Cold storage and temperature-controlled distribution have significantly advanced the food supply chain since being introduced just over 100 years ago. Before then, food preservation was relatively limited to salting and drying; otherwise, you consumed food after it was harvested and before it went bad. Citrus fruits in winter? Not likely!
What started with blocks of ice being cut from lakes in northern states during winter months and preserved using hay, has evolved into the advanced cooling and transportation techniques we all now take for granted.
The demand for cold storage and distribution can arguably be linked to the rise of the middle class, and the demand for fresher foods. And as demand increases, so does temperature-controlled storage and distribution. Capacity is readily being added to major U.S. and emerging global markets on a near constant basis.
According to the U.S. Department of Agriculture’s National Agricultural Statistics, there was 4.17 billion cubic feet of gross refrigerated storage capacity in the U.S. on Oct. 1, 2015. This represents a 3 percent increase in refrigerated warehouse capacity in the U.S. since 2013.
Add to that the services that cold storage and distribution companies are incorporating to attract more business, and it soon becomes obvious that the industry is ratcheting-up its viability as a differentiator for its customers.
In recent years, there’s been a growing interest in the humane and wholesome raising of animals, growing of fruits, vegetables and the desire to reduce superfluous activities between the farm and the fork. This consumer demand has led to an increase in the number of companies adhering to more socially acceptable standards.
You may have noticed the number of aisles in your local supermarket being dedicated to fruits, vegetables, fish and meat. Such increases are the direct result of this increase in consumer demand.
Once these products hit the markets, the sheer volumes of companies vying for retail space on shelves are incredible. There’s also the need to appeal to consumers by pricing products appropriately. So, those wholesome food producers are always looking for efficient and effective processes to balance costs for the production and sale of their product versus the prices consumers receive.
In addition to the farm-to-fork movement, consumers are looking for convenience. Individual packaging, and fresh, nutritious ingredients, available quickly, and even delivered during a predetermined window: Welcome to e-commerce.
In today’s society, anything we want or need is just a click away, including food! From ordering groceries online to ready-prepared meals, and fast-food delivery, consumer convenience is at the helm of such growing market trends, saving time in what some believe is a better use of their time. In fact, according to the Food Marketing Institute and Nielsen, grocery is the next big retail sector to be affected by e-commerce. Their recent study suggests by 2025, 20 percent of all grocery spending could be online. That’s $100 billion in annual online consumer sales.
There is a lot of opportunity for temperature-controlled service providers to appeal to food producers and food retailers with additional value-added services to cater toward the new norm of consumer demand. And temperature-controlled service providers are stepping-up! Tailored solutions can enable food producers to continue to produce goods in larger, economic volumes, and then leave repacking, relabeling, kitting and even order fulfillment to the service provider.
Let’s take a look at a few of these services:
The process of receiving bulk product, either in totes or pallets, and breaking it down into smaller units, then packaging for private label or cobranding producers or retailers.
For instance, a chicken processor could send raw materials to the service provider. The product can then be boxed, blast frozen, repacked and labelled for multiple customers automatically.
The combining of complementary items to produce a finished product per the customers’ specifications. Think lunch packs or chicken and rice meal packs.
Just like the repack operation, the products are received in bulk and then repacked in combination with those complementary items, labelled accordingly, and made ready for the retailer or other customer.
The end result of kitting can also be point-of-purchase displays for cooler or freezer sections of your local market.
Frozen product can be stored for an almost indefinite amount of time, so products can again be produced in bulk, blast-frozen and then stored. As the orders come in, volumes of product can be tempered and a predetermined “use-by” date stamped onto the packaging.
This drip feeding ensures produce is produced and shipped most cost-effectively, perhaps even internationally, but that volumes are always on hand to cover demand.
This process often involves all of the services we’ve discussed here to offer consumers the greatest selection of options. The majority of grocery retailers have added e-commerce as an option for the convenience of their customer base.
The process of order fulfillment for products travelling through the temperature-controlled supply chain is complicated, labor intensive, requires additional IT resources and is severely time-restricted. Additional packaging and dry ice is typically required, adding cost. The secret here is to find a way to fulfill orders on a macro scale. Step-in your friendly temperature-controlled services provider.
Your provider is already repacking product, kitting meals and making items available for delivery. The chances are that they’re already supplying your dark stores or fulfillment centers. The chances are they can also strategize with you to customize a solution, too.
It’s evident that to thrive in the food and beverage industry, you need to be nimble to meet increased consumer demands of this growing market. As temperature-controlled service providers continue to evolve along with customers’ tastes and service demands, they’re working in macro-level economics to pass the savings on to their customers, another benefit in selecting a qualified 3PL to handle your supply-chain needs. It’s well worth engaging with your service provider to re-evaluate your supply chain strategy because when it’s properly designed and executed, the service offerings can be a win/win for all in the food storage and distribution industry.
Ben Medearis is director, Business Development, Southeast Region for Americold Logistics, LLC.