulations and procedures affect all elements of the logistics system. Many governments throughout the world have established policies on the selection of commodities such as medical products. For example, how items are procured, when items are distributed, where and how items are stored, and the quantities customers receive are all factors involved in legislative policy.
In the food and beverage industry, food commodities can be either raw agricultural commodities or processed commodities, provided that they are the forms that are sold or distributed for human consumption. According to the United States Environmental Protection Agency, or EPA, a raw, agricultural commodity is defined to include the following:
- Fresh fruits, whether or not they have been washed and colored or otherwise treated in their unpeeled natural form
- Vegetables in their raw or natural state, whether or not they have been stripped of their outer leaves
- Grains, nuts, eggs, raw milk, meats, and similar agricultural produce
In the United States, although there is no all-encompassing federal legislation regulating the packaging industry, the federal government has asserted its authority to regulate food, drug, and cosmetic packaging to preserve consumer safety and confidence. For example, the U.S. Food and Drug Administration, or FDA, regulates the packaging and labeling of food. The intent of these regulations is to enhance the safety of food distributed throughout the country and keep consumers informed about the food they’re consuming.
From a supply chain perspective, the packaging and transportation of food commodities is highly regulated, especially at the packaging stage. Packaging materials such as plastics, coatings, papers, food colorants, and adhesives must be regulated and deemed safe for use. Under the Federal Food, Drug, and Cosmetic Act, it is the FDA’s responsibility to make certain that no packaging materials contaminate food, and determine if new food-contact materials, or new uses of already-used materials are safe.
In addition, the Food Safety Modernization Act, or FSMA, enables the FDA to better protect public health by strengthening the food safety system. The primary target of FSMA is to eliminate contamination during transportation. By focusing on sanitary transportation, the FDA plans for FSMA to eliminate day-to-day practices that lead to food-safety risks, such as a failure to store food items at the appropriate temperature. Temperature protection is imperative in the food supply chain to ensure the quality of the food remains intact. According to Safe Food Alliance, FSMA will touch every segment of the produce business supply chain from farm to fork. Under FSMA, the FDA has proposed seven major regulations that affect how produce is grown, packed, processed, shipped, and imported.
Legislative Policy on Pharmaceutical Commodities in the Supply Chain
In the pharmaceutical industry, the quality of a pharmaceutical product’s packaging plays an integral role in preserving the quality and effectiveness of medication through its shelf life. Per FDA regulations, pharmaceutical packaging must provide protection against the following:
- Exposure to light, moisture, oxygen, and variations in temperature
- Physical damage through handling, shipping, and storage processes
- Package labeling must clearly identify the product
With these packaging regulations, pharmaceuticals and prescription drugs must be monitored to secure protection in the pharmaceutical supply chain. Strong pharmaceutical legislation in the logistics space not only helps to strengthen each link within the pharmaceutical supply chain, but helps ensure access to and availability of medicines.
Furthermore, a nonprescription medicine is one that the FDA has found to be safe and effective for direct consumer use based on the label instructions and warnings. Regulatory review of CRT drugs is conducted by the Center for Drug Evaluation and Research (CDER) within the FDA. These CRT drugs go through a system of active-ingredient-specific CRT monographs, which is a rulemaking process that establishes drug standards. An expert advisory panel meets to assess whether the active ingredients in the drug meet the standard of GRASE: generally recognized as safe and effective.
In addition to safety regulation, CRT drugs require specific temperature protection during transit. The FDA has specific regulations that define appropriate storage conditions for pharmaceuticals. The majority of CRT medications are designed to be stored in their original packaging at approximately room temperature, which can range from 15-25°C (59-77°F). However, certain refrigerated drugs must be stored and transported within 2-8°C (35-46°F), unless a medicine is deemed stable at other temperature ranges.
Prior to the CRT regulations mentioned, CRT drugs, or control room temperature (CRT) pharma products, were not always required to be protected as part of the cold chain. Historically, cold-chain products received some type of specialized packaging, while CRT products could be shipped with standard packaging. Around 2012, the industry experienced a revolution as managing temperatures of pharmaceutical products during shipment became more tightly regulated. Both cold-chain products and CRT products began receiving specialized packaging geared to the temperature ranges listed on the product label. With this change, the industry saw the demand for passive thermal packaging.
According to Pharmaceutical Commerce, cold chain means, almost universally, a 2-8°C (35-46°F) temperature range. CRT is a mixture of many different storage and shipping temperature ranges, as identified on the product label. There are significant differences in managing the logistics of the two classes of products. Nevertheless, temperature protection for ambient temperature profiles or CRT shipments became just as imperative as practices for cold chain shipments. Now, passive thermal packaging ensures these commodities maintain a specific temperature range during the shipping process by relying on a source of energy and insulation.
Consumer Tastes and Commodities in the Cold Chain
Over the next few years, the ingredient landscape across big food chains is expected to shift considerably as more players move to sustainable, natural, and less processed alternatives, according to Nation’s Restaurant News. Consumer preferences have driven this course over the last decade. Consumers want to know where their food is coming from and how it is raised. Certain food commodities will need to ship under stricter tolerances as less preservatives and fresher ingredients will require increased temperature sensitivity.
In addition, this generational shift in consumer taste is impacting the industry as a whole. According to a report by the U.S. Department of Agriculture, millennial households are buying more unprocessed foods such as fruits and vegetables versus pasta and potato chips. In summary, millennials want their food quick, easy, fresh, and non-processed. Millennials also want convenience. According to Food Insight, 55% of millennials say that convenience is one of the most important factors when they are deciding what foods to buy.
The demand for quality and convenience has also opened up the market to meal kit delivery companies including Blue Apron, and also grocery delivery services such as Amazon Fresh. The cold chain makes all of this possible, but it’s also had to change to keep up with this demand. Without the expertise, execution, and growth of cold food logistics, none of the items mentioned above would be possible.
The cold chain market is expected to experience growth given this demand. According to Food Logistics, the global cold chain market is projected to grow by $3.9 billion, driven by a compounded growth of 10.8%. Transportation companies must adapt so they can safely and quickly deliver food without it going bad. Refrigerated delivery units and passive temperature protection will continue to rise. So, how do supply chains accommodate this demand?
Passive temperature protection ensures that consumable commodities maintain a specific temperature range during the shipping process, whether that lasts hours or days. It’s in these circumstances that thermal packaging and cold chain shipping containers are used to help protect these commodities.
Supply chains will need to adapt and improve their processes in order to keep up with industry regulations and consumer demand.
Overall, commodity security and protection impacts products throughout the supply chain and the consumers that receive them and use them. Food and medicine safety have been and always will be a priority, and it begins with the manufacturing, packaging, and distribution of products.