Cold Storage Logistics: License to Chill

Tags: Specialized Logistics, Logistics, Supply Chain

Specialized providers offer more than just standard refrigeration and freezing services. They also have value-added services down cold. 

For a long time, “cold storage served a single purpose,” says Brooks Royster, president of MTC Logistics, Baltimore, Maryland. Namely, it kept products refrigerated or frozen.

That’s changing.

Here’s a look at 12 trends that are shaping cold chain logistics.

1. New services.

Temperature-controlled warehouse, truck, and trailer providers are adding numerous services—including logistics management and repacking operations—to their portfolios. Indeed, 56 percent of the cold chain industry's revenue now comes from non-storage activities, according to the International Association of Refrigerated Warehouses' 2016 Productivity and Benchmarking Survey.

For instance, a shipper that imports clementines from Morocco may engage its cold-chain provider to separate massive containers of the fruit into retail-sized packages. For some cold-chain shippers, a provider can help identify less-expensive international and/or domestic transportation routes.

"The value-add services have become equally important as the cold box," Royster says.

2. Faster inventory turns.

Dick Cold Storage, based in Columbus, Ohio, used to store many products for three to six months. Now, long-term storage accounts for less than one-tenth of the firm's total income.

In its place are many products that ship in and out on the same day. "We run an organized, high-velocity distribution center," says Jason Dick, vice president and operations manager with the firm. Within hours after customers drop pallets on the dock, they're gone. Shippers save on storage costs and move products to their destination more quickly.

The velocity is exciting, yet requires sharing accurate, detailed information across the supply chain, Dick adds. This includes unique pallet numbers, code dates, mixed code dates, pallet case counts, and item descriptions.

An efficient high-velocity cold chain also requires manufacturers' bills of lading that accurately match a load's physical description, so they provide the next party in the supply chain with all traceable information.

3. Automation.

"If I were to pick one recent trend that stands out, it's the higher degree of automation," says Joe Couto, chief operating officer with Minneapolis-based HighJump, a provider of supply chain network solutions.

Until the past few years, automation had been more prevalent in other parts of the world, such as Europe, where land and labor are more expensive. Many North American firms lagged.

That's no longer the case. In addition to the efficiencies automation can bring, it's a way to compensate for the difficulty in finding qualified employees.

Similarly, more cold chain providers are turning to robotics to rack and pick goods and handle other functions. "Some logistics systems look like a giant kids' playset," says Robert Fay, president of Florida Freezer, North Fort Myers.

Automation also can cut energy consumption. Providers can reduce the physical opening to the cold storage to the size of the goods themselves— whether a full pallet or single units on a conveyor—reducing cold loss, Fay says. The system also can send an alert when, for instance, a door is stuck open and allowing cold to escape.

4. Energy-efficient facilities.

Many cold-storage providers are deploying technology to monitor electricity costs and usage, Royster says. Their goal is to cut usage as the cost per kilowatt increases throughout the day. The facilities are designed to maintain their temperature even as they consume less energy.

 

5. More effective materials.

The basic science behind cooling a building hasn't changed, but the materials to do so continue to advance. For instance, polystyrene as insulation on pipes not only is more efficient than urethane, but it also doesn't retain water, Fay says. That reduces the risk it will rust the pipes.

"Improved packaging provides extended transit time," says James Wilkinson, perishables manager of sales, international group with Yusen Logistics (Americas). One example is Maxtend technology, developed by Mitsubishi Australia Limited. This atmosphere control system manages the carbon dioxide and oxygen levels that fruit and vegetables release in transit, mitigating spoilage and product deterioration.

6. High-tech trucks and trailers.

It's not just buildings that feature more sophisticated cold-chain technology. Trucks that incorporate conveyors can load and unload themselves within minutes, Couto notes. This saves on labor and reduces the risk of violating the cold chain, as the products are on the dock for a shorter time. Manual loads and unloads can run 45 to 60 minutes, he adds.

7. Reduced waste.

Up to 40 percent of food in the United States goes uneaten, according to a report by the Natural Resources Defense Council. Many factors drive this percentage, but given the volume of food that moves through the cold chain, it plays a role.

One underlying challenge has been accurately anticipating demand. Companies need to develop supply chains with the flexibility and capability to move the right amount of product to the right place at the right time. "It's the supply chain ethos, which holds even more true for perishable items," says Toby Brzoznowski, co-founder and executive vice president of Llamasoft, a supply chain design technology provider based in Ann Arbor, Michigan.

That need is driving the application of demand analytics. Supply chain professionals are going beyond product category to identify relevant buying patterns. For instance, companies traditionally analyze products based on attribute, so they compare one brand or flavor of yogurt against other yogurts. But it can make more sense to focus on consumers' buying patterns, Brzoznowski says. An analysis might show consumers' yogurt buying habits are more similar to those of apples than other dairy products.

By applying this information, cold chain professionals can tailor production and distribution to reduce the number of products that expire before they're purchased.

8. E-commerce.

E-commerce transactions are impacting the cold chain. "Not so long ago, our industry was focused on full-pallet-in, full-pallet-out transactions," says Daniel Cooke, director of marketing with Atlanta-based Americold, a provider of temperature-controlled infrastructure and supply chain solutions. Today, food producers are increasing SKU counts to meet customers' growing preference for home delivery of individual items and meal kits.

"That, in turn, requires a greater SKU count on trucks, more pick faces in warehouses, high rates of replenishment, and faster overall cycle times," Cooke says.

9. Preference for fresher food.

Consumers' preference for food that's fresh and local, rather than frozen or shipped across the country, also impacts the cold chain. The breakdown between frozen and refrigerated food used to be about 80 percent frozen, and 20 percent refrigerated, says Corey Rosenbusch, president and CEO with the Global Cold Chain Alliance (GCCA), a trade group representing the major industries engaged in temperature-controlled logistics. That's shifting.

The trend toward fresh food is compelling cold-chain providers to find creative ways to provide fresh products without incurring skyrocketing costs.

"It requires strong tactical execution of details," says Pan Chen, senior director of business analytics with HAVI, which helps foodservice companies optimize their supply chains. Supply chain professionals need to consider, among other factors, how long the food can remain fresh, and their cross-docking and refrigeration capabilities.

The interest in fresher food also is prompting many shippers to establish regional supply chain networks, says Jay Moss, president of specialized services with Transplace, a non-asset-based logistics services provider headquartered in Frisco, Texas. While this won't happen overnight—building warehouses and distribution centers takes time, after all—the move is underway.

Regional routes also allow more drivers to return home at night. That likely will help cold storage providers attract and retain truck drivers, Moss adds.

10. Contingency
planning.

The fear that a disaster will force the shutdown of an operation keeps many supply chain professionals up at night. With products that require a temperature-controlled environment, a thorough contingency plan is even more critical.

"Contingency planning requires collaboration with service providers, granular detail, and a willingness to change," Chen says. For instance, he worked with a chicken company that had one line devoted to patties and another to nuggets. They re-worked the lines so both could do either—a key ability if a line went down.

11. Capacity crunch.

The GCCA's latest report finds an average occupancy rate of more than 85 percent, which most industry experts consider full, Rosenbusch says. One reason is the proliferation of SKUs, as manufacturers continue to add flavors, sizes, and types. In addition, construction of new space slowed during the recession.

12. Labor.

The difficulty many supply chain companies experience in attracting and retaining qualified drivers and warehouse employees is even more pronounced within the cold chain. "People in our industry work in a cold, harsh environment," Rosenbusch says.

Moreover, the move to electronic logging devices may prompt some smaller firms to exit the business. "Anything that affects capacity affects specialty markets, such as the cold chain, to a greater extent," Moss says.

Given that the Supreme Court recently declined to hear arguments against the electronic log regulation, it appears poised to move forward. Firms that haven't prepared to implement these tools have little time to catch up.

Several tactics will be key in reversing the labor shortage. One is telling the bigger story of jobs within the cold chain. "We're helping to feed the world," Rosenbusch says.

Another is developing solid career paths. Cold-chain employees might start as case selector, and then advance to shift lead, supervisor, and into management. "They will not be in a freezer for 40 years," he adds.

Another critical tactic is telling potential candidates the work is more advanced than they may realize. Employees aren't simply driving forklifts, for instance; they need to know how to handle food and pharmaceuticals safely, such as complying with allergen protocols. Most providers apply technology, including warehouse management systems, RFID, and even drones, to a greater extent than some might assume.

The cold chain will continue to advance and the application of technology will continue to expand. "Cold chain logistics is a more sophisticated industry than some might think," Royster says.

We'll be chilling out for a long time to come.






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