Exporting Food and Beverage Business Start-up

Two months ago I posted this on developing export markets for food and beverage products.  Time for an update...

LCL = Less than Container Load

FCL  Full Container Load

The MOQ FOB is valid in the food trade, as we know from feedback from presentations at industry conferences and my own courses through schools.  I personally saw confirmation at the ExpoWest Show, but to my mind, if MOQ FOB does not work in chill, then it is rather too limited.  The challenge to chill in MOQ FOB is cross contamination (onions and cherries cannot be shipped together), the variations of temperature, humidity, venting, requirements of a given product.  Whole lotta mutually exclusive going on, the gathering of unrelated sellers chill products compatibly into one container is a logistical nightmare. 

Given the challenge of coordinating conflicting logistical requirements in chill, for most players in logistics, LCL chill is a nonstarter. The prejudice among traders is chill is necessarily FCL, and usually straight loads at that.  Everyone is in FCL default mode.  MOQ FOB is a nonstarter in the minds of the players.  

Without MOQ FOB, it is exceptionally hard for chill product SMEs to break into the market.  Solve that problem, and give SME’s selling chill products a marketing edge, worldwide.  The big boys who have never considered LCL chill MOQ FOB will be blindsided by new chill products showing up in their countries. This is an opportunity to make news, enhance the image and grow the business, as Ogilvy says...

Logistics is usually about bottlenecks, but in this case it is the opposite, it is about gathering a critical mass.   If the improvements in communication and transportation which so expanded trade over the last 20 years could be applied to that neglected area of LCL chill, then I think there would be outsized results for the efforts put in. So what to do?

The Freight Forwarder is key to solving the problem, and finding one in the chill trade who also was willing to consider LCL took time, but I found one.  Next we picked Hong Kong as a path-of-least-resistance test case.  I studied the five year trend at the ten-digit level in usa-hk exports in chill, and developed a product/temp/humidity/compatibility matrix, of what markets have the largest demand/supply ratio by matrix element.  And prices paid FAS.  Some of the chill traded is actual crops, so we have that time constraint as well (harvest time).

The HKTDC introduced me to a chill food importer/distributor that has its own 3PL operations for absolue QC in the HK & China trade.  The 3PL division is public, handling other companies wares, assuring that requisite economy of scale on that side.

So now we have a five year trend of what chill products move in what quantity from USA to Hong Kong, at what time, at what price, and at what temperature, venting and humidity requirements.  So  we know what is popular, and now it is just a matter of "showing the potential exporters (sellers) the money" and the buyers the opportunity to test market exceptional USA goods.  Small companies who would like to break into hertofore closed markets.  Should a USA producer decline the opportunity, then a trading agent might step in and take the business.

As mentioned above, MOQ FOB is valid, but to be science it also has to be reliable, that is to say others do it and it works for them too. I would like to see more people pushing the same thing independently, and measure the results.

The more the merrier, and if you'd like to join an online class open to anyone in the world on breaking into the food trade worldwide, and copying this plan in the context of exporting food form anywhere in the world, then please consider the course here, and you may register here.  Chill is only one category of this tactic outlined in the class, it applies ot any food or beverage product.  But I keep working the cutting edge, and the solution to this problem will be part of the class.

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