Cold-Storage Solutions Evolve to Meet Retail Needs
The cold chain is an evolving presence in the grocery business, one that has been driven by increasing demand and technological innovation to address conditions in the marketplace today across a range of concerns, including food safety, sustainability and labor.
Woodstock, Ga.-based Primus Builders has a broad view of cold-chain development, as it is, at the core, a refrigerated facility construction company, although it has developed additional related operations over the years. According to Erik Gunderson, founding partner and COO, the course of the business is following broader food-sector trends that have affected supply from field to store shelf. One of them is labor.
[Read more: "The Future of Cold Storage"]
“There is certainly a demand on human resources, so we have been seeing a tremendous demand for more automation, and it hasn’t slowed down,” affirms Gunderson. “It’s only accelerated. So we’re continuing to see more automated facilities that are justifying their capital costs. We’ve seen a higher level of interest and higher level of investment, and that’s across the board: That’s with foodservice, that’s with grocery, that’s with … public refrigerated warehouses and third-party logistics, all deploying automation to streamline and mitigate labor shortages.”
He adds that interest in sustainability is rising again as the COVID-19 pandemic winds down, and even if not everyone wants a LEED-certified building, consumer concern and the cost of energy are twin influences pushing companies to enhance efficiencies.
“We’re seeing an investment in energy efficiency in 2022 more than what we saw a couple of years prior,” notes Gunderson.
High-Quality Facilities and Robot Workers
Another key trend having a substantive effect on investment in the cold-storage sector is the advent of developers that are building more Class A refrigerated facilities, but speculatively.
Gunderson observes that demand for cold storage is such that those facilities are still filling up with customers. Of course, all things are never equal, and some companies, particularly those with prior experience in cold storage, seem to be in a better position to thrive.
“Class A cold-spec buildings are in high demand,” he says. “Those that we’re seeing that are most successful are bringing in cold-storage industry experts. Those that are doing it properly and building a high-quality building are getting their buildings bought out or leased out.”
One reason that food retailing and foodservice operations are working with developers of Class A buildings is energy efficiency. “In these new-generation facilities, the energy efficiency is so much greater than in a lot of the older facilities,” says Gunderson. “There are tremendous energy gains that are being experienced by the people who move into the new boxes.”
The demand is coming across the board — everyone from small foodservice operators to food manufacturers to third-party logistics operators. Even if major supermarket operators aren’t yet using the new spec facilities, Gunderson observes, they have contemplated doing so.
“It’s only a matter of time” before they dive in, he adds.
The evolution of building for the cold chain has been affected by the increased understanding of food safety and appropriate product handling. The companies building new facilities are using technology both as they work with builders in raising facilities and in managing them afterwards. The ability to connect with technology via cell phone is an element that may not seem exactly like a breakthrough, but it has substantive benefits.
“There is a higher level of owner involvement,” explains Gunderson. “There is technology in terms of surveillance with just our cell phones that provides 24/7 access. There are a lot of project management and cost management platforms that are shared between us and our clients. That didn’t happen 10 years ago.”
In operation, systems are so sophisticated, he says, that “there is now the ability to run diagnostics pre-event, pre-problem,” and thereby pre-empt trouble.
At the same time, automation is playing a larger role in cold-storage facility development, in part to address labor issues in a sector where chilly working conditions can limit the pool of potential employees.
“The use of machines in construction and in buildings will continue,” asserts Gunderson. “Automation in the cold supply chain will continue to develop. It’s really hard to work in environments like this. There are regulations that limit time of exposure. That goes away with robots.”
Primus has developed an operation within the business to help clients install the right automation.
“We started our automations or solutions group going on half a decade now, and it took some years to get traction with it, but what we’re able to provide is a third-party view with a construction background on how to get things done and find best-of-class for our client,” says Gunderson. “We’re not trying to sell a particular piece of equipment; we’re trying to find best-of-class [solutions] for our client.”
Turn to Natural
Refrigerants used in cold-chain systems are under scrutiny. The present generation of synthetic refrigerants, which reduced the use of chlorofluorocarbons, has a problem: The replacement of one with the other reversed the decline in Earth’s ozone layer, but the synthetic refrigerants commonly used today, hydrofluorocarbons (HFCs), are potent greenhouse gases. As such, effecterra, a consultancy that works with companies using refrigeration to effectively reduce their carbon footprint and environmental impact, promotes both the use of natural refrigerants and the development and deployment of equipment that uses them.
Although progress has been made by increasing the energy efficiency of systems that continue to use synthetic refrigerants, natural refrigerants have a much lower carbon footprint. This is true despite the fact that one common natural refrigerant is carbon dioxide, according to Chris Vallis founding partner and chief strategy officer at effecterra, which has offices in Reno, Nev., and London.
In fact, the three commonly used natural refrigerants are carbon dioxide, propane and ammonia, and they actually were in use as far back as the 19th century. Chlorofluorocarbons emerged as alternative gases because each of the natural refrigerants had a drawback, Vallis points out. Of the three major natural refrigerants, carbon dioxide requires high-pressure processing in operation, propane is explosive and ammonia is toxic.
“The reason those synthetic chemicals exist is because they were designed to remove risks,” notes Vallis. “Today, with other technology — modern quality systems, standards and codes of practice — we’ve got around to making these technologies safer. We can measure leaks. We can have sensors that can tell you when there’s a leak instantly.”
So, natural refrigerants, once a cause for concern, are much safer today in the quantities used and the systems that employ them, and their prospects are better than those of synthetics, because international agreements, government regulations and, especially, companies at the end of the cold chain, including grocers, are starting to demand them as an alternative to HFCs, which have a much larger carbon footprint.
“Natural refrigerants are future-proof,” Vallis says. “They’re regulation-proof. They are more complicated and potentially more expensive and maybe less energy efficient. But to me, that’s the right place to go. The problem is, there’s no specific champion of those technologies, because nobody has [intellectual property] on a chemical compound that is natural.”
Meeting Needs
According to Charles Betts, national sales manager at Interstate Cold Storage, in Fort Wayne, Ind., a lack of sufficient cold storage in the market at the end of the third quarter and the beginning of the fourth made things tough for vulnerable companies.
“Smaller customers are feeling the squeeze of labor issues, as cold storages are performing less case picking, less repacking, and rather focusing on streamlining the business to operate full with efficient door turn times,” says Betts.
Automation is expanding to meet the labor issue, both in terms of finding and developing workers, he notes, but even as cold-chain operations deal with that, they have to cope with rising electrical rates. Interstate Cold Storage is investing to improve efficiencies, upgrading the company’s ammonia system, evaporators and exterior siding to create the best possible seal at consistent temperatures.
Monitoring continues to be a critical function that Interstate Cold Storage has kept abreast of, notes Betts. “Both in-house and third-party monitoring were robust prior to the pandemic, including hi-def cameras, temp monitoring and engine room compression,” he observes.
At the same time, the marketplace, as it develops, has new needs it wants help addressing. “There has been a steady uptick in [business-to-consumer] fulfillment, but there are few facilities designed to efficiently pack and ship,” says Betts.
Meanwhile, Shannon Welch, managing partner at Jurupa Valley, Calif.-based West Coast Cold Storage, notes that the company assumes a specific place in the market.
“Our perspective is a little unique,” explains Welch. “There are several major cold-storage corporations that own most of the cold storage in the U.S. But like all major companies to work with them, you have to fit into their business model. We see cold chain evolving to help the mid-market companies that need higher levels of customer service, and maybe won’t meet the minimum financial requirements of those bigger corporations: the companies that are too big to do everything in house, but not so large that they have the financial and logistic resources required to work with the major cold-chain companies.”
The inland California location of West Coast Cold Storage means that it has a particular acquaintance with the produce industry, and Welch says that the influence of trends in that sector is affecting the cold chain and operators within it.
“The desire from the market to not move produce so far from where it has grown requires the ability to store that produce close to where it was grown,” she observes. “This requires more specialty cold-storage solutions, but smaller, for those resources.”
Power is of particular concern to West Coast Cold Storage. “This is always a challenge, especially in California with a struggling power grid,” says Welch. “One of the big investments we made was in thicker insulation panels.”
Less Energy Consumption
On the consumer-facing side, Cooler Management works with clients to install and oversee storage equipment, including branded cold fixtures. Cold-storage functionality in store settings requires consideration of energy efficiency, sustainability and aesthetics, according to Mark Inkrott, managing partner at Columbus, Ohio-based Cooler Management.
“The cold chain is certainly evolving to encompass more innovative equipment designs and technology, with an emphasis on reducing energy consumption,” says Inkrott. “Consumers drive demand, and they want sustainably produced products, which means following food and beverages throughout the supply chain is part of the narrative. Equipment today is more efficient than ever, and that is important to consumers. We are seeing cold-storage solutions that not only look beautiful aesthetically, but they also efficiently maintain temperatures, and engage shoppers at the point of sale with digital and branded creative. Additionally, retail real estate is more of a premium than ever; thus, we have seen an evolution with smaller footprints. Equipment that can easily be moved around a store has become popular with many new brands we are working with.”
Cooler Management has to face issues that correspond with those in the larger marketplace, including supply chain disruptions and finding qualified labor, especially from tradespeople such as plumbers and electricians.
“The biggest challenge we have seen in the past few years has been a lack of skilled labor in the field, coupled with long lead times on equipment,” notes Inkrott. “We are fortunate to work with great vendors; however, many times when a specialty skill is needed, we are scouring the entire country for installers, electricians, plumbers and other trades for things like walk-in coolers. To address these challenges, retailers and brands are looking to Cooler Management to manage these processes for them. We’ve worked hard over the years to streamline these processes and develop the necessary relationships for our customers, while putting an operations team in place to complete these tasks on our customers’ behalf.”
At the same time, he says, the market has prompted equipment manufacturers to innovate with clean energy and sustainable materials.
“As the ag and food industries implement carbon-reducing initiatives, the rest of the supply chain will need to evolve and develop equipment standards that match those initiatives,” observes Inkrott. “We are not only working with vendors who are creating technological advances in store equipment, but the industry is continuing to advance our knowledge centered around creating environments that ensure equipment runs with the lowest possible energy footprint.”
