Proposed Logistics Plan for Importing Mexican Avocados to Canada

1 Proposed Logistics Plan for Importing Avocados from Mexico to Canada Presented by: Thashmila Nadeeshani 4542309 Monica Natchathira Reeves 4548057 Sulav Bista 4552572 Sameika Johnson 4487541 Niagara College, Toronto BICG9502 Global Logistics Management Presented to: Dr. Mirbehzad Feizbakhsh 02.13.2024

2 Table of Contents Proposed Logistics Plan for Importing Avocados from Mexico to Canada ..................... 1 Executive Summary ............................................................................................................... 3 Introduction ........................................................................................................................... 4 Product Details ...................................................................................................................... 4 Origin of Shipment ................................................................................................................. 5 Packaging .............................................................................................................................. 6 Transportation plan ............................................................................................................... 8 Transportation costs ............................................................................................................ 10 Warehouse/distribution centre requirements ..................................................................... 12 References ........................................................................................................................... 14

3 Executive Summary

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4 Introduction Exporting fruits and vegetables has a direct impact on Mexico’s GDP, which contributes to a staggering 45.95%. Mexican avocados were the 2 nd most exported item in the country. (Javier & Valencia, 2022) The logistics requirement for exporting to Canada requires a thorough discussion of the transportation of goods, transits, competencies, and costs involved in the process. Product Details Mexico produces more than 771 million kilograms of their specific avocadoes “Hass” which is exported across the globe. The Mexican avocados are always in the season which eliminates the threat of shortage for countries like Canada with long winters. The particular Hass variation contains 12% oil concentration and 70% water with high Vitamin B and Vitamin E. (Javier & Valencia, 2022) 08044000 is the harmonized system code for avocados. The carton boxes pack 4 kilograms of avocados, 216 boxes per pallet, or boxes of 25 pounds with 80 boxes per pallet. These avocados are considered solid state and cause no harm to property or the environment. (GC IMPORTERS LTD - Tropical Fruits, n.d.) The optimum temperature when transporting avocados is 5.5°C ± 0.5°C including a minimum air delivery of 4.5°C. The air that enters the container is being controlled to maintain the optimum quality of the goods. (Bester, n.d.)

5 Origin of Shipment The avocados are imported to Canada from Uruapan, Michoacan, Mexico where the produce starts its journey to Canada. As Canada and Mexico have been in trade since 1994 under the North America Free Trade Agreement (NAFTA) and recently developed stronger trade agreements with the Canada-US-Mexico Free Trade Agreement (CUSMA), the trade has been growing at a steady rate and provides the most stable logistics for importing the avocados from Mexico to Canada. In 2022, Canada also invested $33B in direct investment for Mexico. Mexico is also identified as a primary market for EDC (Export Development Canada). (Canada, 2020) Avocados have not been subjected to tariffs in Canada, and the growth rate of imports has been increasing in the last decade. (Carlberg & Rude, n.d.) The import quota depends on the Canadian government upon applying for an international import certificate. (Javier & Valencia, 2022)

6 Packaging Type of Packaging and Total Number of Packages: For the packaging of this shipment, carton boxes will be used as it aids in mitigating moisture and extreme temperature (Malouf, 2023). The avocados are packed in carton boxes of 25 pounds and carton boxes of 4 kilograms. For the 25-pound packaging, the available sizes include 32's, 36's, 40's, 48's, 60's, 70's, and 84's, with 80 boxes per pallet. On the other hand, the 4-kilogram packaging offers sizes/count of 12's, 14's, 16's, 18's, 20's, 22's, and 24's, with 216 boxes per pallet. The total number of packages is 2072 packages. Weight per Package and Total Weight of the Shipment: According to Rettke, D. (2019) Some areas in Mexico have faced cooler weather in recent winter months, impacting the sizes of avocados imported into Canada. Smaller sizes have predominantly characterized these avocado shipments. Furthermore, Discovery Organics, known for supplying Fair Trade avocados, adheres to a system where size selection is not within their discretion; instead, shipments are organized based on weight. For the 25-pound packaging, the weight per package is 25 pounds, and with 80 boxes per pallet, the total weight of the shipment is calculated by multiplying these values. Therefore, the total weight is 2000 pounds per pallet. Additionally, for the 4-kilogram packaging, the weight per package is 4 kilograms and 216 boxes per pallet. The total weight of the shipment is 3903.52 pounds. Dimensions of packages. Total cargo volume 25-pound Carton Box: Dimensions: 24" x 16" x 6" Volume per box: 24×16×6=2,304 cubic inches24×16×6=2,304cubic inches Total volume for 80 boxes on a pallet: 80×2,304=184,320 cubic inches80×2,304=184,320cubic inches 4-kilogram Carton Box: Dimensions: carton box size of 12" x 8" x 4" Volume per box: 12×8×4=384 cubic inches 12×8×4=384 cubic inches

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7 Total volume for 216 boxes on a pallet: 216×384=82,944 cubic inches216×384=82,944 cubic inches 184,320 cubic inches (25-pound) +82,944 cubic inches (4-kilogram) =267,264 cubic inches184,320cubic inches (25-pound) +82,944cubic inches (4-kilogram) =267,264cubic inches Total Cargo Volume: 267,264 cubic inches. Palletized: The products are indeed palletized. The 4-kilogram and 25-pound container. The pallet is secured with the 25-pound carton boxes, which weigh 25 pounds apiece, arranged. Eighty boxes can usually be accommodated on a normal pallet, providing a solid and well-organized stacking arrangement allowing effortless handling and transportation. A similar strategy is used with the 4-kg carton cartons. Pallets holding 216 of these smaller boxes are used to arrange these boxes. This technique is made to maximize the use of available space, offering a productive way to handle the loading, and unloading of cargo. Are the goods containerized? Type of container used. There is no containerization involved in this shipment, this is because our mode of transport will be ground transportation, specifically a truck. Due to avocados' perishable nature and the need for a controlled chilled environment, ground transportation was the best option. In this instance, the avocados will be transported via trucks, which will maintain a set temperature during the trip to retain their freshness and quality.

8 Transportation plan 1. Local cartage / domestic pre-carriage: Transportation of avocados from Mexico to Canada through land would typically involve domestic pre-carriage. In this case, the avocados would first need to be transported from our production unit in Uruapan, Michoacan, Mexico to Texas which is through the Laredo-Nuevo- Laredo border crossing, and then continue northwards into Canada through various crossings along the US-Canada border using a CPT logistics plan. 2. Mode of transportation: . The most common means of transportation for the export of avocados from Mexico is by land. The reason is that avocados are perishable products that require a controlled refrigerated environment since they need specific temperatures to maintain their quality and freshness throughout their transportation. 3. Suggested routing: Our route involves land transportation via truck through Mexico, the United States, and Canada, utilizing major highways and border crossings to reach Vancouver, British Columbia where our importing company is located.  Michoacán, Mexico to Laredo, Texas, USA: Transported to the border of the city in a truck.  Crossing the US-Mexico Border: Passing through customs and crossing the US-Mexico border at a designated crossing point.  Transit through the United States: Transported through the US interstate highway system.  Crossing the US-Canada Border: Crossing the state of Washington Peace Arch Border Crossing.

9  Transit through Canada to Vancouver, British Columbia: Continue through Canadian highways to Vancouver, British Columbia, which is located on the west coast of Canada.  Arrival in Vancouver: Reaching GC Importers Ltd where they would be distributed to markets, grocery stores, and other retailers. 4. City/port of origin (airport/seaport) and City/ destination port (airport/seaport): City/Port of Origin: City: Michoacán, Mexico Port: Since the transportation is by land through truck, there isn't a specific port involved at the origin. The avocados would be loaded onto trucks at the production unit in Michoacán. City/Destination Port: City: Vancouver, British Columbia, Canada Port: There isn't a specific port involved at the destination since the transportation is by land through truck. The avocados would likely arrive at our distribution centre “GC Importers Ltd” Vancouver, where they would be unloaded and distributed to markets, grocery stores, and other retailers. 5. Estimated transit time from the named place of origin to the named place of destination. T he total estimated transit time for the journey from Michoacán, Mexico, to Vancouver, British Columbia, Canada, would be approximately 6 to 10 days, depending on factors such as border crossing times and road conditions. Here's a more refined estimate of the transit time for each leg of the journey: Michoacán, Mexico to Laredo, Texas, USA (Crossing the US-Mexico Border): Approximately 2 to 3 days . Transit through the United States: Approximately 2 to 3 days. Crossing the US-Canada Border: Several hours to half a day. Transit through Canada to Vancouver, British Columbia: Approximately 2 to 3 days. Arrival in Vancouver: Unloading and distribution can vary in time.

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10 Transportation costs 1. Trucking: actual weight (pounds) and volume weight (pounds) of the shipment for trucking Actual weight in pounds, For 25 pound packaging = 25lbs X 80 boxes = 2000lbs For 4 kg packaging = 8.818lbs X 216 boxes = 1904.688lbs So, the total weight in pounds = 3904lbs Volume weight in pounds, For 25-pound packaging Volume per box: 24×16×6=2,304 cubic inches Total volume for 80 boxes on a pallet = 80×2,304 =184,320 cubic inches For 4 kg packaging Volume per box: 12×8×4=384 cubic inches Total volume for 216 boxes on a pallet: 216×384=82,944 cubic inches So, the total weight in pounds = 184,320 cubic inches (25-pound) +82,944 cubic inches (4 kg) = 267,264cubic inches Air freight and ocean freight are not applicable. 4. Details of Mode/modes of transportation chosen with the rationale for the choice. The mode of transportation will be temperature-controlled trucks. The truck will be of GVWR (Gross Vehicle Weight Rating) 9000lbs and 5000lbs in weight, empty, which will be able to carry our load at once.

11 5. Details of freight costs of main international transportation (in Canadian dollars). Distance from Michoacán to the border city of Laredo, Texas to Vancouver = 2376 miles Total weight in pounds = 3904lbs Trucks payload capacity = 4000lbs Cost per mile for freight = 3$ (USD) So, the total freight cost from Mexico to Canada = 2376 miles X 3 USD =7128 USD X 1.36 =9679.43 CAD

12 Warehouse/distribution centre requirements 1. Warehouse-type based on the type of product. Temperature-controlled facilities at 5 C to 12 C with RH (Relative Humidity) of 95% will be used. Avocado storage facilities should acquire proper ventilation to prevent mould and dehydration and maintain required humidity levels. 2. Type of storage rack required Adjustable pallet racking system in the storage racks will be efficient and flexible in handling, organizing and accessing products. Drive-in racks for efficient rotation and retrieval should be maintained. 3. Warehouse-type based on ownership (private, public, contract) Public warehouses will be used to maintain cost-effectiveness and flexibility. As the storage time for the product is not more than 3 weeks, it is very efficient to use public or contract warehouses. 4. Warehouse-type based on customs clearance status. Bonded warehouse: Avocados will be stored in this warehouse before customs clearance. Non-bonded warehouse: This warehouse will be used after custom clearance for further dispatching. 5. Estimated duration of storage The estimated total duration of storage will not be more than 3 to 4 days including transportation and clearance time at customs. For the better-retained quality of avocados, the maximum storage time interval is 3 weeks from harvesting. So, the optimum storage of avocados in the Canadian warehouse depends on the days of transportation.

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13

14 References Bester, J. (n.d.). AVOCADOS AND TEMPERATURE CONTROL. Retrieved February 13, 2024, from http://www.avocadosource.com/Journals/SAAGA/SAAGA_1982/SAAGA_1982_PG_14 -15.pdf Canada, G. A. (2020, July 6). Canada-Mexico relations. GAC. https://www.international.gc.ca/country-pays/mexico-mexique/relations.aspx? lang=eng#:~:text=Our%20trade%20and%20investment%20relationship Carlberg, J., & Rude, J. (n.d.). REVISTA MEXICANA DE AGRONEGOCIOS CANADA- MEXICO AGRI-FOOD TRADE UNDER NAFTA. http://home.cc.umanitoba.ca/~carlberg/bio/Carlberg%20Rude%20Revista.pdf GC IMPORTERS LTD - Tropical Fruits. (n.d.). GC IMPORTERS LTD. Retrieved February 13, 2024, from https://gcimporters.ca/tropical Javier, F., & Valencia, D. (2022). Mexican avocado subproducts destined for Canada Thesis. https://www.theseus.fi/bitstream/handle/10024/801675/DoddoliValencia_Francisco.pdf? sequence=2&isAllowed=y Locate a Port of Entry | U.S. Customs and Border Protection. (n.d.). Www.cbp.gov. https://www.cbp.gov/about/contact/ports Shipping organic avocados from Mexico to Canada. (2019, February 26). Www.freshplaza.com. https://www.freshplaza.com/europe/article/9075386/shipping-organic-avocados-from- mexico-to-canada/ https://www.europartnersgroup.com/author/europress. (2020, August 20). Fresh avocado: is exporting from Mexico by ocean freight a good idea? Eurogroup Latam. https://www.europartnersgroup.com/global-motion/fresh-avocado-exporting-from- mexico/ Mexico, A. from. (n.d.). Meet Avocados From Mexico at CPMA show. Www.newswire.ca. https://www.newswire.ca/news-releases/meet-avocados-from-mexico-at-cpma-show- 866061409.html Mexico’s Commitment to Food Safety in the Avocado Orchard and Beyond. (n.d.). Avocado Institute of Mexico. https://avocadoinstitute.org/avo-journey/commitment-to-quality-and- food-safety/food-safety-and-traceability/

15 Malouf, S. (2023, November 2). How to Ship Avocados. EPGNA. https://epgna.com/how-to- ship-avocados/

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