Digital Edition

Cool Cargoes October 2015

Issue link:

Contents of this Issue


Page 7 of 31

COOL CARGOES 8 THE JOURNAL OF COMMERCE OCTOBER 2015 than having their customers outsource their transportation to one entity and their cold storage to another, what might be called the new generation "cold storage 3PL" needs to figure out how to make itself an all-in-one solution for its customers. This raises the question of how to keep costs down while investing in diversification. "It's hard," Rosenbusch acknowledged. "We're offering a very value-added service to the customer base, but logistics is always seen as a cost cen- ter. As a result, one of the trends that the industry has seen — and one of the things that keeps our membership up at night — is a constant pressure from our customers to do higher-value activities, but doing so while keeping costs and rates flat." This is particularly trying in a service sector where costs — for labor and energy — continue to rise at a rate of about 4 per- cent a year. One strategy that helps the larger cold chain 3PLs is spreading those costs across their customer base. Another is striving to be innovative on the energy side by both deploying new technologies and becoming early adopters of renewable energy. "This is particularly true in states that offer incentives for the use of renewable energy," Rosenbusch explained. "But the other thing we've found is that a lot of renewable energy companies want to part- ner with our members and use their assets — the warehouses and other large-scale facilities upon which solar panels can be installed. It's typical in those arrange- ments that the warehouse or facility owner gets to use a share of that power for their operations." One area that remains somewhat problematic for the cold chain 3PL is the deployment of automation, which obvi- ously makes a positive impact on labor and energy costs. The problem is, unless the customers are willing to make long- term commitments, it's hard to put in an automated system because their business needs change: today, they have X number of SKUs being distributed in a particular way, and then tomorrow the customer base may shift. "It's a question of how do you make these big capital investments in automa- tion while maintaining that f lexibility across multiple clients. It's not uncommon Preferred Freezer started construction on a cold storage facility in Lynden, Washington, in March 2014. The facility opened in September 2015. . A Glimpse at US Cold Storage Real Estate COLD STORAGE BUILDINGS, ESPECIALLY those built since the turn of the cen- tury, typically sell for about twice the price per square foot than standard ware- houses and distribution centers, according to industrial real estate firm Cushman & Wakefield. "Since 2010, in the top 10 major markets for cold storage warehousing capac- ity, buildings constructed after 2000 (in the 50,000-plus-square-foot category) aver- aged $59.29 per square foot," Cushman & Wakefield said in a recent report. "Recent integration of emerging technologies in newer buildings has pushed values even higher. In those same top 10 markets, the average purchase price for buildings con- structed since 2010 is $150.95 per square foot." Public refrigerated warehouses make up most of the inventory, it said. "There are currently 1,497 cold storage buildings in the U.S. totaling 4.06 billion gross cubic feet of space. These facilities fall under two general categories: public storage, account- ing for 76 percent of the total U.S. cold storage inventory, and private/semiprivate, accounting for the remained 24 percent," according to the real estate firm. In addition, "Approximately 46 percent of North America's inventory is owned by five companies," it said. "Americold Logistics is the dominant owner with 25.7 million cubic meters of space — 20 percent of North America's entire cold storage inven- tory. Because cold storage buildings are specialized and are typically constructed for owner-users, they are seldom traded. Also, the inefficiencies of older product im- pact marketability and contribute to the low trade volume. Users such as Preferred Freezer, Atlas Cold Storage and ConAgra have opted to build new state-of-the-art facilities rather than acquire older ones or convert an existing dry warehouse to cold storage specifications." CC — LARA L. SOWINSKI

Articles in this issue

Links on this page

Archives of this issue

view archives of Digital Edition - Cool Cargoes October 2015