Source: INTERNATIONAL COTTON ADVISORY COMMITTEE, 11/6/14

Few areas of the cotton industry hold more potential for improvement and efficiency gains than logistics, the costs of which can have a tremendous impact on all stakeholders, from producer through the buyer of end products.

That was the takeaway message delivered by the three speakers during "The Importance of Logistics: Enhancing Efficiency," the Sixth Breakout Session of the 73rd Plenary Meeting of the International Cotton Advisory Committee (ICAC).

Global logistics is a challenge shared by all agricultural commodities. International prices are largely determined by supply and demand, but the costs associated with bringing their products to market can vary wildly depending on the country. Brazilian soy farmers, for example, pay 25% of the value of their production just to get it to the port for shipment, while their American counterparts in Iowa only spend about 9%. “Even when the products being transported are identical in every way, those added costs in some countries are sufficient to represent the difference between earning a profit and taking a loss," said Fritz Grobien of Plexus Inc.

The second speaker, Effie Voudouris of Vamvaki Ltd., explained to attendees that logistics are so important to overall profitability that the Greek cotton industry has incorporated its inherent geographical advantages into the branding and promotion of its fiber. Because the country's cotton fields are very close to the ports, its ability to get fiber from the field to the buyer led to the development of one of Greece's primary marketing messages: “Good quality, fast delivery."

Ironically, one of the areas that holds the greatest potential for improvement in cotton logistics has nothing whatsoever to do with physical transportation. Regardless of a country's geographical advantages or disadvantages, every single stakeholder in the industry suffers from the lack of standardized, instrument-based quality testing, according to the session's final speaker, Peter Wakefield of Wakefield Inspection Services. “The process of unstacking, sampling, and testing the quality of bales of cotton part way through the logistical journey – then re-stacking or re-packing everything back into the container before delivering it to the buyer's facility – costs time and money that no stakeholder in the value chain can afford to waste,“ he said.