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Cool Cargoes October 2015

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COOL CARGOES THE JOURNAL OF COMMERCE 7 W E LIVE IN a value-added world. True in just about every facet of our lives, it's especially the case for those engaged in global supply chain logistics — and it's driving change in the industry. Many cold storage operators began as modest family-run busi- nesses and grew around a single fixed asset. They are pressured now to move beyond their four walls to offer transportation and other logistics services that may have been outside their compe- tence fi ve, 10 or 15 years ago. "The whole business model has changed," says Corey Rosenbusch, president and CEO of the Global Cold Chain Alliance, a trade asso- ciation for the cold chain industry, "to the point that many compa- nies have changed their names to refl ect an identify shift from cold storage to their being more of a logistics company." A decade ago, about 70 per- cent of the revenue generated by companies in the cold chain sector came simply from storing products. Today, Rosenbusch and others estimate that cold storage represents a mere 30 percent of annual revenue. So what's the biggest piece of the revenue pie in 2015? Mostly, it's comprised of services — asset or non-asset, or both — that the founders of the industry likely never i mag i ned u nder t a k i ng. "Today, the typical company, for want of a better phrase, is doing more than simply receiving a pal- let, storing it and pulling it back," Rosenbusch said. "They're manag- ing inventory, they're dealing with regulatory compliance issues, and they are booking transportation. Sometimes they have their own fl eet — a majority of our members do — and sometimes they farm that work out. But just about all of them are going to offer some kind of logistics/transportation service to their customers." In other words, the transi- tion from cold warehouse or cold carrier to third-party logistics ser- vices provider is fairly mature. But that's not to suggest it's stopped. A thriving industry continues to evolve, and that's very much the case with the cold chain sector. One dominant theme in recent years has been the search for ways to grow the industry. Despite the majority of cold chain compa- nies offering an array of services, industry surveys suggest many of its customers still don't under- stand that. That wou ld be a sober i ng realization in any case, but it's become even more vexing as cold chain sector clients have begun diversifying their product lines to keep pace with shifting consumer tastes — that is, moving from frozen goods-only purveyors to companies with a product mix that includes an ever-increasing share of fresh fruit and vegetables. When the Global Cold Chain Alliance conducted its most recent member survey on the state of the industry, one of the anecdotes to strike a chord in the association's Washington, D.C., offi ce involved just such a scenario. "A customer called one of our members and said, 'Hey, I know you do cold stor- age, but who can I get to help do the fresh products we're getting into?' " Rosenbusch recounts. "And our member, he almost wanted to scream because his company — like almost all of our members — is well-equipped and experienced in handling goods with a variety of temperature requirements. "Unfortunately, because of our history, we continue to be labeled the frozen industry when we're really so much more," Rosenbusch said. Among the companies taking definitive steps to change that perception is Lineage Logistics, which hired W. Gregory Lehm- kuhl, former president of Con-way Freight, to lead the company in its next phase of growth by expand- ing its por tfolio of cold chain solutions. Prior to joining the nation's second-largest tempera- ture-controlled logistics company, Lehmkuhl was a star of the truck- ing industry, helping to revive and strengthen Con-way Freight's market position in the wake of the global fi nancial crisis and subse- quent recession. "We have an exciting oppor- t u n it y t o le ver a ge ou r v a s t warehouse network and broad value-added services in combina- tion with new technologies," he said in a statement. Beyond addressing the basic imaging issue, in one stroke, Lineage Logistics' bold move fulfilled a goal that many of its competitors, large and small, fi nd challenging to crack: how better to position themselves to be com- plete supply chain partners. Now that they've diversified their services, the goal of com- panies in the sector is to try and capture a bigger portion of their customers' logistics spend. Rather By Lara L. Sowinski Refrigerated providers are moving deeper into logistics by expanding services to meet customer demands "THEY'RE MANAGING INVENTORY, THEY'RE DEALING WITH REGULATORY COMPLIANCE ISSUES, AND THEY ARE BOOKING TRANSPORTATION."

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