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Special Feature: Keeping it cold
Accuracy, logistics, security are all hallmarks of cold-storage warehouses
By Lauren Kramer
April 01, 2010
The cold-storage business generates annual revenues of $4 billion and has grown by leaps and bounds over the past few years. According to the U.S. Department of Agriculture's Capacity of Refrigerated Warehouses Report, which surveys both public and private facilities, there were 1,464 cold storage facilities in the United States in 1998, and that number has grown to 1,578 today.
"There's been an increase in cold-storage capacity of over 1 billion cubic feet in the last decade," says Tori Miller, director of marketing and communications for the Global Cold Chain Alliance. Factors fueling that growth include increased international trade, the growing popularity of frozen commodities and retail expansion, she says.
Preferred Freezer Services can testify to that growth. In 2007 the Newark, N.J.-based company doubled in size, growing from 12 to 24 facilities. "We have 180 million cubic feet now, 70 percent of it filled with seafood," says Danny DiDonato, VP of sales.
Though Preferred Freezer is moving into other frozen-food categories, including bread, appetizers and frozen meals, its sheer number of seafood clients facilitates buying and trading of product between clients within its facilities. "We've built a frozen-seafood network that makes it easier for a new company to utilize our facilities to conduct business," DiDonato says.
At 200 million cubic feet of storage space and 35 facilities, United States Cold Storage (USCS), headquartered in Voorhees, N.J., has also seen significant growth.
"We've grown 30 percent in the last decade," says Mike Radnoti, VP of national sales. "The marketplace has been undersaturated in the last 25 years, and the industry has evolved to the point where you now have to be a logistics expert. Our customers are asking us for advice on how to streamline their transportation costs and improve their flexibility. It's no longer just a warehousing environment."
But since warehousing is the primary business of cold storage, it's critical that it be done with accuracy when it comes to inventory and tracking. Radnoti is proud of USCS's 99.88 percent inventory accuracy. This is attributable to the Warehouse Management System, RFID and barcode-managing systems used at the company, as well as the cycle-count-back system.
"When we take a case off a pallet, we don't just count the number of cases we're taking out, but also the number of cases left on it," Radnoti says. "In essence, pallets are cycle-counted multiple times during any given day. While it seems redundant, customers appreciate the results."
USCS stores seafood for suppliers like Gorton's and Van De Kamps, and Walmart and Sysco are among its retail customers.
"Other seafood customers are aware of that, which drives them to use our cold storage as well," Radnoti says.
Depending on the species, seafood can spend anywhere from three days to three months in storage. The varied time in storage can be a result of products that tend to move a little more slowly, or because at times buyers will purchase seafood in bulk in an attempt to time the market needs, he says.
Shrimp is the largest
seafood commodity at Preferred Freezer, and product is heavily guarded by a 60-camera network. But what sets the company apart from its competition is the facility design, DiDonato says.
"We design and develop our own buildings, which have a smaller carbon footprint and, at 60 feet, are taller than most other cold-storage facilities being built today," he notes.
Backup generators run the buildings in the event of a power failure, and satellite communications take over if the phones go down.
To help streamline logistics, the company offers flexible pickup and delivery times for truckers, closely monitoring turn times, order accuracy and special handling requirements.
Logistics are also critical for USCS's operation. "We really approach our transportation partners as an extension of our company, because they're a huge part of what we do," Radnoti says.
USCS facilities vary in size from 15 acres up to 120 acres, though "we don't utilize all 120 acres," he says. "Each facility is different, depending on our clients' needs, and configuring the property is just as important as the acreage itself."
DiDonato notes that Preferred Freezer's facilities comprise 5 to 6 acres of storage space but span 10 acres in total, to give truckers ample room to move. "Certain locations are open round the clock, but typically we're open 18 hours a day, six days a week" he adds.
"Longer hours of operation are another reason for our success," he continues. "If you have small windows [of time] for receiving or shipping goods, you have truckers sitting around, and your clients are losing money. Having longer hours gives them enough time to unload product, load it and get to their
Logistics are crucial, but accuracy is the surest way to ensure growth in the cold-storage warehousing industry, adds DiDonato. "If you're not accurate in your inventory it's not going to ship out accurately."
A major concern for the company is duties, which have the potential to restrict imports.
"If duties are high enough, customers importing seafood into the United States will stop doing so," DiDonato says. "The United States has eliminated duties on some species, but duties can pop up any day, be it for chicken, beef or seafood. The import numbers
for certain countries have decreased, among them Ecuador, Brazil, China and Thailand, and that's certainly affected our business."
Contributing Editor Lauren Kramer lives in British Columbia