As we are now in the third year of the global pandemic, many industries from restaurants to retail shops are struggling with labor and product shortages. Cold storage is no different. Even before the pandemic, several forecasts predicted both labor and driver issues as well as storage space shortages. In this multipart series, we will discuss the impacts of the pandemic from a 3PL cold storage company’s vantage point.
Available cold storage space had already been a threat pre-pandemic. Several industry leaders and data scientists had predicted a shortage of cold storage space that was set to reach critical mass in late 2020 to 2022 by several models. Cold Storage was (and remains) a hot industry for venture capitalists. The number of greenfield projects, while increasing, was still short of the frozen segment’s growth patterns. Predictions abounded of increased rates due to a shortage of space. The pandemic, however, reduced the production capacity for several food companies. Across the board, demand for cold food outpaced production and many food companies saw “on-hand” inventories reduce to keep up with demand. In a good way, this affected available cold storage space. More companies were able to find cold storage within their service lanes in 2020 and 2021. However, there is a common goal for manufacturers to get their inventory level and fill rates back to pre-covid levels. Therefore, the market is now beginning to forecast as tight again.
The ongoing shortage of available drivers coupled with the lack of warehousing /manufacturing labor has created a real challenge for those who miss their appointments and/or have shifted loads. Prior to the pandemic, there were more choices to “rework a load” and find “temporary storage” near the destination for a second delivery attempt. More facilities are working with limited labor and have diminished support for these “short-term storage” needs.
Some facilities have reduced hours to consolidate labor. Finding 3rd shift labor has been very challenging since the pandemic. It cannot be overstated that the reduced labor resources negatively impact the cost of finding temporary solutions for both missed appointments and shifted loads. Carriers must travel greater distances to find unscheduled services and are paying higher prices for unscheduled labor, often at overtime rates.