Intro
The lasting effects of the COVID-19 pandemic have created a list of challenges and opportunities for the cold storage industry. As consumer demand for frozen food has risen, the need for cold storage spaces has skyrocketed. This has placed immense pressure on facilities to buckle down and figure out strategies to keep their businesses competitive and in the market.
However, despite the challenges, this has generated a handful of opportunities for investors and business owners. New technologies are going to play an important role in the industry, which means businesses are going to want to invest in their facilities.
The future of the cold storage industry is uncertain, but if businesses continue to upgrade and follow the industry's trends, then there should be no problem keeping up.
Current Challenges and Opportunities
Challenges
The cold storage industry is facing a number of challenges, including rising inflation, labor shortages, and the rising cost of materials. These challenges are having a negative impact on the industry, and some cold storage facilities are being forced to raise prices or cut costs.
Rising Inflation
The cost of energy, labor, and transportation is all increasing, which is forcing cold storage businesses to raise prices for their customers. This can make it difficult for them to compete with other food supply chain participants, such as grocery stores and restaurants.
Labor Shortages
The work is demanding and the wages are low, which makes it difficult to attract and retain workers. This is leading to a decrease in the quality of service, as cold storage businesses are struggling to keep up with demand.
Cost of Materials
The cost of insulation, refrigeration equipment, and warehouse racking has increased significantly in recent years, which is putting pressure on cold storage margins. Businesses are finding it more difficult to operate profitably.
Opportunities
The cold storage industry is experiencing a surge in demand due to several factors, including the growing popularity of frozen food, the expansion of e-commerce grocery shopping, and technological advancements.
Increased Demand For Cold Storage Facilities
Since the pandemic, there has been an increase in consumer demand for frozen food, driving the need for more cold storage space. Frozen food offers convenience, reduced food waste, and extended shelf life, making it an appealing choice for many consumers. This trend is expected to continue as consumers become more accustomed to the benefits of frozen food.
Growth of E-Commerce Grocery Market
The growth of e-commerce grocery shopping has also created new opportunities for the cold storage industry. Online grocery retailers rely on cold storage facilities to store and distribute their perishable products and maintain the integrity of these items during the delivery process. As e-commerce grocery shopping continues to gain popularity, the demand for cold storage space from online retailers is expected to rise.
New Technological Advancements
Cold storage facilities are increasingly adopting new technologies, such as automated racking systems, renewable energy, and data analytics software, to improve efficiency and reduce costs. This is making the industry more competitive and attractive to potential investors.
Top 2 Biggest Trends for Cold Storage Systems
Automation
The cold storage industry is undergoing a significant transformation as automation begins to become a popular trend in refrigerated warehouse systems. Automated guided vehicles (AGVs), automated storage/retrieval systems (AS/RS), and other robotic technologies are assisting operations, safety, and efficiency in facilities.
By automating repetitive and physically demanding tasks, such as moving goods in and out of storage, these technologies are freeing up human workers for higher-value activities, such as quality control and customer service.
AGVs efficiently transport pallets between different warehouse zones, while AS/RS systems retrieve and store goods from high racks.
Automated systems enable cold storage facilities to meet the demands of online retailers and other businesses that require quick order fulfillment.
As the demand for advanced cold storage technology continues to grow, expect to witness greater automation technologies introduced to the cold storage industry.
Energy Efficiency Initiatives
Enhancing energy efficiency and maintaining cold chain integrity are crucial concerns for the cold storage industry.
One effective approach to achieving both objectives is the implementation of a drive-through dock design. This design enables vehicles used for storage to reverse fully into the loading dock before opening the doors. This prevents the escape of cold air and the compression of warm air, which leads to reduced energy costs.
Cooler and freezer doors also contribute to energy efficiency. High-speed doors minimize the time doors remain open, reducing air exchange and conserving energy.
LED lighting is an excellent choice for cold storage facilities due to its efficiency and longevity. These lights reduce energy consumption up to 75%. They also last up to 75,000 hours, or around 15 years, and can operate effectively in freezing temperatures.
These are just a few ideas of strategies and technologies that facilities are using to be more mindful of energy efficiency.
What role does solar play in the industry’s future?
Cold storage facilities are one of the largest energy consumers in the industrial sector because of the continuous operation of refrigeration systems. Solar can significantly offset or even eliminate the need for grid-supplied electricity, leading to savings on energy bills.
Solar energy also aligns with the cold storage industry's commitment to sustainability.
It enables the energy independence of cold storage facilities. Reliance on the grid for electricity can leave facilities vulnerable to power outages and disruptions. Solar panels provide a reliable source of power, making sure that operations can continue uninterrupted, even during grid disruptions. This energy independence is crucial for maintaining product integrity and preventing costly losses.
Clean energy is bound to play a huge role in the future of the cold storage industry. Its ability to reduce energy costs, promote sustainability, and enhance energy independence makes it a strategic solution for cold storage facilities of all sizes.
As renewable energy continues to advance and become more cost-effective, the investment of solar in the cold storage industry is expected to grow, paving the way for a more sustainable future for the industry.
Case Study
Sport Subaru, committed to sustainability and reducing its carbon footprint, partnered with ESA to install a 395-kW rooftop solar project at their new Orlando dealership.
This pilot project for future electrification of all Don Mealey Group Auto Dealerships aims to reduce annual electricity costs by 60% with a payback period of 6 years, decrease greenhouse gas emissions, power EV charging stations, and align with Sport Subaru's sustainability goals.
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