Criticality of U.S. food supply chains from Latin America

By Santiago Pérez Olvera and Mateo Rojas

Editor’s Note: The SCM capstone Criticality of U.S. Food Supply Chains from Latin America was authored by Santiago Pérez Olvera and Mateo Rojas and supervised by Dr. Christopher Mejía Argueta ([email protected]) and Dr. Elenna Dugundji  ([email protected]) and. For more information on the research, please contact the thesis supervisors.

What would happen if a critical U.S. port dedicated to perishables suffered a disruption? Is the U.S. port network prepared to receive the diverted cargo? These questions have arisen from disruptions such as long bottlenecks in the Port of Los Angeles during COVID-19 or, more recently, the crash of the container ship Dali on Mar. 27, 2024, near the Port of Baltimore.

Food imports from overseas via ocean transport are essential to the U.S. food supply and to economic growth. In 2023, they reached an all-time high of $202 billion. Latin America and the Caribbean are a growing U.S. supplier region of agri-food products, with exports expected to grow at a compound annual growth rate of 10.3% through 2025. The resilience of the U.S. port network is critical to maintaining this supply.

A qualitative and quantitative approach

Our research examined the port networks for seven critical perishable goods, including dry, cold, and frozen containerized cargo. These goods collectively represent 4.7% of total U.S. food imports, with 68% originating from Latin America and the Caribbean. A disruption at a crucial port, such as the Port of Wilmington, Delaware, responsible for 25% of all banana imports, could result in the collapse of the entire port network. This scenario would impact consumers through increased prices or, in the worst-case scenario, shortages. Additionally, there is a significant risk of food waste if the bananas spoil.

We first built an overview of the networks by examining data from the U.S. Department of Agriculture, the U.S. Census Bureau, and interviews with port terminal companies. Next, we identified vessels carrying our cargo of interest using import data from the Import Genius platform. Finally, we traced the routes these vessels followed using AIS data from Marine Cadastre. This process implied a computational challenge of handling more than 2.25 billion rows of data when combining all the sources. Once we tackled the challenge, we measured the criticality of the ports, ranking them by import volume and centrality metrics.

Besides identifying the critical ports in the networks, we wanted to provide strategic recommendations on what to do in case of a specific disruption. Therefore, we developed a discrete-event simulation capable of analyzing the possible outcomes of an interruption of operations at one of the identified critical ports.

We considered labor and infrastructure capacity limitations for the simulation, including the number of available cranes and refrigerated container plugs. We also estimated lead times between the ports, annual container throughputs, possible vessel routes, and average service times per port. Additionally, we built five different simulation scenarios, considering changes in the number of containers per ship and the rate of ship arrivals.

What would happen if the Port of Wilmington suffered a complete shutdown?

We developed an illustrative example for the commodity banana simulating a complete shutdown of the Port of Wilmington. In this case, the refrigerated container (“reefer”) plugs were the principal logistics infrastructure influencing the adaptability of ports in case of a disruption. The results demonstrated that the eastern U.S. port network is resilient enough to maintain banana imports despite the disruption. New York and Philadelphia ports could serve the rerouted vessels, dedicating at least 17% of their reefer plugs. In this scenario, vessel waiting times to be served would be up to four days. Alternatively, Philadelphia could act as the main point of contingency by dedicating 50% of its plugs to serve the vessels headed initially to Wilmington.

The proposed approach can also address disruptions at any port and for other perishable commodities.

Every year, approximately 80 students in the MIT Center for Transportation & Logistics’s (MIT CTL) Master of Supply Chain Management (SCM) program complete approximately 45 one-year research projects.

These students are early-career business professionals from multiple countries, with two to 10 years of experience in the industry. Most of the research projects are chosen, sponsored by, and carried out in collaboration with multinational corporations. Joint teams that include MIT SCM students and MIT CTL faculty work on real-world problems. In this series, they summarize a selection of the latest SCM research.

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