Question

Consider the following scenario: Kellogg’s distribution of cereal products to customers in Guatemala is coordinated through Crowley Maritime Corporation, a U.S.-owned and operated third-party logistics company (3PL) with a distribution centre in Guatemala City, Guatemala. Orders for the Latin America region were consolidated, and aggregate orders were placed with Kerry Inc. in Gridley, Il. Kerry Inc. shipped consolidated orders, palletized and labelled by distributor, by intermodal to Mexico City, at which point trailers with orders for distributors in countries south of Mexico were moved over the road. Crowley’s general manager in Guatemala City advised Kellogg’s head office personnel in Battle Creek, Michigan that they had identified approximately 140 pallets of salmonella-contaminated cereal products still in wholesale inventory in Guatemala. Unfortunately, despite FDA recommendations for disposal, government officials in Guatemala, upon learning of the recall through their government Facebook account, had contacted Crowley and insisted that no contaminated food products be disposed of in Guatemala. Furthermore, since the contaminated products had been shipped from the United States, Guatemalan authorities insisted that the contaminated products be returned to the U.S. for disposal. Kellogg’s Supply Chain Manager had already spoken with their freight forwarder and customs broker regarding arrangements to return the contaminated products to the U.S. Mexican authorities would not allow the contaminated products to transit through Mexico, which left marine transport as the only economically viable option to ship the contaminated products from Guatemala to the U.S. Kellogg’s customs broker had placed a call to US Customs and Border Protection (CBP) for advice since the returning goods would be labelled “CONTAMINATED – Not for Resale – Goods returned for disposal only”. Since the returning shipment would not be subjected to the same level of scrutiny as a commercial shipment, CBP expressed concerns that someone might target the shipment for smuggling or terrorism reasons. As a result, CBP stated they would only allow the shipment to enter the US if the origin port was compliant with the International Ship and Port Facility Security Code (ISPS) and the Container Security Initiative (CSI).

a) Describe the possible intermodal transportation of Kellogg’s “Honey Smacks” cereal from Kerry Inc. in Gridley, Il to food distributors in Guatemala. For example:

i) What intermodal carrier(s) might be available to Kerry Inc. in Gridley, Il. offering service to Mexico and Guatemala? (2 points)

ii) Assuming the intermodal shipment travelled by rail from Gridley to Mexico City, describe the route and possible carriers involved. (1 point)

iii) Describe the highway route from Mexico City to Guatemala City. (1 point)

iv) Where would the shipment encounter Guatemalan Customs when it left Mexico and entered Guatemala? (1 point)

Answer 1

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a. Describe the possible intermodal transportation of Kellogg’s “Honey Smacks” cereal from Kerry Inc. in Gridley, Il to food distributors in Guatemala.

i) What intermodal carrier(s) might be available to Kerry Inc. in Gridley, Il. offering service to Mexico and Guatemala?

• From USA to Mexico it can be Rail (Pro Gate LTD), Truck (Mig-Express), Ship (Red Sea Company).
• From USA to Guatemala it can be Truck (Mig Express) or ship (Prime league company).
• From Mexico to Guatemala it can be Truck (Mig Express) or Ship (H Strom AS)

N.B.- Train service in Guatemala is not active, hence we can’t use Rail Freight for Guatemala (Rail transport in Guatemala, n.d.).

ii) Assuming the intermodal shipment travelled by rail from Gridley to Mexico City, describe the route and possible carriers involved?

•  MIG Express is an international freight forwarder organization that can ship the items from Gridley to Mexico City. The possible route is as follows:

Figure 1: Route from Gridley to Mexico, City (Mig Express, n.d.)

Note: Since they are freight forwarders and will rely on actual rail carrier organizations. They can use the network of Burlington Northern Sante Fe which works with Mexican rail companies such as Ferromex, Union Pacific to connect Gridley to Mexico City.

iii) Describe the highway route from Mexico City to Guatemala City?

• Highway route as per MIG Express is as follows.

Figure 2 Route from Mexico City to Guatemala (Mig Express, n.d.)

iv)   Where would the shipment encounter Guatemalan Customs when it left Mexico and entered Guatemala?

• The customs will be at the border or Chiapas, Mexico and San Marcos, Guatemala.

Figure 3 Intersection where shipment will encounter customs (Mig Express, n.d.)

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