Most economists and U.S. business advocates say a key ingredient to solid, sustainable growth in the American economy is expanding exports. After all, as large as our domestic consumer market is, 95% of the world’s markets lie outside the United States.
But what happens to a shipper that suddenly receives a large agricultural export order that’s time sensitive and requires an innovative transportation network to make it happen? Exactly such a dilemma was facing Birdsong Peanuts, the Suffolk, Va.-based “sheller” whose motto is: “We are peanuts. It’s that simple.”
How this fifth-generation, 102-year old company crafted a new logistics solution into a dynamic, ongoing, highly sustainable intermodal operation with the help of three partners is a masterpiece of planning, operations and collaboration.
In fact, Birdsong and its logistics partners Cordele Intermodal Services and the Georgia Ports Authority were awarded one of three 2016 Alliance Awards presented by SMC3 and Logistics Management magazine. These awards are the only honor in the industry that recognize strategic partnerships working to produce meaningful, collaborative supply chain outcomes. Here’s how Birdsong and its partners solved this impressive export challenge.
The China syndrome
Birdsong buys carefully selected peanuts directly from farmers’ fields. They’re then cleaned, shelled, sized and usually shipped in truckload lots to manufacturers who turn them into many popular food items—from peanut butter to peanut M&Ms. In fact, Birdsong is one of the country’s largest shellers, buying about one-third of U.S. peanut production.
The company operates six shelling plants throughout the peanut-growing belt comprised of 11 states extending from Virginia to New Mexico. In addition, it operates 85 buying points where it buys and stores farmers’ stock. It also owns extensive cold storage warehouses to keep peanuts in a protected environment until shipped to customers.
Although not a household consumer name, Birdsong is well known in the close-knit peanut industry. Chances are, if you eat products made from American peanuts, you’ve consumed peanuts from Birdsong.
In 2012, Birdsong received a massive order of peanuts from China to help meet the demand for the Chinese New Year. Even though the company was close enough to use the Port of Savannah’s 18 all-water direct services to China, Birdsong needed a long-term, sustainable logistics solution for getting their product to the port from their South Georgia locations.
“We had never shipped peanuts from the United States to China,” explains Sally Wells, Birdsong’s corporate logistics manager. “Our normal exports amounted to 150 to 200 containers a month to western Europe through Rotterdam.”
However, the Chinese New Year order was substantially larger. It required Birdsong to ramp up to between 400 and 500 containers a month from December through March and move huge volumes to the Port of Savannah to get to China before the Chinese New Year.
However, Wells found that there wasn’t enough capacity to move the order via truck in the time allotted. Plus, it was going to be too expensive to move the order by truck due to the additional cost for chassis rental fees incurred during fumigation, which would have taken place off-terminal in Savannah.
In fact, moving the container off terminal would have required Birdsong to wait up to five days at a cost of $20 to $25 per day for each chassis rental— and there would have been an additional day and charge for the dray into the port at a cost of $85 per container.
“Having to pull one container at a time out of the port opens up the possibility that each truck potentially could be a problem or have a delay,” Wells explains. “It just wasn’t going to happen.”
Birdsong reached out to Cordele Intermodal Services (CIS) based in Cordele, Ga., to inquire about moving the large order bound for China. CIS said it had the capacity to move the large order, and offered direct container drayage to the Savannah port via rail. Additionally, CIS offered Birdsong cost savings in both the chassis rental and drayage through its offering of on-terminal fumigation and USDA inspections.
This would allow the container to be sealed and ready to go to the ship in Savannah with reduced emissions levels from the fumigation process required of overseas shipments. As a result, Birdsong would be able to fulfill its export order. And if this new collaboration worked, it would allow the company to aggressively pursue more business in new markets—and at the same time, it would benefit Georgia peanut farmers by creating a new service so more acres of peanuts could be planted.
“The ability of CIS to bring 100 to 150 containers at one time into the port and send them out three times a week was the only feasible way we could have handled this business,” says Wells, admitting that Birdsong had not thought of intermodal before due to rail’s traditionally slower transit times.
“Adding up to 10 days transit time for a perishable commodity was risky, so I had some reservations,” says Wells.
But right before the deadline, Birdsong and CIS ran a test. “We sent five containers to the Savannah port to get our feet wet,” Wells recalls. One big issue was the fumigation process, which is required of all exports and usually done at the port, requiring up to three days to complete.
However, Jonathan Lafevers, CIS’ president and CEO, discovered a new, off-port fumigation location in Cordele, Ga., right off Interstate 75 in the southwestern corner of Georgia. This by-passed the port completely for fumigation, which would have slowed the entire export process to a crawl.
“The biggest obstacle was refining the fumigation process by implementing a new fumigant,” says Lafevers. “The fumigant that was historically used took up to three days to complete its process, but the new fumigant only required 24 hours, and that helped tremendously.”
The way CIS fumigates also reduces the number of days that the shipper pays for chassis, as CIS grounds the containers during this process. The typical process was to leave the container on wheels—which is anywhere from two days to six days—and the shipper is paying at least $20 per day for the chassis.
In addition to saving the $20 to $25 per container for chassis rental charges and the $85 drayage fee per container, Birdsong saved by moving the fumigation location out of the Port of Savannah to Cordele. To top it off, it saved precious time. At the end of the day, Birdsong has gone from shipping 10% to 20% of its traditional exports via intermodal to now almost 90% of all exports using the CIS partnership.
In the meantime, CIS actively sought out a licensed fumigation company and offered to set up an office and storage facility on their property, giving the fumigator access to the containers and the ability to track and make sure that the fumigation occurred properly and timely.
In the process, Birdsong found that although the freight difference between direct truck-to-port and rail-to-port was almost a financial wash due to their loading locations, the savings they incurred by eliminating the extra chassis rental fee and an extra day from port to fumigator and back to port in Savannah was a significant cost savings.
Evolving and growing
In the middle of 2015, there was an even greater opportunity for even more substantial volume increases to China. This time, the Georgia Ports Authority and CIS were able to increase the number of trains running weekly back and forth to the port.
Once again, Birdsong was able to successfully take advantage of export opportunities by leveraging its partnerships. However, it became clear that Birdsong needed to have a lot of containers pre-positioned in Cordele, a move that required the steamship lines to give CIS something known as Container Yard Status (CYS). This is a way that allows steamship companies to match their capacity with expected volume levels.
“Not all steamship lines go to China,” says Wells. “So together with CIS we put together a business plan to pre-position containers through CYS to keep the flow of containers consistent.” And since that time, CIS has worked hard to get CYS with many of the railroads Birdsong needed to use for peanut exports.
Furthermore, because of their newfound, far-flung markets, U.S. farmers in the southeast had a new opportunity to grow more peanuts. “The peanut industry is kind of small, and everybody knows each other,” says Wells. “What we did back in 2012 and 2013 plowed the road to make intermodal attractive for all companies exporting peanuts.”
And as a result, starting in 2015, many other rival shellers were taking advantage of Birdsong’s solution by going through the Cordele intermodal facility for their exports. “Our whole industry is benefitting,” adds Wells.
Assuring capacity, future growth
Birdsong’s peanut exports are part of CIS’s strategic plan, and now the shellers can count on the service provider’s capacity and coordination from the Port of Savannah for future growth.
According to Wells, the company learned that trying innovative approaches to logistics challenges can and will pay off. She adds that, due to the collaboration, Birdsong’s logistics division now has the confidence it needs to support its marketing group in selling larger volumes for export knowing that they can now meet deadlines.
Also, in times of tight truck capacity, CIS can use a savvy shipper like Birdsong to realize opportunities to grow market share. Intermodal transit, which prior to 2013 had absolutely no place in peanut exports from Georgia, is rapidly becoming the industry standard way of shipping—and this would not have happened without this collaboration.
There are also substantial sustainability benefits, adds Wells. She says that Birdsong has a strong historical commitment to the environment, and this intermodal solution fits right in with that goal. “If you can take hundreds of trucks off the road, saving 10 hours to 12 hours a day on a trip, and replace that with one train moving 150 boxes to the port twice a week, there’s a tremendous benefit to the environment,” she says. “We really try to look for those opportunities.”
Going forward, Cordele and Birdsong are committed to continuing and strengthening this unique forward thinking. According to Wells, the company plans to continue to increase export volume via intermodal to their traditional export markets as well as trying to grow shipments to newer markets like Vietnam.
The vital keys to making it work, Wells stresses, are collaboration between shippers and transportation provider, keeping communication lines open and maintaining a commitment to continuing process improvement.
“My advice to any shipper that needs a custom supply chain solution would be to go into the process and expect to be fully candid about needs and current costs,” says CIS’ Lafevers. “If a provider can understand the pain points of the current process, they can better develop a system that works for everyone involved. Custom solutions should elicit long-term commitments, as there will probably be significant capital investment by both parties.”
Birdsong’s Wells says that she’s quite proud of the way all the obstacles were cleared, not just for her company, but for the entire peanut industry. “Our Georgia farmers are benefiting,” she adds. “It’s a great pathway to get a lot of product moved to China in a short period of time. All those peanuts need a home, and if we can create a home to export to China, it helps our farmers.”