The logistics industry is a fast-paced, complex system involving many stakeholders and moving parts. In an environment that heavily relies on proactive measures, including enhanced communication and data-driven solutions, unfortunately, inefficiencies can still arise. When they do, it can interfere with day-to-day procedures, impacting costs and compromising the integrity of goods and services.
In the cold storage industry specifically, having a strategic plan in place ensures products are maintained at optimal temperatures throughout transit and storage. After all, many inefficiencies in the cold chain stem from issues related to logistics, inventory management and communication.
This guide explores common challenges, best practices and forward-thinking tactics to mitigate inefficiencies in the cold storage segment of the cold chain.
As a cold storage provider, we understand, and can identify, what main issues cause kinks in the system. They are:
When a business is faced with one or more of these mistakes, managing their cold storage facility during the aftermath can be a challenge. However, your third-party cold storage provider can help steer you back in the right direction by providing:
It would be amiss if we didn’t mention some of the cold storage challenges we see occurring in the field and give suggestions on how to mitigate them.
Maintaining optimal temperature conditions is one of the biggest challenges in cold storage. Any fluctuation can lead to product spoilage, increased energy costs and non-compliance with regulatory requirements. Here’s how cold storage facilities can properly manage temperature control.
Different industries and products require unique cold storage strategies to maintain quality and safety. For instance, ice cream and fresh proteins demand precise temperature control, and pasteurized crab and refrigerated produce require individualized storage environments to prevent spoilage or contamination. When products arrive at a warmer temperature than the storage area it is known as “heat draw”. To mitigate this issue, you must draw the warmer temperature air out of the freight which incurs a significant cost.
Proper cold storage management means meeting regulatory compliance. Addressing issues such as non-compliant freight, damaged goods and incorrect labeling helps cold storage facilities avoid fines and maintain operational efficiency. Taking proactive measures, like thorough documentation, regular stakeholder meetings and standardized procedures, can reduce these challenges and associated costs.
Optimizing your cold storage unit requires adherence to Standard Operating Procedures (SOPs) to ensure efficiency and consistency.
Efficient inventory management minimizes waste and improves overall productivity. By implementing the following best practices, cold storage facilities can reduce errors and improve workflow.
Cold storage facilities consume a significant amount of energy. Implementing different strategies can reduce costs and environmental impact while maintaining optimal storage conditions. Key SOPs, which must be diligently followed and regularly reviewed, for energy management include:
Additionally, facilities should monitor innovations in refrigeration and building technologies to continuously reduce energy consumption, and ensure staff adherence to best practices.
Speaking of innovations in refrigeration, we’ve devised some key trends to watch for in the coming years.
If you want to stay ahead in the industry, we suggest taking some proactive measures to optimize your cold storage operations such as:
The role of cold storage is set to evolve significantly over the next 5–10 years. As food safety regulations become stricter and consumer demand for preservative-free products rises, cold storage facilities will play an even greater role in maintaining product integrity. Increased visibility through real-time tracking and data analytics will allow businesses to optimize their supply chains, while advancements in refrigeration technology will enhance both efficiency and sustainability. To stay ahead, businesses need a third-party cold storage provider they can count on. At Interstate Cold Storage, our expertise ensures your products remain safe, fresh and ready for market. Get in touch with us today to learn how we can help you navigate the future of cold storage with confidence.
Whether you’re a pharmaceutical or biotech company with highly regulated cold storage requirements for medications and vaccines, or you’re managing fresh harvests, processed foods or perishable goods which need refrigeration during distribution, you need a cold storage partner who understands the unique needs of your business.
After all, your main goal is to ensure the safety, efficiency and traceability of your goods. When partnering with a third-party cold storage provider, making certain all your T’s are crossed and I’s are dotted is imperative.
That's why we've compiled a list of five best practices you can implement to streamline operations and avoid potential issues.
Read on.
1. Selecting a cold storage facility provider
Choosing a third-party cold storage provider begins with evaluating the facility's location and design. Consider these factors:
Making the right choice ensures your goods are stored in an optimal environment and reach their destination efficiently.
2. Prioritizing accurate data and rate-setting
Accurate data is key in cold storage coordination. A third-party cold storage partnership works best when the provider understands the services your business requires and its potential challenges. Inaccurate data creates unforeseen rate adjustments, so be sure to provide your cold storage partner with a detailed program profile.
In other words, good data translates into smoother operations and transparent costs.
3. Defining release and recall methods
Before setting up an account with a cold storage provider, it is important to establish clear release and recall procedures to prevent issues like unnecessary lot recalls, which can drive up costs and delay timelines. Third-party cold storage only notes the information of received goods that are required based on your program profile. If the data isn’t recorded upfront, then your cold storage partner will be unaware of the data you are releasing or using to put on hold. Make sure to articulate how a product is released (i.e., pallet ID, lot number, or item number) and develop a robust process to address recalls efficiently.
Clear communication prevents confusion and additional expenses during operations.
4. Standardizing pallet labeling and inventory traceability
RF scannable pallet labels are a powerful tool when working with third-party cold storage companies. RF scannable labels ideally include item numbers, quantity on the pallet and production date in the scannable data. This eliminates most human errors in copying and transposing that data into the warehouse WMS. It also saves time on the receiving dock, which reflects a more efficient handling charge rate.
When RF labels are unavailable, pallet placards are the next best option and can provide essential data in a format that's easy to locate, saving time and improving accuracy.
5. Reconciling discrepancies and optimizing processes
Stay proactive with inbound and outbound shipments to maintain inventory accuracy:
EDI is a powerful, industry-wide tool designed for electronic data transfer between manufacturers and their customers with a cold storage provider acting as an intermediary to receive and transmit data for inbound shipments, inventory adjustments and outbound orders. If a manufacturer is not EDI-ready, (several companies can help evaluate these capabilities) the next best option is to implement a Standard Operating Procedure (SOP) for daily reconciliation of inbound and outbound loads to identify any discrepancies.
The difference lies in the details
Managing cold storage for multiple clients presents unique challenges for third-party facilities. Unlike manufacturers who store only their own products, third-party providers must handle a wide range of labels, data formats and inventory from various manufacturers. To address this complexity, pallet placards and RF-scannable labels have become essential. Moreover, third-party cold storage providers often assign unique pallet IDs to each load, ensuring accurate tracking and preventing data mix-ups. By implementing these practices, third-party facilities can streamline operations, reduce errors and ensure the needs of each client are met.
Trust family-owned Interstate Cold Storage to take great pride in providing third-party cold storage solutions for your business. Contact us today to get started!
The demand for cold storage services has evolved in recent years, and like anything else, it has made an impact on costs. Population growth has been the traditional driver of the rise in demand for cold storage space, but in today’s environment, the demand for cleaner labels, particularly products with less preservatives, has resulted in a larger portion of the American food supply requiring colder temperatures. This conversion to clean labels is an ongoing effort and continues to exhibit increasing traction.
While supply and demand influences storage rates, cold storage companies have been basing prices on skyrocketing storage costs. Why? Expenses related to cold storage have increased at a rate faster than the general Consumer Price Index (CPI).
Read on as we break down the complexities.
What industries or seasonal patterns are driving higher demand?
As mentioned, healthier products tend to require colder temperatures. For example, seafood, proteins, produce and baked goods are all key drivers of frozen storage. As far as seasonality, July through early November traditionally sees the highest demand for cold storage due to the impending holiday season. Interestingly, the rising popularity of ethnic frozen meals has also increased demand for cold storage warehouses.
How energy costs and labor shortages play a significant role
Energy costs and labor shortages have had a profound impact on cold storage inflation. Looking at the numbers, 75% of the cold storage work force earn between $42,000 and $60,000 annually, a wage range that has seen some of the steepest increases across the labor market. Labor expenses make up roughly 30-35% of total warehouse costs and have risen by 23-27% over the past four years.
Additionally, commercial electricity costs have steadily climbed since 2021, leading to a double-digit increase in expenses. As large-scale energy consumers, cold storage facilities purchase electricity in bulk, with energy expenses representing 8-11% of their total operational costs.
The role of supply chain disruptions
Like in many industries, supply chain disruption has also affected the cold storage business. Know how microchips disrupted the automotive industry? They also affected the material handling industry with similar increases in cost of goods sold. Carrier performance (ability of drivers to arrive at their warehouse appointment on time) was impacted negatively by supply chain disruptions, adding costs to warehouses.
Parts/supplies that are integral to warehouse performance and building maintenance were tough to find and diminished warehouse efficiencies.
Additional barriers and the need for technology upgrades
What barriers and high costs are driving up cold storage rates as companies expand capacity? Newer facilities now face costs that are 45-60% higher than historical spending, with significant increases in expenses for material handling equipment, steel racking and cement foundations. These higher construction and equipment costs translate into higher operational expenses, which impact rates charged to customers.
With respect to technological upgrades, the cold storage industry has been compelled to move toward ammonia as a coolant versus traditional coolants, resulting in significant capital investment. While technology investments may not cost more upfront, the increasing complexity of these upgrades now demands significantly more labor to ensure smooth implementation compared to previous years.
Primary factors driving cold storage inflation beyond the national CPI inflation rate
To summarize the key factors driving up prices in the cold storage industry, we’ve compiled a breakdown of the primary contributors:
Will cold storage rates continue to outpace national CPI inflation?
In a word, yes. CPI reflects the costs typically associated with household spending, whereas cold storage inflation is driven by industrial expenses, which are rising at a faster rate. Key costs for cold storage, such as facility rent, labor, commercial electricity, insurance, taxes, building supplies, maintenance and material handling, continue to increase faster than household-related expenses.
What steps are being taken to manage rates?
Strategies being considered to mitigate inflationary pressures on cold storage rates include the implantation of solar power and automation, although the outcome of these strategies are still unknown in terms of return of investment (ROI). Both strategies will be evaluated as cold storage facilities reach the later stages of their lifecycle. Maintenance costs for aging systems will play a critical role in assessing the overall ROI.
In other words, for the time being, the trend of cold storage costs outpacing CPI is likely to continue, keeping businesses and consumers’ eyes on the charts. No matter what the future holds, rest assured Interstate Cold Storage will be there every step of the way. Our first priority is serving our customers, and that means maximizing efficiency to keep prices in check, so your pocketbook is protected from unnecessary costs. Need more information on this subject? Contact Us!
Managing perishables in a cold supply chain makes operations much more complicated than in a dry storage supply chain. There is a lot of movement that needs to be coordinated from your facility to refrigerated trucks to your outside cold storage facility, and back to trucks—sometimes multiple times! — before reaching your end user. Each step along the way creates a threat of increased logistics costs and allows more chances for something to go wrong. And these mistakes are often very costly.
At Interstate Cold Storage, we’re committed to helping our customers reduce costs, manage inventory effectively, and optimize their supply chain. Here, we’ll give you an overview of common cold supply chain inefficiencies where you may be able to streamline your supply chain operations to improve your bottom line.
The pandemic had some surprising effects on our economy. One was how it sometimes increased efficiency in the cold supply chain.
During Covid, customers weren’t able to get many products and materials. Availability controlled the supply chain, and customers were generally satisfied with taking whatever they could get. Because of this, suppliers were confident in demand and produced as much as possible. They were also able to ship more efficiently, moving products in full truckloads at a time.
Full Truckload (FTL) shipping tends to be more cost-effective than Less Than Truckload (LTL) shipping because the entire truck is dedicated to one destination, reducing transit times, handling, and the risk of damage. When the volume justifies it, FTL is typically the preferred choice for shipping, boosting supply chain optimization.
Efficient bulk cold storage facilities, such as Interstate Cold Storage, rack systems and buildings designed to maximize the speed of FTL shipping, and can rack the same number of pallets in 20 minutes that would take an hour in another facility.
Since the end of the pandemic, however, the rise in inflation has been driving down unit sales, returning to the buyer-driven model that was common before Covid. With reduced demand, many manufacturers have drifted back to “just-in-time” models with smaller orders, LTL shipping, more case pick, and lower inventory.
Shipping partial loads has been up in 2024. Although many believe LTL shipping cost is spiking now, its volumes dropped by about 4% during the pandemic. LTL shipments have seen an increase of about 8% since 2023, which is a normal rise after allowing for market adjustments following pandemic-related disruptions.
Shipping partial loads is an important option for businesses that don't have the volume to fill an entire truck. While it is more costly than FTL, it’s often the best solution for smaller or more frequent shipments.
In addition to the obvious costs of LTL shipping, there are other factors that add to the expense, including:
A better solution would be to partner with a cold storage facility, such as Interstate Cold Storage, that uses a real-time online EDI inventory management system with inbound/outbound freight tracking.
Cross docking is a strategy of directly transferring products from an inbound shipment, such as a truck, to outbound transportation with minimal or no storage in between.
Although it was a more effective strategy pre-Covid, cross docking is labor-intensive and usually too expensive for the current cold supply chain due to the worker shortage. It is also risky, with no margin for error. 15-20% of shipments are delayed enroute and miss their window for catching the outbound transportation. Few facilities offer cross docking since Covid, preferring to work with more traditional turn rate customers which are less hectic and problem prone on the shipping and receiving docks.
Interstate Cold Storage offers flexible cold storage options that keep your products safe while reducing the risk of delays common in cross docking.
FTL shipping and cross docking have been good strategies in the past, but the current market requires a more finessed approach. Identifying and eliminating areas in your supply chain with unnecessary costs — even if they are small in themselves — add up to big savings overall.
The first step in supply chain optimization is to take a good, hard look at your current activities and find areas that could use improvement. If you partner with a customer-focused cold storage facility, such as Interstate Cold Storage, it should be able to provide you with much of the data you need to get started.
Look at your:
You should know how your inventory assets are allocated in addition to your inventory levels. Further, you should ensure your products travel the shortest distance possible, and your supply chain team should periodically evaluate your routing.
Your cold storage facility should also be able to provide essential data to assist your supply chain optimization efforts. This warehouse assessment can help you to lower your cost per order, reduce freight costs, and increase your storage capacity in the facility.
In addition to supply chain cost reduction, you can also implement other strategies to reduce spending:
Savvy business leaders know supply chain optimizationis key to reducing costs and boosting profits, but it can have even farther-reaching effects. Simplifying your operations with Interstate Cold Storage helps protect your perishable products and make your supply chain more resilient. And by reducing inefficiencies, manufacturers can better handle disruptions, delays, or unforeseen challenges, lowering costs and fines from unmet deadlines.
Established in 1973, ICS is a leader in cold storage facilities, shipping and distribution, with warehouses located across the Midwest. Headquartered in Fort Wayne, Indiana, our family-owned company has five locations and close to 22 million cubic feet of refrigerated space. The International Association of Refrigerated Warehouses honored ICS as one of the top 20 North American refrigerated warehousing companies. Our facility network currently supports temperature ranges from -15°F to 35°F with multi-room and multi-temp offerings. Interstate Cold Storage is a subsidiary of the Tippmann Affiliated Group and has two facilities in Fort Wayne, IN; one in Napoleon, OH; and two in Columbus, OH.
Want to learn how Interstate Cold Storage can help supply chain cost reduction for your business? Contact Us.
If you deal in food, pharmaceuticals, chemicals, or other perishables with specific temperature or humidity requirements, you need a facility where you can store your goods at optimal temperatures and humidity levels to preserve freshness between production and retail.
But because there are different types of cold storage warehouses, choosing the closest facility to your operation or the one with the lowest rates without looking at specific crucial factors can have a tremendous impact on your operating efficiency, causing increased turn times and reducing your profit.
Understanding the differences between bulk cold storage and distribution cold storage — and asking the right questions at the facilities you’re considering — can help streamline your business’ operations and help you pave the way to higher profits.
(more…)Frozen foods are an important staple in modern diets due to their convenience, long shelf life, and nutritional value. Quick freezing solutions preserve nutrients and quality, reducing waste by allowing foods to be harvested in-season and consumed at peak freshness, year-round. Cold storage facilities maintain the temperature of these frozen foods, playing a critical role in maintaining the quality and safety of these foods from harvest to the dining table.
(more…)
