Food firms facing major hurdles to meet halal logistics requirement

By Lester Wan contact

- Last updated on GMT

Dr Khairil Ismahafiz Muhadzir, group chief commercial officer (CCO) of DagangHalal said with demand for products increasing, several countries are now demanding the supply chain meet halal standards as well.
Dr Khairil Ismahafiz Muhadzir, group chief commercial officer (CCO) of DagangHalal said with demand for products increasing, several countries are now demanding the supply chain meet halal standards as well.
Considering the huge global halal food market, there is growing demand for complementary halal logistics — but is industry up to the challenge?

Dr Khairil Ismahafiz Muhadzir, group chief commercial officer (CCO) of DagangHalal — one of the world’s largest online halal marketplaces that works closely with Malaysian and international certification authorities — said the global halal market is valued at US$3.36tn, with food comprising close to 42%.

Furthermore, he said Pricewaterhouse Coopers (PwC) declared that the estimated purchasing power of Muslims in the Asian region for food will be close to US$300b by 2030.

With demand for products increasing, several countries are now demanding that the logistics aspects of the supply chain meet halal standards as well.

Understanding needs

“When people talk about halal logistics, they always think of transport or cargo. Whereas, it falls into bigger roles and responsibilities among the stakeholders,”​ said Dr Muhadzir, who said it must encompass the activities of suppliers, manufacturers, retailers and distributors.

Each “department”​ has its own obligation or part to play, and halal logistics is not solely the domain of logistic services providers, he added,

"Whether that product or ingredient comes from a plant or an abattoir, how it will be transferred to manufacturing where it will become processed from raw materials into processed foods, and then how it will be distributed to the retail (channel) or the supermarket or store, throughout the chain you could see a lot of involvement in terms of halal logistics,”​ said Dr Muhadzir.

Malaysia has its MS2400 halal logistics standard as the market reference and coverage encompasses logistic transportation and cargo handling, warehousing and retailing.

Others include the international halal logistics standard IHIAS 0100:2010.

Dr Muhadzir said there are three “critical points” in maintaining the halal status throughout the supply chain: suppliers’ obligation, the transformation from raw material to finished goods, and the distribution system.

“We need to know whether the suppliers are really practising the halal (procedures) during their transporting of the food from the farm or the abattoir to our manufacturers,”​ he said.

“If there is contamination in the process, that means you would not be able to obtain halal certification even if you have produced the halal products (under the halal-certified processes) within your factory.”

Challenges to adoption

He acknowledged, however, that there are several challenges facing food firms seeking to adopt halal logistics.

He said there is a lot of technology that can produce fake halal certificates or labels, and there is a shortage of technical experts to pass on advice.

While manufacturing plants in Malaysia usually have a halal executive and a halal auditor to monitor compliance, some countries still do not have this in place, while others refuse to accept some certification bodies.

“Most of the food industry will think, if I obtain the halal food certificate from MUIS (Singapore), I still need to obtain the halal certificate from JAKIM (Malaysia), I still need to obtain a certificate from MUI (Indonesia),”​ he said.

Dr Rodney Wee, CEO of Asia Cold Chain Centre, said that one way to overcome this to a certain extent is to adopt a high standard that other countries accept. For instance, Australian abattoirs complying with halal certification use the Malaysian standard because it is one of the highest and is accepted by many other countries.

In a competitive sector, most logistic or transportation companies don’t want to invest in halal logistics. The demand from industry and consumers is currently also not significant enough to push them to invest more.

Dr Muhadzir said, in Malaysia, not more than 10 companies have obtained a halal logistics certificate and the number in other countries might be less.

“When you want to evolve from conventional to halal warehouse, you need to have a segregation in storage. You need to build a barrier, you need to have a dedicated plant, for instance,” ​he said.

“You need to invest on all that, so it’s going to be a very high cost.”

The same goes for the lorry or cargo transportation. A dedicated lorry for halal logistics is costly, especially if the demand is not there to utilise it.

However, these challenges will have to be overcome for food firms to tap into the rising demand for halal products.

“They want to make sure that the whole supply chain, till it is received by the client, is totally halal compliant including in the logistics,”​ he added.

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