How to Optimize Logistics with Bulk Wine & Spirits Solutions

Area Director North America Company brief introduction Mr. Thomas Barfoed Area Director North America JF Hillebrand Group

JF Hillebrand Group 2 key global brands Beer, wine & spirits Packaged and bulk 2 key global brands International logistics service providers specialized in niche markets Trans Ocean led the way in the development of a one way aseptic flexitank. JF Hillebrand Group acquired Trans Ocean 2007. Industrial bulk liquids

WHAT IS BULK SHIPPING? THE BULK ADVANTAGE EQUIPMENT OPTIONS INDUSTRY SAFETY QUALITY CONTROL BULK SUPPLY CHAIN

Defining “bulk” cargo Bulk Trailer Flexitank ISO Tank Bulk Tanker Bulk is product that is sold unpackaged in large quantities Road transport Sea Freight Bulk Trailer 2-24,000* liters Flexitank 12-24,000* liters ISO Tank (up to) 26,000 Liters Bulk Tanker ~500,000 liters Until the introduction of a Flexitank for bulk liquids in the commercial market in the 1970’s , shippers had two choices, bulk tankers or ISO tanks (ISO = international shipping standard) Bulk trailers (USA domestic market, US-Canada, Intra-European markets) – single or compartmentalized tanker trucks (carriers typically operate their own fleet) Bulk Cargo

Intermediate Bulk Containers Defining “bulk” cargo Bulk is product that is sold unpackaged in large quantities Bottles 9 Liter (case) Drums (up to) 200 Liters Intermediate Bulk Containers (IBCs or Totes) 1,000 Liters Palletized Cargo

WHAT IS BULK SHIPPING? THE BULK ADVANTAGE EQUIPMENT OPTIONS INDUSTRY SAFETY QUALITY CONTROL BULK SUPPLY CHAIN

Cased Goods Shipping Model Production Bottling (Origin) Shipping Market Equipment Pallets (US) Cases Liters 20’ container 10 560 5,040 40’ container 21 1176 10,584 Shipping Capacity

Bulk Wine & Spirits Shipping Model Production Shipping Bottling (Destination) Market Bottling at destination allows the option to bottle different bottle sizes or different labels depending on local market demand changes. (producers often sell the same wine to different supermarkets using different bottles & labels) Equipment Pallets (US) Cases Liters 20’ container 10 560 5,040 40’ container 21 1176 10,584 Shipping Capacity ISO Tank / Flexitank 24,000*

Additional cost considerations: Example – FOB Spanish Port to door Napa PRODUCT IN BULK PACKAGED PRODUCT 1 Flexitank = 24,000 Liters 1 x $4,750 shipping cost Cost per liter = $0.20 2.3 x 40’ Dry containers = 24,000 Liters 2.3 x $4,150 shipping cost Cost per liter = $0.40 Additional cost considerations: Destination bottling cost? Storage cost?

Shipping Model Comparison PRODUCT IN BULK PACKAGED PRODUCT Private label market Local blending Rapidly adapt to market changes Tax advantage* Premium market Estate bottled authenticity Supply chain flexibility Higher volume commitment Fixed geographical bottling point Higher transport cost per unit Longer lead time for bottling changes

WHAT IS BULK SHIPPING? THE BULK ADVANTAGE EQUIPMENT OPTIONS INDUSTRY SAFETY QUALITY CONTROL BULK SUPPLY CHAIN

Flexitank Benefits Limitations Global availability Cost advantages Road, rail, ocean transport Single use Non-hazardous liquid only Technical support Recyclability varies by manufacturer Shipping Capacity : 15,000- 24,000 liters* *Max load COA Flexitank Code of Practice

ISO Tank Benefits Limitations Hazardous liquid (spirits) Ease of loading/discharge Temperature control Reusable units Availability, re-positioning Cleaning / contamination risk Per diem costs Higher cost compared to flexitanks Shipping Capacity : 22,800- 26,000 liters* *Max load for California is 24,000L

IBC’s / Totes Benefits Limitations Ideal for brand trials Good for receivers with limited capacity Storage ? Unit positioning at origin Limited payload Disposal (resale market?) Addt’l handling / repositioning Non Hazardous liquids Quality concerns? Shipping Capacity : up to 1,000 liters

WHAT IS BULK SHIPPING? THE BULK ADVANTAGE EQUIPMENT OPTIONS INDUSTRY SAFETY QUALITY CONTROL BULK SUPPLY CHAIN

65 Flexitank – Quality Standard Timeline Container Owners Association Flexitank Code of Practice established New PAS/1008 Flexitank Standard COA launched Nov 2004 June 2008 Jan 2009 Jan 2015 Sep 2016 Flexitank division launched Flexitank Management Committee (FMC) created http://www.containerownersassociation.org Flexitank Companies are COA Associate Members 65

Flexitank Industry Standards Flexitank Code of Practice Container selection for transport Container and flexitank marking Incident management, insurance, training PAS/1008 Standard Materials, Valves (loading /discharge) Flexitank System (including rail impact testing) Commodity loading temperature range Documentation, Incident Records COA – Flexitank Division Reference http://www.containerownersassociation.org/index.php/news/34-coa-updates/412-coa-flexitank-division-status-report LINK FOR CODE OF PRACTICE: http://www.flexitanks.org/files/COA_Flexitank_Code_of_Practice_V5_September2016.pdf http://www.flexitanks.org/index.php/news/524-pas-1008-2016-specification-for-the-performance-testing-of-a-single-use-flexitank-published

WHAT IS BULK SHIPPING? THE BULK ADVANTAGE EQUIPMENT OPTIONS INDUSTRY SAFETY QUALITY CONTROL BULK SUPPLY CHAIN

Questions to ask about Flexitank Quality Manufacturer Owned or purchased? Factory Standards ISO 9001: 2008, ISO 22000 Compliance Container Owners Association ISO PAS 1008: 2016 Materials 100% virgin grade materials? Opaque or transparent? Barrier Protection layers against oxygen ingress, halo-phenals “cork taint” and hydrocarbon taints “naphthalene” Food Safety Certified to EU and FDA standards? Performance R&D: valve technology and design?

Questions to ask about ISO Tank Quality Ownership Fleet owned or third party? (liability, cross-contamination?) Commodity ISO Certified for hazardous liquids? Compliance Wine & Spirits Trade Association (WSTA) Code of Practice for transport in tanks, vessels, including cleaning practices Food Safety Certified to EU and FDA standards?

WHAT IS BULK SHIPPING? THE BULK ADVANTAGE EQUIPMENT OPTIONS INDUSTRY SAFETY QUALITY CONTROL BULK SUPPLY CHAIN

What to consider for converting to bulk shipping Facilities Logistics Brand integrity Quantity Destination bottling capacity? Destination storage? How quickly is the SKU moving? Fast mover? Spirits or wine shipping solutions and cost? Estate vs local bottling?

What to look for in a bulk logistics partner? Manufacturing Research & Development Logistics Management & Solutions Information & Risk Management R&D/Manufacturing – design, raw materials, vendor management, compliance, control & safety Fitting & technical assistance – trained/certified carriers, experienced drivers, load/discharge training, 24/7 support, project management Intermodal Transport Mgmt – delivery door to door, flexible supply chains, demurrage & detention solutions Information & Risk Mgmt – tracking/reporting, order mgmt. system, quality indicator reports, incident & risk traceability, compliance Recycling – flexitank recycling initiatives, bulkhead recovery, UN Global Compact Global Network Fitting & Technical Assistance Safety, Recycling & Sustainability Global Network Infrastructure

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