“The oats are cheap, but the boats are expensive” or Paradigms of cross-border food logistic

On November 8, Oleg Kobiakov, Director of the FAO Moscow Office, spoke at the round table entitled “Agrlogistics – new technologies and solutions”, organized by the International Coordinating Council on Trans-Eurasian Transportation together with the Afanasy Nikitin Association.

The rapid development of the economies of the Asia-Pacific Region (APR) over the past decades has lifted millions of people out of poverty. However, high rates of economic growth, stimulating effective demand, and an increase in the population of the Asia-Pacific Region exacerbate the issue of providing this macroregion with food.

At the same time, according to FAO, up to 14% of all food produced in the world is lost at the post-harvest stage. To prevent such losses of food during transportation, fully functioning infrastructure facilities and efficient logistics are required.

The use of new logistics technologies, in particular, containerization and multimodal transportation, should lead to a reduction in total costs throughout the entire logistics chain, shorten delivery time and reduce risks to participants. Containerization combined with digital platform solutions creates the possibility of direct targeted delivery from the manufacturer’s warehouse to the door of the end user.

The round table was moderated by the Secretary-General of the International Coordinating Council on Trans-Eurasian Transportation G.I. Bessonov and the President of the Afanasy Nikitin Association D.V. Potapenko.

In his speech, Oleg Kobiakov noted that due to the growing internationalization of world food trade, it is the transportation leg that plays an increasingly important role in agrifood chains.

“In today’s world, most food – except perhaps for China – is not consumed in the countries where it is produced. The total average annual grain harvest on the planet exceeds 2.5 billion tonnes, and the total fisheries catches and aquaculture products are equal to 200 million tonnes. Transport workers are responsible for moving these “food mountains” from producers to consumers.

In terms of volume and tonnage of transported goods, food is now second only to energy. Food aid alone provided to the poorest countries of the world through the UN World Food Programme (WFP), established by FAO for these purposes 60 years ago, is received by more than 100 million people in 60 countries around the globe. WFP itself has essentially become one of the world’s largest logistics companies, with its own merchant marine, truck and aircraft fleet, and transporting tens of millions of tonnes of food supplies annually.”

The Director of the FAO Moscow office emphasized the importance of uninterrupted food supplies. “Given the high degree of division of labour in the global agro-industry and the sale of the vast majority of food products through market channels, it is extremely important to ensure the smoothness, transparency and predictability of the global food conveyor.

The recent crisis associated with the cessation due to hostilities of grain and vegetable oil exports by sea from Ukraine has led to a surge in grain prices on world stock markets and in the domestic markets of importing countries, and the resumption of these deliveries under the “Black Sea Grain Deal” has contributed to stabilizing the grain market and returning prices to almost pre-war levels.”

Oleg Kobiakov also outlined the new challenges facing food logistics: “Today, and even more so tomorrow, it will not be enough just to deliver a food cargo from point A to point B, covering the needed tonne-kilometers. The goods must arrive as quickly as possible, without losses and in unchanged quality, with a minimum time for loading and unloading. This, in turn, requires constant renovation of the vehicle fleet, creation of an innovative warehouse and port and terminal infrastructure supported by ICT and satellite technologies.

The role of the human factor is growing – the coordinated work of operators in all supply chain links is of high importance, namely of customs, veterinary and phytosanitary controllers, warehouse officers, especially in transporting perishable products of the highest consumer demand.

Thus, the task of the day, set by the UN Food Systems Summit last year, is the full integration of the transport component into the agrifood chains,” the FAO expert concluded.

Head of the ESCAP Subregional Office for North and Central Asia N.N. Pomoshchnikov gave an overview of current global and regional trends and challenges related to the transportation of agricultural goods, relevant transport connectivity and food security initiatives.

Director-General of the Institute for Agricultural market studies (IKAR) D.N. Rylko, Chairman of the Agro-industrial complex (AIC) Committee of the Chamber of Commerce and Industry (CCI) of the Russian Federation, Academician of RAS P.A. Chekmarev, Director of the Centre for Geospatial Economic Analysis of the Faculty of Economics of Lomonosov Moscow State University A.P. Dobrynin shared their vision on the state and prospects for the development of the North-South food traffic market.

First Deputy Head of the General Department of Organization of Customs Processing and Customs Control of the Federal Customs Service of Russia S.A. Amelyanovich and Assistant Head of the Federal Service for Veterinary and Phytosanitary Surveillance V.V. Lavrovsky informed about the measures taken by state control bodies to ensure uninterrupted and safe transportation of agricultural goods through the territory of the Russian Federation.

During the forum, it was noted, in particular, that the development of container agricultural cargo transportation has a certain niche potential, since this technology allows for special deliveries, those carried out at the request of a specific recipient interested in a certain batch of products, as well as for delivery to remote regions. At the same time, the promotion of such a technology requires the availability of container handling equipment and appropriate infrastructure, participants in the transportation process should closely cooperate not only with manufacturers or suppliers, but also with other market participants representing the financial, insurance, information technology and marketing sectors.

Background information

The International Coordinating Council on Trans-Eurasian Transportation (CCTT) is a non-profit transport association registered in Switzerland.

The founders of the CCTT are Russian Railways; DB AG; GETO (Group of European Trans-Eurasian Forwarders and Operators); KIFFA (Korean International Freight Forwarders Association).

As for today, the CCTT comprises 96 companies from 23 countries, including the railways of Europe, Asia and the CIS countries, leading shipping companies, operators and forwarders, ports and stevedoring companies, government organizations, administrations and scientific organizations, telecommunications and marketing companies, security services and mass media.

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Afanasy Nikitin – Association of participants in agricultural, infrastructure and humanitarian projects of the Eurasian space “Volga-Caspian Basin-Indian Ocean”

This is a non-profit association of Russian and foreign entrepreneurs, commercial structures and enterprises, government agencies, scientific and public organizations interested in developing the production and export of agricultural and industrial products using the potential of the Volga-Caspian Basin and related international transport and logistics corridors.