TRUCKS AND FREIGHT: Transportation And Logistics Logjams Continue

Of all the disruptions caused by the COVID-19 pandemic, those around logistics were among the most troublesome. Although the pandemic sparked worldwide shipping and distribution woes, the effects on the local New York market were as pronounced as they have been nationally and internationally.

In the Bronx, a major problem is much the same as in other markets: a lack of truck drivers. Whether they moved on to new employment, retired or have simply been waiting to return to work when things are safer, truck drivers have been scarce, and that scarcity has impacted product entering and leaving the market. Now, even if the salaries and conditions involved are made more attractive, the requirements around training new truck drivers and getting them on the road ensure the shortage isn’t going away soon. Coupled with an overburdened freight network, moving produce from farm to table has become a tremendous challenge.

D’Arrigo has been fairly successful in coping, says Gabriela D’Arrigo, vice president of marketing and communications.

Over the road, sometimes we can’t find a truck but usually our long-time relationships come through for us,” D’Arrigo says. “Local is trickier, finding truck drivers. It’s not everybody’s dream job, and they have to get the training, and get licenses. They couldn’t do it during COVID.

“Everyone is trying something different. For us consistency is key. That’s an underlying value of the company. Consistency is going to keep business going. We know what we have to do to get produce here. Prices are going up. We’re working with our most reliable carriers, ones we’ve known for decades. We know we can lean into them at times like these,” she says.

“I have never seen prices like I’m seeing now,” adds Myra Gordon, executive administrative director of the Hunts Point Terminal Produce Cooperative Association, adding that it isn’t easy to negotiated pricing because of shipping backlogs and lack of drivers, which means if your company isn’t willing to pay what’s asked “you’re not going to get the load.” 

REDUCING FOOD WASTE: Industry Plays Role In Sustainability

Sustainability is a critical consideration in a New York region often challenged by environmental issues and with so many shoppers sensitive to how businesses deal with social issues.

As wellness becomes a broader consideration embracing environmental and social as well as health considerations, retailers, wholesalers and growers all will see new demands or regulations. Issues such as food waste and distance from farm to market are becoming more important to consumers in addition to traditional concerns such as natural resource protection.

Lidl is among the retailers that are responding to those concerns and is the Produce Business Retail Sustainability Award winner, featured in the May issue. The company employs several initiatives, such as Too Good to Waste, to address food waste and sustainability, which many consumers keep in mind when choosing where to shop today.

Too Good to Waste saves the carbon inputs that go into bringing food to market, which would be lost if the food was simply thrown out. At the same time, because Too Good To Waste food is heavily discounted, it addresses food affordability for low-income consumers.

Among wholesalers, efficiency and awareness can address significant environmental and related issues, says Stefanie Katzman of S. Katzman Produce.

“Our business model as a wholesale/distributor is designed to cut down on food waste,” she says. “We have access to a wide range of customers looking for all different sizes and quality when it comes to their fresh fruits and vegetables, so we’re able to find a home for nearly every piece of produce that comes through our facility.”

The company also has strong ties with major donation organizations such as the Food Bank for New York City and City Harvest, “so in instances where oversupply could potentially end up as waste, we are able to not only save it, but also get it to those who need it most.”

She adds that S. Katzman Produce, over the past 10 years, has cut down its carbon footprint and “converted over 75% storage vans from diesel to electric. We have a robust recycling program and are proud to participate in New York City’s zero waste challenge to send zero waste to landfill by 2030.” 

LABOR QUESTIONS: Labor Issues Hammer Retailers, Wholesalers Alike

Labor has become a big issue for both retailers and wholesalers in the New York region.

Anthony Serafino, executive vice president, Exp Group, North Bergen, NJ, voices a common frustration. “We can’t find enough employees. What we’re doing is what we’re always trying to do: select people who get it, who fit in our culture.”

Marc Goldman, produce director for Morton Williams Supermarket, Bronx, NY, says that multiple increases in New York’s minimum wage have hit his budget to the extent that he can’t execute some ideas he has, particularly if they involve any kind of preparation. The city has raised the minimum wage on multiple occasions over the past several years to $15 an hour.

“It sounds wonderful, but companies are not just going to accept making less money. Then you wind up having less labor,” he says, adding, “At first, it wasn’t too bad, with everyone pitching in. But now we’re cutting labor. We have less help.”

Goldman has been forced to trim hours from workers’ schedules so, despite the higher wage, some of his employees make less money than they did before. Bagged salads have replaced some of the fresh greens Morton Williams once offered.

“We shrunk the greens section in half,” Goldman says. “They’re easy to pack out, and it helped. Some decisions are made for you.”

He acknowledges labor is an issue throughout the supply chain, but the difficulty managing a retail workforce is what hits home.

“It’s the biggest challenge right now, especially in New York,” he says.

FUTURE TECHNOLOGY ‘We’ve Always Done It This Way’ Doesn’t Cut It

At a time when technology is becoming more integrated into personal and professional life, the effective application of new resources can be an advantage. However, marrying high tech with a human side is important in a produce business that deals with all the variables associated with fresh food.

“Industry knowledge is one of the most important assets in our business,” says Stefanie Katzman, executive vice president of S. Katzman Produce, Bronx, NY. “Information is key, but knowing how to use that information is what makes a successful wholesale/distributor. Technology, like it has done for so many industries, just amplifies the existing core of your business.”

S. Katzman Produce has longtime and new customers that both rely on it for support, she says.

“The veterans rely on us to communicate when the markets are changing,” she says. “The newcomers not only need us to share this information, but they also need our help interpreting it. What does rain mean for them today, and then how does it affect them a few days later? How should they adjust their retail pricing or displays? What products should they promote at which time of year? What great new items are out there that they have not even heard of yet?”

At the same time, technology as it is developing at retail is creating change. As they boost services such as delivery and curbside pickup, retailers need greater consistency of supply to help their employees who support those functions.

“When it comes to e-commerce, it is crucial to deliver the perfect piece of produce that the consumer is expecting, because you only have one opportunity to get it right. The consumers are trusting the e-commerce service to select produce of the same quality they would select themselves in stores. If the e-commerce service can’t deliver that quality on their first delivery or on a consistent basis, then the consumer may decide to redirect their business elsewhere,” Katzman says.

For many wholesalers, technology is a means of making the interaction with customers easier for all involved. Many relied more on technology during the pandemic, often building on initiatives they launched or at least explored before the pandemic.

Joshua Gatcke, general manager of Nathel & Nathel, Bronx, NY, says the company is continuing to introduce “simple, yet innovative, technologies to our customers. We will continue to build out our customer base using our customized ordering app and push marketing outlets that our customers can digest.”

James Lee, operations manager at Lee Loi, Bronx, NY, says a younger generation is coming to the fore at the Hunts Point market, and they are more comfortable and even enthusiastic about technology and want to use it as a means to the end of making operations more efficient and effective.

“We want to modernize the market,” Lee says. “The market is very old school. We still get things faxed. So, we’re trying to implement new systems, new POS systems. It’s a different mindset.”

Gatcke says he’s anxious to use technology to make the business more effective, but recognizes the process has to take into consideration the culture of the New York marketplace.

“You’re dealing with a customer base that’s relatively adverse to change,” he says. “We’re figuring out ways that are easy for them to digest information and marketing. So we have emails that go out, really basic things that we weren’t doing here to let them know about new items we might have, but also do it in a way that’s scalable and doesn’t take a lot of time during our day.”

“Whether you are a 90-year-old buyer or a 20-year-old buyer, everyone, for the most part, in this industry has a smartphone, so we’re focusing on that,” Gatcke says. “We actually developed an app we’re really proud of that’s in its beta launch, but we’re quickly moving to rolling it companywide to anyone who wants to use it. We’ve seen everybody from small retail stores to large retail stores to street buyers demonstrate a really strong interest in it.”

LOCAL AND GLOBAL: Can The Big Apple Go Local And Global At Same Time?

If ‘buying local’ can maximize its potential in the New York market, it needs to evolve, says Jeff Shilling, vice president of procurement at FreshPro, West Caldwell, NJ.

“Local product is more difficult to consolidate, as there are a lot of smaller farmers with high overhead and transportation costs,” he asserts. “There will be a need for better central consolidation of local products in the near future. Neighboring farmers will have to join forces to be able to deliver their products in a lower cost manner.”

Local produce is part of the equation for the market going forward, but, says Charlie DiMaggio, owner, FresCo, advantages and disadvantages must be weighed.

“We have to ask ourselves why local produce is better,” he says. “Is it because it’s fresher, easier on the environment, and keeps money in our communities? All the points are good points in a political debate or discussion. However, we all must realize that local is not always the best solution. Are the local farmer’s methods as good as or better than state-of-the-art farms? Is local transportation better than state-of-the-art national trucking, and as we add new business partners and growers from coast to coast, what should always be at the heart of buying decisions is ‘are we giving our customers the freshest product with greatest value?’”

And yet the New York market is among the most diverse in the world, which challenges retailers and wholesalers, and the ethnic makeup of the market shifts over time. Consumers in the New York region often adopt the food of ethnic groups other than their own, and demand can surge for particular products that become generally popular. Indeed, New Yorkers can be scrupulous about the authenticity of their produce, which has international and interregional implications.

“It’s our responsibility to satisfy our customer base by supplying every type of produce they could want” says Stefanie Katzman, executive vice president of S. Katzman Produce, Bronx, NY. “We have a diverse customer base in New York City, and we partner with grower/shippers all around the world to bring our customers exactly what they want from near or far. Whether it’s dragon fruit from Vietnam, organic turmeric from Jamaica or southern peaches out of Georgia, we’ve got our customers covered.”