Unmonitored logistics costs can destroy your stock price and corporate reputation

Earlier this year, Kraft Heinz was forced to write down the value of its Kraft and Oscar Mayer brands by a staggering $15 billion as it posted a $12.6 billion loss and cut its dividend by 36%. As a result, its stock price plunged by 25%. The news caught even the most seasoned investors off-guard, with Warren Buffet seeing his 27% stake lose over $4 billion overnight and left other food and beverage giants worrying about their own operations.

What is perhaps most surprising, was that the company’s sales had actually increased over the reporting period. There were a range of complex pressures behind the issue, but the company’s Chief Executive Officer, Bernardo Hees, cited logistics costs as a major contributory factor in bringing about this catastrophic performance.

The Kraft Heinz experience is a stark reminder of the importance of exploring innovative ways to reduce total cost of ownership (TCO). This is particularly relevant for food and beverage companies for whom commodity prices for agricultural and packaging materials are rising at a challenging rate.

At Cordstrap, we pride ourselves in delivering cost savings for partners in a range of innovative ways. Our cargo protection solutions have been developed to reduce TCO by reducing damage to cargo in transit, as well as designing and developing cargo protection solutions for our partners. In this way we have reduced the time and number of personnel required to safely package and securing shipments. This not only cuts dispatch times but also reduces labour costs which can have a significant impact on TCO.

Spoilage is also a factor for food and beverage shippers and we have developed the world’s most advanced moisture control systems. These reduce the risk of damage to products and packaging from high levels of moisture – another potential cost that can quickly eat into profits and have harmful, knock-on effects for relationships across the supply chain.

Delays can also have a serious impact on profitability, especially for perishable goods which could lose their entire value sitting on a quayside. Inadequate or substandard packaging is a common cause of delay for shipments which do not meet the required standards at any point of inspection along their journey. This further adds to TCO as shipments will often require repacking before they are permitted to make their onward journey and can incur retention fees.

Cordstrap’s protection solutions are fully CTU Code compliant and are certified by all the world’s major regulatory bodies including DNV, the IMO, Mariterm AB and have been fully approved by the Association of American Railroads (AAR). As the only cargo protection specialist with a truly global support network, we are in a unique position to ensure that your entire supply chain operates to the standards that will ensure safe and swift passage through ports throughout the world.

To talk about the many ways in which we could help your business reduce TCO and raise profitability, get in touch with one of our cargo protection experts.