Halal is used to describe anything permissible under Islamic law, in contrast to “haram†â€“ which is forbidden. This covers aspects such as behavior, speech, dress, conduct, manner, and dietary laws.
This dichotomy of usage is similar to the Hebrew term “kosherâ€Â. As well as the production and consumption of food, halal products and services include cosmetics, pharmaceuticals, clothing, financial services, and logistics.
The global halal food market alone has an estimated value of US$580 billion and is growing rapidly. Halal logistics, meanwhile, is a newer phenomenon, where the Shariah is being applied to the logistics discipline. This development is quite similar to Islamic banking, where a banking system is developed according to the principles of the Shariah.
The main objective of logistics is the integral management of physical goods flow and information flow against optimal costs meeting the customer requirements.
As the Muslim consumer requires the consumption of halal products, not only is the production of the halal products important but also the logistics to the consumer, in order to ensure the integrity of the product at the point of consumption.
Halal compliance is extending along the value chain, both upstream towards farms and downstream towards food services and towards transportation, warehousing and handling of halal products at ports and airports. A supply chain approach ensures integrity from farm to fork.
The responsibility of the halal integrity of a supply chain is with the brand owner, covering sourcing and distribution. Logistics links the individual components together and should therefore be well organized.
Global research by LBB International on Muslim consumer perception reveals that halal logistics is very important for the consumer. Furthermore, the consumer is willing to pay more for halal products that carry the assurance of a halal logistics system.
These findings are an important rationale for the food, pharmaceutical and cosmetics industry to organize their supply chains accordingly. Secondly, the logistics industry will now need to gear up to offer halal logistics solutions for the halal industry.
International Developments
In Asia, Malaysia is envisioned to become a global halal hub, supported by its halal standard (MS 1500:2004), halal brand, halal food, pharmaceuticals (OTCs, vaccines, vitamins, etc), cosmetics industries, and the development of halalregional distribution centers.
Under the auspices of the Malaysian government, the Halal Industry Development Corporation was formed to implement this ambitious program.
As a result of its efforts, various logistics companies are already halal certified today, such as Century Logistics, CCN and MISC Logistics as well as ports (like Northport). Aside from Malaysia, Thailand and Indonesia are also important producers and exporters of halal food.
In the Netherlands, the Port of Rotterdam started with a consortium back in 2005 with Eurofrigo (Cold Room Warehousing) and VAT Logistics (logistics service provider) to provide halal logistics services and promote the halal gateway to Europe. Over in France, the Port of Marseilles is developing a halal regional distribution center in collaboration with Malaysia.
During the World Halal Forum Europe, held in The Hague, the Netherlands, (November 2009), participants and speakers agreed that halal is no longer a taboo in Europe as awareness about halal products and certification has notably increased over the last couple of years.
Advertising campaigns on halal products, certification and labels are also on the rise in Europe, particularly in France, which has an estimated five million Muslim population. There remains a need to harmonize the halal standards in Europe, to simplify halal for the consumer and meet the diverse needs of the European consumers.
With halal now being a global business, led by multinationals (such as Nestlé), and with logistics being inherently crossborder, an international halal logistics standard is important. Hence, following the mandate from the Organisation of the Islamic Conference (OIC), the IHI Alliance was entrusted to harmonize the halal standard and certification system globally.
The Global Halal Standard developed by the IHI Alliance consists of 10 modules with the first (IHI AS 01) on Logistics. This standard was made public during the World Halal Forum held in Kuala Lumpur, Malaysia in May 2009.
Vital ingredients
The main principle in halal logistics is the segregation of halal and nonhalal goods through the transportation, storage, and (sea/air/rail/inland) terminal operations. The requirements at each of these key logistics elements are describedbelow.
Transportation
In the transportation of halal products, halal and non-halal goods are not mixed on a load carrier (like trolley or pallet) or in a container/common transportation vehicle (in case of bulk shipments). There is also a clear difference in transportation in case of ambient or reefer (chilled or frozen).
For refrigerated shipments there should be no mixing in the same container/common transportation storage of halal and severe najis (items regarded as ritually unclean) like pork meat. In case of ambient transports, here should be no mixing of halal and non-halal goods on a pallet or load carrier, and tertiary packaging should be used to protect the halal cargo along the supply chain.
Cleaning procedures for both the container and transportation vehicle are important issues to be addressed for halal transportation operations when the history of a vehicle and container is not available or the former transport carried severe najis. This means, for example, that under the Shafi’i school of thought (practiced in Asia) it requires washing seven times with a soil based solution. To work with cleaning certificates is highly recommended.
Storage & Warehousing
As goods move through the supply chain, they are in one of the following three stages: movement, transformation or storage. Evidence supports that goods spend a lot of time in storage and relatively little time in movements and transformations. Hence this is an important argument to address the halal compliance for storage and warehousing.
The nature of its environment and the various handlings and different parties involved makes the warehouse sensitive to cross contamination and mistakes. Cross contamination can happen in the various stages of the warehouse processes, such as inbound handling, storage, cross-docking, value added logistics (VAL) and outbound handling.
The basic principle of a halal warehouse is a segregation of halal and non-halal cargo throughout the warehouse process. This relates to both “physical†and “virtual†segregation. Physical segregation addresses separation throughout the warehouse processes, namely:
• Receiving – Verification of halal status of cargo and labeling
• Putaway – Halal and non-halal cargo is not mixed on the same pallet/ load carrier
• Storage – Halal cargo will have dedicated floor/rack locations (ambient) and dedicated cold rooms (in case of chilled or frozen environment)
• Cross-docking – Halal and nonhalal cargo is put on different pallets/ load carriers and have designated intermediate buffer locations
• Value Added Logistics (VAL)– Repackaging, sorting, labeling, etc for halal items is undertaken at a designated area
• Order Picking – Halal and nonhalal cargo are put on different pallets
• Shipping – Halal pallets are labeled and are loaded into the truck/container
The dedicated floor and rack locations for halal products should be clearly differentiated by a different color. To simplify operations further, the halal label should have the same color as the floor and rack locations. In this way the compliance is easy to implement and to check.
In case of a reefer cargo, halal and severe najis cannot be stored in the same cold room. However, in case of a lack of dedicated facilities a physical barrier and containerization are practical options.
In case a warehouse handles only halal products, the halal warehouse is also called a “dedicated halal warehouseâ€Â. Although a dedicated halal warehouse does not require physical segregation, much emphasis is on the receiving process, where before unloading, the halal status of the cargo has to be confirmed.
Meanwhile, virtual segregation covers three key areas:
1. “Halal Supply Chain†code to halal cargo in the IT systems (such as warehouse management system, ERP, etc)
2. “Halal Supply Chain†code to freight document
3. “Halal Supply Chain†label to halal cargo
Terminal
Sea, air, rail and any other type of inland terminal play a key role in facilitating high volumes of both halal and non-halal goods. These terminals are centers of complex multi-modal transportation networks with many different parties involved – customs, inspection, cargo handlers, terminal operators, etc, making communication of the halal status of a shipment essential both physically (through labeling on cargo & freight documents) as well as virtually (halal code).
The basic principle of a halal compliant terminal is to ensure a physical segregation of halal cargo from non-halal cargo through the terminal process. Inspection of cargo through various parties such as customs, veterinary or health authorities at international sea and airports is common. However, it is important that inspection of halal cargo is done at a designated area to ensure that the halal integrity is not compromised.
Terminals are also used to facilitate the transportation and holding of livestock. It is therefore very important that there is no mixing of halal and non-halal livestock (such as pigs) in the quarantine and holding areas.
Integrated Strategy
For effective logistics management of a halal supply chain it is important to have halal logistics integrated into the logistics strategy. Secondly, the company should have a solid visibility of its supply chain, supported by key performance indicators. Finally, regular halal logistics audits should take place to ensure that the halal logistics performance is under control.
The audits should cover sourcing (towards the supplier), distribution (towards the customer) and materials handling (within the company). This is particularly important as poor performance on halal has shown to have major implications for the image of the company and its brand, which can take years to recover. Halal logistics guidelines are therefore important to be addressed in the contract between shipper and logistics service provider.
Overall, the halal compliance of the sourcing and distribution should not be seen as a problem to address but as an interesting opportunity to gain competitive advantage in your industry. Indeed, halal logistics is a new mega trend, and an opportunity for the logistics industry to capitalize on. And according to the LBB International survey, various markets will sanction a premium price for a halal compliant logistics system.
In summary, the halal industry is a big and fast-growing market. Integrity of the supply chain is critical to provide the assurance of the integrity to (Muslim) consumers worldwide. And with the international halal logistics standard, developed under the IHI Alliance, the halal industry and logistics service providers can now comply with a new standard of logistics excellence, the International Halal Logistics StandardIHI AS 01.